Well there are three, not one, separate court actions in play....

Well there are three, not one, separate court actions in play.  So I think bitter and spiteful government might be a bit of a harsh judgement.

1. Australian Administrative Tribunal, where ACO/Phoenix will attempt to overturn national regulators decision to cancel their registration (effectively their 'licence to trade")

2. Federal court where ACO/Phoenix are attempting to to overturn decision of commonwealth Department of Education to cancel payments related to Vet Fee Help Claims.  This is the subject of yesterdays reserved decision.

3.  The action by the ACCC alleging breaches of consumer law announced for hearing in October.

To suggest bitter  and spiteful of the government  is a bit halfbaked.   For government departments to be moved into such actions requires a helluva lot of inertia to be overcome, as they operate in the full knowledge that they will be challenged. In each case where court action is being initiated (in this case; two by ACO and one by ACCC) the authorities involved have or will have (at least in their opinions) exhausted their opportunities for rectification or contract improvement by ACO.  

As to insurances being a technicality... One of the conditions of receiving tens of millions (in ACO's case) of funding is that protection of prepayments or study access must be provided by the recipient (much like drawing down grants).   It's called tuition assurance and is anything but a technicality, as there would be any thousands of students whose fees have been prepaid on their behalf by the government.  While bank/cash guarantees or trust accounts have not been imposed by the feds, the contract conditions were certainly clear from the start.  

Finally, "if the work is done payment is due".  Fair enough, but given the regulators action to cancel registration, it seems the work has not been done, given it is a basic requirement of operation that registration or "competency to operate" is maintained.  (analogy would be an unregistered  electrician signing off on an electrical safety certificate- would you be happy with that?). Whether this formed part of the current court case, I have no idea, but it is blindingly obvious to anyone with more than a passing interest in the vocational training sector.

Note that I have no direct knowledge of what is or has happened inside ACO, and I make no judgement on any allegations. If you look at my post a couple of days ago, regarding the stay order issued by the AAT, you might see though that ACO seem to be continuing  to skate on thin ice at the edge of court orders.


Can ACO survive?
1. If they win the funds they are claiming from commonwealth, it is not inconceivable that a considerably leaner operation will get to the AAT, which I think was mentioned for next couple of months (havent re-read announcements).  You can see the cashflows for yourself by looking at their latest quarterly announcement.   If they dont win the case , I'm not sure why they would bother to continue at all- guess that's for the Board.
2. From study of previous AAT cases, there is some chance of winning AAT, given that the AAT take into consideration facts as at time of hearing, not time of regulator action; however ASQA have massively improved their performance at AAT so in the absence of any direct facts, I would put odds at better than  even against an ACO win here but I still wouldn't place a bet. No one of the public can see what is going to be presented at the hearing.
3. I wouldn't fancy ACO's chances at the ACCC.   There's enough stated on the public record, that indicates that current ACO defence is to be along the line of  "there was no actual harm as the prospective students that were allegedly misled didn't actually proceed to "do their dough".  My reading of consumer law is that it makes no difference whether there was an ultimate victim - it comes down to whether misconduct took place or not".  We will have to wait and see both sides to go near a solid prediction though.

Regardless of all this, the reputational damage and loss of access to government funds, upon which the business model seems to have largely been built, indicate that survival is an unlikely option.

My heart goes out to the students and teachers in this debacle.  I certainly have empathy for the shareholders who might console themselves with 'if it seemed too good to be true then....".

I would repeat my call for a federal commission of inquiry.  To allow companies (public or private) to get themselves into this mess on the back of government monies, aside from any comment about corporate behaviour, begs the question as to who takes the responsibility for poor implementation of government policy?

Of course, we would all welcome some updated and timely information to the market. Maybe we are all barking up the wrong tree?


Should disclose that I work in the vocational training sector but have no relationship with ACO or any or its competitors.