The long tail of Australian private for-profit VET scandal

Some years ago, Wired magazine editor Chris Anderson published a ground-breaking book entitled The Long Tail: How Endless Choice is Creating Unlimited Demand. In it, Anderson deftly analysed the impact of the Internet and the digital world on traditional business models.

But Anderson’s introduction of the term “the long tail” has taken on another popular meaning – how certain events continue to resonate in economics or society, long after the initial impact has disappeared.

The much-abused, now (thankfully) closed Australian Government loan scheme for vocational education and training (VET) students, VET FEE-HELP, is a prime example of how the long tail continues to affect us.

The latest manifestation of the long tail came last week, with the news that a now-closed private for-profit Australian VET provider, Unique International College, had “been fined $4.2 million after it was found to have acted unconscionably by enrolling people from remote NSW communities, including a teenager with learning conditions, into online courses costing nearly $27,000 by offering them free laptops.”

According to the Sydney Morning Herald article (31 October 2019): “In six separate cases, it was found Unique International College failed to inform the prospective students of the cost of the course they were signing up to, did not tell them they would incur a debt and did not give them copies of the agreement they had signed.”

The conduct “’involved the exploitation of an uneducated Indigenous person with no understanding of what he was agreeing to in return for a laptop which was worth substantially less than the debt which was being incurred,’ Justice Nye Perram found in his Federal Court judgment.”

The article continues: “Unique made a net after tax profit of $8.2 million in 2014 and $33.8 million in 2015, the ACCC told the court. Justice Perram found Unique acted deliberately in remote communities on a number of occasions, including Walgett in October 2014, Wagga Wagga in March 2015 and Bourke in June 2015 but ‘was ignorant’ to the fact it was contravening consumer law.”

A year and a half ago, the Sydney Morning Herald described VET FEE-HELP (logo pictured below) as “the biggest public policy scandal in Australian history: the systematic rorting of the vocational education and training system.” At times, provider profit margins reached a staggering 80% of income. All of this continues to prove how government funding of privately delivered VET is fraught with potential difficulties.

Although the VET FEE-HELP scheme finished at the end of 2016, almost three years later we are still faced with court cases that continue to uncover the abuses undertaken by for-profit education providers who found ways to rort the system of government payments.

And, sadly, there is another “long tail” to this not-yet-finished story: the replacement Commonwealth Government scheme, VET Student Loans, has significantly under-spent. As TAFE Directors Australia CEO, Craig Robertson wrote on Monday of this week (4 November): “At the same time VET FEE-HELP was scrapped in favour of VET Student Loans, cutting the flow of about $1.5bn per annum in legitimate loans to something like $300m for VET Student Loans. States and territories, let alone decent providers, were left high and dry.”

(Full disclosure: I participated, as a representative of Community Colleges Australia and not-for-profit community-based VET providers, in the Australian Government’s VET Student Loans Stakeholder Reference Group as that program was being established.)

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