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Senator Simms details the rorts of the private for-profit VET sector

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Robert Simms 1 Dec 2015

The VET FEE-HELP system is broken.

What was originally designed as a model to expand access to training for Australians has now become an untameable beast that is ripping off students, ripping off taxpayers and corroding the integrity of our entire VET sector.

Since the full transition to a demand driven entitlement, VET FEE-HELP has exploded in cost, rocketing from 300 million in 2012 to 650 million in 2013 and then almost tripling in 2014 to nearly $2 billion dollars of taxpayer and student money.

Current estimates put it at $3-4 billion dollars for 2015.

And what do students and the taxpayer get for their money? A never ending conga line of rip offs, scandals and rorts. Let me recount just a few to the Chamber:

•Only last week, we found out that third party brokers were posting fake job averts, and when applicants enquired and applied for the job, they were told they would need a further qualification to be able to take up the role; a qualification which would handily be provided by the RTO employing the broker.


•Earlier this year reports surfaced about brokers signing up those with intellectual disabilities to 5 figure loans to study courses that they didn't even understand that they were enrolled in. Not only were they signing up the intellectually disabled Mr President, but it was in their brief to seek out those who wouldn't understand the terms of their agreement or the complexity of the HELP system and income contingent loans or the expectations that student should have of their education providers. I am absolutely disgusted by this sort of behaviour and am furious this was ever sanctioned by the VET model.


•In my home state of South Australia, the company iEducate has been going around to schools, particularly those in lower socioeconomic areas, offering inducements to direct students to their courses. A letter that we obtained shows iEducate offering schools money for signing students up for their courses. Part of the letter reads thus: "There is no limit to the number of students you may enrol, therefore we would pay your school a $5,000 grant should you successfully enrol ten students, provided they pass the census date." They also offered potential students ‘free' laptops. This vulture-like behaviour is just another example of the voracious and unethical business model practised by these providers - luring students away from school and lumping them with huge debts before they even turn 18.


•There are further stories of students have been drawn in by inducements like laptops and ipads, even after the government's recent round of reforms. While before the reform students were told they were free, they are now told that laptops and ipads are simply loans that the RTO will never attempt to recover.


•Hundreds of students have signed up to a class action against Evocca College for providing sub-standard courses and using unethical and non-transparent market practices. Students would be routinely be told degrees would cost half of what they would actually cost, and Evocca has the gall in their submission to the committee inquiry into this Bill that students are intentionally misusing the system and one way to fix it is to lower the repayment threshold to stop low socio-economic students from gaming the system.


Can you imagine Mr. President, adding a $40,000 dollar student loan repayment to someone living on 30k a year, right on the margins of being able to make ends meet. What nonsense. That is victim blaming at its absolute worst.

And besides the scandals, besides the rorts, what sort of aggregate outcomes are we getting? Plummeting graduation rates, plummeting levels of skills training and exploding student debt, much of which will fall on the taxpayer.

Last month the National Centre for Vocational Education Research established that in the early days of the scheme only 21% of students eligible for a VET FEE-HELP loan completed their courses. For those doing full time online courses in management or commerce, the graduation rate is 8%. 8% Mr President. What an appalling reflection on our training system. But unfortunately graduation rates are just the beginning of this sordid tale.

Such is the lack of confidence in the current VET sector that often the degrees are worth less than the paper they are written on. Businesses know students are not being equipped with the necessary skills to graduate, and students are then left floundering with huge debts, worthless degrees and job prospects that are damaged rather than enhanced.

The collateral from this VET FEE Help experiment is huge. There is expected to be over a billion dollars in dodgy loans that will be unrecoupable and which must now be footed by the taxpayer. And that is only for those students who are expected to never earn enough to meet the income threshold, for those unlucky enough to earn near the median income, and indeed Mr President you should never be unlucky to achieve an income of just on 54k per year in a country as lucky as our.

Those who are unlucky enough to earn over 54k per annum must now repay tens of thousands of dollars for their worthless qualifications that haven't contributed to either a student's skills or employability in the slightest.

VET FEE-HELP has failed. The two national agreements which were part and parcel of the VET FEE-HELP roll-out espoused the following aims:

•Improve training accessibility, affordability and depth of skills

•Encourage responsiveness in training arrangements

•Assure the quality of training delivery and outcomes, with emphasis on measures that give industry more confidence in the standard of training delivery and assessment

•Provide greater transparency through better information to ensure consumers can make informed choices, governments can exercise accountability

Is training more affordable? No, not for the taxpayer and certainly not for students with the blow out in unregulated course fees. Is training more responsive?

Responsive to the demands of the for-profit rent seekers perhaps, or perhaps it is the rent-seekers who have been responsive to the gaps in the system that they are exploiting. Is training of a higher quality? Certainly not.

The sector has never been held in higher disrepute. Even many in the private VET industry are now calling for further regulation. And greater transparency so consumers can make informed choices? Laughable Mr President.


The measures before the Senate today are like putting a new coat of paint on a car with a cracked engine and a shattered driveshaft. The car is broken and it doesn't matter how many racing stripes you paint on, it won't do what is was designed to do. The government needs to tear the system down, go back to the drawing board and start again.

Labor's amendments are an improvement again, but they won't fix what is a broken system. This is the result of a flawed incentive structure, where you have a demand driven entitlement combined with an information asymmetry and a profit incentive. You can try and regulate, you can try and educate, but the for-profit shonks will always find the gaps as long as the incentive is there to do so.

Neither Labor nor the Coalition have their hands clean here. We need to stop playing politics with our students' future, we need to rethink how we supply skills training in this country and we need to put a stop to this broken system and start again.

The Greens are committed to seeing the end of the VET sector being used as a political football. We want to actually fix this broken system. While the Labor and Liberal parties have been scoring political points off each other in the Parliament, thousands of students have been duped out of getting the quality education they thought they signed up for. Many more have been lured into courses they never wanted or needed. Even more are now straddled with debt and worthless degrees.

While we recognise that today's amendments wouldn't even come close to solving all the problems, we believe they will put a cork in some of the worst of the practises. The system needs to be re-designed from the ground up, and hopefully this bill will provide the breathing space to allow this to happen.

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