Reinventing VET FEE – Help

So I think no matter what happens in September or October at the next federal election the VET FEE-Help (VFH) will change in 2017 and I think for a lot of us in the sector, particularly those who have been around for a while, changes to the system cannot come quickly enough.  We have seen the VFH system spiral out of control over the last couple of years.  I have on a more than a few occasions previously suggested that while there have certainly been unscrupulous, profiteering activities by a small number of providers the main issue with VFH was that the system and the contracts around it were simply not appropriate.

Even if we simply consider the process of applying for status as a VFH provider, the focus was almost completely on the financial aspect, sure there were a few nods to policies and procedures, but in the long run financials were what the decisions were based on.  Part of me understands mindset here, providers are regulated by ASQA and therefore if they where a registered provider then the compliance around quality of training and outcomes should have technically at least been taken care of.  But without a doubt this mindset is wrong, not because ASQA is not doing its job but because registration as a provider is simply a compliance process and not a quality process.  In addition it seems to me to be obvious that simple compliance is insufficient when we are talking about contractual arrangements of the nature of VFH.

So given the government has said that they have open table policy in terms of changes to the VFH system what changes do I think need to be made in order to make the system work more effectively, given that I think we need to have an income contingent loans system for vocational education.

  1. Ban completely or restrict heavily the use of education brokers.  I disagree somewhat with ACPET’s stance here and also the argument that it is difficult to find students without the use of a brokerage.  Student recruitment and marketing should be controlled in house with no loopholes for the RTO to blame third parties for any issues.
  2. Extra scrutiny paid to providers who delivery a significant portion of their programs online, because well lets be honest it just hasn’t worked and figures show that strongly.
  3. ASQA registration, financial information and a nod to quality through polices is simply not enough.  That being said, being anything less that medium risk with the regulator should have their VFH status refused or paused until such time as they can show that they are back at medium risk or below.
  4. RTOs must have been trading/delivering training for a substantial period of time, I think at least five years.  No provider should be able to start-up and get VFH status.  I think the must have been delivering Diploma level courses for 5 years concept is a bit wrong-headed as there are quite a number of legitimate reasons why a high quality provider may have chosen not to become involved in Diploma level qualifications and a range of reasons not relating to directly to VFH for them to decide to take them on.
  5. Buying, transferring ownership, rolling up into a holding company or any activities like that should void the VFH status of the RTOs and a reapplication process with their new status commenced.
  6. Payment should be on completion of units or subjects not commencement.  If you can’t cash flow your business to cope with this then your business model is probably wrong.
  7. Significant movements in a providers VFH enrolments, particularly increases and particularly in programs with low employment outcomes should trigger audits from both the department and ASQA.
  8. Active monitoring of marketing advertising and student enrollment practices needs to be instituted.
  9. Complaints process that triggers cessation of payments for the particular student or for all payments where there are significant numbers or types of complaints.
  10. Automatic 5 year ban from operating or being a high managerial agent of a VFH provider where there have been negative findings relating to another RTO they have been involved with.
  11. Automatic cessation of payments where any action is taken by ASQA, ACCC, The Department or any other similar body against a provider.
  12. Where potential students may be eligible for alternative funding options to VFH to access a course they must be notified of those other options.
  13. Limit fees.  I have often said I struggle with Diploma prices over $10,000 given that 3-5 years ago they were as low as $5,000.  This should particularly be the case where the course has low employment outcomes or workforce needs (Diploma of Counselling for example).  Set a standard limit on fees and if providers wish to charge more than this they must make their case as to why as part of their application for VFH status.
  14. Give the Department the power to simply cease payments immediately where any matter of concern arises until that matter has been decided.
  15. Cancel all existing VFH provider status and make every provider reapply.
  16. Transition any continuing students to the new system and even new providers where necessary.
  17. Strong government information campaign around VFH, what is legal and what isn’t.

So there are my thoughts on at least some things that would make a much better VFH system.  I know that some of you are going to disagree strongly with my on some of the points I have made and I would be really interested in hearing why you disagree and what you think an alternative would be.


Anyway that’s just my opinion.


About pauldrasmussen
Paul Rasmussen is one of Australia’s most widely read Vocational Education and Training Commentators. He provides deep, unbiased analysis and insights not only on topical issues, but also on the underlying structure and policy which supports the industry. His writing and analysis has been praised for its uncompromising and thought provoking style and its ability to focus on the issues of real importance to the sector. He has advised various government departments and ministers, training providers, public and private organisations, not for profits and small to medium enterprises on the VET sector and the issues and opportunities facing it. He is one of Australia’s most awarded learning professionals and a regular speaker at a range of conventions and forums. His extensive experience in vocational education, and learning and development coupled with formal qualifications in philosophy, ethics, business and education management allow Paul to provide a unique view of the road ahead and how to navigate it.

13 Responses to Reinventing VET FEE – Help

  1. Rod Piper says:

    The same old will be the same as it was in 2014 – 15 – 16 and dare say 17. The issue is constant change in government, The I will change things because I want to, and the constant change in language and purpose.

    The dreaded word reform pushes everything back to zero. Means more millions pushed into the new and well lessons not learned from the past.

  2. Ann says:

    Whilst most of your points make sense Paul but enough of the ‘ pay on completion’. Let’s get real here. RTO’s have to contract trainers and have infrastructure in place to deliver quality education. Term by term census dates are fair. No one will have 100% completion but low completion should be questioned for sure.

    • pauldrasmussen says:

      Ann i am not convinced. If you look at a lot of direct funding from the state governments it is paid on completion and RTOs who utilse that as a funding source seem to survive. I think kne of the things completion funding does is force providers to concentrate more on outcomes than enrollments and after all in the long run it is the outcomes that are important not the sheer number of enrollments

  3. Jim Davidson says:

    Your comment on financials is very appropriate. Effectively it restricts the system to the well heeled well established segments of training ( corporate and govt based which is also where most of the failings have been found ). The rest of us poor buggers that are passionate and training as if we are going to meet the trainee on the road one day and want to survive that are financialled out of the system

  4. Mark Matthews says:

    I agree that there is an urgent need for VFH reform measures in order to weed out the ‘dodgy’ operators. I agree with most of your suggestions, however some would hurt those of us who are attempting to do the right thing – effectively throwing the ‘baby out with the bathwater’. The suggestions I take issue with (and reasons why) are outlined below;

    POINT 6 – Payments based on completions would result in ‘dodgy’ RTOs manipulating student performance and outcomes in order to ‘get them through’ and diminish the sector’s credibility in terms of delivering high standards and reliable qualifications etc. It’s also problematic because non-completions are often based on factors outside of the RTO’s control (eg student health issues; personal finances; laziness and/or inability to do the work required to achieve competency etc). A training provider that doesn’t allow undeserving candidates through or turn a blind eye to poor performance just to maintain their completion rates would be punished under this system. Also, in no other business does a ‘customer’ pay only if they end up using the product or service. Airlines receive payment in advance for passenger travel and keep the fare even if the customer doesn’t turn up for the flight. They aren’t paid at the end of the journey and it should remain the same for training services if the student fails to ‘show up’ (in every sense) for the course.

    POINT 7 – Low employment outcomes do not necessarily represent poor practices by the training provider. The state of the economy; government policies and many other factors mean that in many industries the jobs simply aren’t there at the end of the course. It doesn’t mean though that we shouldn’t be training people for those industries because (in my view) each individual has the right to pursue their desired vocation regardless of how competitive or difficult the particular industry may be to find work.

    POINT 13 – Limiting fees doesn’t take into consideration differing cost structures and business models of providers. RTOs paying rent in the Sydney CBD and staff wages have much higher costs than one in a small country town. Similarly, an RTO may wish to provide additional services to students (such as high quality equipment; resources; facilities; special events; field trips etc) that another RTO delivering the same course chooses not to provide and so they need to charge higher fees for these additional services. Putting a cap on fees thus diminishes providers’ ability to deliver training in their own unique way and would negate competition and innovation by making everyone the same due to limited available funds.

    POINT 14 – This puts too much power in the hands of regulators and could force the closure of a business denied operating funds during the course of investigations (especially if they take a long time as government ‘inquiries’ usually do) when they could ultimately be found innocent of whatever ‘matter of concern’ prompted the investigation.

    POINT 15 – Would create unnecessary red tape and expense and be a pointless waste of everyone’s time and energy. Make those who have had their provider status cancelled re-apply by all means, but everyone else should not have to pay the price for others poor business practices and/or illegal or unethical behaviour.

    Would be interested to hear your thoughts on any of the above.

    • pauldrasmussen says:

      Mark, you make some interesting and valid points and I will work through them in turn.

      Point 6. I disagree with your position here for a number of reasons. It seems clear to me when we look at the enrolment vs completion data that has been collected and is available that there were a lot of people who providers got paid for who never completed and while I certainly agree with you about issues surrounding manipulating outcomes to ensure people pass, spending public money on outcomes that are never generated, particularly in the sums we are talking about does nothing for reputation either. Ending up front payments would also stop VFH being viewed as a cash cow. I am going to write a longer piece on completions vs commencement payments this week, because while a think a system like the one in QLd for their direct funding works quite well (payment on unit completion) and those RTOs who utilise it seem to survive quite well, I also think there might be a middle ground which may be far more effective.

      POINT 7 Mark you are right, low employment outcomes don’t necessarily have a connection to the quality of the training or the provider and I also fully support the idea that people should be able to choose to study whatever they want. What I guess I am driving at here is indicators of where there might be an issue, if an RTO has a steep rise in enrollments in a course where there are low employment outcomes, I think we need to ask why has this occurred and it is due to the way in which the course is being marketed. Take for example the Diploma of counselling, this course is in terms of the student ever getting employment or building their own practice almost utterly useless, participants are far better served if they want to work in the community sector to get a cert III or IV first, get a job and then move into that area when the occasional job arises. Yet despite this we saw a massive rise in the number of enrolled student, and it appears a significant reason for this was the marketing around the course and if it had been investigated we would not have the issues we have around it now.

      POINT 13. No it doesn’t which is why I suggested a base fee which the RTOs could then as part of their application process seek to have raised due to a range of factors, specialist equipment and resources, trips overseas for students etc. Doing it this way would put the onus on the provider to show why its course should cost more than the standard fee it would also then make the delivery of those additional services part of the contract with the government and if they werent delivered then action could be taken. It is also completely possible for the government to set differential rates for different courses for example $8,000 for a management diploma as opposed to $14,000 for an IT diploma. This is done all of time through the sate funding systems there seems no reason why i couldn’t be applied to VFH. It could also the case that the government could set a recommended price and then RTOs would then have to justify to students why they were either over or under that price.

      POINT 14 I understand the concern here about the ability of legitimate businesses being forced out of business due to spurious complaints, however I would see it working something like this. Student complains, all funding relating to that student is frozen and the RTO received no funding for that student until matter is resolved. A significant number of students in a course complain, all funding relating to that course is frozen for that provider until the matter is resolved. Significant numbers of complaints across courses, all funding is frozen. What does significant mean, I’m not sure at this stage.

      POINT 15 This happens with contracts all the time though. A contract runs out and everyone involved needs to reapply. Anyone who has had their status cancelled should not be allowed to reapply but everyone else should go throug the reapplication process. When direct funding contracts in QLD expire everyone has to reapply, there is a simplified process for those who had a previous contract (there are certain things that you dont have to show as the government already has access to the information) but everyone has to reapply. I don’t see why there is any justification for VFH to be any different from any other contract arrangement.

      I really appreciate your comments Mark and as I said I will be posting a longer discussion on completions vs commencements payments and would be delighted if you wanted to comment on that.


    • pauldrasmussen says:

      Mark, I have written a longer response to the completion payments argument here.

  5. Mark Matthews says:

    Would just like to add to my previous comment regarding POINT 6 – “Payment should be on completion of units or subjects not commencement.” Training organisations (just like airlines) need to pay contracted staff and other costs (eg rent/aircraft) regardless of whether or not the paying customer uses the service for which they have booked or enrolled. It’s not workable for the business to receive funds only when the training/journey has been completed, as the expenses are incurred regardless of whether or not the customer/student bothers to turn up.

  6. Anna Keavney says:

    thanks for your detailed analysis Paul

  7. I agree with each of your points Paul. though I do think it needs to go much further.
    Point 2. I believe 100% online programs should not be eligible for VFH at all. If they stay then payment should be post performance review by the regulator.

    Point 6. Regarding pay on completion, I agree. However, if fees are to be paid in advance than the payment programs must be staged. I have never met a contract trainer who is paid in advance so forget that argument. During registration and upon adding new programs each delivery strategy should be accompanied by a financial cost timeline and if criteria are met, payments released to the RTO upon reaching those time lines and not course commencement.

    Point 7. Low employment outcomes should obviously be considered, yes everyone has the right to study what they like toward a career they like. But the underlying reason for VFH is to assist those disadvantaged to achieve employment. It isn’t a bottomless pit of money and its existence requires real outcomes.

    Point 13. I read this point with Fee Fairness in mind. Not just the students but also from a competition perspective. It is my opinion that those who don’t want to see caps on course costs and constantly use the excuse of city vs country cost comparisons etc offer a mute argument. There is obviously a larger student market in highly populated areas which more than offsets cost to deliver in regional areas. Add to that the reduced options for regional based students and a significantly smaller pool of education and training professionals, coupled with higher resource cost from print media to facility fit out etc. It is clear that the cost to deliver argument is an uneducated one.
    If you want to see fairness, lets talk Not for Profit organisations (NFP’s) and those who are Directors of multiple NFP Educational establishment’s milking the system. Any NFP that is an RTO and wishes to register for VFH should be forced to demonstrate that its principal purpose for existing is as an RTO.

    It’s as much about what VFH isn’t. It is not a funding source for other business activities at your organisation nor is it a buy a bigger house/yacht/car facility. It is for students to access otherwise unaffordable ‘High Quality Education’ and should never be allowed to become anything but that. RTO’s who cant stand on their own merit should not exist let alone have access to what is putting disadvantaged peoples, who often have no chance of completing long term programs in debt.

  8. Gil Deane says:

    I agree with all of your points Paul and think they are a good summary of what is wrong with VFH (still). I think though that your point 6 would overcome most, if not all of the issues. Let’s face it, we all know of RTOs that have been taking financial advantage of the system with no thought or care for the quality of outcomes. If RTOs were only paid on completion of units (and if ASQA are serious, retrospectively) we would see an immediate exodus of dodgy RTOs who have been taking huge advantage of the VFH framework. You also referred to quality of training. This needs to be addressed in all areas of VET not just in relation to VFH. Poor quality training is common in the industry. If ASQA enforced payment on completion and got rid of dodgy operators, they may be in a better position to spend time and resources on ensuring that the quality training was the rule not the exception. Only then can we proudly say that we are indeed educating. Until then, in my opinion, VET will not give Australia quality education outcomes which in the not too distant future will provide a generation of qualification holders without the required knowledge. The availability of quality education is not only a business, it’s the future of our country – let’s do it right!

  9. You say that “we have seen the VFH system spiral out of control over the last couple of years….by a small number of providers”. I tend to disagree with this. I would say it is with the majority of the VFH providers and their prices inflation. Most VFH providers prices are far above the normal range of prices for a Diploma course. Most add on extra as it is government money and they dont have to justify their pricing model. I agree totally with a fixed price model being introduced where the Government sets the price for the VFH courses. Setting a Diploma at between 5 and 10K depending on the type is fair. 24K for a Business Diploma is mad and yet the government approved this for one RTO. How is it possible that no one thought to question that price?
    I feel the government needs to set boundaries that are fair and reasonable but still realistic. Possibly a loading for specific courses etc.
    I totally agree Paul with your point about pay on completion but possibly make it pay on submission with an establishment payment up front to cover starting costs (possibly 30% of course cost) and then as each subject is submitted payments are approved. Like C3G funding. Would make RTO’s work harder to keep students.

  10. na says:

    Just thinking, if government should be campaigning more for study courses to people on the dole, which really isn’t promoted , ces used too. Even if it was pushed more or a must for these people to take on a vet fee and a selected course, courses must reflect each regions state and town. I believe it will help most people entering or on the dole, but not some unfortunatley which are the minority that don’t want to work and don’t pursue ever. plus majority people a very unlikely to make over the expected mark but they will be given new tools to enter a market place and feel better about it which will look and find jobs and leave the dole eventually when time permits, with the great help from studying. Most people on dole need a push and guidance

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