Most people will be familiar with the law of unintended consequences. It occurs when a planned strategy or initiative fails to achieve the particular objectives for which it was implemented.

Sometimes an unintended consequence will result in an unexpected benefit, but these instances are mostly celebrated as being circumstantial ‘flukes.’ Sometimes it results in more than just failure. Australia has a few that are embedded in our history.

Introducing rabbits and foxes for a spot of game hunting reminiscent of the good old days in Britain and importing toads to take care of a pesky sugar cane beetle are amongst our most celebrated examples of the ‘law’ in action. The ultimate outcome is one where a ‘perverse’ result is delivered. This is defined as a resultant effect precisely contrary to what was originally intended. That is when the supposed solution to a problem actually makes the problem much, much worse.

Here’s a lovely example of it:

Prior to independence, India’s governing British Viceroy became concerned about the number of venomous snakes in and around Delhi. He offered a bounty for every dead cobra. This was a very successful strategy. Cobras were being killed in large quantities by motivated groups of snake hunters.

However, some business entrepreneurs started to worry when the wild stocks of cobras began to run low. They decided they could breed large numbers of cobras to keep their cash flow coming. When the government became aware of this ruse, they scrapped the reward program. This change of business model saw the cobra breeders let loose all the now-worthless, cranky and dangerous snakes. As a result, the Delhi cobra population greatly increased. The apparent ‘clever’ solution to an initial problem actually made the situation far worse. This event has entered the lexicon as ‘the cobra effect’ and is often used to illustrate the causes of any incorrect stimulation to the economy and politics with a book of the same title written by a German economist.

The amalgam of politics, economics, dangerous snakes and stupidity seems a perfect fit. Data from the government’s abysmal VET FEE-HELP student loan scheme revealed the scale of rorts being carried out. The government has introduced a bill to halt funding of specific vocational education and training courses in an attempt to overhaul the taxpayer-funded loan scheme, which has blown out from $325 million in 2012 to $2.9 billion in 2015 after private training provider businesses were given access to the scheme.

Data shows that since 2009, private training provider enrolments grew at nearly three times the rate of comparable TAFE student enrolments. Up to 320,000 courses were funded by the program in 2015, with an average course cost of $19,413 being charged by the private training sector. This was compared to an average course cost of $7,582 at Australia’s TAFE colleges.

Federal Education Minister Simon Birmingham will now seek to strip funding from many so-called lifestyle courses such as ‘Circus Art Performance’ and ‘Ayurvedic Lifestyle Consultation’ which previously attracted the student’s fees being paid up front to training providers. It’s hard to believe the levels of stupidity in ever having allowed that to occur.

In the 2015 VET FEE-HELP report, Birmingham said there was evidence of wide spread abuse of the scheme.

“While there are legitimate employment reasons for people sometimes studying more than one course at a time, the scale of multiple enrolments suggests it has often had little to do with boosting employment opportunities and more to do with boosting education provider revenues,” he noted.

The data also compared the high tuition fees being charged by private training businesses for popular courses with the lower TAFE fees being charged for the same courses. It suggested many private RTOs have made huge profits from the VET FEE-HELP scheme off the back of a total vacuum in governance. ASQA was and remains the government’s regulatory authority to prevent wide scale abuse and rorting. The report also listed the 20 most popular VET FEE-HELP funded courses at TAFE colleges last year and found, in every case, that private colleges had charged, on average, significantly more to deliver exactly the same course.

Much focus has been placed on the direct economic and reputational damages caused by the ‘cobra effect’ of a failed policy to entirely deregulate the vocational education and training sector. It was intended to increase the opportunity for more people to engage with a post-school education, obtain qualifications and re-train for new careers. Most sensible people support the idea that spending money on expanding education and training schemes is never a bad idea or a waste of money. But the spending and outcomes must be targeted, accountable, verifiable and reliable. The entire policy and this specific scheme were always fiascos from their outset and should never have been expected to be able to meet that criteria.

The failure still remaining largely unidentified is the perverse element of the unintended consequence. This is most prevalent where the training that was and is being delivered and the course qualifications being issued have direct links to occupational licensing requirements.

Many media publications reported on certain courses to help highlight the gross inequity in the fees being charged by private training providers compared to those charged by TAFE. One such course that was focused upon is the CPC50210 Diploma of Building and Construction (Building).

In the National Training Package, this qualification is described as follows:

“This qualification is designed to meet the needs of builders, including selecting contractors, overseeing the work and its quality, and liaising with clients. The builder may also be the appropriately licensed person with responsibility under the relevant building licensing authority in the State or Territory. Builder licensing varies across States and Territories and additional requirements to attainment of this qualification may be required.

Occupational titles may include: Builder.

Under the AFR’s headline Students enrolled multiple times in shonky colleges, the article’s author, Tim Dodd, reported that “In one case, for the Diploma of Building and Construction (Building), TAFEs charged an average fee of $3,914 compared with $20,071 at private colleges, more than five times more.”

The ‘Diploma of Building and Construction’ (Building) course qualification is necessary for many applicants in order to obtain their ‘builder’ class licence across most states in Australia. So what precisely would compel anyone to voluntarily agree to pay five times more to a private training organisation to complete exactly the same qualification that they could have done at a TAFE but at a fraction of the cost?

Surely a rational person would never choose this as a realistic option? A simple ‘back of an envelope’ economic business analysis should also have prevented any prospective private training college from ever having sought to introduce a training program that would require them to offer their course fees based on such highly uncompetitive pricing arrangements. But they most certainly did.

There was and continues to be many private training organisations that describe themselves as ‘colleges’ or ‘institutes’ promoting this course, and several other building qualifications at the Certificate 3 trades, Certificate 4 and even Advanced Diploma levels. All of these courses have direct links to occupational licensing. Many have done a roaring trade, particularly with heavy print and radio advertising promoting a ‘Recognition of Prior Learning’ (RPL) for prospective clients.

Basically, RPL means a qualification may be issued based on the applicant providing some ‘evidence’ of their inherent and pre-existent skill and knowledge of the course content. It doesn’t mean they have to sit for examinations or anything onerous to prove their competence.

RPL assessment is allowable and legitimate under the highly flaky ‘rules’ governing assessment of course competencies. And remember who is in charge of policing the quality standards of the massive VET environment: ASQA. The same bureaucracy that entirely failed to prevent the massive rorts from occurring within the now discarded and discredited student loan scheme. It is utterly implausible that they would have ever possessed the necessary resources or capabilities to adequately scrutinise the integrity of each and every private provider.

The success of this business model ultimately relies on the qualification’s link to securing an occupational building license. This should have rung alarm bells and raised serious investigations within every state and territory agency that has jurisdictional responsibility for the issuance of building or trade related licences.

If the politicians and bureaucrats had simply joined the dots, they would realise that they are the ones directly responsible for protecting building consumers from the risks of repeated contractual rip-offs, continued poor quality outcomes, and incomplete and defect-ridden construction work and building projects. They can only avert these risks by ensuring that fit and proper persons – and that specifically means persons who have been appropriately trained and qualified – will only ever be issued with a licence to practice building construction work and offer their services to the public as ‘licensed’ builders.

Tens of thousands of home building consumers now and into the future will be at an extreme risk of becoming victims of the law of unintended consequences, which has effectively provided a conduit for untrained persons to obtain a building licence from the issuance of a non-credible qualification and then enter the industry and market without having ever undertaken a rigorous assessment and valid examination of required skill and knowledge.

It’s time for government to develop a whole of business approach to rethink the establishment of a uniform set of requirements that cover builder training and qualification requirements, licensing quality standards, and appropriate licenced work classifications right across the Australian building regulatory environment. Under the present circumstances, it makes an infestation of poisonous cobras look like a minor concern.

  • I feel it's important to clarify for people interested in getting registered in Victoria, the CPC50210 Diploma of Building and Construction (Building) is NOT mandatory to gain registration in any Victorian category of builder.
    The Diploma is what is called the 'prescribed' qualification, but an applicant who applies for registration without the qualification can instead sit a two hour test at the VBA to determine whether they have relevant level of basic skill and ability.
    This means that people who have gained their skill "on the tools" are still welcome to apply, no matter their level of schooling.
    I would also encourage people from other states to call their relevant building regulator to check out the requirements before paying for this Diploma, you may find that you don't need it at all…

  • Your clarification perfectly illustrates the absurdity of Australia's inconsistent approach to the issuance of an occupational licence to perform a wide range of building construction tasks ranging from those that are fairly basic to highly complex. I don't doubt and indeed know of some people who are 'self taught' for want of a better description and who would be highly competent to perform or manage the building tasks they are most familiar with. But they would be in the vast minority. The fact that a two hour examination is adequate to validly test the level of competence to give someone a licence that will allow them to sign a contract with a client to satisfactorily deliver a million dollar construction project is slightly disconcerting. Even a novice driver has to book up 120 hours of supervised driving practice before they take a test to give them P plates. Small wonder the tribunals and courts across the country are clogged with home building disputes. The pathway that has been rorted is that through private RTOs who charge a lot for the expediency and lack of real analysis of the applicants 'prior learning'.

    • The two hour examination is a small component of a far more complex ~15 week registration process which involves testing, interviews, work history, references and more. But I don't feel this is the place for an argument. I simply encourage people considering registration to explore the process fully before lodging their applications.

  • Once again Brett, a clear thinking perspective. There has been widespread abuse in the training sector. And the cobra effect you so aptly describe has certainly made many people lots of money and simultaneously lowered standards to the point of appalling. The 'certificates' are meaningless, even if they were not 'shonky'! Many 'builders' have never been on a building site, cannot speak English or read plans! No matter! But the result of the law of unintended consequences? Or was it planned and the consequences intended? As you rightly point out, consumers are and will continue to be seriously damaged – around 750,000 Australian consumers a year! And more into the future as there is no political will to change – politics/bureaucracy now so intertwined as part of Business. As if incompetence and lack of skills is not enough, then we have the bullying, unscrupulous and corrupt conduct inflicted to further harm consumers. Add to this a no touch regulatory scheme in an ever-growing high-rise, often crazy and unsupervised building environment – alarm for the whole community! Poorly built, unsafe buildings with dangerous non-conforming products thrown into the mix, incompetents with no concern for the value of life – workers, consumers or others who will use these buildings. The 'carrot' approach to fund and foster business at the expense of everything else and everyone, the 'reward' for disastrous consequences lies at the root of failure. A great system for all the beneficiaries of the carrots – the 'rewards' phenomenal. But for the non-rewarded who suffer so badly because there are no standards and no sticks, it is devastation. The culture of the construction industry, and the bureaucracy must change – or there is no hope!

    • Thanks Anne. It is self evident that we have a very serious problem in respect of the ways in which a person can demonstrate that they are competent enough to be granted an occupational licence that allows them to enter into a contract to deliver something that involves the largest financial and personal investment most families or individuals will ever make. Further to this issue is the complete lack of uniformity between state and territory agencies that are issuing builders licences. All agencies purport to have consumer protection as their central theme but their inability to recognise that high quality training and standardised level of formal qualification with none of this 'evidence' of prior learning or testimonials or private RTO interview nonsense – must be at the core of ever being considered for a licence. Its jurisdiction should be made consistent across all of Australia to prevent the backdoor of 'mutual recognition' that currently permeates the broken system including that of 'licence lending' that has attracted much attention in another Sourceable article by Kim Lovegrove.