Newshub can reveal taxpayers have shelled out millions of dollars to training schools that broke Qualifications Authority rules, and then, when investigated, shut up shop.
Taxpayers have paid more than $11 million to six failed private training schools, all of which broke NZQA rules and then cancelled their registrations.
The schools breached rules in a number of ways, including not having qualified teachers, entering into unapproved sub-contracting arrangements, students failing to meet English language requirements and financial mismanagement.
One school in Southland got $9.1 million in funding for courses but didn't even deliver the programmes it promised. It then went into liquidation.
The door's locked at Te Kaupapa Training Limited in Lower Hutt. It got nearly $500,000 in funding but wouldn't share its financial records with NZQA. It then cancelled its registration.
Then there's 2 Meke Training - a Whangarei-based provider. It got more than $700,000 but was told to stop enrolling students due to poor performance.
Agribusiness Training Limited, which trained students in agriculture, horticulture and beekeeping, is now in the hands of Dunedin liquidators after it failed to properly deliver courses. It got $9.1 million. The Government is still trying to claw back more than $6 million in tuition subsidies.
"The system is failing," says Labour associate tertiary education spokesperson David Cunliffe. "The rorting is rife and the Government is way too slow to pick up on it."
The Government hasn't managed to get back a cent from Agribusiness. Its directors refused to talk about the issues, despite messages left by Newshub.
When we eventually got hold of the family at home, we were told no one could talk because they were "too busy".
Documents show other schools that got funding and then broke NZQA rules include Industry Training New Zealand, Ngati Ruanui Tahua Trust and K.A.A.T, which was run out of a flat in Otara. It apparently ran courses on computing, business and early childhood and got $194,000 in funding. It then refused to disclose financial records and went into liquidation.
"It seems like in some cases money was accepted from the Crown very shortly before liquidation," says Mr Cunliffe. "I think the Serious Fraud Office needs to look at those issues."
"There is around 600 to 700 providers overall," says Tertiary Education Minister Steven Joyce. "For the most part they behave themselves, and when they don't TEC has the ability and determination to get on top of it."
With millions in funding and nothing to show for it, critics say it's a scandal. But the Government says more rule-breaking training schools are being busted because of better auditing.
TEC still confident in funding system
The Tertiary Education Commision, which dishes out the money to training schools, says it has improved its oversight of the industry.
"The TEC has progressively enhanced its monitoring of the sector over the last few years," CEO Tim Fowler told Newshub. "We now have a more sophisticated and effective system."
He says since 2014 the TEC has commissioned an independent review of the TEC and NZQA approach to monitoring and has implemented or is implementing the recommendations from that report, increased regular audits, reviews and investigations and tightened the reporting requirements for TEOs.
"We are confident in the monitoring of the system and the system's overall performance," says Mr Fowler.
"Despite these changes we have sought recovery of $31.4 million from the sector in the last three years. However this represents less than 0.4 percent of the annual funding for the sector."
Contact Michael Morrah here.