Training providers are back in the spotlight again after Vocation was forced to forfeit $19.6 million in funds yesterday.
Vocation acquired Real Institute for $54 million earlier this year and last month it raised $74 million in a placement to institutions.
But an announcement to the Australian Securities Exchange yesterday revealed Vocation had agreed that it will give up $19.6 million in funding from the Victorian Department of Education.
Get business news first
Sign up to SmartCompany’s daily newsletter
Vocation will still retain $9 million in government funding resulting in an earnings impact for this financial year of $5 million.
Vocation is coughing up the cash after a lengthy investigation by the Victorian Department of Education into two of Vocation’s registered training organisations in Victoria, BAWM and Aspin.
The training provider has agreed to restructure its Victorian operations and will stop using third party training and assessment providers, which it has blamed for the shortcomings.
“While Vocation will restructure its Victorian operations it will continue to have significant business in the state focusing on operating its business through two rather than four Registered Training Organisations,” the provider said in its statement to the ASX.
The vocational training sector has been in the spotlight for some time with training providers accused of “following the money” rather than trying to meet industry needs.
Jenny Lambert, director of employment, education, and training at the Australian Chamber of Commerce and Industry, told SmartCompany the last six years have seen dramatic changes in the education sector and some of the quality issues which are apparent in the Vocation settlement are a product of that.
“There certainly have been concerns about quality for some providers for some time, particularly in the way the funding was changed in Victoria and in some states,” Lambert says.
“Alongside a very healthy increase in the number of providers, which is a good thing, come a number of providers who are taking shortcuts and not delivering the courses the students or industry expects.”
Lambert says quality is a key issue for businesses and ACCI is pleased to see the federal government has provided additional training to the regulator.
She expects Vocation will not be the only education provider to come a cropper.
“I think we will see similar sorts of issues but ultimately we will be much better off,” she says.
“What we all want is a market that is flexible and contestable but high quality.”
The Department of Education says it has a systematic, risk-based approach to auditing contracted providers to ensure training delivery meets the high standards set out in its funding agreements.
A Department spokesman told SmartCompany its review found some of the training provided by BAWM and Aspin did not meet its standards.
“The Department is committed to ensuring students receive high-quality training from contracted providers,” the spokesman said.
“BAWM and Aspin will also no longer accept new students and will be withdrawing from their 2014-16 Victorian Training Guarantee contracts and leaving the market early next year following the ‘teach out’ of continuing students.”