Another giant education scam in the Australian education sector

How could successive Australian government be so careless as to effectively waste more than $7.5 billion on a very expensive yet dodgy vocational education program that mainly generated generally worthless and mainly counter-productive outcomes? Why did so many of those in the educational sector who were aware of this giant rip-off say and do nothing? And could it be that what has been referred to as ‘arguably the biggest public policy scandal in Australian history’ (as well as its education sector) is just the tip of the iceberg of a much deeper scandal and much wider mass education rort?

The dust is finally starting to settle on the massive VET FEE-HELP (private vocational colleges) scheme rort which saw many opportunists set-up, rip-off, shut-down and then take-off with millions when the extent of this became obvious and the government finally acted to scrap the program in December 2016 (1). It is now estimated that this has cost Australia (i.e. ‘you and me’ as well as well as our government) more than $7.5 billion including rorted loans and student bad debts (2). The plan was to ‘give job skills to young Australians’ by paying part of their tuition fees was well-intentioned. But as is now happening so regularly across both public and private sectors, you get monumental rip-offs instead of promised outcomes – because of the inevitable rip-offs based on a foundational toxic mixture of ‘business greed, political inertia and bureaucratic fumbling’ (as the SMH put it). Although, it should be noted that ‘the crooks’ in these scams included bureaucrats and politicians as well as opportunistic fly-by-night conmen posing as business people. The Financial Review referred to the ‘stupendous incompetence’ behind the VET FEE-HELP scheme (3). Yes, there was this also, but there was mainly endless rorting by a number of people who help set up or run the scheme who really had either criminal intent or lack of accountability which they should be held responsible for.

As another recent SMH article (4) reports, this rort saw many ‘fly-by-nighters’ also access the scheme to gain ‘virtually unregulated access to government subsidies for every student enrolled, usually tens of thousands of dollars per student. Fuelled by salesmen who lured students with free laptops to sign up to over-priced, often online courses, providers made away with billions of dollars of government money while delivering very little education’. In short, the participating colleges were paid now by the government for the future debts of the students (i.e. the resulting student loans) – with students generally either getting a worthless degree but a large debt OR not being able to finish because the colleges closed down first BUT they still have the debt to the government. As well as being ripped off by both the debts for either diplomas they did not get or were generally worthless anyway, anecdotal evidence indicates that many of these were additionally traumatised by their loss of trust in the system and in the promise that further education might help them get a career or at least a decent job. But so hasty, incompetent and very careless was this program that dodgy colleges were even able to conscript the Australian Tax Office to provide the file numbers of non-enrolled students to get additional funds for themselves (5).

Of course, the additional unacknowledged costs which are hard to put a figure on include both (a) disillusionment and big debts for nothing of many of the 500,000 plus students reported to have been caught up in this, and (b) the general damage done to the reputation of vocational education in Australia. This is a sector which should have been providing significant employability and credibility antidote to the mass education scandal of higher education – where students are also being directed into often worthless but increasingly expensive degrees to so often become ironically less employable as they notched up to $100,000 or so in student debts that many will never be able to pay off (6). This was further reinforced by how an afterwards survey also pinpointed how a lot of the students had pursued courses more for reasons of lifestyle interest (e.g. physical fitness or personal training courses) than job prospects. This is despite how the rationale had been that the scheme would address skills shortages in the economy as well as lesson unemployment rates for young people. Such sheer carelessness is exemplified by how there was few checks and balances from the beginning, and even as problems started to rise nothing really was done to address these. In fact the whole thing had some disturbing similarities with another good idea around the same time that also became a disaster initiated by the same Labour government (although Liberals were no better) – Kevin Rudd’s ill-fated (if well-intentioned) home insulation scheme (7).

There was a pattern of rorting in the scheme common to both those who were later seduced to rip off the scheme and those who planned from the outset to do this. For all this entailed massive profits before the Government pulled the pin on the worse offenders who then typically went ‘bust’ or bankrupt with the excess monies already secreted away. A lot of the worst offenders were corporate groups with stables of different offending colleges. For instance, Phoenix college – who enrolled more than 9,000 students in 17,000 courses and was paid more than $100 million by the Commonwealth – was part of the larger group Australian Careers Network (ACN). ACN left 15000 students without a course to finish when they entered voluntary administration soon after coming to the attention of authorities (8). Then there was Evocca College has a graduation rate of about 10 per cent despite claiming more than $290 million in government funding (9). But arguably one of the worst offenders was Global Intellectual Holdings which owned Aspire, Keystone and Compass colleges – all of which closed when the parent company suddenly went bust leaving thousands of students stranded also. What was known about this group is that its two key shareholders, Aloi Burgess and Roger Williams, paid themselves about $10 million each through dividends and loans to shelf companies before effectively doing a runner leaving their company and its colleges to close down in disgrace at the expense of students, government coffers and the wider community (10).

The Phoenix group exemplified another tendency which gets to the heart of a wider problem. It not only had an often ill-qualified and minimal number of staff to support courses, but also specialised in online courses and related diplomas as a source for raking in the money.  So, at the heart of the related rorts of Australian vocational education and university sectors also is the notion that education and learning are simply about delivering information or content and diplomas or degrees which typically promise jobs and a future but in reality are often simply worthless pieces of actual or virtual paper. This has also provided the rationale for attracting international fee-paying students with similar promises and also similar rorts (e.g. 11) as we noted in an earlier post (12). In other words, instead of aiming to support students and society to achieve their potential, formal education (in Australia at least) is becoming a snake oil practice which is increasingly failing to deliver and could go bust at any time (13).

In sum, vocational education used to have some integrity in Australia in terms of being linked to some direct mode of experiential learning (academic degrees typically not – with some exceptions like medicine). It could have capitalised on this as the employability of the university sector mass education market in general began to increasingly flounder [ But the VET FEE-HELP scheme scandal overseen by clueless politicians, non-accountable bureaucrats and predatory investors has not just demoralised the sector and all the participating students.

Its fate represents a wholly avoidable general disconnection with notions of educational quality derived from learning by experience. This is especially exemplified by the cynical and increasingly counter-productive tendency of colleges and universities alike to substitute not supplement good teaching and/or academic support with endless online courses of largely meaningless content [If interested, you can read more about this larger problem of the loss of confidence in human experience in modern education further reinforced by the recent tendency to online courses – and an informal lifelong learning remedy for it – in our latest paper:

Richards, C. Addressing the global demoralization of education and society: Towards an informal lifelong education resolution to the experiential learning ‘contradiction’ 















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