Vocational education salesman "Hamza" and his car full of laptops. Credit:Michael Bachelard Given the nature of adversarial politics in this country no one will stand up to be held accountable. But everyone now acknowledges there is a crisis in the vocational education and training sector. The new minister in charge of vocational education Senator Scott Ryan is working on reform to be announced next year. He told me: "The design of the system and the assumption that it would behave like the university market I think is profoundly flawed and practice has shown that." The Opposition leader, Bill Shorten, has promised if elected an "evidence-based review" of VET. It's a limp response that conveniently ignores the fact the Labor Party is responsible for unleashing the mess. In 2012 the Gillard government gulled the states and territories into defunding their TAFEs with the offer of uncapped Commonwealth money via student loans, in return for making their TAFE systems "contestable". That meant that TAFE was forced to compete with private providers for federal vocational funding. What we have four years later is another example of government failure in design and implementation like the pink batts program, Building the Education Revolution (the notorious school halls), job placement agencies and Collins class submarines. But there have been no admissions or confessions from Bill Shorten for Labor's destructive VET policy. A thoughtless Liberal Party has ideologically pushed the privatisation of vocational education, largely on the claim that state-based TAFE was a union-controlled monopoly provider and after heavy lobbying from private providers.

TAFEs once had responsibility for vocational training, but their funding was cut, while private colleges were allowed to compete for funding in the sector. Credit:Dominic Lorrimer Sorry to be cynical, but the major parties are also in the market for slush funding political donations from many of the private entities which have been enriched by the policy. State and federal parliamentary inquiries and the work of investigative journalists have exposed non-compliant, get-rich-quick operators using unscrupulous enrolment practices to get students on the books, seriously damaging the reputation of, and trust in, vocational education and training qualifications. In October 2015, the scale of the problem began to open up as a joint investigation by the ACCC and the NSW Fair Trading Department led to allegations that a private Sydney college recruited illiterate and disabled students to take out thousands of dollars in loans to fund courses they were never told they were being signed up for. That case, and two others like it, are underway in the Federal Court to recover more than $300 million in taxpayer dollars. Minister for Vocational Education and Skills Scott Ryan. Credit:Alex Ellinghausen Senator Ryan is departmentally cracking down on shonky operators, withholding funding, forcing closures, sometimes involving bitter litigation.

But the regulator, the Australian Skills Quality Authority, is only requiring registered training organisations to name and vouch for the "brokers", or salesmen, they employ to sign up as many students as possible – rather than prohibiting the practice. Neither major party will abandon its commitment to the contestable VET market. Why not? The Australian Chamber of Commerce and Industry has despaired at the current distortions and poor outcomes. "The once high reputation of VET has now been trashed by the behaviour of unscrupulous VET operators and the arguable naivety of senior government bureaucrats," former Skills Tasmania director and regional employer, Paul Roberts-Thomson, wrote in the public administration website The Mandarin. Australia's vocational education system has been turned into a competition for students with slick TV, online and radio marketing promising to transform people's lives. TAFEs have been defunded and downsized, with some TAFE colleges forced to hire out premises to private providers. TAFE's market share has plummeted nationally from 74 per cent in 2004 to 52 per cent by 2014 and it is still falling. The NSW government has massively increased TAFE fees and abandoned many courses deemed unsuitable for a commercial business plan. TAFE students are also being directed to VET FEE-HELP to fund their courses. According to Pat Forward, Australian Education Union federal TAFE secretary, commercialising vocational education has undermined Australia's apprenticeship system and it has not resolved skills shortages.

The Australian Industry Group's chief executive Innes Wilcox wrote in a recent article in The Australian that we have never seen the training system in such a parlous state with "much of the system captured by for-profit providers, severely diluting the pivotal alignment of public expenditure to economic imperative and production improvements". "Large tranches of money courtesy of VET FEE-HELP have delivered alarmingly low completion rates" and seriously eroded public confidence in the training system. At one of Australia's largest private colleges, Australian Careers Network, 80 per cent of students never completed courses. On Tuesday, it collapsed leaving 15,000 students in limbo and taxpayers $160 million in debt. Wilcox says there were only 308,800 apprentices and trainees in training in mid-2015 compared with 387,100 a decade ago from a high of 446,000 in 2012 – a 30 per cent drop in volume. The conflagration of taxpayer money was comprehensively exposed by analysts and researchers Andrew Norton, Ittima Cherastidtham and Ben Kunstler of the Grattan Institute in their April 2014 report, Doubtful Debt. They did not use the word "conflagration". That is my concluded view. But its use is justified and substantiated by the facts. Their report examined all aspects of income contingent loans or HELP (Higher Education Loan Program) which evolved from HECS, the higher education contribution scheme first introduced in 1989. While acknowledged as an effective policy and a success story in funding Australia's higher education by allowing university students to pay for their education when they earn a threshold income (currently $54,000) its extension to other forms delivered by the contestable and private provider market system has resulted in a blowout.

"By 2017 the Commonwealth will have $13 billion of loans on its books that it does not expect to collect." Thirteen billion dollars. VET FEE-HELP provision from taxpayers is estimated at more than $3 billion for 2015. VET FEE-HELP started in 2009 for students undertaking diploma, advanced diploma, graduate certificate and graduate diploma courses with an approved VET provider. Then in 2012, under the Gillard government's National Agreement for Skills and Workplace Development a competitive voucher system for vocational education was introduced. By 2013 there were 5000 approved VET providers. Some vocation training outfits started small but only took off with the cash flow rocket fuel of VET FEE-HELP. Many applicants had no prior experience in vocational education. The fact many of them were accredited in the first place with just an accountant's supportive letterhead validation of submitted course, staffing, business plans and cash flow projections, has raised claims of "regulatory capture" by vested interests. Like the $2 company cowboys exposed in the recent NSW ICAC findings of the "gaming" of coal exploration licences, accreditation seems, in retrospect, to be the first implementation downfall. Chris Robinson, chief commissioner of ASQA, rejects the regulatory capture criticism. ASQA has regulated the sector as an independent statutory authority with enforcement powers since its foundation in 2011 and has deregistered about 400 RTOs through its risk and compliance audits, he says. It moves on student complaints and tip offs from industry. Although some deregistered entities can redeem themselves and be allowed back in, and often dispute ASQA's audits in the Administrative Appeals Tribunal, 10 per cent have been forced out reducing current numbers to around 4600.

"Some low risk, specialised and small operators became very large, very fast," he said. When I asked if the contestable market was a mistake, Robinson said: "The contestable market is a big question ... obviously. The fact that we've had to take a decision to deregister 10 per cent of all the training providers that ASQA regulates since we started four and a half years ago is some indication that some training providers have behaved badly in the market. "That doesn't mean the VET market is inherently the wrong thing or that it's not a good idea. It does have benefits. "We certainly need to ensure that various providers are eliminated from that market." Robinson believes that ASQA has sufficient powers currently to clean up the shonky operators and to ensure a qualification guarantees a graduate's competence in the designated skills. But he believes there is a need to specify quality parameters in training packages so that RTOs deliver better quality training. Robinson points out that ASQA is not responsible for VET FEE-HELP.

Although student loan schemes accept a degree of unrecoverable debt, the number of VET FEE-HELP assisted students is expected to triple by 2016-17 along with unrecoverable debt. VET FEE-HELP loans have grown rapidly from 2009, rising to 12 per cent of all income contingent loan payments to providers by 2013. The Grattan report found that people who did achieve a VET qualification were 50 per cent less likely than higher education graduates to repay their debt because, through only part time work and consequently lower incomes, they would never reach the repayment threshold. Adding to the implementation dysfunction is the dropout or non-completion rate currently reported at a staggering 79 per cent by the National Centre for Vocational Education Research. Courses – including rapid growth in online education – once offered by TAFE colleges around the country for a regulated and more affordable few thousand dollars now are turbo-charged by the deregulation of fees. Examples: Advanced diploma of contemporary screen acting $44,000; graphic design and website development $45,000; project management $42,000; international business $43,000. Vulnerable or gullible people dreaming of reshaping their lives with a qualification and high paid careers to follow could be lured to sign up with a VET FEE-HELP loan.

The only possible constraint is the near $100,000 lifetime limit on borrowings. This sort of demand-driven system now comes with a seductive sales pitch of "no up front fees" with loan "brokers" offering free iPads, computers and in some cases overseas trips. The take up has seen profit levels now estimated at 30¢ in every taxpayer dollar, according to the Workplace Research Centre at the University of Sydney. More than 75 per cent of the $1.6 billion spent through the loans scheme to 2014 had been soaked up by the private sector. In the process the cost burden of skilling, reskilling and upskilling to sustain taxable livelihoods in a rapidly changing jobs market is being transferred to the already lower paid shoulders of the students who may or may not become qualified. Now there is a proposal to extract repayment from the deceased estates of all student loan defaulters – perhaps akin to a practice known by morgue workers as "ratting". And there is a competency and quality assurance problem. Last year more than 9500 students were forced to hand back their certificates by the Victorian regulator with another 3000 qualifications under investigation there. What are the solutions to this policy failure?

The AEU wants an immediate cap of 30 per cent on taxpayer funding made available to private providers with 70 per cent allocated directly to TAFE to help restore the sector's ethical reputation and integrity. Subcontractors and third party brokers should be banned, the AEU says. The Australian Industry Group's Innes Wilcox wants to bust the state-based systems with a national industry-directed apprenticeship system with less reliance on market based training. Shadow minister Sharon Bird said a Shorten Labor government would ask COAG to drive a new agreement with the states to restore TAFE as a "dominant public provider" to set standards, quality and price with a statutory obligation to provide regional training, access for disabled, disadvantaged and Indigenous communities and to be resourced accordingly. Minister Ryan says Labor's fix will take two more years. His redesign of VET FEE-HELP will contain costs and restore compliance from its announcement next year. "The Coalition has already introduced more than a dozen reforms targeted at the conduct of providers and brokers and protecting students and taxpayers", he says. However, it is significant that neither major party will abandon its commitment to the contestable VET market. Why not? With the now exposed loss of financial control, waste and lower skills outcomes $3 billion could buy a lot of certified competent vocational training from providers – public or private.

Vocational education and training is unlikely to be a hot federal election issue, unlike climate change, fair tax reform and marriage equality. But crucially for its rescue from shonks and ideologues and Australia's 21st century skills capacity … it sure needs to be. Quentin Dempster is a contributing editor.