The Crisis in Australia's VET System: Understanding the Fallout

Cancellations of VET Diplomas in November 2025

This year, in November 2025, Australia experienced significant cancellations of VET diplomas. This situation highlights a persistent issue that has worsened since the pandemic. The root causes are structural and behavioral, not merely accidental. A subset of RTOs has been operating in “bad faith,” issuing qualifications without adequate training, assessment, or recordkeeping. These practices are often driven by perverse incentives linked to rapid revenue from fee-for-service models, particularly affecting vulnerable students, including some international learners. Weak controls in parts of the provider market, gaps in oversight of subcontracting arrangements, and inconsistent enforcement have historically allowed these operators to scale quickly before detection.

The Immediate Consequences for Workers

The immediate consequences for individual workers are severe and concrete. Thousands of people who believed they held legitimate diplomas have had their qualifications canceled retroactively. This leaves them in practical limbo: employment is at risk, licensing or registration is jeopardized in regulated roles such as aged care, early childhood education, and disability support. Additionally, personal reputational damage is not easily repaired. For many, the cost is not just emotional but also financial. They face lost wages, relocation costs, and the expense and time required to re-train or re-assess through legitimate channels. These human impacts are amplified in shortage occupations where replacements are not easily found.

The Employer's Dilemma

Employers face a two-fold problem: operational risk and reputational exposure. Those who unknowingly hired staff with invalidated credentials confront immediate staffing shortfalls and regulatory compliance issues. This is particularly critical in safety-sensitive roles in aged care and construction. The need to rapidly re-assess, re-train, or replace staff imposes direct costs and operational disruption. It also forces employers to invest more in due diligence, verification systems, and ongoing competency assurance. This extra compliance burden is particularly heavy for small and medium enterprises. Collectively, these challenges reduce confidence in credentialing channels and raise hiring friction across sectors.

The Macro Socio-Economic Fallout

At the macro socio-economic level, the fallout is significant. In the short term, there is a productivity hit when critical roles are understaffed or filled by individuals whose skills must be re-established. In the long term, public trust in the VET system can erode. This erosion can lead to several negative outcomes: employers may devalue VET credentials, prospective students may shift to higher-cost or less-appropriate pathways, and the government may be forced into heavier regulation and funding to restore integrity. All these factors increase the economic cost of building workforce capability. There is also a fiscal cost associated with enforcement, re-training programs, and support for affected workers. These are not hypothetical numbers; they are already emerging budgetary items in recent government responses.

A Path Forward: Three-Pronged Approach

The path forward should be three-pronged: strengthen prevention, accelerate remediation, and redesign incentives.

Strengthening Prevention

Prevention means closing regulatory gaps around subcontracting, enhancing data-driven monitoring of provider behavior, and mandating independent assessment or re-validation for high-risk qualifications.

Accelerating Remediation

Remediation requires fair but decisive processes for affected workers. This includes funded re-assessment pathways, temporary bridging arrangements for essential services, and practical supports that preserve livelihoods while restoring standards.

Redesigning Incentives

Finally, to change incentives, funding and registration models must be restructured. We need to ensure that rapid enrollment and revenue extraction are not more profitable than quality delivery. This will require collaboration between government, employers, and the best RTOs to rebuild a market where integrity is rewarded. If implemented coherently, these reforms can restore confidence while minimizing harm to workers and employers. However, delay risks prolonged disruption and greater social costs.

Conclusion

The current crisis in the VET system is a wake-up call for all stakeholders involved. We must act decisively to restore trust and protect the workforce. It is essential to foster a system that prioritizes quality and integrity over rapid profit.

By Carmen Nunes / Pro-Vocational Founder

What do you believe is the most urgent action Australia must take to restore trust and protect the workforce?

• 0%A. Mandate independent, nationally standardised assessments
• 0%B. More regulatory monitoring & shut down non-compliant RTOs
• 0%C. Fund re-assessment and retraining pathways
• 0%D. Redesign VET funding and provider incentives

You can vote for more than one answer.