For-profit education: plenty of blame to go around

Success has a thousand parents, failure is an orphan. The truth of that proverb is illustrated by the blame game now going on around the disaster that is for-profit Vocational Education and Training (VET) in Australia. In the last couple of weeks, I’ve seen dozens of different stories illustrating the extent of the failure. The Oz alone has at least ten.

Reading these stories, it’s clear that this isn’t a matter of bad apples or abuse of the rules. The for-profit sector as a whole is delivering abysmally poor results while chewing up billions of public dollars.

Unsurprisingly, Labor is blaming the government for allowing this to happen. Equally unsurprisingly the Oz is running the line, pushed by Minister Simon Birmingham that it’s all the fault of the ALP who extended the FEE-HELP scheme to the VET sector in the first place.

I had to check back on the history, which reveals that this was actually an initiative of the Howard LNP government, announced in its final year, implemented by the Rudd Labor government, and carried on by the Gillard and Abbott governments. Victorian governments of both parties led the charge at the state level. So, there’s plenty of blame to go around.

But, that’s history. The real problem is that no one is willing to admit the obvious lesson, already evident from the US; for-profit education, funded by public subsidies, is a recipe for disaster.

I should concede though, that Birmingham is already edging towards the right answer, saying that he is and not as keen as he was to extend subsidies to bachelor and sub-bachelor courses at private colleges.

Another piece of good news is that the ACCC and Auditor-General are finally getting their teeth into this, doing what should have been done by the supposed regulator, the Australian Skills Quality Authority, which has been asleep at the wheel ever since it was established.

But no amount of tightening up at the edges can fix this problem. The only solution is to abandon subsidies to for-profit providers and put a serious effort into restoring and upgrading the TAFE system.

Finally, a blast from the past. Back in 2012, ACPET, the for-profit VET lobby group cited me as saying

“I think we will continue to see many examples of (dodgy) educational institutions. They are going to be much more common than examples of successful profit driven training or educational enterprises”.

The report in question (paywalled) concluded by quoting me as saying

The only solution is ultimately for the federal government to take over this area [of VET] and to then have a much more robust accreditation system for private providers than we have, and a much more sceptical one”

ACPET suggested that my position was reminiscent of the Flat Earth Society. At this point, I’d say the Flat Earth Society has at least as much credibility as ACPET.

33 thoughts on “For-profit education: plenty of blame to go around

  1. @Ivor

    We need to get from where we are now to a form of democratic socialism without following the path of violent revolution. At least that is my view. The ideas of thinkers like Richard D. Wolff seem to offer the best path. He advocates worker owned and managed cooperatives as the alternative to capitalist and corporate enterprises.

    As I see it, this idea would leave in place two institutions we are familiar with. These institutions are national governments and markets. The change to worker owned and managed cooperatives would in turn change and condition governments and markets. It is not possible to predict ahead of time how these changes would proceed in detail. For an interim period, which might be decades or even centuries (after all capitalism has lasted about two centuries in its right), we would indeed see a form of market socialism. I don’t think it is valid to postulate that this type of economic system would be the “final system” or the “end of history” either. I think further political economic evolution could take us beyond market socialism and/or beyond nationalism. A descent into barbarism, by failing to transform and slough off capitalism, is also sadly possible. One cannot predict the future with certainty.

    We need to take one step at a time. With democracy as our touchstone, we need all workplaces, all enterprises, to become democratic. They must be owned and managed by the workers. This would indeed lead to a form of market socialism. However, I think it is false to imagine that progress in the future could only go as far as we can imagine now. The most brilliant and forward thinking person of medieval times could never have imagined capitalism. Too many necessary institutions and technologies for capitalism simply had not arisen. The same holds true for a form of economy beyond any mere imagination of market socialism. We cannot conceive it yet. The conditions for its existence have not yet arisen.

  2. @Ikonoclast

    That is pretty much how I see things particularly if people can learn to see that;

    1) capitalism is not a synonym of markets or private ownership or individual enterprise.

    2) you cannot over-come capitalist crisis tendencies with stimulus, debt, growth or productivity.

  3. As I mentioned before, private high schools are an example of successful private education providers. They aren’t for profit, they have external assessment, their students have parents who will kick up a fuss if the school isn’t run well, and they are in competition with each other, and schools in the government system. Also, their children’s future is seen as a really important investment by many parents. And the bonus is that your kid gets great sports, music and travel opportunities, while mixing with children that may be able to help them in future.

    It seems to me that pretty well all the conditions above (except the bonus) are necessary for them to work well. And clearly private VET providers don’t have some of these in place. So they don’t work.

    And they particularly didn’t work back when the students came from overseas and worked as taxi drivers while waiting for their qualification to come through giving them Australian permanent residency, which is actually what they were paying their dodgy education provider for anyway.

  4. @John Brookes

    My personal (anecdotal) experience is the state high school education I got a generation ago was as good as a medium private school education in the 2000s. In other words, I paid fees for my kids to get an education only as good as the one I got from the state for free. My observations and investigations of local state high schools before I sent my kids to a private school indicated that state schools had declined significantly in quality since my era.

    This has all been achieved by starving state schools of money and skewing the playing field to private schools. It’s an interesting kind of inflation. The state service declines and people feel forced to pay private providers to get what the state service used to provide out of taxes. Of course, we now pay taxes and fees. I guess that makes us doubly lucky.

  5. I thought of another successful case of private and for profit education providers. A guy I know trains train drivers. He does this for mining companies and for the WA transport authority. Again, there are reasons why this works.

    Firstly, he is paid by people with a fair amount of power. Do a bad job, and they simply don’t use him again.

    Secondly, if a failure in his training translates to a train disaster, he will cop a lot of flak.

    He related a story recently of one of his clients trying to change the way he taught certain safety issues – and explained that he had to teach it properly (according to the rules) because he would be in trouble if he did otherwise and there was a disaster. He invited his client to get the rules changed 🙂

    Surely the worst possible way of funding education/training is to lend the money to the student, and say, “Go ahead and choose what you reckon is best”. This “empowerment of the individual” is nothing more than an invitation to scammers. The student is usually young, naive, lacks the necessary knowledge to make a good decision, and doesn’t have the power to remedy the situation if their provider is no good.

  6. Much of the poor service delivery also appears related to the prospects of the student bearing any financial liability. In the abscence of a co-payment, or any prospect that the student will earn the level of income required to repay the debt then the student themselves have no incentives to pass the course or to ensure the course is even suitable for their needs. I also assume that enrolment makes its easier to substantiate various studentwelfare payments.

    So while some institutions will act unconscionably, others are simply addressing the increased demand from students responding to very poor incentives. In this case I agree with John Brookes

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