Further crackdown coming for VET sector to target ‘ghost colleges’

Skills Minister Brendan O’Connor has signalled he will pursue more measures to rid the vocational education sector of corrupt providers and to lift training standards, after the federal government shut down a loophole used to rort the student visa system that led to an explosion of “ghost colleges”.

Among the options O’Connor is considering is a crackdown on dormant Vocational Education and Training (VET) organisations that haven’t provided training for extended periods.

Skills Minister Brendan O’Connor is considering further measures to crack down on fraudulent VET providers.Credit: Dominic Lorrimer

Tightening requirements on providers to inform regulators of significant changes to their operations is also being considered, to keep a closer eye on the sector. This would include changes in ownership or the location where the training is provided.

An investigation by this masthead this month revealed a loophole in Australia’s visa system that allowed international students to abandon university courses for cheap private colleges, so they could work instead of study. The policy led to a sprawl of “ghost colleges” across Melbourne, where tens of thousands of students are registered to learn, but few attend their courses.

The measures O’Connor is considering are part of a series of recommendations provided to the former Coalition government in 2018 and 2019 but never implemented.

O’Connor confirmed he was working with the states and territories and the VET sector “to examine further measures and tools to support the regulator to stamp out potentially unlawful activity”.

“There are a range of measures we are considering to strengthen the integrity of the sector that the previous government sat on for years and failed to take any steps [on],” he said.

He said the government was concerned about an increase in applications to become registered training provider over the past year and was scrutinising the pattern of behaviour behind the rise.

Government data reveals that, in vocational education, more than half of the growth in international students is at smaller providers, where visa refusal rates have also climbed. There were 40,000 refusals in the VET sector last financial year alone.

On Friday, the country’s skills ministers agreed to beef up the powers of the Australian Skills Quality Authority (ASQA), which regulates the VET sector, in determining whether those running colleges are “fit and proper”.

O’Connor said the tougher rules were a “critical step to preventing substandard and potentially unlawful operators owning and managing RTOs [registered training organisations] and profiting from vulnerable students”.

“While this change may affect a small number of providers, their actions traduce the whole sector. We need to lift standards and quality to not only crack down on unlawful behaviour, but to also ensure students are getting the skills that they and the economy need,” he said.

Boosting the ASQA’s powers is part of a broader suite of measures the federal government announced on Friday that aim to dismantle an industry of “ghost colleges”. The government said it had closed a loophole that had enabled student visas to become a proxy for work visas.

The investigation by this masthead revealed shonky education agents were exploiting a “concurrent study” arrangement that enabled them to poach recently-arrived international students from universities to cheaper private colleges that provided little, if any, training while the students entered the job market.

The policy led to a sprawl of “ghost colleges” across Melbourne, where there are just under 300 private vocational colleges, including 70 on Queen Street in the CBD alone.

Under the government’s changes to the system, students will have to remain at the university for at least six months until they can transfer to a vocational course.

The scale of the fraudulent scheme was underpinned by federal government data, which showed a sharp uptake in the use of the concurrent function – 17,000 in the first half of 2023 compared to 10,500 for the same period in 2019 and 2022 combined.

International Education Association of Australia chief executive Phil Honeywood said the reforms were welcome, but ASQA needed stronger enforcement powers and resources to pursue fraudulent providers.

“Successive governments have not resourced regulators sufficiently to ensure that they can appropriately police bad behaviour,” Honeywood said.

There are more than 4000 registered VET providers, but less than 10 per cent are set up to provide courses exclusively to international students.

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