VET FEE-HELP scheme must be suspended while problems are resolved

1 December 2015

The Federal Government’s announcement of a cap on VET FEE-HELP funding for next year does not go far enough and the program should be suspended, the AEU said today.

AEU Federal TAFE Secretary Pat Forward said VET FEE-HELP debts were exploding and the program was being systematically exploited by dodgy private operators.

“The Federal Government has effectively admitted the VET FEE-HELP scheme is failing, yet has still committed to accruing at least another $4 billion of taxpayer-funded debt in 2016,” Ms Forward said.

“The cap on funding for the overall scheme and for individual providers to their 2015 amounts will do little to stop the rorting of students and taxpayers, which has seen the ACCC investigate private operators.

“Dodgy operators will simply be limited to rorting the same amount in 2016 as they did this year.

“There should be a total suspension of any new VET FEE-HELP debts while the many issues surrounding rorting of the scheme are independently investigated and resolved.

“Total VET FEE-HELP debt for 2014 was $1.7 billion, but 2015 debt had reached $1.74 billion by mid-May and is on track to reach $4 billion by the end of the year. This explosive growth is creating a huge liability for taxpayers and channelling funding away from TAFEs.

“The Grattan Institute has estimated that 40 per cent of this debt will never be repaid, effectively delivering big profits to private providers at the expense of taxpayers.

“Education Minister Simon Birmingham said last week that the VET FEE-HELP scheme is a ‘disaster’ and ‘one of the worst get-rich schemes I’ve ever seen’.

“VET FEE-HELP should be shut down while a full inquiry is carried out. The proposed departmental inquiry does not go far enough.

Ms Forward said there was still uncertainty around new regulations being proposed by the government.

“This is the third attempt at tightening regulation of VET FEE-HELP and is likely to have as little effect as the previous two.

“A Senate Inquiry into the funding of VET released earlier this month found serious flaws in the VET FEE-HELP scheme, and stated that its continued operation poses an “unacceptable risk to the Commonwealth”.

“The Inquiry has also found that controls on providers have been “unacceptably loose” and there is “no effective price control” in the private VET system.

“We cannot continue to keep giving taxpayers’ money to private colleges at the expense of TAFEs.

“Governments must ensure that at least 70 per cent of funding for VET is reserved for TAFEs to ensure that they can remain at the heart of the training system. If we lose the quality, capacity and experience of TAFE, the standards of vocational training in Australia will fall.

Media Contact: Ben Ruse 0437 971 291