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Legislative Council - Fifty-Second Parliament, Second Session (52-2)
2012-05-31 Daily Xml
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TAFE SA BILL

Second Reading

Adjourned debate on second reading.

(Continued from 17 May 2012.)

The Hon. K.L. VINCENT (12:26): First, I would like to thank the Minister for Employment, Higher Education and Skills (the Hon. Tom Kenyon MP) and the Australian Education Union for taking the time to meet with me and discuss this bill. I wish to place on the record my deep reservations with regard to not so much this bill but the broader range of reforms being contemplated for TAFE SA and Vocational Education and Training (VET).

The Skills for All set of reforms that the government wishes to pursue is in many respects similar to the reforms undertaken in recent years in Victoria, reforms which have proven to be a disaster in that state. This reform, I realise, is driven by the federal government, and the state government finds itself in something of a bind, rushing to make reforms that it realises are likely to be problematic in order to access federal money that the VET sector desperately needs.

In Victoria, the opening up of the VET sector to private providers had very serious and significant negative consequences. TAFEs found themselves overstretched and underfunded, required to offer higher cost courses, expensive student support services and regional campuses. These expenses were not shared by TAFE's private-sector competitors and, as such, significant financial burdens were placed upon TAFEs, and many providers found themselves under financial strain, in some cases facing insolvency.

In recent weeks I have observed with great sadness that the last remaining diploma course in Australian Sign Language (Auslan) in Victoria was cancelled at TAFE's Kangan Institute in a dispute over funding. The course is an important qualification required by those hoping to become Auslan translators for the deaf and hearing-impaired. Given that there is a serious shortage of Auslan interpreters in Victoria, as there is here in South Australia, the loss of the course has been a huge blow to Victoria's deaf community.

While I have been reassured that the government has learned from the apparent mistakes made in Victoria's VET reforms, I still hold grave concerns about the future of TAFE SA and VET in this state. I am concerned about its ability to continue to offer the high standard of education that we currently enjoy and to deliver important courses, such as the diploma level Auslan qualification. I am also concerned about the quality of training and the level of support services that will be available to students of private providers.

My concerns about the reforms are, of course, numerous, and I could speak about them at some length; however, I recognise that they relate more to the Skills for All reforms than to this bill in particular. I would be very keen to see the government proceed with these reforms in a slower, more careful fashion.

Having seen similar reforms result in a complete disaster in Victoria, I feel that an approach that is less hasty and more cautious would be prudent, to say the least. While I realise that the issue of federal funding places additional pressure on the government, one would hope that this pressure would not result in reforms with such serious and wide-ranging consequences being undertaken with undue haste and without sufficient care.

The Hon. R.I. LUCAS (12:30): I rise on behalf of the Liberal Party to support the second reading of the TAFE SA Bill. In doing so, I acknowledge that we will treat the debate as a cognate debate. Parliament is being asked to consider today not only this bill (which is Order of the Day No. 9) but also the Statutes Amendment and Repeal (TAFE SA Consequential Provisions) Bill (which is Order of the Day No. 10). My comments are addressed to the first of the two bills, the TAFE SA Bill.

I indicate that from our viewpoint we will treat the debate as a cognate debate and will not make a significant second reading contribution to the subsequent bill when we debate it. I do note, however, that the amendments the Liberal Party is moving as part of this cognate debate are not actually to this bill but are necessarily applied to the second or subsequent bill, so there will be, clearly, the need for a committee stage of the second bill.

With those introductory comments, I indicate, as I said, that the Liberal Party is supporting the second reading. I acknowledge that the shadow minister in another place, the member for Unley, has outlined in comprehensive detail the Liberal Party's position, a range of questions and views on the clauses, as well as the purpose and background of the legislation, and I do not intend to repeat all those for the record in the Legislative Council.

The first thing I want to do, however, is indicate that the member for Unley did get a commitment from minister Kenyon in another place to take on notice and answer a whole series of questions. In the last 48 hours, my office has been chasing the member for Unley to ask him to provide us with the answers that minister Kenyon provided to him, or undertook to provide to him, when this bill was being debated much earlier this month. The debate commenced on 3 May and then continued through until 16 May.

I was surprised when the member for Unley's office indicated that, contrary to the commitment given by minister Kenyon, no answers had been provided to the questions which had been placed on notice and which the minister had agreed to take on notice and provide an answer to the member for Unley. What I want to do at the outset of my contribution is to repeat the questions the minister took on notice and ask the minister to provide copies of those answers.

I am sure that the hardworking members of the department would have prepared the answers, and I am at a loss to understand why they have not been provided. Clearly, given the minister's commitment to give them, we are not in a position to want to proceed until we actually receive the answers that were promised some weeks ago now. The first series of questions was in response to questions from the member for Unley who asked:

What is the level of debt that TAFE SA will be carrying? Perhaps you could also explain for the last five years what the cumulative deficits have been for TAFE and how they will be dealt with either before TAFE is transferred to the corporation or later, and how future deficits may be dealt with?

The minister said:

We do not have a level of debt figure for you at the moment but I will get that for you. The financial deficit in the last financial year was approximately $6 million which is around 2 per cent of its budget.

There was a series of questions that the member for Unley raised to which we have not yet received answers from the minister. I do note that in that section of the debate the minister outlined:

My intention is for TAFE to move at the very least to a break-even position of very small, slight surpluses which would give us a little bit of a buffer.

My question is—and this was not asked by the member for Unley: Can the minister outline what will be the dividend policy that Treasury will require of TAFE SA should, at some stage in the future, it make profits on its operations as the minister has outlined he believes will happen in the reasonably short term; or will the agency not be required to either repay capital or pay a dividend, or any sort of additional financial return based on its profitability, back to Treasury? Will it be able to keep 100 per cent of its profits irrespective of the level of the profitability of the agency?

I am not sure that in my reading of this in the last 24 hours I have picked up all the questions that the minister took on notice, but I am sure that the departmental officers will have noted all the undertakings that the minister gave and will have the answers available. The member for Unley asked the minister whether he could bring back to the parliament—'I don't expect him to have the answer here and now'—a list of the 80 or so surplus employees who are with the department at the moment, their job titles and their salaries. The minister said, 'Yes, we are able to provide that and I will get that to you.' Again the minister has not done that.

The next answer was in response to a series of questions that the member for Unley asked about HECS deferral. I will not read all his questions, they are available on the Hansard. The minister's response was:

My understanding on that question is that the arrangements for this are administered by the federal government and that they apply equally to TAFE and private providers. Again I will check that and make sure that that information is correct.

Again I am advised that the minister has not provided that assurance or clarification. Then there was a question from the member for Goyder in relation to insurance obligations for the new TAFE SA structure:

Will they be covered as part of some self-insurance that the government currently has or will they need to go out to the marketplace to ensure that they have professional indemnity and public liability in their own operations so that that becomes part of their cost of operations?

The minister said:

Perhaps we can take that on notice and get a detailed response to you on that one just to make sure that we have covered off every area. It may be that those liabilities are split between the department and TAFE but I will get you a full answer.

I must indicate that I have not spoken to the member for Goyder but I assume that if the member for Unley and the shadow minister have not received answers to their questions that it is probably unlikely that the member for Goyder has received answers to the questions he put and the minister undertook to provide answers to. The next issue was raised by the member for Unley:

Just for those who might be following this debate on Hansard, what are the obligations now on TAFE to ensure that their overseas students are complying with these requirements?

The minister said:

I am not able to provide that detail now but I will get back to you with that information. Some issues are around change of address and stuff like that but it is best that I get back to you with a fuller answer.

Again I am advised that the minister has not provided the fuller answer in relation to those important issues.

I think they are the major issues which were raised by the member for Unley and the member for Goyder, to which the minister promised replies which have not been received. So, as I said, if I could ask for the minister handling the bill in this place to ensure that those replies are received, so that they can be assessed. We can discuss those with the shadow minister and then decide whether or not we are going to proceed with any amendments, as a result of any of the information or answers that the minister has promised to provide.

I want to raise now some other issues that have not been fully explored in the comprehensive House of Assembly debate. One of the issues I wanted to seek answers from the government on is the budget treatment of the new agency, vis-a-vis the current budget treatment for DFEEST.

In broad terms, as I would understand the position, DFEEST currently is what I would call a normal or usual government department or agency and is included in what is called the general government sector for budget purposes. Therefore, its surplus or its deficit is an impact on what is called the net operating balance, which is produced by Treasury in the Budget Papers which we will see later today. We understand that we are likely to be seeing net operating deficits of up to $800 million a year for the next couple of years, but that calculation is done on a budget sector defined as the general government sector.

My understanding of what is occurring, that I asked for clarification and confirmation on, is that I suspect TAFE SA has been taken out of the general government sector and is probably going to be a public non-financial corporation, or a PNFC, in budget terms. If that is the case, it takes the financial accounts of TAFE SA out of the general government sector and puts it into the PNFC sector, which will mean there will be a budget impact in terms of budget aggregates, such as the net operating balance, and a range of other budget aggregate figures as well.

What I am seeking is a detailed response from the minister, which will necessarily require—but I am sure it would have already happened. We would not get this far without Treasury having looked at what the impact of this particular government decision will be on the budget accounts from next year.

It goes back to some of the questions that were raised by the member for Unley in relation to who is going to take on the debt figures and/or deficit figures of DFEEST at the moment. I am assuming, having read the debate, that it is more likely that DFEEST may well be keeping those particular debts and deficits, but it is not clear.

In some parts of the debate, the minister says, when he talks about the number of TVSPs or job reductions, that they are and will be divided between DFEEST and TAFE SA. I must just clarify that I am assuming that the new part of the agency which is not TAFE SA will still be called DFEEST. I am not entirely sure that that is the case but, anyway, for the purposes of my contribution, I will refer to it as the remnants of DFEEST.

The minister made it clear in his contribution that the TVSPs or the job reductions will be divided between the new TAFE SA and the remnants of DFEEST. So, it is possible, I guess, that debt figures and others like that might also be reallocated between the two agencies. I am particularly interested in this to see what the impact of such a move will be on a budget aggregate such as the net operating balance. That necessarily, as I said, will require Treasury input which would have already been conducted, given we are so far down the track in this debate.

In looking at the government's proposed structure, in essence in almost floating off TAFE SA as a competitive provider of technical and further education services, I note the relatively recent experience of TransAdelaide where it was the provider of public transport services. Many years ago the former government (continued by the current government) introduced competition into that section of the market. TransAdelaide was then set up supposedly able to compete with the other providers.

There are all these similar questions that are being asked now about the relative position of the public provider TAFE SA and the private training providers. They were all being asked at that time about TransAdelaide versus the private providers. We note that in that space TransAdelaide has either disappeared or virtually disappeared from the marketplace.

That certainly was not what was envisaged at the time. It certainly was not what was publicly announced at the time. I note that the minister is saying publicly that that is not going to happen with TAFE SA either; it will continue to be a strong and competitive presence in this area. As I said, I make a cautionary note that similar undertakings were made in relation to the TransAdelaide agency as well which went through very similar competitive market arrangements.

The next issue I want to raise is that the minister highlights that TAFE SA—and I am not sure on exactly what measure—has about 80 per cent of the market. That is the percentage figure he has referred to, so it is still the dominant provider at the moment. However, if the Hon. Ms Vincent and others are right, they have observed that TAFE SA could gradually and slowly decline, as has occurred in some other jurisdictions. My question to the minister is then: what is the position of TAFE SA in relation to compulsory redundancies?

As you know, in the general government sector—and it may even be broader than that and I seek clarification—there are currently arrangements where there is virtually no forced redundancy other than in very limited circumstances within the public sector; that is part of enterprise bargaining arrangements that have existed for many years under Liberal and Labor governments. While the legislation in the public sector envisages forced redundancies in a wide variety of circumstances, enterprise agreements have meant that those legislative options have not been taken up.

I note that the government has announced that after the election all bets are off and that forced redundancy will be an option for the future should it be re-elected. My question to the minister is: given there will now be a competitive market and given that TAFE SA will be competing—and he is clearly not in a position to give any guarantee that TAFE SA will continue to maintain 80 per cent of the market share—if that was to decline, how does TAFE SA manage its staffing and employment expenses if it does not have the option of forced redundancies?

Let us say that TAFE SA, in competing for work, does not maintain an 80 per cent market share and it drops back to a still dominant 50 per cent and loses 30 per cent market share over the coming years. Clearly, TAFE SA and its board would then be saying, 'We can't keep the same number of staff that was required for an 80 per cent market share. We must get rid of an equivalent to the cost base that measures a 50 per cent market share.'

If the board, the CEO and TAFE SA, in this competitive marketplace the Labor government has now signed up to, find themselves in that position, and there are no options of forced redundancy, what then happens? The only thing that can happen then is that TAFE SA would have to continue to maintain surplus employees at significant expense to its budget, and that can mean only two things. It either runs massive deficits and, if it does do that, my question to the minister is: who finally controls the level of deficit that TAFE SA can run?

Let us say TAFE SA says, 'Well, we're going to run a $10 million deficit this year, because we're hoping that in two years' time we'll be able to turn it back into profit.' My question is: who actually finally approves the level of deficit that TAFE SA signs off on? Does the minister Kenyon equivalent (whatever that is to be called in the future) have to approve and authorise the TAFE SA budget for next year? Is it the Treasurer? Does he or she have to sign off on that? Is it both, or does neither minister have any role in approving and authorising the budget? I am seeking some specific responses to those questions as to whether a board or CEO decision to run deficits of some magnitude for a year require approval by someone other than themselves.

The bottom line, then, is that they either run the deficits and someone then has to pick them up or, if they are not entitled to run the deficits, they then, I assume, have the authority to increase massively the fees and charges imposed on the remaining courses of the 50 per cent market share they have because, if they are going to run a $10 million deficit and they are told they are not allowed to run that deficit, they would have to massively increase, in the 50 per cent market share they still have, the fees and charges. The reality is that, if you have a massive increase, you may well lose even more market share, and that will be the commercial judgement they will need to make.

My question again is: does TAFE SA independently have complete authority over the level of fees and charges it imposes to help it balance its budget? If it does not, does that have to be approved by the minister Kenyon equivalent and/or the Treasurer in the future? Again, I seek a detailed response from the minister in relation to that.

In relation to TAFE SA, as it moves through, let us say, in the first instance, voluntary redundancies, will the up-front costs of voluntary redundancies be subsidised by way of loan or other arrangement from Treasury to TAFE SA to help it fund the up-front costs of voluntary redundancies? It will be the same question, of course, but magnified if they are forced redundancies. But in the first instance, as we are moving through the voluntary redundancies, will Treasury either loan or provide an appropriation to TAFE SA to fund the up-front costs of the voluntary redundancies?

On 3 May, in the member for Unley's contribution, he went through a long discussion about VET FEE-HELP, HECS-style schemes, etc. Again, I will not read all his contribution; the departmental officers will be well aware of it. He went on to conclude:

I am not aware of whether it was concluded as to whether the state or federal governments would carry the financial burden of any dishonoured debts with regard to the scheme. Again, perhaps the minister might be able to clarify that either in his response, his closing summary to the second reading speech or, alternatively, through the committee stage.

On my reading, I could not find a response from the minister at any stage of the debate and again I seek a response from the minister to the detailed questions of the member for Unley. During debate in another place the minister and the member for Unley entered into a long discussion about the enterprise bargaining arrangements, and the minister said:

We are not putting employment conditions into the bill that are not already in the relevant bills that exist at the moment.

He went on to say:

Largely, the terms and conditions in the current acts have been superseded but it was not my intention to come in here and just delete all of those without significant consultation.

I am wondering whether the minister is in a position to provide some greater detail as to, if that is the case, why he has, as the minister, included what he says are superseded provisions within the legislation. He says he was not prepared to do that without consultation, but my understanding is that there has been a long period of consultation in relation to this with the AEU and other stakeholders.

I wonder whether the minister is in a position to provide some greater explanation as to why he is bringing in legislation with what he says are superseded provisions but, nevertheless, we are being asked to support legislation with superseded provisions within them. There was a series of discussions about reasonable access for third-party providers. I seek leave to conclude my remarks.

Leave granted; debate adjourned.


[Sitting suspended from 12:59 to 14:17]


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