Education rort chicken comes home to roost

By Leith van Onselen

The ABC has reported that the federal government is preparing to write-off billions of dollars of higher education loans as the scandal-ridden vocational education and training (VET) sector has caused bad debts to soar:

An ABC Freedom of Information (FOI) investigation has revealed the Government is forecasting losses of more than $13.5 billion on just four years’ worth of loans…

The Coalition is also considering changes to the scandal-plagued vocational education sector, which is helping fuel the bleak fiscal predictions…

The amount never to be repaid on loans issued in 2018-19 is predicted to exceed $4.4 billion — a budget hit nearly four times higher than expected from loans issued last financial year…

A recent Government budget update showed more than 20 per cent of debt issued in 2018-19 was not expected to be repaid, with the average amount of debt tipped to be $22,500…

“This is principally driven by what we call doubtful debt, that is student debt we don’t expect to get back,” Grattan Institute higher education director Andrew Norton said.

“Driven by expanding student numbers in the higher education system and the extension of HELP loans to students doing vocational education diplomas, which has been very much in the news for lots of malpractice in that industry.”

The Opposition’s higher education spokesman Kim Carr said the focus should be on cleaning up vocational training.

“Personal trainers, and people that are undertaking diplomas of digital interactive gaming, those types of courses are being used running up big debts with no capacity to graduate and no real prospect of repaying,” Senator Carr said.

“We can’t allow these phoney training colleges to be able to inflict this sort of suffering on so many students.”

The Grattan Institute’s new report entitled HELP for the future: Fairer Repayment of Student Debt, highlighted in all its glory the escalation in HELP loans and doubtful debts:

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Much of the rise in bad debts has come from the private VET sector, which has been subject to widespread rorting.

As was revealed by The Australian last year (here, here and here), private colleges received more than $1.4 billion in government-funded VET Fee-Help loans in 2014, four times as much as was provided to public vocational education and training providers. Yet despite this massive funding imbalance, only 14,400 students managed to complete courses at private colleges in 2014, compared with 18,400 students at TAFE and other public providers.

The obvious first solution is to crack-down hard on the VET sector to ensure that only the best courses/providers receive public funding.

Another is to adopt the Grattan Institute’s proposal to lower the repayment threshold on HELP loans to reduce costs to taxpayers and forestall the need to slash university funding.

[email protected]

Unconventional Economist

Comments

  1. Can somebody keep me in the loop, i.e when the next insulation bats or education scheme comes up. Cause private sector sucks ass!

    • The private sector will always look to game the system.

      But good point about the pink batts – these write-offs have come just in time for the election and for the LNP to remind voters about the ALPs mistakes.

    • arthritic kneeMEMBER

      Here’s one: After Hours Bulk Billed GP Services.
      Their whole model is based around billing Medicare for “urgent” cases 100% of the time regardless of patient circumstance. This costs the taxpayer $160 a pop.
      With the end user not paying a cent expect this to blow out massively. As this has only really kicked off recently they should get a minimum 3 years to make hay

      • Today's Empire Tomorrow's Ashes

        I really don’t get this. We recently called to use this in Sydney for wifey instead of going to the Very Expensive to the Taxpayer ED at St George (trying to do the right thing).

        Surprised it was BB’d.

        BUT REMEMBER: it is still cheaper than the ED. $160 for a visit is a lot cheaper than a preventable/unavoidable ED visit.

      • Yes AK – this is the next big VET-style rort IMO.

        I do some casual work in this field. I get 40% of billings and the deputising service gets the rest. They provide me with a car and driver plus basic admin work.

        They have a love-hate relationship with me though as my rate of patient ‘churn’ is comparatively low but patient feedback is excellent, which reflects well on them and drums up more custom.

        My experience is that it does prevent a significant amount of ED presentations however as you say, at $160/consult, or $130 in my case, I am not sure if the benefits outweigh the costs.

      • Genius idea. My local GP does it after hours for extra bucks.
        But who allowed it? It will cost medicare a fortune in time.
        Me, I want to open a medical centre. My local one is always packed with a very long waiting time so there’s room for another one nearby.

      • infotech….

        Day surgeries after overheads are a lot of work for little profit…. most just start out with the intent to run cash flow across the book and wait for a buy out from some PE or consolidator mob…

      • Ronin8317MEMBER

        Thanks for the info. Now I know why all those dodgy medical centers open till 10pm around my area.

      • Dr J – I assume the driver is paid some rate too. And is there basically for safe? So there are some costs in addition to you?

        I know there were a few times when I ended up in ED when a vhome visit would have been better for both me and the taxpayer (not including my PFO incidents when I was young).

      • arthritic kneeMEMBER

        I noticed 2 things that flagged this for me.
        Non-stop radio ads – nearly as many as for Personal Trainer VET courses and that’s saying something.
        The second was all the sick notes people bring in to work are from one of these guys.
        Like all things it is great in concept and every patient avoiding a hospital is a win but when what they are really selling is convenience and there is no threshold to pass for access to the service this will snowball

  2. I too will be on the look out for the next govt scheme to pop up so i can get in on these rorts as well. Hey maybe some one can run a master class on how to rort the taxpayers. That diploma should have govt funding available. O wait maybe realestate spruikers already have those classes.

    • Mining BoganMEMBER

      You’re on the wrong side of the rort. You have to be part of the rent-seeker crowd that gets to push the idea onto the government of the day. You also have to know the current value of the kick-back.

  3. “write-off billions of dollars ”

    When they say write off, does that mean they are going to forgive the debt to people whos crooked colleges have gone bust but left the student with the debt ?
    Does it mean they forgive the debt from people unlikely to ever pay, and now those people dont need to pay it back.

    Or does it mean that the govt will still collect the money if it can, it just does not count on it in future budgets ?

    • The linked article talks more about doubtful debts, not write-offs/ forgivenesses per se.

      • It gets written off on death, the estate does not pay (unless the relevant statute has changed).

      • At the moment the only way to discharge the debt is to pay it off or death. Bankruptcy doesn’t even discharge it.
        However, they have calculated who is most likely not going to pay off their debts and are not dead (the permanently disabled and the post retirement age people).

  4. Who cares how much it costs. We need as many new australians as possible. We need as many foreign students to buy our multi million dollars homes …

  5. 13.5 billion. Think how much could have been usefully spent on vocational training.

    Idiots never learn.

    The home insulation saga was a complete fiasco but this leaves that for dead.

    • Try several hundred billion on a broad band white elephant.. this was always about other policy directives. No one is going to employ a hair dresser from a 3-month TAFE course, nor IT skills, brick laying… etc, etc.

      Heard a great advert about getting a high performance job at a top NRL club after 12 months via the Sage Institute of Fitness or something or other. Anyone who believes that should go for it… its your dime, you can spend it how you want.

      • Nope – it was a vision of hope over pragmatism. A vision of an ideologue over reality. Wireless will be cheaper and faster in time…

        Remember his laptop for every child! Tablets came out within 12 months and everything was obsolete.

        Beware of people with answers that fit in sound bites. Rudd is arguable the worst PM since the 20’s. And that is some kind of record…

      • Ronin8317MEMBER

        The ‘one laptop per child’ is criminal because it’s done wrong. The student should be accessing a virtual server, with the laptop only acting as a client terminal. This makes a everything easy to maintain and upgrade, and much much cheaper. The universities have been doing this for decades, so there is already expertise to implement this.

  6. Grattan has it right – lower the threshold, make them pay. There has to be a clear message sent to ensure students make a commercially appropriate study choice. If your study choice can’t be paid for, because future prospects aren’t so good, then don’t do that study – simple. Then the market will sort out what does / doesn’t get offered as a course. Interactive gaming – wtf? As for those wanting to do arty farty stuff, fund yourselves or take up a hobby, just don’t expect the public purse to pay for it.

    • Actually interactive gaming is a valuable course when studied at the right college by experienced tutors. But many colleges have no business at all offering this specialised course. Or some are just charging way too much. eg one of the courses is approx 50k.

      • AngryMan, it’s creating games – programming, 3d graphics and animation, visual fx etc. Useful skills in many fields, not just for creating games. I did one the first courses back in the 90s and worked for 10 years as 3d visualiser in archictecture. Others went to work on major films and game titles.

    • You working on the assumptions of the rational agent model which puts all the agency on the consumer….

      Skippy….. one would think by now some would have gotten a clue…

    • Ronin8317MEMBER

      What happens when your ‘private education service provider’ takes the money and then run? It’s just outright fraud when you can’t back out of your course and have to pay upfront.

    • [email protected]MEMBER

      just as the government sheds its responsibility to ensure training colleges are legitimate,(after trashing uni’s and TAFEs) they start drumming up the idea of post- death transferable debt and they stoke up hatred towards the younger abandoned generation

    • It is not all bad. There has been a substantial increase in competition in the “massage” sector especially in Sydney’s North Shore.

  7. Tafe is being systematically destroyed for this…. (what was once, and could still be with a bit of a funding change) an entirely functional and well regarded education system. Being slowly destroyed for idealogical and rent seeking reasons.

    Tafe has suffered some serious funding cuts.
    Mis-managed IT implementations that break critical internal systems to the point the functional electronic record keeping systems don’t work and teachers are resorting to paper rolls again.
    Not to mention the corrupt IT managers sending contracts to fake companies they own.

    My father is a teacher at Tafe and a few ex-colleagues are working on the implementation of projects related to IT infrastructure changes. By all appearances it is so poorly managed to the point it is almost like it is intentionally being mis-managed to destroy the viability of Tafe.

    With the upcoming workforce changes due to industry closures where will people get retrained? Not at some dodgy fly by night training outfit targeting foreign students. Tafe used to be the place you could go to get industry changing mid-career if you’re old job was no more. Not so much these days. I guess all those people can now line up a CentreLink.

    • “With the upcoming workforce changes due to industry closures where will people get retrained? Not at some dodgy fly by night training outfit targeting foreign students. Tafe used to be the place you could go to get industry changing mid-career if you’re old job was no more. Not so much these days. I guess all those people can now line up a CentreLink.”

      yep your right.
      I recall a time when employers preferred TAFE graduates over uni graduates, becasue they came better prepared for actual work in the industry of choice. Not so much anymore i guess.

    • I went to tafe for a computer science course and later completed it at University to get the degree. But my time at Tafe was far more useful and I feel I got a better education than via the University component of it (I went to Swinburne).

      I’m now back at Tafe for a hobby course (which could lead to employment in a different field) I’m doing body shop work (old school panel beating and hand forming metal etc..). Which I love, but the way the Tafe is being run is an embarrassment the enrollment system is a joke and I would not be surprised if it was deliberately being run poorly to do away with Tafe altogether…

      It really makes me mad, however for some reason this year it looks like my course might run for free due to some government funding that suddenly became available, still not sure what it’s all about but free courses is good news for me.

      The government seems desperate either way…

    • +100. The once excellent TAFE system in NSW is being starved of funding to allow these outrageous rorts to flourish. My brother, a head teacher at TAFE in a highly regarded indstry discipline, is suffering mental health issues due to the egregious pressures being placed on TAFE staff to try and deliver a quality outcome whilst being starved of funding. He is the one that had to meet with employers who are complaining that the quality of teaching is falling, and that trade apprentices are ill-equipped for the job.

      The solution is simpole, get rid of HELP, get rid of any public funding of private courses, and apply those funds to TAFE.

    • Mining BoganMEMBER

      TAFE used to help the little person so therefore under Liberal Party ideology must be killed in favour of elitist rent seeking.

      That’s all there is to it.

  8. How does the privatisation of Vocational Training business case look now?
    What an absolute fiasco – yet nobody will be held responsible – while at the same time we are left with a gutted TAFE system and yet more govt debt.
    Well done neoliberals – your flawed ideology leaves taxpayers with yet another mess to sort out!!!!!

    • Partially complete. The privatisation looks partially complete.

      The profits have now all been privatised. The second and final stage is where the losses are socialise. This is commencing.

  9. The Tories are so illogical.

    On one hand they gave money for these courses but on the other the they smashed the chances of Aussie graduates getting a job by having mass immigration!

  10. thefatgeneralMEMBER

    I think they need to only provide the cash when paid by the end user. If the training providers (uni’s etc) only get paid when the student pays then they would have a huge incentive to make sure the units are commercially (as in lead to employment) viable and not push students with no prospects through via tick and flick. It would also ideally result in much better engagement by education providers with the marketplace as they would want their graduates employed/earning asap in order to get their revenue schemes.

    I fear one day the interest rate will be put up to ‘normal’ rather than CPI and it’ll (HECS debt) become a massive tax cow for milking (along with lowering the repayment threshold). Government charges ‘normal commercial rates’ but borrows at the government rate and pockets the difference.

  11. FYI the whole internet learning thingy is already in its death throws… hence the late stage looting…

  12. Corruption is a cancer… If there is a loophole there will be someone willing to exploit it. Something like this will grow and end up hurting more and more the longer you let it go on.

  13. VET ‘reform’ was premised on demand-led training to meet industry need. Different rates of course subsidies were meant to send a price signal to students with courses deemed to be closely linked to industry need attracting the greatest subsidy, lifestyle courses none. Government assumed that the price signal alone was sufficient regulation of the sector, blissfully naive of the gaming by the Phoenix providers in capturing a large share of equally naive students. It is in effect still supply-led training but instead of delivery by heavily regulated and accountable TAFE it is fleeced by the Phoenixes. Another generational cluster-fvck.