Retrenchments, Disinvestments, Downsizing and Closures: OZ education Industry, this is the GRAFFITY ON THE WALL…

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In an article titled THE WRITING ON THE WALL, FRANK BONGRIONO writes in INSIDE STORY of yesterday on how the British Universities are downsizing due to Global Recession. I quote the understanding of disinvestment from his piece…
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… the School of Arts and Humanities would be “disinvesting… from areas that are at sub-critical level with no realistic prospect of extra investment.” Universities are a fruitful source of neologisms – I once had a couple of philosopher colleagues who coined the word “lucrepath” for an individual consumed by the desire for money – so I decided to look up “disinvestment.” To be fair, I did find it in an electronic version of the Concise Oxford Dictionary, where it is defined as to “withdraw or reduce an investment.” But Wikipedia was more specific, telling me that the term came into use in the 1980s to refer to “a concerted economic boycott, with specific emphasis on liquidating stock, to pressure a government, industry, or company towards a change in policy, or in the case of governments, even regime change.” The term was often applied to South Africa’s apartheid regime. Perhaps my college was really engaged in an elaborate piece of political activism, a cunning plan to overthrow the Brownite tyranny?
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The article further continues…
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Like much of the university sector in Britain, it has certainly gone out of its way to lay blame for the current situation at the feet of the government. Letters signed by vice-chancellors have appeared in the press pointing to the dire consequences for both British civilisation and economic prosperity if universities are starved of money. But to accept the reasoning that it’s all the government’s fault you would also need to accept that university administrators were notably aloof from the spending spree in which so many others with access to ready cash engaged in happier times.
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This article caught my interest due to its timing and my continuing observation of the trends in Australia. Today is a particularly sad day… and also proves that we reap only what we sow is not always true.
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IDP’s Indian operation has indeed been the biggest contributor for the organization and I have closely observed it right from its first roadshow in mid 90s as a competitor. The former Country Head of IDP and I have had a sweet-and-sour relationship for years and I still would not mind discussing any issue related to the industry with him appreciating his interest in the AUSTRALIAN EDUCATION BRAND. I am sure he will too. IDP has also been seen as the flag bearer for the Australian Education (especially quality education) in India. Over the last year, it has also attempted at moving into representation of US Universities and here too I have exchanged several notes with its current Country Manager.
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I am now reliably informed(SEE NOTE BELOW) that following a drop in interest for Australian Education, IDP new management, being hardcore businessmen assumingly, have decided to start closing some of its branches and have also suddenly issued marching orders to almost half of their staff at some of the other branches. To explain the enormity of the situation, I quote from a mail in wide circulation from someone representing and marketing a leading Australian education provider (comments made in her non-official capacity):
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“I feel very sad for some of the staff whom we have built relationships over so many years and who were asked to leave the organisation ‘just like that’ – without the opportunity to even say their last goodbyes. Some of these are the sole earning members of their families. “
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If all the tightening and reviews leading to restrictive visas should only result in elimination of the bad providers and bad agents, then why IDP… Is IDP the definition of a “bad agent”?
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Clearly the proverb: YOU REAP WHAT YOU SOW is not always true. The “bad agents” moved to UK and other countries and the one to be affected will remain the “good agents”.
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Colleges continue to close down one after another. Even Colleges, who were not shortlisted for audits and were even termed as the good colleges and made to absorb students affected by the closure of other colleges, have opted for voluntary administration. An example of this is the Meridian Colleges. Most give the reason for this to the new policies adopted by the Australian Government, which is not just a move towards tightening, but appears to some as vindictive. We need to remember that these colleges were given licenses by the Government and were audited from time to time by the Government. Should we summarize from the sudden vigil on its part that till now the Government was clearly in slumber. This should be investigated before investigating the colleges.
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One more private college (Austech) closed down today. I donot know the owners or any of the students who studied at this college. However, the media release issued by them today is very descriptive and lists the reasons for their closure.
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Taken as the dying words, they carry weight and I would let you read between the lines quoted from the media release:
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“Despite our considerable success, we reached a point whereby financially it was no longer sustainable to continue.  I have no option but to stop.”
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“Some of the issues that contributed to our demise include:
  • · The unresponsive, slow, and adversarial behaviour of the Vocational Education Training Accreditation Board (VETAB) in New South Wales.
  • · Notwithstanding winning recent litigation brought by VETAB our legal costs were enormous and VETAB continued to create delay and thereby commercial uncertainty for AIFE. One can win a case but still lose.
  • · The lack of a national regulator.  The state based education training bureaucracies all operate demanding different requirements thereby massively increasing the costs of operating in more than one state.
  • · The recent unworkable changes to the bond arrangements for education providers under the Overseas Students Tuition Assurance Scheme.
  • · The recent collapse of the Indian market for Australian vocational education and training following the adverse publicity flowing from the incidents of violence involving students from India.
  • · Recent changes to the migration system.
  • · Recent changes to the trade recognition of qualifications.
  • · An unworkable and unfair regulatory framework for the collection of fees due for tuition services already provided.  The effect of the current system is that students can avoid paying for services already provided and still demand their qualification documentations even while refusing to pay fees.
  • · Industry uncertainty during this volatile period. “

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The emotions of the media release is evident in these closing remarks…
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“Now that AIFE has had to cease trading our students face a stressful and difficult period.  For those who still have significant amounts of their training to complete finding an alternative training facility quickly may not be easy.  I apologise to our students for this outcome and I apologise to the parents and families who have supported our students coming to Australia.  To the staff of
AIFE thank you for your support and the contribution you have made to so many young people visiting Australia as students.  I regret the dislocation the closure of the college will have on your professional and family lives.”
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“Subject to the direction of the liquidator I will do what I can to assist the regulatory authorities and the liquidator to help students move onto other opportunities, staff to end their employment with AIFE as smoothly as possible and for suppliers to be treated fairly.  I am aware that some students have just completed or are now completing their studies.  I will do whatever is necessary with the liquidator to ensure these students receive their certificates or statement of attainment as soon as possible.”
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“The end of AIFE is the end of a dream my late wife and I nurtured over many years.  I do not know what the future will bring for me or my family.  All I can say now is to wish for better times for those affected by the liquidation of AIFE.  I hope the vocational education and training sector for international students can be revived and expanded as a significant part of Australia’s international relationships.”
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“As a liquidator is about to be appointed my role as spokesperson for this company will cease.  I cannot not take any media enquiries.  Please direct all enquiries to the liquidator”
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Guys, this is not the WRITING ON THE WALL but the GRAFFITY ON THE WALL… Graffiti, that is indicating unrest and unstated emotion. The only ones who can address this is AUSTRALIAN GOVERNMENT after shutting off the KNOW ALL experts.
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ADDED ON 23RD MARCH: THE COMMENTS MADE IN THE BLOG ABOVE ABOUT THE IDP BRANCH CLOSURE/DOWNSIZING IS BASED ON SECOND HAND INFORMATION. THE PURPOSE OF THIS IS TO HIGHLIGHT THAT CHANGES IN CIRCUMSTANCES AND REGULATIONS AFFECT BETTER AGENCIES OVER OTHERS. IT MAY BE IDP TODAY AND OTHER LARGER OPERATORS TOMORROW… IF IDP WISHES TO MAKE A STATEMENT, IT WILL ALSO BE PUBLISHED.

14 Comments

  1. Hi Ravi, The only thing we can do is, just write on your blog walls and express our frustration, nobody else is there to hear our stories. After I read the news about austec closing down due to the reasons mentioned in the media release and listed above in your blog, I have decided not to send my EOI for an Evisa and be a part of a falling industry, where nobody knows whats happening and no one knows what can be expected. Its a total failure of the industry and the policy makers and the stake holders. All the best to you and ohers who are still waiting for some miracle to happen.

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  2. Hi Ravi,

    We have been shouting from the roof for such a long time that the current policies are definitely not favoring the cleansing of the market, earlier they were only facilitating the cheap institutions and now forcing the right colleges and agents to close down. Though I was also not affiliated with AIFE, I was watching them closing for them having won the case. But it is proved again that “Might is right”. If you remember, during our visit to Australia, in July 2009, I had put forward the point with various officials, that the “Wrong detection of disease will only lead to wrong medication” and this is what precisely is happening here. Best of luck to us all and Australia.

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    1. Agreed. The closure of Austech is only an example. Many know that there were things wrong with this college. Even the FOUR CORNERS exposed some wrongs. However, the rules are set by the same people who allowed its abuse and now are trying to penalise. I guess there is a need first to find a cure and only when all options are exhausted should be opt for surgery.

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  3. Ravi,

    Pure Capitalism without social security for a country like India is extremely dangerous. Left parties do play a critical role and my skewed views for them are balancing….

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    1. Its true that many also become over-enthusiastic when hiring and hence sometimes get over staffed. Anyway, the reality is that Institutions are closing down in Australia leading many jobless AND agents are closing branches and cutting staff in India leading many jobless. The Work regulations in Australia will also make many students jobless. The cumulative effect of all this will mean slow economy overall.

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  4. Last week, rumours were strong about CIC closing down. I personally checked with the college, which denied it completely. In fact, last month, we received an email from Phil Honeywood stating that “Cambridge International College remains financially solvent and has recently passed a full VRQA financial audit with ease” and “I would like to take this time to clarify the position of Cambridge International College (CIC) Australia, and provide assurance that CIC will continue to provide quality and affordable English Language and Vocational courses to international as well as domestic students well into the future.”

    What do we make of it? Decisions like voluntary administration are taken in closed doors and not known to staff until last minute.

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  5. Hi Ravi

    It is indeed a sad time for all of us and hope you remember my earlier statement to you, just before the IDP incidents, that the bigger companies have bigger worries which has come true. We all are aware that IDP has done commendable work to uplift the brand name of Australian Education by sending quality students to quality institutions.However, the recent closure of colleges in Australia and low interest of Indian students choosing Australia as their study destination is the root cause of this volatile period which has forced IDP to take this drastic decision resulting in loosing many trusted and hard working employees who were perhaps the sole bread earner. We all know who is responsible and if the Aussie govt thought that their policy regulations will take care of the doggy Agents then they must realise that they are horribly wrong because IDP is definitely not a doggy agent.To make matters worse the new visa regulations will act as a catalyst to the ever growing problem once the on shore students realize that their dream of getting PR is shattered. Were are we heading for and why don’t the Policy makers in Australia open their eyes and try to solve the issue by bringing India back to assessment level 3 for Visa sub class 573 which will pave the way for only genuine and quality students from India to study in Australia!! I’m sure this is what we all want !!

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    1. I foresee that AL change will happen soon. First they have to fix the packaging problem and now that is announced, lets hope for India moving to AL3 for 573 soon. I remain hopeful. Will hope that Kapil Sibal understands the AL issue and that he does support our viewpoint in his meetings in Canberra next month.

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  6. The whole blame goes on the policy makers
    Atleast now they should get in rules and policies for a better administration – I think they are getting there. Anyhow damage has already been done

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