2015-09-16
Ms PENNICUIK (Southern Metropolitan) — I would like to speak today on the Victorian Ombudsman's report of 2 September 2015 titled, Conflict of Interest by an Executive Officer in the Department of Education and Training. The report starts by saying:
The public sector is rightly proud of the values it espouses. They are demonstrated daily by the many dedicated individuals working in departments and other agencies, motivated by the desire to help others.
However, it continues:
When evidence comes to light, such as in the recent IBAC hearings —
regarding departmental employees and school principals engaging in fraudulent behaviour —
that public officials are feathering their own nests, it shakes our confidence in honest officialdom to the core.
This investigation continues a long Ombudsman tradition of exposing conflicts of interests in the Victorian public service. In reading this report I see there are examples of public servants who take their role very seriously and act appropriately and there are those who clearly have not. This report found that between 2011 and 2013 an executive officer of the department was involved with a company called BAWM, and during this period he was also involved in a complaint against that company but was negotiating an executive role and equity in OzSoft, which was a subsidiary of BAWM. In August 2013 he received dividends of $30 000 while still employed by the department in his notice period, and as a result of his contracts he received significant financial benefit. When he sold his shareholdings to Student Hub and then to Vocation in December 2013 he received more than $860 000.
In 2010 BAWM received $780 000 in public subsidies; by 2014 that had risen to almost $46.5 million.
As serious as this issue is, I would like to turn my attention to some of the other findings and revelations in the report. These can be seen in terms of the context of $1.2 billion of public money being spent in the vocational educational and training (VET) sector, with the vast majority of that now going to private registered training organisations (RTOs) based on market contestability. This report finds that:
RTOs determine the fees and students pay any gap between these fees and the VTG —
Victorian training guarantee —
funding provided by the state government, which on average is 15 per cent.
…
RTOs estimate the number of student contact hours necessary to achieve competence. RTOs also assess student competency and capability in the workplace.
The complaint that was made against BAWM was an alleged 'discrepancy between the number of hours of training actually provided by BAWM and those claimed'. The executive officer who is the subject of the report met with the complainant on the same day that he was made a director of a subsidiary of that company. The complaint was meant to lead to an audit, which did not proceed, and this report implies that this was due to the influence and activities of the executive officer, who was involved with that company from which a complaint was being made but which was now not being audited. The Ombudsman has recommended that that audit now proceed.
In terms of establishing the number of hours that RTOs claim and what they are paid for, some of the comments by the team leaders that deal with this issue are very revealing. The report states that one team leader 'was concerned because the complainant had told him that if the practice complained about was acceptable, the complainant, who was associated with another RTO, intended to implement it'. The team leader told the Ombudsman's office:
… whilst it's acceptable, if it was to happen wholesale which I think to some extent it is … it would blow the market up.
What was alleged to be happening was reported as being:
… highly possible … but we try to stamp it out as much as we can … we've got 500 contracted RTOs and we have to choose where we put our efforts.
The report quotes another team leader as saying:
… our evidentiary requirements in our contracts state, 'If you claim [this] …you've got to have a piece of evidence'. … it's within the rules. The system allows it. They can do it. It's not right and we're doing crackdowns at the moment … but the system allows it.
I have been drawing attention to these problems with RTOs for many years.