Death Knell of the High Growth Mega Colleges

Vocation in Administration, Australian Careers Network in Administration, RTO services group in administrationEVOCCA, shedding staff and campuses, a small number of sackings at Careers Australia and then silence, and Ashley services group trading at way below its high water mark.  One has to ask is the time of the high growth mega provider over?  I think the answer is assuredly yes.  I also think that it will be a long time before the sharemarket sees another VET related IPO, there is a smell about them now and it is not a good one.

To be fair, there are also still some very large colleges out there, but when one looks at the other players there is a difference between a number of those that remain and those that are in various levels of trouble and this difference is growth rate and sustainability.  The bigger players who are left have had sustainable business models, have built there businesses over many years in lot of cases,  and did not expand rapidly on the back of VFH fueled enrollments.

It is highly unlikely that we will see the unbridled growth and expansion that has occurred over the last few years in the sector again anytime soon.  The market and the government have realised the issues and taken steps to stabilise the sector.  As I have said previously it was at least in some cases only the massive influx of money generated by large enrollment numbers, enormous fees and commencement payments that allow this growth to happen.  It was only pie in the sky projections, premised on the unending continuation of both funding regimes and student numbers which made some of these operations look like market darlings, when in reality as we have seen, changes in funding and student numbers, have either ground expansion to a halt or driven companies into administration.

I also think the days of the roll up company, where a parent company owns multiple providers are, if not over, very close to it.  With the regulator focusing on what have clearly become high risk indicators and lenders seemingly unwilling to back high market valuations, it seems that we will be back to mostly small to medium size operators, generally in niche or specialised markets, producing sensible and sustainable growth and profits for all of their stakeholders while at the same time producing the high quality student outcomes that the non-public VET can actually produce.

Personally I think this is a good thing, the larger you are the more difficult it is to provide high quality training to everyone, in every course, all of time.  This has long been one of the problem for the public providers, where they were to some extent expected to do just that and the variation in quality even between different faculties in the same TAFE, was sometimes astounding.  Yet the non-public side of the sector (or at least those who attempted to become mega providers) failed to see this lesson, the wider the range of programs you have the more difficult it is to ensure the right staff are in the right place, with the right qualification, at the right time, providing the right training and assessment with tools that have been properly validated.  I know, I ran an enterprise provider and L&D department that was responsible for the training needs of nearly 36,000 staff and volunteers.  Just ensuring that all of the necessary information for each student is captured is truly a nightmare of epic proportions let alone anything else.

So while I feel deeply sorry for the staff and students who have been and will continue to be effected by this correction, it was as I have said for many months now a correction which had to occur and a correction without which the VET sector both public and non-public together could not begin to move forward to actually again begin to make a difference in the lives of people who come to us.

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.

2 Responses to Death Knell of the High Growth Mega Colleges

  1. Very good read Paul and totally agree. Hopefully when the dust starts to settle, the micro- to small providers will get some respect and leeway as many of us have our livelihood riding on our business. For some, including myself, training and education is not just a business outlet, it is a vocation and passion; something we have been ‘called’ to do from inside and not necessarily driven by the financial gain.

  2. I agree with Dion; well thought Paul. I think this whole direction of the industry (private and public) over recent years has detracted from the goals and needs of passionate vocational practitioners, committed and ethical business people and more importantly people in need of learning/training/education to help them achieve their goals, be they for work or broader professional or person development reasons. Let’s hope the painful correction leads to a better environment to support these goals and needs.

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