Labor to Crack Down on Dodgy VET Providers with Tougher Regulations

International student volunteer chefs work at the Melbourne City Institute of Education (MCIE) in Melbourne, Australia, on 22 May, 2020. (William West/AFP via Getty Images)

The federal Labor government has moved to tighten the regulation of the vocational education and training (VET) sector in an effort to crack down on dodgy registered training organisations.

The move comes following the release of a 2023 report that highlighted the need to prevent some non-genuine VET providers from exploiting the visa system and international students.

On Feb. 7, Skills and Training Minister Brendan O'Connor announced that the government was introducing a new bill to amend the National Vocational Education and Training Regulator Act 2011.

The bill aims to eradicate unscrupulous training organisations engaging in fraudulent activities or circumventing regulatory requirements.

“What we are doing is simple. We are making it tougher for the bottom-feeders, the fraudsters, and the cheats to take advantage of students for a quick buck. We are restoring integrity to the sector,” Mr. O'Connor said.

“We will weed out dodgy providers that exist in the sector, who seek to exploit students and compromise the integrity and reputation of the entire sector in the process.”

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According to government data (pdf), the VET sector contributed $40.3 billion (US$26.3 billion) to the Australian economy and supported 250,000 jobs in 2019.

There are around 4,000 VET providers in the country, with 800 offering training courses to international students.

New Changes to VET Regulation

A major change under the bill is a provision that cancels the registration of a VET provider if it does not deliver any training or assessment for 12 months.

In addition, new VET providers who have operated for less than two years will not be allowed to expand their course offerings.

The government said the above measures would tackle “shell” training organisations and ensure they have the capability and commitment to continue their operation.

The government will also enhance the power of the Australian Skills Quality Authority (ASQA), giving it greater discretion in processing applications from VET providers.

Similarly, the training minister will be granted new power to demand the ASQA not accept or process new applications in certain situations.

At the same time, the government will expand the scope of offences and civil penalties to cover a broader range of false or misleading representations by service providers as well as increase the maximum penalty for each offence by five times.

In an interview with ABC News, Mr. O'Connor said the maximum penalty for a serious transgression of the laws could reach as high as $993,000.

“I think this increase in penalties will deter bad behaviour,” he said.

“Millions of students are engaged in the VET sector, and we need to look after them.

“Ultimately, it’s critical for industry, for our economy, for our labour market, that we have the highest possible quality education and training sector.”

The Australian Education Union welcomed the new legislation, saying it would allow regulators to manage risk and threats to the VET sector.

“As the minister said today, for too long, the system has been plagued with bottom-feeders, fraudsters and cheats,” federal union leader Correna Haythorpe said.

“That stops now, and we urge all political parties to support this legislation.”

A welder Isaac Fifita is pictured at work in Sydney, Australia, on Sept. 22, 2005. (Ian Waldie/Getty Images)

Concerns Over-Regulation and Market Intervention

While the Independent Tertiary Education Council Australia (ITECA) supported measures that protect the interest of students, the peak industry body was concerned about the scope of the new power granted to regulators under the legislation.

Specifically, the ITECA pointed out that the legislation brought about a degree of market intervention that had never been seen in the skills training system and other sectors of the economy.

There was also a concern that the bill did not clearly articulate why and for how long the government might act to stop the creation of new training organisations or prohibit them from expanding their operations.

“ITECA wants to see amendments that strengthen the legislation by putting in place safeguards. These include placing a limit on the amount of time that a ban on new registered training organisations would be in place,” ITECA chief executive Troy Williams said.

“It’s also sensible that the government publish the underpinning reason for making such decisions.”