Image for Damning findings on training company spark calls for Tasmanian Liberals to return donations

The Tasmanian Liberal Party is under pressure to return a $23,500 political donation after an investigation by the Australian Competition and Consumer Commission (ACCC) led to the private training company repaying $44 million in public funds and cancelling the enrolments of over 20,000 students.

Last week the ACCC announced Careers Australia had signed a binding legal agreement in which it admitted it had broken provisions of consumer law and misrepresented the financial costs of courses it promoted to vulnerable and disadvantaged consumers.

In the last financial year Careers Australia Group donated $23,500 to the Tasmanian Liberal Party, the lion’s share of the company’s political donations in 2014-15.

In the settlement with the ACCC it was revealed that between 1 August 2013 and 31 March 2015 the company had received and processed just under 40,000 applications for student enrolments in courses under the Commonwealth Government’s vocational training VET-FEE Help Assistance Scheme. 

Of the applications 20,242 students were enrolled and incurred a debt to the Commonwealth Government for their courses.

However, as a result of the ACCC investigation Careers Australia cancelled 12,130 of these student enrolments and repaid $44.3 million to the Commonwealth Government. Over 7000 students have either completed their courses or are part way through their training.

How many of those enrolments were of Tasmanian residents is unknown as the ACCC stated it did not have the data. Tasmanian Times asked Careers Australia how many Tasmanian residents were included in the over 20,000 students enrolled. However, they did not respond to the questions in time for this article.

Give it back say other political parties

In mid-March the Tasmanian Liberal Party notified the Australian Electoral Commission (AEC) a $20,000 donation from Careers Australia Group had been misattributed to Patrick McKendry the company’s Managing Director. (While the Tasmanian Liberal Party’s return to the AEC lists Careers Australia Group as having donated $20,000, the company’s own returns disclose it contributed $23,500.)

Careers Australia’s return to the AEC reveals the Tasmanian Liberals have been the largest recipient of political donations with lesser contributions to the Queensland Labor Party, the Liberal National Party in Queensland and the New South Wales branch of the Liberal Party.

Careers Australia’s donations to the Tasmanian Liberal Party have been criticised by other major Tasmanian political parties, which have called for the donations to be returned.

“Given that Careers Australia has been forced to cancel thousands of enrolments and repay millions of dollars due to its questionable conduct, the Tasmanian Liberal Party should return the money,” said Cassy O’Connor, the Leader of the Tasmanian Greens.

The $44 million Careers Australia repaid to the Commonwealth Government, she argued, is public money that was intended to fund legitimate skills development.

“If the Liberals don’t want to be associated with a discredited company that misled people at public expense, they should return the donation in full,” O’Connor said.

Tasmanian Labor Leader, Bryan Green, expressed alarm at the impact of the company’s misleading marketing. “The actions of Careers Australia have had a significant effect on Tasmania, including a reduction of VET FEE HELP places being available to people looking to study,” he said.

“For the Liberal Party to profit from Careers Australia during this time is extremely concerning. Liberal Party Director Sam McQuestin should immediately repay the money, Green said.

Tasmanian Times sought comment from the Tasmanian Liberal Party’s State Secretary, Sam McQuestin, on whether the party would consider returning the donation in the light of Careers Australia’s settlement agreement with the ACCC. No response was received.

McQuestin was also asked if Careers Australia had made further donations to the Tasmanian Liberals in the current financial year. No response was received to this question either.

The lure of easy taxpayer money

The company’s settlement agreement with the ACCC sheds light on how lucrative the government-funded private training industry can be.

During the 20-month period under investigation the company was paid $190 million by the Commonwealth Government and made an after-tax profit of $28.5 million.

The agreement also notes that if all the students who were originally enrolled had completed their courses the Commonwealth Government would have paid out over $300 million.

In early July 2014, while Minister for Employment in the Abbott Government, Tasmanian Liberal Senator Eric Abetz visited Careers Australia Group’s Fortitude Valley Campus to announce an alliance between the private education company and a major recruitment company. Careers Australia Group’s donations to the Tasmanian Liberals were made after Abetz’s visit. Tasmanian Times does not suggest the donations have directly or indirectly influenced Abetz’s decision-making.

Careers Australia was not the only training provider which sought out Abetz.

Last month ABC Radio National’s Background Briefing revealed Ivan Brown, the Chief Executive Officer of the Australian Stock Exchange-listed company Australian Careers Network (ACN), sought a meeting with Abetz. At the time ACN’s subsidiary company, the Phoenix Institute, was under investigation by the ACCC.
Brown told the ABC Abetz

“came back to me and we had a meeting in a hotel just around from ... not far from Parliament House, and he said: ‘Look, Ivan, I’m really sorry. I’ve spoken to people in the party. I don’t know the ins and outs of the whole scenario but what I can tell you is this. It’s a Labor policy, we’re going to destroy it, and we’re going to blame it on Labor’.”

Abetz confirmed to the ABC the meeting had been held but disagreed with Brown’s version of the discussion.

Careers Australia’s ‘unconscionable’ marketing

The settlement agreement with the ACCC – signed on May 13 by two of Careers Australia’s directors – reveals the company’s marketing agents promoted course enrolments by offering laptops or iPads to students and telling them they were free, even though students would have a debt to the Commonwealth Government for their courses.

The company’s sales representatives also told students the courses were free and even obtained potential students details from on-line job applications for jobs they had been unsuccessful in getting.

The agreement also notes some of the marketing agents “appeared to target disadvantaged and vulnerable consumers, including jobseekers, high school students, Aboriginal consumers in rural areas and those with low levels of literacy and numeracy skills.”

In one instance, Careers Australia signed up 80 students in Yarrabah, an Aboriginal community near Cairns. An audit of these enrolments found all were “falsely informed” by the marketing agent and “their exposure to a future debt” was not explained.

In another case a 59 year old unemployed man in Armidale was encouraged by a Careers Australia representative to enrol in a course “that was not suitable for his needs.” Careers Australia’s marketing agent told the man he “would receive immediate job assistance after enrolling in the course.” However, the settlement agreement notes the man “did not receive any job assistance.”

After controversy over the company’s marketing techniques Careers Australia cancelled the enrolment of all the students enrolled from Yarrabah as well as the man from Armidale.

After reviewing the company’s marketing the ACCC concluded the company’s marketing agents had “pressured disadvantaged and vulnerable consumers into enrolling in Careers Australia courses that were not suitable for their education levels and personal backgrounds.”

Careers Australia’s marketing in these and other cases amounted in the ACCC’s view to “misleading and deceptive” behaviour and “unconscionable” conduct.

While the ACCC has reached a settlement with Careers Australia they declined to comment on whether any of the marketing agents alleged to have engaged in “misleading and deceptive” behaviour and “unconscionable” conduct included Tasmanian companies. Nor would the ACCC comment on whether any action was being taken against the marketing agents.

Bob Burton is a Hobart-based Contributing Editor of Tasmanian Times. His earlier articles on Tasmanian Times are here.

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