New report says VET needs urgent review

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30 August 2016

A new report from the Centre for the Economic Development of Australia has found that Australia’s Vocational Education and Training system has been weakened by scandals around the behaviour of private providers and needs an urgent review.

CEDA’s report blamed "regulatory oversight" and "poor decision-making" for the VET FEE-HELP student loan scandal, which has seen a blowout in taxpayer funds going to for-profit providers despite growing evidence of rip-offs and fraud in the sector.

CEDA is a business-focused think tank and is yet another voice added to the growing chorus of discontent with our privatised VET system.

AEU Federal TAFE Secretary Pat Forward said business and industry groups were increasingly concerned about the damage government policies of privatisation were doing to VET and Australia’s future skills base.

“Industry recognises recognise that the huge damage being done to our TAFEs, and the reputation of our VET sector, has long-term consequences for the health of our economy.

“They recognise that the current VET FEE-HELP system – which rewards low-quality private providers and costs taxpayers $2.9 billion per year – is not sustainable.

The CEDA report recommends a comprehensive national review of VET to address the issues caused by low-quality private providers and the drop in government funding for TAFEs.

CEDA Chief Executive, Professor Stephen Martin, said yesterday the VET sector had been weakened by falling enrolments, scandals and a disconnect with industry.

“That is why CEDA’s report is calling for a comprehensive national review of the sector,” Professor Martin said.

He said there needed to be a refocus on working with industry to ensure courses are being linked with the labour market so that students have a real chance of getting a job on completion of a course.

“Comments from the Federal Minister for Education Senator Simon Birmingham last week suggest that the government is taking the right approach to cutting off dodgy private operators with poor outcomes from utilising VET FEE-HELP. However, much more needs to be done,” Professor Martin said.

“The skyrocketing VET FEE-HELP costs have been concentrated to a relatively small number of private operators and must be fixed. However, what is equally concerning is the drastically plummeting enrolments in government supported providers.”

The AEU has criticised Minister Birmingham for failing to tackle the root causes of VET FEE-HELP rorts – the deregulation of VET and the lack of accountability for providers, which has allowed private operators to make huge profits at taxpayer expense.

Ms Forward said the cost of VET FEE-HELP has ballooned to $2.9 billion a year.

“84 per cent of VET FEE-HELP funds are going to the for-profit sector, which has a student completion rate of just 8 per cent. How is this giving the taxpayers value for money?” Ms Forward said.

“VET FEE-HELP must be suspended while a full review is carried out.

“Campuses are closing and insufficient funds are available to deliver courses, and at the same time billions of dollars are being diverted to low-quality private providers through VET FEE-HELP.

“The answer to the VET crisis must involve reserving at least 70 per cent of VET funds for TAFEs, so that they can continue to deliver quality courses for students.

CEDA’s report also backed concerns about the rapid drop in funding for TAFEs, finding that the number of VET students funded by government dropped by 12 per cent in 2015 compared to 2014.

The AEU’s analysis of the latest NCVER funding data found that funding to TAFEs has been cut by 24% in 2015, compared to a 1% cut in government subsidies to private providers.

The CEDA report also recommended:

• Improving data and transparency of data to help stakeholders make more informed decisions;
• Ensuring regulators have the power to act if standards are not being met; and
• Providing national information around providers, pricing, qualifications, audit findings and satisfaction survey results to the public.

Ms Forward said that it was clear that the only beneficiaries of the current system were for-profit operators, and that urgent action was needed to preserve the quality of VET in Australia.

“When CEDA, unions and business groups like the Australian Industry Group are telling the Federal Government that VET is in crisis, then it needs to start listening,” Ms Forward said.