November 14, 2014

What is at stake as Australia's private vocational colleges implode?

By Pat Forward

Over the last few months, stories have emerged in the media of rorts in Australia's private for-profit vocational education sector, as these providers attempt to milk government training subsidies.

Newly sharemarket-listed provider Vocation Ltd is facing a class action by shareholders angry that it failed to disclose that its activities were under investigation from the regulator. Vocation Ltd has now been forced to payback almost $20 million in subsidies to the Victorian Government because the training it provided was substandard.

But it is likely that this is only one example of many. The ASQA’s annual report for 2013/14 found that 75 per cent of RTOs failed to meet basic training and assessment standards, and that 21 per cent still could not do so after being given a chance to improve. Add to that the widespread reports of the activities of some providers as they attempt to entice students - many of them some of the most disadvantaged in our community - into enrolling in courses of dubious value at exorbitant cost.

This is not what the proponents of privatising vocational training told us would happen. These providers are not trying to compete on quality, innovation or value. They are simply trying to exploit the funding system to boost their profits.

Competition and privatisation in the vocational education sector has delivered none of the things it was supposed to for the community and for the economy. It has not improved, but destroyed quality. It has not saved, but wasted money. It has not provided employment for young people, but wasted their time, and often their once-only chance at a government subsidised qualification.

It has also delivered a huge blow to one of Australia's most trusted education institutions, TAFE, undermining the unique role it plays in our society.

TAFE institutions are crucial to a fair and just society. Their destruction - and they are being destroyed - will affect the lives of many hundreds of thousands of people who rely on an education at TAFE to prepare them for life in an increasingly complex world. The destruction of TAFE is being undertaken consciously and wilfully and it has bipartisan political support. But the destruction is hidden, it is occurring slightly below the radar as politicians of both major political parties mouth rhetorical support for TAFEs, but continue to enact destructive polices, under-resourcing TAFE colleges and forcing them to compete on unfair terms with voracious profit-driven private colleges.

In two states, TAFEs are now minority providers and more than 70 per cent of Victoria and South Australia's public vocational education funding is open to the private sector. All other states and territories are pursuing the same damaging policies in the vocational education sector. This destruction is occurring at an incredible pace, with little analysis of what is happening or what the community is losing.

Competition in vocational education has not delivered efficiency, nor has it been a prudent use of the public's funds. Government funding has not been used to deliver high quality vocational training, and it has not been used to prepare young people for work or further study. It has been used to line the pockets of predatory entrepreneurs. Hundreds of millions of dollars have been ripped out of vocational education by entrepreneurs keen to follow what most now admit is a lax and far too easily accessed funding regime - and the public, governments and individual students have little to show for it.

We should all be concerned about what is happening to TAFE and in the vocational education sector because trust in the system is being eroded, because a highly regarded public institution is being destroyed, and because public money is being wasted.

But we should be concerned mostly because the futures of many young Australians are being trashed.

Over the last few months, stories have emerged of students being ripped off, TAFE teachers losing their jobs, TAFE campuses being closed, TAFE courses being shut down. This is where the real damage is being done, to students who need the best training to help them complete at a time of rising youth unemployment.

The vocational education sector is in crisis, with poorly-conceived government policy at odds with public opinion and the public good.

Both major political parties must listen to their communities and respond to the current crisis in vocational education before it is too late. For the ALP, TAFE, not some abstractly conceived vocational education market, should be at the centre of their commitment to fairness and prosperity. TAFE should be at the heart of Labor's vocational education policy.

For the coalition, the destruction of TAFE is wasteful and inefficient.

For all governments, the key must be putting an end to mindless competition for public funds. The race to the bottom has already damaged the system - many people believe beyond repair. In Victoria TAFE market share was 75 per cent in 2008. In 2014 it is 27 per cent. Many insiders believe that it is closer to 20 per cent as subcontracted delivery to the private sector is increasingly the only way that TAFEs can afford to operate.

The immediate solution is simple and cost effective. Serious limits must be imposed on how much public funding is open to this shoddy market. This would not cost governments a single cent. Proper standards must be developed before the ongoing allocation of public funds to private colleges. At the very least, colleges delivering vocational education should be required to have as their major purpose the delivery of vocational education. They must also be banned from outsourcing their training to unregistered third parties.

If governments are determined to make hundreds of millions of dollars available to an untested and untried private market, then they must resource the Regulator to enforce high and improved standards. It is simply not good enough to open a sector to rampant competition, and then turn your head when rorts and rip-offs are revealed.

On its public listing twelve months ago, Vocation Ltd’s owners withdrew $225 million in clear profit in the same year that Victorian TAFEs had a further $212 million cut from their funding. Vocation's profits came exclusively from the Victorian public purse.

Twelve months on, Vocation Ltd’s reputation is in tatters, thousands of students have been ripped off - and TAFE in Victoria hovers on the brink of destruction.

Surely enough is enough.