12 February 2015
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With the recent Productivity Commission Report on Government Services showing VET enrolments declining in 2013 by more than 60,000 (3.9 %) – admittedly after some years of growth – a report by Workplace Research Centre at the University of Sydney – commissioned by the Australian Education Union – shows that large private training college chains have been generating extraordinary profit margins on the back of their recent access to public subsidies.
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The report says the profit margins leveraged from public subsidies at three listed training companies — Vocation, Australian Careers Network and Ashley Institute of Training — averaged 35% in 2013. Victorian government funding of for-profit colleges had jumped from $137m in 2008 to $799m in 2013. Victorian government subsidi¬es bankrolled $606m in private college profits between 2011 and 2013.
Lead author Serena Yu said governments had opened up the training market to improve the accessibility, quality, affordability, responsiveness and transparency of delivery.
I can say emphatically that none of those have happened.
She said there had been more training in areas of skills shortage, but research suggested that those courses were mostly undertaken at TAFEs, not at private colleges.
Meanwhile tens of thousands of students have bankrolled what John Ross in The Australian refers to as the “creeping privatisation of vocational education and training”, with the number of diploma students taking out HECS-style loans increasing – almost 2000% in four years.
New figures from the federal Education Department suggest the fee hikes feared in higher education may already be a reality in VET, with more than 100,000 mostly diploma students accumulating debts that theoretically could nudge $100,000 each.
The figures, given on notice to a Senate committee, reveal the number of students accessing VET Fee-Help loans rose from about 5000 in 2009 to 100,000 in 2013.
The Workplace Research Centre report warns that many VET Fee-Help loans may never be repaid because typical diploma-qualified occupations — such as aged care, childcare and retail store management — attract award wages around $10,000 below the current VET Fee-Help repayment threshold of $53,345.
The report also cites concerns that private colleges are deliberately signing up underprepared students who have little chance of earning enough to repay their fees. But far from getting a free ride, most students are the victims of a scheme that has raised fees, curbed choice and damaged training quality. “Opening up VFH provides states an opportunity to withdraw from higher-level qualifications, as Queensland has done,” the report says.
The report makes five recommendations:
1. Minimum hours of delivery for courses, to prevent unrealistically accelerated delivery of courses
2. Capping funding to private RTOs to ensure TAFEs remain able to provide quality education
3. Ban the subcontracting of delivery of courses to unregistered providers
4. Better regulation of RTOs’ recruiting practices and business models
5. An end to governments manipulating subsidies for private RTOs, in response to distortions in the market and rent seeking behaviour by providers.
Rod Camm, chief executive of the Australian Council of Private Education and Training, said private colleges are delivering the same training outcomes at a lower cost while rogue operators are being weeded out.
“We certainly support any measure that improves the quality of the sector,” he said.
But he resisted calls to ban sub-contractors, saying private colleges should have flexibility as long as they can ensure quality. He also said setting mandatory training hours could be problematic because vocational training was a competency-based system, allowing high achievers to finish quickly instead of being held back.
See
The capture of public wealth by the for-profit vet sector
Fee hikes becoming VET realityCalls for crackdown on private colleges amid soaring profits