VET regulatory standards

Acquire in the dock

Fairfax Media   |   18 December 2015

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Acquire Learning is the latest training company to land in the Federal Court accused of unconscionable conduct and false or misleading behaviour after it sold tens of thousands of government-funded courses to vulnerable job-seekers.  The Australian Competition and Consumer Commission (ACCC) has alleged before the Federal Court that the company bought the details of unsuccessful applicants on job websites, then cold-called them to sell expensive diploma courses.

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The courses, funded under the federal-government funded VET FEE-HELP loan scheme, cost between $19,000 and $52,000.

ACCC chairman Rod Sims says the Victoria-based company took advantage of vulnerable consumers and used “unfair tactics” and placed “undue pressure” to convince consumers to enrol.

A script for Acquire call centre operators shows that people looking for jobs online were told by telemarketers: “We are all about helping people land their dream job.”

The script also promises a free computer or iPad for signing up to a course, which has since been made illegal under federal legislation. Job seekers were also promised “the edge over other applicants”.

The ACCC says telemarketers signed up unsuitable people to courses, and misled them that the primary purpose was not selling an educational service, but getting the “client a job”.

In return, Acquire was paid large commissions by the training organisations they sold on behalf of, while students “did not receive the promised employment prospects and were left with a significant VET FEE-HELP debt,” according to the ACCC.

Fairfax Media has been told that 7%  or fewer of people signed to courses through Acquire actually completed the course.

One job seeker was told, falsely, “we actually put 4217 people … into jobs last month”.

Sims acknowledges that the behaviour, which took place between July 2014 and March 2015, was historical, and the company had made “large strides” towards improving it.

But he said while it was going on it was “so egregious that it can’t go unrecognised”.

Acquire has recently moved from being strictly a sales company, having bought a majority stake in jobs website CareerOne (where Rupert Murdoch’s News Corporation remains a minority shareholder). It also bought its own training organisation, Franklyn Scholar.

 

See
ACCC targets training broker Acquire Learning & Careers

Reforming vocational education: it’s time to end the exploitation of vulnerable people

The case for REAL reform

Republished 16 December 2015

………………………………………………………………………………………………………Mary Leahy

It’s hard to argue with the proposition that Australia’s vocational education sector is a mess.  Mary Leahy (University of Melbourne) writes that tightening regulation and tweaking some of the settings will contain the damage, but these measures alone will not address deeper problems in the sector.   Real, sustained improvement requires rethinking the funding and regulatory models but also the purpose and idea of vocational education.

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VET Reform

How the business model works

There is clear evidence of rorting and rent-seeking in the vocational education and training (VET) sector.

The behaviour of some training providers, agents and brokers is nothing short of despicable. Thousands of students are being signed up to courses that they have little or no chance of completing.

The business model is fairly simple:

  • Register as a training provider and ensure your students have access to VET FEE HELP income-contingent loans.
  • Sign up as many students as possible for single or double diplomas.
  • The student takes on a VET FEE HELP loan to defer payment of course fees.
  • The training provider receives the VET FEE HELP payment from the government.
  • As long as the student is enrolled beyond the census date, the training provider is paid.
  • Even if the course is never started, the provider will receive funds from the government and the student is liable for the debt.

Chasing the dollar

This has given reprehensible providers a stream of revenue without the expense or trouble of providing much in the way of education.

Fees have grown, with a number of providers charging over $10,000 for a diploma.

The figures are staggering. A total of $2.4 billion in VET-FEE HELP was paid to training providers in 2015 (up to November 15), a big increase from $1.7 billion in 2014.

Yet graduation rates for many providers were abysmal, well under 10%.

Other providers do graduate their students, pushing them through qualifications in improbably short times. The approach has been described as “tick and flick”.

In Victoria alone, around 9,500 qualifications were revoked in one year.

The suggestion that payment should be shifted from when a student starts a course to when they complete it will not prevent the rorting, although it may force some providers to at least go through the motions of offering an educational program.

This outcome was predicted

Some shake their heads and say that no one could have foreseen what has happened. But it was predicted.

Prominent academic Leesa Wheelahan consistently argued that the reforms would result in a race to the bottom. Others expressed similar views in the media and within the sector.

The TAFE institutes have been hit hard, with a significant reduction in market share. Conditions are also difficult for any private operators with a genuine commitment to vocational education when competitors offer quicker, easier qualifications.

How have governments responded?

Governments have taken some action. Training providers are no longer permitted to provide incentives such as laptops and iPads, although there is evidence the practice has continued.

Providers will no longer receive up-front payment for the whole course. Funding for the loans has been frozen.

The Department of Education and Training is preparing to receive loan applications rather than leaving the training providers to process these.

These initiatives are to be applauded.

Key government reviews into funding, quality and the private training providers have also been undertaken. The extent of their impact on government policy is still emerging.

Alternative options being considered

Other options are being debated across the sector. These include risk-based approaches to regulation of providers and/or qualifications.

It has been suggested that students should be charged a minimum fee so they have “skin in the game”.

Questions are being asked about the wisdom of allowing the same organisation to train, assess and issue a qualification.

There is interest in finding reliable ways of distinguishing between providers that seek to deliver high-quality education and training, from operations seeking to milk public funding.

There is also renewed interest in the practice of teaching, which has been marginalised over the past 30 years.

Significant profits have been extracted but scrutiny from various regulatory bodies and the media has had an impact.

A number of large training businesses are in serious trouble. The Vocation group has folded and Australian Careers Network’s shares have been suspended since October. More will follow.

How did we get here?

The current situation has been built by layers of reform intended to create a vibrant, responsive sector that provided greater choice and flexibility for students.

The Council of Australian Governments (COAG) agreements in 2009 and 2012 led to the implementation of demand-driven training systems across Australia.

The idea was to give students greater choice and make providers more responsive to students and employers.

Victoria was the first state to implement the reform. Rapid growth in subsidised training rather predictably led to a massive budget blowout.

The government’s commitment to the market model was ironclad, leaving adjustment to the subsidy or funding rates as its only response.

A dramatic cut in May 2012 was followed by other significant reductions. Other states followed, introducing variations of the Victorian model, all hoping to avoid the pitfalls.

The lack of certainty encouraged providers to game the system and direct students into the courses that attracted higher levels of subsidy. In some cases this was a matter of survival. This problem was compounded once access to VET FEE HELP was expanded.

Longer-term shifts in the sector have also impacted the quality of vocational education.

The marginalisation of teaching, which is starting to be reversed, is one factor. Another is a form of outcomes-based education that does not recognise development and growth and is stripped of the knowledge we need for employment and citizenship. This raises fundamental questions about the purpose and function of vocational education.

Key issues

One of the problems with a market in education is that only after the course has been completed can the quality of education and training be assessed.

Another issue is that the vocational education market is based on flawed assumptions about the way we form preferences and make decisions.

There is a body of research that demonstrates that we do not operate as rational economic agents. We are all influenced by the way options are framed. Our preferences are not fixed. Our assessment of risk is shaped by our circumstances, particularly the opportunities available to us and the timing of any rewards and costs.

These findings challenge the assumptions underpinning user-choice policies.

Choosing a VET course is complex. There are five levels of qualifications, thousands of providers and specific rules about entitlement to government subsidy and VET FEE HELP loans.

A number of research projects are examining young people’s choices about study and work. It is apparent that the difficult circumstances some face limit the meaningful opportunities available to them.

The behaviour of providers and agents that exploit the hopes of people seeking to improve their prospects should continue to be exposed and condemned. But we also need to examine fundamentally flawed funding and regulatory models that allow and reward the exploitation.

Looking forward

Measures to control VET-FEE HELP will rein in the worst excesses.

Some operators will leave the sector. Others are reviewing their policies and practices. Hopefully governments will act on recommendations such as those produced by the Victorian VET Funding Review.

However, considerable risks remain when there is pressure to extract a profit and limited opportunities to cut costs without compromising the quality of provision.

This is compounded when students are unable to judge the value of their course until it is too late.

Politicians, policymakers and commentators need to ask whether the market can deliver what was promised by reforms in this sector and by the recently adopted competition policy.

We also need to reconsider the type of vocational education developed and delivered in Australia.

Some researchers argue for a more coherent approach to vocational development. Qualifications will be organised within broad vocational streams such as engineering or care work. Social partners will play a role in identifying the capabilities that will underpin qualifications. Courses will be designed to develop the knowledge, skills and attributes a person needs to work in their vocational stream.

In this way people will be prepared for a career, not just for a job that may be transformed or disappear. The approach is designed to build trust in the quality and relevance of qualifications.

A system that demands robust vocational education will not be attractive to those focused on extracting excessive profits.

Wasting public funds is a serious matter, but more troubling is the trashing of the vocational education system and the exploitation of vulnerable people.

The Conversation

Mary Leahy, Academic, Melbourne Graduate School of Education, University of Melbourne. This article was originally published on The Conversation. Read the original article.

The Scan #175 11 December 2015

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News

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VET FEE-HELP skewering system

 

Calculator11 December 2015      |       Explosive growth in the VET FEE-HELP scheme has masked massive direct public disinvestment in vocational education and training. While a report by NCVER shows a notional growth of 1.7% in 2014 over 2013 (plus $141.0 million, from $8512.4 million to $8653.4 million), it’s all in VET-FEE Help payments: actual direct expenditure by governments, including the Commonwealth declined markedly VET FEE-HELP.  VET funding through state and territory governments fell almost $320m, while fee-for-service ¬revenue — largely contributed by businesses — fell more than $130m. Federal government funding through channels other than VET FEE-HELP fell almost $500m.  Financial information 2014 shows that VET FEE-HELP is supplanting traditional forms of VET financing, as state governments and businesses withdraw hundreds of millions of dollars from the sector. Government spending fell $416m last year, even though Canberra shovelled an extra $1.06 billion into VET FEE-HELP….[ READ MORE ]…..

Innovating an “ideas boom”

Innovation

7 December 2015      |       Prime Minister Malcolm Turnbull unveiled his much-anticipated Innovation Statement, saying he wanted to drive an “ideas boom”. The statement allocates almost $1.1 billion over the next four years to promote business-based research, development and innovation.

A key focus of the plan revolves around strengthening ties between the business community, universities and scientific institutions.
A $200 million innovation fund will co-invest in businesses that develop technology from the CSIRO and Australian universities. CSIRO will also get an extra $20 million to help commercialise research outcomes.
The mechanisms for funding university research are being simplified, with more focus on industry collaboration and less on publishing articles in academic journals. The six block grant schemes will be collapsed into two, with equal rating for research excellence and income from industry. The government will add $127 million in funding for university research over the next four years.
The previously endangered National Collaborative Research Infrastructure Scheme will receive $1.5 billion over 10 years for projects such as ocean monitoring, advanced manufacturing and medical research.
There will also be $800 million over the decade for two major scientific projects: the Australian Synchrotron in Melbourne (which uses light beams a million times brighter than the sun to generate discoveries) and the Square Kilometre Array (the largest radio telescope ever constructed).
The government will spend $84 million “inspiring” Australians in digital literacy and science, technology, engineering and maths (STEM). This includes new money to upgrade teachers’ digital skills, educational apps and $13 million to boost the participation of girls and women in STEM….[ READ MORE ]…..

Research quality soars

5 December 2015     |     The inaugural State of Australian University Research 2015–16: Volume 1 ERA research2National Report comprehensively details the quality of Australian university research benchmarked against world standards.  It identifies the excellence in research across a broad range of universities and the outstanding performances in areas of specialisation. Overall the quality of Australian university research continues to improve. The report confirms Australia’s university research performance is amongst the best in the world. In 2015, 89% of the assessed research areas in Australian universities is rated as world class, up from 68% in 2010….[ READ MORE ]…..

Phoenix crashes…and burns

Phoenix

5 Decemebr 2015    |      Melbourne’s Phoenix Institute has shut down its “real world division” (that is, its face-to-face, classroom rather than online delivery) as a result of a federal government crackdown which has seen VET FEE-HELP funding to the entire sector frozen and legal action initiated by the ACCC. Some 260 transpersonal counselling and art therapy students are affected by the closure.  Phoenix is one of a large number of colleges to have grown exponentially through its sale of online diplomas around Australia, using government money under the VET FEE-HELP scheme.It started the year claiming $200,000 per month from government to pay for courses, but by September, it was applying for a variation, claiming an annual payment of $300 million – or $25 million per month – a 125-fold increase….[ READ MORE ]….

Crackdown looming 

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4 December 2015    |    New rules to better protect students in the vocational education and training sector will come into effect from 1 January 2016 with the passage of the Higher Education Amendment (VET FEE-HELP Reform) Bill 2015 on 3 December. The changes a requirement providers assess the student’s capacity to undertake the course for which they are enrolling.  Ahead of the introduction of a new funding model in 2017, the total loan limit for existing VET FEE-HELP providers will be frozen at  2015 levels. There will also be tougher entry requirements for registered training organisations seeking to become a VET FEE-HELP provider….. [ READ MORE ]…..

Vocation collapses entirely

Vocation snip30 Novemebr 2015    |    Less than a week after going into voluntary administration education and training services company Vocation has been closed down, leaving 150 of its 180 employees without a job and more than 10,000 students in limbo.  In a statement on Monday 30 November 2015, administrators Ferrier Hodgson advised that as a result of further customer contract terminations, the lack of available liquidity to fund operations and the lack of ongoing support from key stakeholders, the voluntary administrators of Vocation Ltd have had no alternative but to cease the majority of the company’s operations effective from 30 November 2015...[ READ MORE ]….

ACCC hits up Phoenix for $106 m

26 November 2015    |  The Australian Competition and Consumer

Carpetbagger
Loot in the bag…?

Commission (ACCC) has accused leading VET provider Phoenix Institute of false, misleading and unconscionable conduct and is seeking recovery of $106 million in Commonwealth funding through VET-FEE HELP.   The ACCC claims Phoenix tricked disadvantaged people into signing up for multiple courses and incurring large debts to the Commonwealth.  The alleged victims included those with intellectual disabilities, and people on Aboriginal communities. Sales people authorised by Phoenix signed them up to multiple online diploma courses which cost $18,000 each, even though some did not have access to the internet or computer skills.  The Australian Skills Quality Authority (ASQA)  has also announced that it proposes cancelling Phoenix Institute’s registration as a training organisation, meaning it will then be ineligible for further government funding ….[ READ MORE ]….

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UA News

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Go8 Nov

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NCVER Insight November 2015

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Milestones

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Murdoch names new vice-chancellor

3 December 2015

……………………………………………………………………………………………………… Internationally experienced university leader and academic, Professor Eeva Leinonen has been selected as Murdoch University’s next vice-chancellor, which has been shaken for more than a year by power struggles and a probe by the West Australian Corruption and Crime Commission..

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Eeva

Professor Leinonen is currently a deputy vice-chancellor at the University of Wollongong, a role she has held since 2012. Prior to this she was Vice Principal (Education) at King’s College London.

She has an academic background in linguistics and psychology and has extensive experience in higher education in the United Kingdom, Europe and internationally, including 19 years at the University of Hertfordshire, where she served as Deputy Vice Chancellor and Dean of Health and Human Sciences.

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Comment & analysis

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Venting about VET 

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25 November 2015     |    An RTO operator, who wishes to remain anonymous (fair enough),  laments that the reputable “sprats”, such as herself, are being caught up in the net intended to catch the “sharks” in the VET ocean.

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Governments in Australia extol the virtues of small business – for their contributions to employment and innovation, for example – but in the training industry “small” is starting to be an impossible feat.  It’s getting to the point that an RTO can only survive if it has an extremely large scope and doesn’t specialise, as that gives it the flexibility to game the system to survive constant funding and regulatory changes.

…what we have seen in recent times is the proliferation of “sharks” in the VET ocean – alpha predators, who are big mean and nasty.  Governments are casting a net – not before time, either – to at least rein them in.  But the VET “sprats” – smaller reputable providers – are emerging as “collateral damage”, caught in the net intended to capture the sharks and subject to an ever increasing burden of regulation which, in context, is unnecessary.  By and large, the sprats aren’t the problem authorities are trying to net.

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Once was TAFE

8 December 2015

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There’s been a growing chorus of outrage over the looting of VET FEE-HELP by a handful of VET providers, coupled with disbelief that the government and regulatory agencies could have had such lax safeguards as to allow this to happen. It was all perfectly predictable. On 29 April 2012, The Scan published Once was TAFE, a commentary on the then Victorian government’s introduction of so-called “competitive neutrality” in the public funding of VET. It’s a piece that has stood the test of time. It does beggar belief that having been witness to the chaos that was occurring in the Victorian system courtesy of open access to funding and manifestly inadequate regulatory procedures, the Commonwealth could basically repeat the mistakes of Victoria in extending access to VET FEE-HELP – and then let it run unchecked for a couple of years. 

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The past couple of years have been like Christmas time for carpetbaggers in the Victorian VET sector. The “skills reform” initiated by the former Labor government opened up public funding of vocational educational and training provision to all comers.  And as to the field of dreams, the private RTOs have flocked.   At the end of September 2011, 721 providers were delivering government subsidised enrolments in Victoria, almost 80 more than at the same time in 2010 and 160 more than in 2008. The share of government subsidised enrolments by private providers increased from 14% in 2008 to 36% at the end of September 2011 and is now in excess of 50%.

These are sudden and dramatic shifts, which have resulted in the apparent destabilisation of a number of the public TAFE institutes.  In 2011, the combined surpluses of the 14 standalone TAFEs in Victoria, which fund really important things like infrastructure and facilities, halved, from$192m to $98m.  Analysis by sector specialist Gavin Moodie reveals that if you discount one-off capital items, the underlying operating results are pretty bleak, with only 4 of the 14 standalone TAFEs operating in the black.

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9 December 2015

Beggaring belief

Fairfax Media reports on the $1 million cost to taxpayers of completed Human Resource Management Diplomas at the so-called Australian Institute of Professional Education (AIPE) – Aussie dollars$111 million paid out in VET FEE-HELP in 2014 for just 117 completions.  Meanwhile The Oz reports that the Australian Competition an Consumer Commission is taking a third provider – Empower Institute – to court over allegations of “misleading or deceptive and unconscionable conduct” when marketing its courses to remote communities across the country (it will follow Unique International and Phoenix College to the Federal Court dock) – it enrolled 14,000 in 2014 for just 5 completions, which would work out at over $10 million for each completion !!!  

And while  VET FEE-HELP was being looted, what was ASQA, the sector regulator, doing?  Not a lot it seems: it got around to launching an investigation into AIPE in November 2015 – that’s right, last month. 

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Anatomy of a scandal

How did the Australian VET system get here?

8 December 2015

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Jim Davidson, a former senior official of both the Victorian and Commonwealth governments and now a Senior Honorary Fellow of the LH JimMartin Institute, dissects the  crisis now enveloping the VET sector. As as he asks: How  could this have happened?  Good question. He says future policy responses by government need to deal with the root causes of the current growth in VET FEE-HELP and not further exacerbate the issues caused by the current policy settings.  And he proposes that an immediate measure should be  a moratorium on VET FEE-HELP loans for online course delivery and establish an enquiry to formulate appropriate requirements and costings for online delivery of nationally accredited qualifications including a benchmark completion rate.  It’s a bit of a no-brainer: ALL the providers under investigation and/or being prosecuted by the Australian Competition and Consumer Commission have one thing in common: online delivery.

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8 December 2015

ACPET dismayed, too

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Rod Camm2ACPET’s Rod Camm expresses dismay over the raft of changes in relation to VET FEE-HELP legislated last week  -and fair enough, too, because the blameless will be collateral damage in cracking down on the utterly blameworthy rorters.  But Camm also poses the question that has occurred to most VET sector participants and observers: how could this have been allowed to happen?  He answers the question thus: 

Without….checks and balances this could only mean Government has been approving this phenomenal growth, in a relatively small number of public and private providers, blind.

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Print

Of course the last week was, and the week coming, will be dominated by discussion about the Higher Education Support Amendment (VET FEE-HELP Reform) Bill 2015.

As you would all be aware, the Government introduced the changes with no forewarning or consultation.

On hearing of the changes, I flew to Canberra to meet with Ministers, the Opposition and Senators in an attempt to rectify the problems, particularly the Freezing of VFH accounts at 2015 levels. Unfortunately, the Bill was passed that day, less than 24 hours after it was introduced.

Many members have expressed their concerns and it is important that you continue to do so. What disappointed me was that I, along with other representatives from the sector are appointed to a VFH Reform Working Group. To be on this group we were required to sign detailed confidentiality agreements. The Group only met a week ago where we discussed a range of reforms. Unfortunately there was not a word of the changes the government was about to introduce. Not sure I will attend this group again.

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The importance of universities to Australia’s prosperity

28 November 2015

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 Universities Australia commissioned Deloitte Access Economics to analyse the contribution that universities make to Australia’s economic and social prosperity. This work was undertaken to inform the development of Universities Australia’s Keep it Clever—Policy Statement 2016.  The report seeks to present a comprehensive and coherent framework of benefits generated by universities. This includes examination of the conceptual role of universities in Australian society and how they contribute to the success of the nation, as well as a more detailed analysis of the benefits directly attributable to universities. The scope of the analysis does not include a detailed examination of the economic activity generated by university operations, but rather examines the contribution made to the productive capacity of the economy through universities’ teaching and learning, research discovery and adoption, and community service activities.

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As institutions, universities embody social, economic and intellectual resources which combine to generate benefits on a local, national and global scale. They equip students with the knowledge and skills that allow them to make greater contributions to society; they generate and disseminate knowledge which enhances productivity and improves living standards; and they provide a myriad of broader community benefits.

This report canvasses and examines the various ways in which universities contribute to our economic and social prosperity and how, given the economic imperatives confronting Australia, the sector’s role is likely to evolve and grow over time.

 Universities’ operations make significant contributions to Australia’s economic output

Australia’s university sector directly employs over 120,000 staff and supports the delivery of education to over one million students. The operations of the university sector generate significant contributions to Australia’s economic output and national income.

    • The sector contributed around $25 billion to the Australian economy both directly and indirectly in 2013, accounting for over 1.5% of Australia’s GDP and 160,000 fulltime equivalent (FTE) jobs.
    • In 2014–15, education related exports accounted for 5.7% of Australia’s total exports, representing the largest service export and the third largest export category overall. Higher education is the single biggest contributor to this, representing around two-thirds of the total value.

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How teaching funds research in Australian universities

28 November 2015

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A report by the Grattan Institute report finds that universities earn up to $3.2 billion more from students than they spend on teaching, and have powerful incentives to spend the extra money on research. International students, who usually generate more revenue per student than domestic students, contribute a substantial proportion of this surplus. The report’s author, Andrew Norton, says the finding is concerning because, while university research matters to Australia, the evidence that it improves teaching is less clear. He observes that direct spending on teaching, by contrast, is far more likely to ensure that universities offer the high-quality courses students want. In this commentary in The Conversation, Norton observes that the priority of research within universities means that teaching does not always get its share of time and money. He proposes that any new funding system must ensure that money intended for teaching is spent on teaching.

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UnisNo-one knows exactly how universities spend their money. But questions are asked about how universities have financed huge growth in the amount of research produced over the past 15 years – and a new report by the Grattan Institute could have the answer.

It finds that, in 2012, universities spent at least $2 billion on research that was meant for teaching. This means that around one dollar in every five was spent on research rather than tuition.

Universities are not doing anything improper in spending money this way.

The current legislation pays universities on student numbers, but is silent on how exactly the money should be used.

But the absence of specific teaching funding makes it hard to ensure that any extra money intended to benefit students is actually spent on students.

So why are universities so focused on funding research? And is there a need to be more transparent about how universities spend their money?

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Life & stuff

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A  candle in memory of David

8 December 2015

Candle
On 9 December 2006,17 year old David Iredale and three mates went for a hike in the Blue Mountains as part of their Duke Of Edinburgh Award program.  They planned it pretty carefully and they had detailed maps and stuff. But it all went terribly wrong: the maps indicated a fresh water source along the route, which wasn’t there. It was hot -mid-30s centrigrade- and they’d run out of water. Somehow, David became separated from his mates – my recollection is that as the strongest of the hiking party, he struck out ahead of the others to seek assistance. He became severely dehydrated and rang emergency services on his mobile phone. It was very poor reception but he tried to get across to the operators the dire circumstances of his plight. He made a number of calls, to no avail. Various operators kept asking for his street address. He kept telling them he was on a big rock near a walking trail in the Blue Mountains. But they kept demanding his street address. He asked for a helicopter to be sent.  He was told off for being abusive. In the event, nobody did anything. David’s body was recovered some days later. Each year at this time, I reflect on this terrible episode and remind myself to be not indifferent to the plight of others.  I tell my kids, if you get into any sort of real trouble, you ring me and/or your mother FIRST; we might argue later, but we’ll address the trouble first.

And I light a candle in memory of David.

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One Hundred Stories

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Monash University’s commemoration of the Great War.

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Wall of Commemoration
The One Hundred Stories are a silent presentation. They remember not just the men and women who lost their lives, but also those who returned to Australia, the gassed, the crippled, the insane, all those irreparably damaged by war. The Great War shaped the world as well as the nation. Its memory belongs to us all.

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The VET Store

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The VET Store is a  service by the VET Development Centre which provides access to a range of information to support VET practitioners in the work they do.

VET Development Centre
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Anatomy of a scandal

How did the Australian VET system get here?

LH Martin Institute    |     8 December 2015

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Jim Davidson, a former senior official of both the Victorian and Commonwealth governments and now a Senior Honorary Fellow of the LH JimMartin Institute, dissects the  crisis now enveloping the VET sector.  As he asks: How  could this have happened?  Good question. He says future policy responses by government need to deal with the root causes of the current growth in VET FEE-HELP and not further exacerbate the issues caused by the current policy settings.  And he proposes that an immediate measure should be  a moratorium on VET FEE-HELP loans for online course delivery and an enquiry to formulate appropriate requirements and costings for online delivery of nationally accredited qualifications including a benchmark completion rate.  It’s a bit of a no-brainer: ALL the providers under investigation and/or being prosecuted by the Australian Competition and Consumer Commission have one thing in common: online delivery.

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skills (1)

 

In 2009, the Commonwealth developed a National Partnership Agreement for Voational Education and Training (VET) that proposed the introduction of competitive funding arrangements into training.

This agreement did not proceed because of State reluctance and ACTU pressure not to extend the recent reforms by the Brumby Government in Victorian VET into the other States. The exposure of TAFEs to competition, notably from community, private and employer-operated registered training organisations (RTOs) was strongly resisted.

As a result the competition proposals only proceeded in Victoria, which was designated as a ‘reform State’ in the associated legislation. Victoria both contributed to the loan cost for VET FEE-HELP and grew its total quantum of VET funding to meet the demand for training.

In 2012 a new National Agreement on Skills Reform was finalised, and it emphasised three things: a new national entitlement to government subsidised training to the Certificate III level, competition in training provision and expansion of the VET FEE-HELP Scheme.

It sought to improve accessibility and equity in training by:

Improving the accessibility of higher level qualifications and working with the Commonwealth to enhance a quality framework including state and Commonwealth quality requirements for RTOs to access income contingent loans ‘.
The Commonwealth agreed to remove the credit transfer requirements that had been part of the original legislation. VET FEE-HELP was extended to support government-subsidised training and the 20% loan fee was removed in state subsidised courses, but not in full fee and privately funded training. The result has been the national training system that we see today, including the rapid growth in VET FEE-HELP.

Governments have been the architects of the current VET FEE-HELP growth through policy settings that have enabled States and Territories to:

1. Cost shift to the Commonwealth, for example Queensland no longer funds higher level qualifications, and to students through and loans to students through VFH for Diplomas.

2. Gain the benefits and funding offered by the Commonwealth while not meeting their competition commitments, and effectively reduce their overall financial investment in training (Noonan et al., 2014).

3. Allow some TAFEs to be exponents of on-line training, targeted at management and commerce studies, with completion rates in some cases less than10%. 10 of the top 15 online training course providers are State–owned TAFEs, the largest NSW TAFE. (ACIL Allen Consulting, October 2015)

VET FEE-HELP (VFH) enrolments by provider (2013)

(ACIL Allen Consulting, October 2015)

Distribution of enrolments by mode of delivery – top 15 VET FEE-HELP providers and all others (2013)

(ACIL Allen Consulting, October 2015)

The Commonwealth has failed to properly monitor and control the growth in VFH which has consequentially seen the:
1. Emergence of brokers offering inducements and receiving payment for no training delivery,
2. The growth of 5 large privately owned online deliverers,
3. Escalation in prices of Diploma qualifications,
4. Elimination of any upfront payment by students to moderate demand,
5. The exorbitant growth in management and commerce studies and
6. The disastrous completion rate (7%) in online courses.

Future policy responses by government need to deal with the root causes of the current growth in VET FEE-HELP and not further exacerbate the issues caused by the current policy settings. They also rely on effective monitoring of rates of growth, funding estimation processes and investigation of emerging trends.

In the short term, the Commonwealth Government must:

1. Place a moratorium on VET FEE-HELP loans for online course delivery and establish an enquiry to formulate appropriate requirements and costings for online delivery of nationally accredited qualifications including a benchmark completion rate.

2. Take administrative action or amend the Higher Education Support Act HESA if necessary, to prohibit the use of Commonwealth Loan funds to students being used by approved RTOs to reimburse agents for the recruitment of students.

3. Require RTOs undertake their own marketing activities which ensures the RTO is subject to the ASQA regulatory standards and oversight.

4. Introduce a modest co-payment for all students accessing VET FEE-HELP in the form of an application fee that must be paid by the student prior to commencement. This would be more effective than the proposed two day cooling off period.

5. Require RTOs with Diploma and Advanced Diploma qualifications seeking support through VET FEE-HELP alone, or jointly with State subsidised purchasing, to have their courses individually accredited by a recognised Course Accreditation body, including where the qualification exists in a Training Package.

In the medium term, the discussions re new Federation arrangements for VET can then focus on:

Governance

  • The retention of ownership of TAFE Institutes by the States and the ACT, (unless a State or the ACT decided to sell off individual TAFEs or the TAFE system as an entity).
  • States disentangling ownership responsibilities from purchasing decisions.

Registration of RTOs

  • Victoria and Western Australia to refer the registration authority to the Commonwealth to ensure a single national regulatory framework for all RTOs.

Purchasing

  • The purchasing and/or funding of Certificate I to IV training courses to be as the sole responsibility of State and Territory Governments.
  • Diploma and Advanced Diploma courses purchased or funded by States and Territories to be subject to State based purchasing priorities and requirements.

Accreditation

  • Victoria and Western Australia to retain their course accreditation powers and bodies to ensure alternative course accreditation mechanisms to ASQA are available, as in the UK, Canada and the United States.
  • States consider the reintroduction of course accreditation requirements for qualifications seeking subsidized purchasing, including when the qualification is provided for in a Training Package.

References

ACIL Allen Consulting, 2015, Australia’s Skills Reform Journey: The Case for VET Reform and Progress To-Date. Available from: www.acpet.edu.au

P. Noonan, G. Burke, A. Wade and S. Pilcher, 2014, Expenditure on Education and Training in Australia, Mitchell Institute. Available from: www.mitchellinstitute.org.au

 

It just beggars belief

9 December 2015

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Fairfax Media reports on the $1 million cost to taxpayers of completed Human Resource Management Diplomas at the so-called Australian Institute of Professional Education (AIPE) – $111 million paid out in VET FEE-HELP in 2014 for just 117 completions.  Meanwhile, The Oz reports that the Australian Competition an Consumer Commission is taking a third provider – Empower Institute – to court over allegations of “misleading or deceptive and unconscionable conduct” when marketing its courses to remote communities across the country (it will follow Unique International and Phoenix College to the Federal Court dock) – it enrolled 14,000 in 2014 for just 5 completions, which would work out at over $10 million for each completion !!!

And while  VET FEE-HELP was being looted, what was ASQA, the sector regulator, doing?  Not a lot it seems: it got around to launching an investigation into AIPE in November 2015 – that’s right, last month. 

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Measures to rein in rorters

Commonwealth    |    3 December 2015

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New rules to better protect students in the vocational education and training sector will come into effect from 1 January 2016 with the passage of the Higher Education Amendment (VET FEE-HELP Reform) Bill 2015..

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regulatory-jigsaw5These changes include:

  • that training providers must ensure they are not signing up students for a VET FEE-HELP at the same time as they are being enrolled in a course
  • providers must assess the student’s capacity to undertake the course for which they are enrolling
  • stronger safeguards for under 18 year old students so that they cannot be signed up for a VET FEE-HELP loan without parental consent, and
  • it will be easier for a student to have their debt cancelled where they have been signed up for a loan inappropriately and for the Government to recoup the cost from training providers.

The legislation also includes further measures to tighten the VET FEE-HELP scheme ahead of the introduction of a new model in 2017 including:

  • freezing the total loan limit for existing  VET FEE-HELP providers to 2015 levels
  • introducing new entry requirements for registered training organisations seeking to become a VET FEE-HELP provider
  • moving from payment in advance to payment in arrears for certain training providers, and
  • pausing payments to training providers for new enrolments until concerns about poor performance are addressed.

ACPET dismayed, as well

8 December 2015

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ACPET’s Rod Camm expresses dismay over the raft of changes in relation to VET FEE-HELP legislated last week  -and fair enough, too, because the blameless will be collateral damage in cracking down on the utterly blameworthy rorters.  But Camm also poses the question that has occurred to most VET sector participants and observers: how could this have been allowed to happen?  He answers the question thus: 

Without….checks and balances this could only mean Government has been approving this phenomenal growth, in a relatively small number of public and private providers, blind.

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Print

Of course the last week was, and the week coming, will be dominated by discussion about the Higher Education Support Amendment (VET FEE-HELP Reform) Bill 2015.

As you would all be aware, the Government introduced the changes with no forewarning or consultation.

On hearing of the changes, I flew to Canberra to meet with Ministers, the Opposition and Senators in an attempt to rectify the problems, particularly the Freezing of VFH accounts at 2015 levels. Unfortunately, the Bill was passed that day, less than 24 hours after it was introduced.

Many members have expressed their concerns and it is important that you continue to do so. What disappointed me was that I, along with other representatives from the sector are appointed to a VFH Reform Working Group. To be on this group we were required to sign detailed confidentiality agreements. The Group only met a week ago where we discussed a range of reforms. Unfortunately there was not a word of the changes the government was about to introduce. Not sure I will attend this group again.

In terms of the future, I have been advised in no uncertain terms that neither the Minister nor Department have any discretion to vary VFH allocations for 2016 (based on the formula in the legislation), and that the Government had two choices, to close VFH down or to freeze the program at current levels. This means that the only way to fix this is for further legislative amendments, which can’t be until next year, assuming the Government agrees to do so.

ACPET will continue to address our concerns at all levels of the Government.

So, how did we actually get here?

There have been some strong voices this week apportioning blame for the VFH meltdown. However, if you are under any illusions the answers lie in the legislative amendments.

Let’s start by remembering what has been happening under this program:

  • Student loans have more than doubled to $1.74B in 2014
  • Since commencing in 2009, $3.1B has been funded
  • Student numbers increased by 103% from 2013 to 2014
  • Completion rates remain at about 10% below that of sector average
  • On-line VFH completion sits at 7% completion rate compared to 23% for students funded outside of the program.

In a +$3B program the Government only last week introduced changes to give it the power to:

  • Pay providers considered high risk in arrears to ensure student data is authentic
  • Suspending payments for new enrolments where there are concerns about a provider’s performance until agreed actions to lift performance are completed
  • Ensuring providers have appropriate tuition assurance for their number of students
  • Appointing investigators to better cope with expertise and resourcing requirements.

Really?

Surely we could not have a +$3B program where the Government could not investigate rorting, suspend payments and even monitor performance? Without these checks and balances this could only mean Government has been approving this phenomenal growth, in a relatively small number of public and private providers, blind.

The case of the prosecution rests.

While some argue ACPET should have done more, and this is perhaps the case, in the weight of the lack of program management, where even as the Tuition Assurance operators we did not know of the growth until after it happened (12 months later) we were swimming upstream, and that is putting it politely.

All of our Senate Inquiry submissions and public statements have pushed for changes. Yes some of them have now been introduced but the Freeze really was ill conceived. If they had consulted we could have had a bi partisan approach to real change, fully supported by the quality end of our proud industry.

And despite all of this, still no national Ombudsman.

While we have distributed what we know of the implications of the changes, if you have questions about how to calculate your notional allocations for next year, please contact your local executive officer.

Other news in the media of course relates to the closure of Vocation RTOs and the Phoenix Campus in Melbourne. Our only priority is to focus on the students and we are working with administrators and government and the management of Phoenix to ensure the students can continue their studies.

Once was TAFE

8 December 2015

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There’s been a growing chorus of outrage over the looting of VET FEE-HELP by a handful of VET providers, coupled with disbelief that the government and regulatory agencies could have had such lax safeguards as to allow this to happen. It was all perfectly predictable. On 29 April 2012, The Scan published Once was TAFE, a commentary on the then Victorian government’s introduction of so-called “competitive neutrality” in the public funding of VET. It’s a piece that has stood the test of time. It does beggar belief that having been witness to the chaos that was occurring in the Victorian system courtesy of open access to funding and manifestly inadequate regulatory procedures, the Commonwealth could basically repeat the mistakes of Victoria in extending access to VET FEE-HELP – and then let it run unchecked for a couple of years. 

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The past couple of years have been like Christmas time for carpetbaggers in the Victorian VET sector. The “skills reform” initiated by the former Labor government opened up public funding of vocational educational and training provision to all comers.  And as to the field of dreams, the private RTOs have flocked.   At the end of September 2011, 721 providers were delivering government subsidised enrolments in Victoria, almost 80 more than at the same time in 2010 and 160 more than in 2008. The share of government subsidised enrolments by private providers increased from 14% in 2008 to 36% at the end of September 2011 and is now in excess of 50%.

TAFE qualsThese are sudden and dramatic shifts, which have resulted in the apparent destabilisation of a number of the public TAFE institutes.  In 2011, the combined surpluses of the 14 standalone TAFEs in Victoria, which fund really important things like infrastructure and facilities, halved, from$192m to $98m.  Analysis by sector specialist Gavin Moodie reveals that if you discount one-off capital items, the underlying operating results are pretty bleak, with only 4 of the 14 standalone TAFEs operating in the black.

Of the dual sector universities, at least Victoria University (VU) is struggling and probably Swinburne.  There have been successive waves of redundancies at VU and another wave looks imminent, with a major restructuring of the university just announced.  The TAFE activities, up to Cert IV, are being spun off into a technical college, which could well be the first step towards ultimate divestment.

In public policy terms, the character of an institution delivering a qualification – public or private, TAFE or university, state domiciled or interstate – doesn’t actually matter, so long as what it is providing represents value in terms of both cost and quality.

It could be argued that, setting aside the inevitable implementation issues that come with such a systemic shift, the evidence of the Victorian market-based reforms is that opening the publicly funded training sector up to a greater role for private providers has led to increased participation, improving the skills of the workforce and therefore productivity, and improved equity by increasing both the choice available to individuals and access.

That could be argued but you would need to cross your fingers behind your back (and definitely not cross your heart and hope to die) to argue it.

The stories of utter rorting are legion – like the private RTO that grew enrolments in education and training by 4000% in just a year or the private RTO that offered sporting organisations kickbacks to spruik their courses.

The Scan did its own random survey of private providers and it seems that the emerging industry standard is that you can secure a CERT III/IV with about 40 hours of work and diploma with 60-80 hours.  The nominal hours on your personal training plan will show 400-800 hours to comply with the AQF but wink, wink, nudge nudge etc.  And if you’re doing it online (as many of the offerings are), you needn’t even bother with that:  invite your friends around for a study session, provide beverages and comestibles, and you could knock it over in no time at all.

The end result is that any VET qualification in Victoria delivered outside the public TAFE system over the past couple of years has to be considered suspect (which is, of course, tough on the many reputable private RTOs).  The qualifications system has been debased.

So the Victorian Coalition government inherited a training mess.  And a budget problem:  state sourced expenditure on VET has gone from $800m in 2008 to possibly $1.5 billion this financial year – and growing.

The government obviously had to act, both to protect the integrity of the training system and to protect the public purse.

In October 2011, funding to support what might be broadly termed the community service obligations (CSO) of the biggest TAFEs was slashed by 25%, apprenticeship fees were increased and funding for the seven fastest growing areas of enrolment (including business studies, hospitality and fitness training) was reduced to rein in runaway growth (and dubious quality of provision) in the private sector.  The public TAFEs were reported to be “stunned” and “shocked .

Measures to be announced in the budget on 1 May, “pre-announced” in The Australian on 28 April, have elevated the attitude of TAFE stakeholders to apoplectic.  By one of those quirks of fate, the Australian Education Union was holding its annual TAFE conference in Melbourne on 28/29 April and it was the topic du jour (check the traffic #TAFE on Twitter).

In effect, the government is introducing “competitive neutrality” into the training market.  None of this nonsense about funding TAFEs to meet any sort of CSO: an additional base funding allowance of up to 22%, designed to help them provide a full range of training services, is to be removed.  Funding rates are to be slashed from between $6.50 and $8.00 to less than $2.00 an hour per student, in business, hospitality, retail, customer contact, process manufacturing, events, fitness and sport.

On the upside, high-demand courses in high-cost areas such as roof tiling, aeroskills and mechanical trades will attract between $11.00 and $12.50 an hour.  This obviously favours TAFE because, at the moment, such training is dominated by TAFE but under the new “competitively neutral” funding arrangements that may change (and quickly, too).

We really need to await the full budget detail to draw final conclusions: the government has got the bad news out of the way so will there be any measures to soften the apparent blow to TAFE – for example, something to support the already wobbly regional TAFEs?  Peter Hall, the skills minister, is a National Party member based in Gippsland, so you would think he might be uncomfortable leaving regional TAFEs to simply swing in the breeze (he certainly has been in the past – Drop in TAFE enrolments concerning).

But the feeling among TAFE stakeholders is one of despondency, unremitting gloom and doom.  As one authoritative commentator put it to The Scan, TAFE in Victoria is “rooted”, or words to that effect.  Another stakeholder observed that the “mad Victorians”, having stuffed up the international sector, are now doing the same to the domestic market.

We’ll see.  Publicly provided TAFE will survive, for the time being at least, but it is hardly likely to prosper.  You can see a path where many of the TAFEs become residualised, with underutilised assets and need “special assistance” to cover declining revenues.  This runs counter, of course, to the logic of “marketisation” as it has finally emerged in Victoria and so you end up at privatisation.

And you ask the question “why”?  Certainly the disorderly and disruptive process of skills reform in Victoria doesn’t seem to have served any public good: it’s blown the budget and debased the qualifications system.  And it’s degraded what was once such an important public asset and contributor to the public good: Victoria’s public TAFE system.

See
Victorian skills reform archive

Phoenix crashes and burns

Fairfax Media    |     5 December 2015

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Melbourne’s Phoenix Institute has shut down its “real world division” (that is, its face-to-face, classroom rather than online delivery) as a result of a federal government crackdown which has seen VET FEE-HELP funding to the entire sector frozen and legal action initiated by the ACCC. Some 260 transpersonal counselling and art therapy students are affected by the closure.

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Phoenix

 

The funding freeze could prompt a number of multi-million dollar college collapses as the government belatedly clamps down on an out-of-control sector that will cost it $4 billion or more this year.

Any unravelling is also likely to reveal that the sector’s insurance falls far short of what’s required to cover student debts to the government under the VET FEE-HELP scheme.

Phoenix Institute is insured for just $500,000 while its owners say it is owed $276 million by the federal government in unpaid VET FEE-HELP.

Phoenix is one of a large number of colleges to have grown exponentially through its sale of online diplomas around Australia, using government money under the VET FEE-HELP scheme.

It started the year claiming $200,000 per month from government to pay for courses, but by September, it was applying for a variation, claiming an annual payment of $300 million – or $25 million per month – a 125-fold increase.

However, the college has received no payment since August after questions began to be raised about its recruitment practices. The regulator, the Australian Skills Quality Authority, cancelled its registration, effective from 6 January 2016, and parent company Australian Careers Network has been at a trading halt since October.

Insurance is supposed to cover the cost of students’ relocation for training, or the cost of their debt to the government under the HECS-style loan scheme.

But one of two insurers for the industry, the Australian Council for Private Education and Training, admitted it had been caught short by the explosive, sales-driven growth in the industry this year.

“We’ve increased our premiums tenfold because of all this, but the fact is this sector grew incredibly fast, and nobody but the government knew how fast,” said chief executive Rod Camm.

“We had providers growing at vastly beyond the rate we expected.”

If insurance cannot cover the cost of courses or student debts when colleges close, taxpayers are likely to be left carrying the bill.

Separately, the Australian Competition and Consumer Commission (ACCC) has issued proceedings in the Federal Court against Phoenix Institute alleging false, misleading and unconscionable conduct by the provider and seeking recovery of up to $106 million in VET FEE-HELP payments..

Phoenix is strenuously defending itself against the allegations.

A spokesman for vocational education minister Luke Hartsuyker said existing students of Phoenix will receive help to be placed with another training provider, or receive a refund for incomplete study.

Comment on regulatory failure (2): The Australian

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