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Costly computer system bungle results in TAFE revenue being underestimated by $138 million

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TAFE NSW spent more than $10 million to discover it had understated its revenue from skills training by $138 million, the auditor general has reported.

Long-running problems with the TAFE NSW computer system which records enrolments meant the auditor general was unable last year to provide an unqualified estimate of 2014-2015 TAFE revenue. 

Fairfax Media recently revealed that documents released under freedom of information showed NSW Treasury clawed back $210 million in cash from TAFE at a time when the public vocational educator was struggling with the disastrous enrolment system and making hundreds of jobs redundant. TAFE was unable to accurately report its revenues because of the IT problems.

NSW Opposition spokeswoman for Skills Prue Car said the Baird government's "incompetence has meant TAFE teachers have been forced to spend their time scrambling to try and fix a broken enrolment system". She said millions of taxpayers' dollars had been spent finding lost enrolments and missing fees. 

"TAFE's failed computer system has resulted in enrolment chaos and forced taxpayers to fork out an exorbitant $10 million paying consultants to fix its accounting systems," she said.

"While TAFE teachers are being sacked and campuses are being closed, this $10 million on consultants is nothing but an insult."

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NSW Teachers Federation deputy secretary Maxine Sharkey said money wasted on the failed IT system, which is used to manage enrolments and administration, had been compounded by millions more spent to compensate for its failures.

"The whole thing has been an overspend," she said. 

"Their underestimate of revenue meant TAFE teachers were being bullied to reduce their delivery costs because TAFE didn't know they had this extra revenue. Right now our members are at the end of their tether and they are being bullied mercilessly to cut costs that didn't need to be cut."

TAFE NSW said the Audit Office had issued a qualified opinion on TAFE NSW financial statements in 2014-2015 as a result of limitations in its recording of student revenue. Extra resources were needed to calculate revenue from student enrolments for that year and for 2015-2016

"The data remediation process was successful, and systems have been put in place to maintain data integrity until the system is replaced, with the Audit Office issuing an unqualified opinion on the financial statements for 2015-2016," a TAFE NSW spokesman said.

"Although this came at a not insignificant cost, it was vital so TAFE NSW can be more accountable to the taxpayer for the funding it receives, as well as prepare the organisation to implement a new streamlined and standardised operating structure under One TAFE."

The NSW government now plans to introduce a new cloud-based IT system to manage student data. A tender process is underway and a new system is expected to be operating by 2018.

According to budget documents, TAFE NSW lost over 5000 staff between 2012 and 2015, and there were 150,000 fewer TAFE course enrolments in 2015 compared with 2012, after fees jumped following deregulation and government funding cuts. 

The documents released under freedom of information laws say the amount of $210 million considered to be "surplus" was calculated by the Boston Consulting Group, which received flak earlier this year for its $90,000 report on the vocational education sector that called TAFE "inefficient" and "uncompetitive" and promoted a private college network that had been raided by the AFP.

The Auditor-General issued a "qualified audit opinion" of TAFE for the 2014-15 financial year, meaning it couldn't accurately report its financials, because of the introduction of the disastrous Learning Management and Business Reform (LMBR) enrolment system at the same time as the Smart and Skilled reforms.

By June 2015, the documents show, TAFE's problems were so severe that consultants KPMG identified more than "100 system issues" plaguing TAFE's enrolment and financial services, including that "cash received is not reconciled to enrolment records". There were duplicate records, incorrect start and end dates and incorrect fee information. Fairfax Media has reported that TAFE spent $17,980,414 on redundancy payments for 233 staff in 2016.

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