SUBJECT/S: Vocational Education Crisis
JOURNALIST: As you may have heard the changes to TAFE as well as to the way students are able to access FEE-HELP, there is a HECS like fee loan system in the vocational education sector. The government has cracked down upon that after allegations of wide spread rorting of the system and just this morning, less than an hour ago, we were told that one of the biggest private providers of education in Australia has just collapsed.
Now this company, the parent company is called Global Intellectual Holdings, they run the Aspire College of Education, the Designworks College of Design, the RTO Services Group and the Australian Indigenous College have just been placed in voluntary administration. They have about 20 different campuses around Australia, under those names and other names.
They made $83 million in revenue in the year to June 2015 making them one of the largest companies in Australia in this area, according to the Sydney Morning Herald. They made a profit of $18 million and they paid $14 million of that to two directors and they have now gone into voluntary administration leaving some students completely high and dry having paid their fees and they have got nowhere to go, they’ve got no qualifications, they have nowhere to go to get any kind of education. Where does this leave them? Where does this leave the government, State and Federal governments with changes to that kind of education.
Sharon Bird is the Opposition spokesperson for Vocational Education, she is on the line now, good morning.
SHARON BIRD, SHADOW MINISTER FOR VOCATIONAL EDUCATION: Good morning Nick
JOURNALIST: What have you heard from some of the students around Australia about these colleges?
BIRD: Look this is, as you just indicated in your opening, just recent news. It’s not unprecedented we have had other large colleges over the last 12 months or so experience similar problems and so it’s sadly too common a story that is going on in some of the private sector. It’s one of the reasons that, in opposition, we have been pushing the government to take action on some of these sorts of business models because the problem was, at the end of the day, too many of them are based on recruiting students regardless of their capacity to take the training.
They were loading them up with debts and then students were either finding they couldn’t handle the course and they were failing or dropping out but they still had the debt. We were getting feedback from businesses, some of them get their qualifications but it is such poor quality that businesses were creating, if you like, blacklists of training providers that they wouldn’t employ people from. There has been a huge problem in the sector.
JOURNALIST:Has that kind of allegation been levelled against some of these colleges owned by Global Intellectual Holdings? Are they on a blacklist?
BIRD: I don’t know because, to be honest, employers who talk to us don’t go into the detail because they are concerned about naming particular companies. It’s more a systemic problem that has been there, in terms of the stories that we were hearing, and I think I have talked about them to you before about this, lining up outside the Centrelink offices trying to recruit people, doorknocking in poor suburbs and trying to recruit people, all of that sort of behaviours have been going on.
The national regulator has been following up and the ACCC has been following up with a number of colleges so who was actually looking at this particular one, I don’t know, but the priority surely has to be now the many, many students who have been displaced. There is a national public insurance scheme that is run by the peak body, the Australian Council of Private Education, but again it depends on whether these particular colleges were members and were covered by that scheme.
JOURNALIST: What would that cover, hypothetically?
BIRD: That is a scheme that is designed to provide a guarantee to get students into the training they were doing with another provider and the federal Department of Education needs to be involved in that as well. I would just suggest to them that their priority today has to be taking some urgent action for those students. I want to also recognise that there is an awful lot of staff who are losing their jobs as well so a terrible disruption to a lot of people by this outcome.
JOURNALIST: The allegation has been that the college has just enrolling as many students as possible knowing that they were covered for their fees, upfront by the government, and then they will just be left with a debt much like HECS, has that happened with this particular college?
BIRD: Well again the details about this particular one, I’m going to have to have a look into today because, like you, I have only seen it in the last hour. On a general position this has been a thing, and I want to say the government has taken some pretty serious action in terms of clamping down on what was going on. The problem was it just took them too long and, as you indicated, last year big profits were being made and the action to make sure that they were enrolling students appropriately not forcing students into inappropriate courses, not aggressively marketing, not delivering poor quality, all of those things just took too long.
So we saw that explosion over the last two years, I think it was about $700 million in VET FEE-HELP loans in 2013, well by last year it was up to $1.7 billion, and so you just saw an explosion in this sort of activity.
JOURNALIST: Well that’s true but have, I don’t know whether this is the case with this particular college, is it possible that very well run colleges have been caught in the crack down on VET FEE-HELP? I know for instance, the Steiner College that trains teachers in Sydney is caught up in that and they have had that withdrawn, and there is no allegations, as I understand, against them rorting the system.
BIRD: And that is part of the problem at the very last moment when Parliament was sitting at the end of last year the government bought another raft of amendments into legislation to, what they have effectively done is frozen funding at last year’s level, across the board. We made the point to the government, at that time, that by rushing it in this way, basically they briefed us as the Opposition as the Bill was put on the table in the Senate, that they really could create more problems than they are solving.
We have had lots of feedback from a number of quite genuine good quality private providers, who have been operating for decades, that this has put real pressure on them. Most of the ones I have spoken to haven’t said it will actually mean that they will close but its created significant problems for them and again my criticism of the government has been that it either drags its heels for ages before it acts and then when it acts it uses a sledgehammer and the implication is that there is a whole lot of students, and as we have seen today, workers as well, dramatically affected by that. Whether that is the factor that made the difference to this particular college at the end of the day, I don’t know.
JOURNALIST: Well fair enough. So it is possible that some good operators have been caught however the figures in this Herald story are alarming. They made a profit of $18 million, $14 million of that in dividends went to two directors, is that at all appropriate for a company, whatever the company’s business is?
BIRD: I think these are no doubt the issues that the administrators and people with an interest in it will be looking at in coming days. The problem has to be, I think, the providers who are out there with a prime purpose to be making a profit, not the prime purpose to provide education and training to people and, as you have indicated and I have met many of them, there are some great private providers out there who have been doing it for a long time and are really dedicated to quality in their sector.
Often they are targeted at a particular sector it might be music academies or film and television schools and people like that who have been doing it for a long time, and the problem for them is when the bad behaviour goes on they all cop the reputational damage. Then when the government takes action it is very drastic then they also have pressure put on them and their capacity to go on. It’s a reflection of the fact, I’d argue, that it just took the government too long to get on top of this and send very clear signals that the sort of behaviour and business models, that were all about making profit, that were all about dragging as many students through the door as you can regardless of their capacity to undertake the training or finish it was unacceptable.
JOURNALIST: But how do we get a better system in place so we can ensure there are good operators in the private sector because we know that there are good operators in the private sphere.
BIRD: I mean, I would argue, first and foremost you have to have a strong dominant public provider in the market, that is our TAFE system, because what TAFE does is that it sets the benchmark so people know their experience with TAFE that tells them what is quality, what is a reasonable price and so you have that balance in the system of a dominant public provider. Then you need to have really rigorous process’ to qualify to be a private provider and to access any sort of government funding, whether it is a student loan scheme or direct subsidies.
JOURNALIST: It sounds like insurance should be some sort of compulsory part of being in this space so at least the students aren’t left high and dry as they seem to be with this situation.
BIRD: That’s right and it is the case that there is a type of insurance scheme that good quality providers are part of to give those sorts of guarantees. Now I am not sure, as yet, if this particular organisation was part of that scheme. I will certainly be trying to find that out today.
JOURNALIST: You can let us know, thanks very much.
BIRD: Thanks Nick.
JOURNALIST: That was Sharon Bird sitting in Parliament in just a moment and she is the Opposition spokesperson for Vocational Education as the Aspire College of Education, the Design Works College of Design, the RTO Services Group and the Australian Indigenous College have all gone into Voluntary Administration and they are owned by Global Intellectual Holdings. If you or one of your family is involved in any of those colleges what have you heard? What have you been told about your future? Are you able to get your money back? Are you able to enrol in another college? Are you insured? Let us know 1300 973 300.