10 July, 2016

Redesigning the VET FEE-HELP mess

By Gavin Moodie

The Abbott-Turnbull Coalition and Shorten Labor are at last taking the outrageous and hugely expensive scams of VET FEE-HELP more seriously. Both Government and Opposition are proposing to supplement their piecemeal changes since the scandals started attracting damaging publicity from 2011. But we can see how difficult it is to wind back the advantages of vested interests, even when they have been rorted so outrageously as VET FEE-HELP.

Labor’s proposal to cap VET FEE-HELP loans at $8,000 per student per year with exceptions was predictably opposed by Australian Council for Private Education and Training. But it was also opposed by TAFE Directors Australia, which is meant to represent the interests of public TAFE institutes which have been damaged so greatly and undeservedly by the VET FEE-HELP rip-offs and the associated changes in funding. Apparently TDA prefers its institutions’ interests over the interests of the public they are meant to serve.

Year dot

The legislation for VET FEE-HELP was introduced into Parliament by the Howard Coalition Government and it started in 2009 under the Rudd Labor Government. It was opposed vigorously by the Australian Education Union, student unions and other advocates of progressive policies. I and many of my colleagues supported VET FEE-HELP. I at least regret that I didn’t foresee the extensive damage it would do to public vocational education, which was clear to the AEU and others.

When it was introduced students could get VET FEE-HELP loans only if they were enrolled in a program which was accepted for credit towards a higher education award. Under these conditions take up of VET FEE-HELP was modest. Private higher education providers didn’t invest the considerable effort needed to assess qualifications for credit when it wasn’t in their financial interests. Universities were as conservative in assessing qualifications for credit then as many complain they remain today.

In July 2009 the Rudd Government removed the credit transfer requirement in ‘reform’ states which made government funding available to all registered training organisations in the state. The only ‘reform’ state was Victoria, which became ground zero for the rorting and budget blowouts that became scandalously common. All other states followed by signing the Commonwealth’s National partnership agreement on skills reform in 2012.

As the Abbott-Turnbull discussion paper on redesigning VET FEE-HELP notes, the credit transfer requirement was ‘a significant protection for students and the Commonwealth’. However, the discussion paper doesn’t raise returning the credit transfer requirement as one of the options for protecting students and the Commonwealth revenue.

Review process

The Abbott-Turnbull Government has released a discussion paper on redesigning VET FEE-HELP and has invited comments. The Government plans ‘an intense period of consultation’ on the options it outlined before submitting legislation to Parliament. While this is a considerable improvement on previous changes which have been made without public consultation, it is still too limited. Apparently the Government will not publish submissions. This is poor because publishing submissions helps to inform the public and develops mutual understanding of peoples’ positions.

More seriously, the review is limited to VET FEE-HELP. Yet, as we have seen, the introduction of VET FEE-HELP was related to the provision of public subsidies to private for profit providers. And we shall also see that it is also related to the level of funding for all vocational education programs and vocational education’s curriculum, pedagogy, assessment and quality assurance. The continuing attempts to change vocational education piecemeal makes it even more internally inconsistent and will fail to address fundamental problems with the way vocational education was changed in the mid 1990s. There needs to be a comprehensive and open public review of Australian vocational education.

Inputs, processes and outputs

It is crude, but still informative to consider education like any form of production which requires inputs and processes to produce outputs. Educational inputs include motivated students with some minimum preparation, able and enthusiastic teachers, a good curriculum, learning spaces and facilities, and other resources. Processes include creating and maintaining an environment that supports learning, pedagogy or a teaching-learning process, and student support.

Unfortunately we do not understand exactly what combination of inputs and processes are needed to produce educational outcomes. We know that students with strong school results who are taught a strong curriculum full time on campus by well qualified and paid teachers achieve good educational outcomes. But we also know that many of these inputs and processes are not necessary. Many students succeed without a strong educational background and by studying by distance or online learning. It is therefore tempting to conclude that all educational inputs and processes are contingent: that the only relevant factor is educational outcomes.

This is the promise of competency based education: that students are not judged by their previous educational attainment or by how long they spend studying, but by their achievement. There are indeed successful educational systems that work along these lines. The University of London was founded in 1836 initially solely as an examining body for its colleges and other approved institutions, and now 54,000 students study for University of London degrees by distance education in 180 countries. The NSW Legal Profession Admission Board administers the student-at-law examinations which meet the academic requirements for admission to practice as a lawyer. But both these bodies administer examinations which are set and assessed externally: the light investment in and monitoring of inputs and processes is balanced by comprehensive and rigorous assessment of outcomes.

From the mid 1990s Australian vocational education has been based on competencies with little or no monitoring of inputs and processes. But whereas the University of London and the NSW Legal Profession Admission Board administer rigorous comprehensive external exams, almost all Australian vocational education assessment is conducted internally by the providers and usually by the people who are expected to do the teaching. And when Australian governments made big financial rewards available to for profit vocational education providers there was a direct financial incentive for providers to cut their educational inputs and processes and lower their assessment standards which resulted in the degradation of standards and poor quality that plague the sector now.

VET FEE-HELP was modeled on HECS HELP for higher education, but such problems could not arise in higher education partly because higher education monitors inputs and processes closely. Thus, standard undergraduate arts, sciences and business degrees take 3 years of lectures, tutorials and practical classes. Exceptions are accepted only if they are justified extensively. VET FEE-HELP may be redesigned extensively to stop blatant rorts attracting headlines and blowing out government budgets, but the more fundamental problems of vocational education’s quality and standards won’t be addressed until either governments require external assessment or they pay far more attention to vocational education’s inputs and processes. This will require vocational education to discard competency based education’s preoccupation with outcomes and replace it with a balanced attention to inputs and processes as well as outcomes.

Completion is an indicator of success because it has better outcomes

The Commonwealth’s discussion paper notes the common claim that completion rates aren’t meaningful in Australian vocational education because many students enrol in vocational education to complete just a few units. This claim would be relevant if students who completed only a few units had strong outcomes in transfer to further education, employment or higher pay so that they could repay their HELP debt. But low completion is as much an issue for vocational education as it is for school and higher education because students who do not complete vocational education qualifications have poor outcomes: few transfer to further education, few improve their employment position and few earn higher pay.

Governments should therefore start paying far more attention to completion as an indicator of quality and success in vocational education.

The scams and explosive growth have been by the private for profit providers

The Commonwealth’s discussion paper wrongly claims that the problems with vocational education are ‘not simply a matter of private versus public sector provision, VET has always been a blended sector and should remain so’. The national system established in 1975 on the recommendation of Australian Committee on Technical and Further Education was of TAFE, not of TAFE ‘blended’ with private for profit providers. As the discussion paper notes, making government subsidies available to private for profit providers was a condition of the Australian Government’s VET provider guidelines which were introduced only in 2009.

The discussion paper notes that average VET FEE-HELP tuition fees are from twice to five times the price of corresponding NSW TAFE courses. The discussion paper reports that the amount of VET FEE-HELP loans increased from 2012 to 2015 by a very strong 300% at TAFEs, but it exploded by 1,000% at private providers (Table 1). The problems with VET FEE-HELP are not only a failure of markets but are mostly a failure of private providers.

Table 1: change in loan amounts by provider type, 2012 – 2015, millions $

Provider type





change 2012 to 2015 $

Change 2012 to 2015 %

Other public




























Source: adapted from Australian Government (2016: 28) Table 8: Loan amounts by provider type (millions $).

The failure of markets

Conservatives in Australia, Aotearoa New Zealand, the UK and USA believe that public social goods such as education and health can and should be allocated by markets. The obvious and extensive failures of allocating social goods by markets are ascribed to gaps or weaknesses in market information, market regulation or market design. The Commonwealth’s discussion paper on redesigning VET FEE-HELP notes the numerous different designs and redesigns of markets in Australian vocational education. All have caused major problems, requiring substantial changes which in turn cause new problems which have led to more subsequent changes and redesigns. Yet the discussion paper insists that all that is needed to end the current problems arising from the designed market is yet more market design.

Public social goods such as education and health require substantial public investment, partly because high quality education and health services are expensive and partly because some of their important benefits are long term, general and hard to evaluate. Markets are a very poor way of allocating these public investments because the separate decisions of individuals ignore the shared interests of society and because in the end allocating public goods relies on values and judgments of the public interest. Market designers try to rejig their market to reflect their view of the public good, but collective and shared goods cannot be achieved by the separate and individual decisions of market actors.

Embedded programs are a problem only for VET FEE-HELP

Embedding or nesting subjects and sometimes whole programs in higher level programs is quite common in higher education, as it is in vocational education. But it causes problems for VET FEE-HELP mainly because providers are keen to embed low and mid level vocational courses in high level courses for financial rather than educational reasons and because VET FEE-HELP introduces an artificial distinction between high level vocational education eligible for VET FEE-HELP and low and middle level vocational education which is not eligible for VET FEE-HELP.

Embedding would not be a problem for VET FEE-HELP if lower and middle level vocational education were better funded and if grossly excessive fees were not available for high level programs thru VET FEE-HELP. VET FEE-HELP’s problems with embedding should therefore be solved not by making embedding harder but by increasing the funding of all vocational education and by not making VET FEE-HELP available for exorbitant fees.

‘Industry needs’ should not defeat students’ interests

The discussion paper asks whether VET FEE-HELP should be related to ‘industry needs’. This would make vocational education different again from higher education which the government supports with HECS HELP according to students’ interests, not an assessment of industry needs. There is no rigorous national mechanism for determining ‘industry needs’ and it is very doubtful that the state mechanisms for determining ‘industry needs’ are rigorous. Labour market forecasting is notoriously unreliable: it was invented to give astrology a good name.

Industry contributes very little to publicly funded vocational education and little to enrolments supported by VET FEE-HELP. Industry is not a ‘stakeholder’ because it contributes no stake. In stark contrast to industry, students contribute substantially to VET FEE-HELP. Students also contribute their effort, time and foregone income to education. Students should be supported in their choices where to invest in education, which should not be distorted by the interests of industry or governments’ attempts to read the employment market. Of course students need more support and protection against being gulled into incurring debts that are of little value to them and are unlikely to be repaid, but that should be to advance students’ interests, not industry’s.

Bigger changes needed

It is good that the Coalition and Labor are finally trying to fix the mess that they created with VET FEE-HELP. But the problems are far deeper than the different ‘redesigns’ that they are contemplating. Hopefully there won’t have to be more damage to students, teachers and TAFE institutes before the Coalition and Labor address vocational education’s deeper problems.

Gavin Moodie is Adjunct Professor in the Department of Leadership, Higher, and Adult Education, OISE, University of Toronto and Adjunct Professor of Education at RMIT University, Australia