This has come at the expense of TAFE, which has lost significant market share. The report, commissioned by the Australian Education Union, argued public confidence in vocational qualifications would be "fatally eroded" if a more sustainable funding model for TAFE was not found. In NSW, the state government has stripped more than $800 million and more than 1000 jobs from TAFE. From this year, TAFE will increasingly be forced to compete with private companies for contestable funding. The union's TAFE spokeswoman, Pat Forward, said the basic architecture of the reforms in NSW were a "mirror image" of the reforms that have damaged the sector in Victoria. "The private sector is so out of control that it's almost unregulatable," she said. "This is a huge waste of public money, all of those millions of dollars are just wasted in what is already an underfunded sector."

But NSW Education Minister Adrian Piccoli argued a major focus of his government's reforms was "to protect TAFE's viability". "The Victorian market is totally contestable while NSW has put 19 per cent of its budget on the market," he said. "All providers delivering government subsidised training in NSW must meet clearly defined quality standards." He said there was a cap on fees and enrolments for subsidised places in NSW, so the competition was on quality. The concerns about unscrupulous practices are shared by the federal government. On Thursday, the new assistant minister for education and training, Simon Birmingham, told the Australian Chamber of Commerce and Industry he was prepared to crack down on "dodgy providers" and would consider banning enticements such as free iPads and cash rebates used to lure in students. "We will not support abuse of the [government loan] scheme by people out to make a quick buck at the expense of the vulnerable and the taxpayer," he said.

The chief executive of the Australian Council for Private Education and Training, Rod Camm, acknowledged there were problems "at the margins of the sector". "We want poor providers and rogue providers removed from the sector and we will work to do that," he said. The peak body planned to finalise a new code of practice on Friday that would "significantly up the ante".