Magazine of Socialist Action in Australia

Higher education scams a product of privatisation

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A series of scandals at the end of last year have exposed the shocking cost and rampant corruption of the privatised vocational education sector.

The closure of the Phoenix Institute in December highlighted the outrageous practices in the deregulated sector. While Phoenix did offer ‘real world’ courses in art therapy at a campus in Melbourne, the vast bulk of its enrolments were online. The college employed teams of sales people that aggressively enrolled students in bulk. These dodgy operators targeted vulnerable communities – including migrants, people with disabilities and Aboriginal communities– and offered incentives like free laptops, knowing full well that many of the people recruited would never even begin these courses, let alone complete them. Students who didn’t complete their course were still lumped with a sizeable VET FEE-HELP debt, even if they were tricked into enrolling.

For every student enrolled the college received tens of thousands of taxpayer dollars. At the beginning of 2015 Phoenix was claiming around $200,000 per month from the government to pay for its courses. By September, it was claiming $25 million per month!

Phoenix’s mistake was the particularly brazen speed and scale at which it demanded more public money. But it is far from alone in its tactics. Other providers like Sydney’s Empower Institute and the Australian Institute of Professional Education are also facing deregistration for their dodgy tactics.

In 2014 the vocational education system cost the taxpayer $1.3 billion in subsidies, but in 2015 this rose to over $4 billion! Thanks to the privatisation of vocational education taxpayers are essentially funding lucrative get-rich-quick schemes that are ensnaring some of the most vulnerable members of society into lifelong debt.

Such unscrupulous methods are increasingly the norm because the system encourages them. Despite the explosion of similar dodgy schemes in the early 2000s when sections of the TAFE system were privatised, Labor extended HECS-style loans to vocational education in 2012, with basically no restrictions, oversight, curriculum stipulations or caps to keep the system in check. In the wake of the Phoenix scandal Labor higher education spokesman Kim Carr told the Turnbull government to “turn off the tap of the billions of dollars that are flowing to these shonks, these shysters!”, conveniently glossing over the fact that it was Labor who turned the tap on!

Faced with the embarrassing Phoenix revelations, the Turnbull government has tried to look proactive by putting a freeze on payments to private colleges and changing aspects of the way payments are made. This is extremely lenient, as far as punishments go: it simply means that if a ‘college’ like Phoenix conned $60 million out of the public in 2015, it can’t con more than that next year!

The government’s supposed crackdown and Labor’s confected outrage are just smokescreens. Both the major parties are thoroughly committed to the privatisation of public services. In some cases like TAFE they deliberately undermine funding to the sector in order to set up an argument for the greater ability of the so-called ‘efficient’ private sector to take over.

Despite the strikingly similar disappearance of billions of dollars of public money during the power industry and public transport privatisation processes, the government accepted every recommendation of the recent Harper review, which advocated the further outsourcing of public service delivery.

The rampant pace of privatisation and the undermining of public education by both the major parties is not going to slow unless a political alternative is built. The alternative to privatisation is bringing education (back) into public ownership under workers’ control and management. Only this way can we ensure that education is run not in the interests of private profit but in the interests of ordinary people and our communities.

By Chris Dite


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