The for-profit motive in education is a failure

Introducing the profit motive in Australian post-secondary education has been an abysmal failure. That’s the message from the recent research by Professor John Quiggin (School of Economics, University of Queensland, pictured left) in his Conversation article, “Why the profit motive fails in education” (10 December 2019), and presented at CCA’s annual conference in Brisbane on 19 November.

Professor Quiggin’s article is based on his conference presentation (view the slides here PDF) and provides a quick – and depressing – summary of how Australian governments embraced the market approach to vocational education and training (VET). First it was Victoria, under the Labor government of John Brumby, subsequently adopted by Brumby’s Liberal successor, Ted Baillieu, who severely cut TAFE funding, and by both Liberal and Labor federal governments.

As Professor Quiggin writes: “The Victorian template was embraced federally first by the government of John Howard, which extended the Higher Education Loan Program to VET, and then those of Kevin Rudd and Julia Gillard. It grew even more under Tony Abbott, increasing at triple-digit rates between 2012 and 2015, until evident problems forced government action. The Australian National Audit Office’s scathing assessment of VET-FEE-HELP in 2016 led to it being scrapped.”

Professor Quiggin points out the problems in for-profit higher education in the USA – such as University of Phoenix – and the failed experiments of privatising schools like Edison. He counts Australian universities as lucky by generally avoiding private schools, although University of Melbourne Private closed in 2005 after losing more than $20 million.

Professor Quiggin notes that the privatised Australian early childhood education sector has also been producing shonky providers, given the flow of government subsidies.

Australian For-Profit Education Scandals Stay in the News

Problems with Australian for-profit education has made it into the news again this month, with The Sydney Morning Herald reporting (7 December 2019):

“Federal authorities have spent almost $10 million chasing shonky training providers who conned taxpayers out of hundreds of millions of dollars, but not a single person has been charged with fraud over the scheme. Private colleges that systematically rorted Australia’s vocational training system have also avoided repaying tens of millions of dollars in penalties by going into liquidation, while former students are saddled with massive debts, many having received no qualifications.”

ABC TV’s 730 Report (16 December) and the Herald (1 December) both report that the Commonwealth Government has been forced to wipe off “about $500 million in dodgy debt accumulated by unsuspecting students as part of the most disastrous education rort in Australia’s history.” In addition: “In a sign that the problem is far from over, the Commonwealth Ombudsman has warned that it could take up to a year to assess thousands more unresolved complaints, due to the unprecedented volume of people coming forward seeking to have their debts re-credited.”

Sydney Morning Herald Letters to the Editor

Letters published in The Sydney Morning Herald on 8 December 2019 reinforce how the public perceives that for-profit education is both misguided and destructive:

“At least Skills Minister Michaelia Cash got it right when she referred to the VET-Fee-Help program as a ‘disaster’. That would be the kindest description available and every government of either persuasion should learn from this disgraceful and inept attempt to privatise something that should never have been privatised. It’s neo-liberal, free-market policy at its worst.”

“Even Michaelia Cash calls her government’s privatised tertiary education ideology a ‘disaster’. Time and time again we see how the profit motive undermines public services like education, hospitals, health insurance, sustainability and even the critical social function of banking. Yet, glued to their ideological worship of the profit motive as the only motivating force worth considering, Cash and her followers are blind to its failings. Until yet another disaster, like this, forces them to look for scapegoats.”

Disability Employment Services Also Called Out

Research also released this week (19 December 2019) by the independent Australian investigative news outlet Crikey has called out for-profit Disability Employment Services (DES) providers, not just for the quality of their disability job placement services but also in how they place their clients into their own accredited education activities – all paid for by the Commonwealth Government. Crikey reports:

“Education offers a huge revenue stream for [DES] providers, who receive funding for simply placing a student in education…. Investigation has revealed a quarter of providers also run registered training organisations and courses, making the government incentive a pretty sweet deal…. One former DES provider employee in NSW told Crikey that in-house courses run by the provider were always preferred to external TAFE courses. ‘The company ran internal courses in hospitality and retail, so they would always be a focus,’ they said. ‘If someone said they wanted to do an IT course, the company would say they’d have to focus on something different.’”

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