Masters in Building Training and NSW government Smart and Skilled program in court over COVID payments

In the NSW Supreme Court, the state government has said Masters in Building Training Pty Ltd (MIBT) was paid $744,130.23 in pandemic advance payments over May and June, 2020. But it had failed to return about $413,405 of that by October last year.

The State of NSW also claims that students were given qualifications by MIBT without meeting course requirements, which it argues triggered overpayments to the training organisation. This led to police investigation "Operation Fish", documents before the court show.

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Apprentices who thought they had qualified in a trade took their concerns to the NSW South Coast Labour Council after their student records showed their training was incomplete and they may need to go to TAFE to repeat.

"An apprentice from the South Coast indicated he finished his four-year apprenticeship. He thought that was the ticket he needed to start his career in construction," Labour Council secretary Arthur Rorris said.

"But he was advised that, on his apprenticeship record, two years of his modules that he's completed weren't registered. He was told he had no other option but to go to TAFE to repeat those two years.

"And for many, it was units, modules and years that need to be repeated, which is a real tragedy."

Department left apprentices "in the lurch": MIBT

An MIBT spokesperson denied student records were incorrect and said if students had been "left in the lurch" the fault lay with the education department's Smart and Skilled program.

"MIBT has complied with its obligations to provide those records, in the form of a Statement of Attainment, to the affected students at the conclusion of the funding contract (30 June 2021) between MIBT and the Department of Education's Training Services NSW funding division," the spokesperson said in a statement.

"Some of the affected students had commenced, but not completed all required work as at 30 June 2021 and therefore had not been assessed as being competent, for some units of competency.

"The NSW Government chose not to renew previous subsidised training arrangements it had with MIBT beyond 30 June, 2021."

The first court case

Since 2014, MIBT's annual income relied on funding through its contract with the department's Smart and Skilled program, which provides students with subsidised training.

The company took the department to court last year, claiming the termination of MIBT's contract in March 2021 was invalid. It said the department owed it more than $300,000 in subsidy payments.

The second court case

But the department filed a cross-claim in October 2021, alleging the contract termination was valid after MIBT failed to return COVID payments and maintain proper training records.

The cross-claim was heard in the Supreme Court before Justice Julie Ward in November last year, but a decision is yet to be handed down.

"Everyone is a loser here"

Mr Rorris said regardless of who is at fault, hundreds of apprentices living in areas desperate for skilled tradespeople have been hurt.

"Everyone is a loser here - the apprentices, their employers who have invested their time and money, and the bushfire-ravaged regions that desperately need every single construction worker and tradie they can get their hands on," he said.

"This is proof that the system is a mess and why we need to stick with TAFE and end this fiasco of taxpayer money wasted and our local apprentices and tradies being punished for it."

TAFE is inundated

NSW Teachers Federation TAFE organiser Rob Long said it's left TAFE, which is already inundated with new apprentices, having to "mop up the mess".

"Traditionally, Moruya TAFE would take one first year apprentice group every year," Mr Long said.

"In 2021 they had five groups. So that's an indication of the demand that this community has for rebuilding the community.

"I've talked to the teachers at TAFE and they're hopeful that these apprentices might only have to repeat two years, but they can't guarantee that.

"They've got to do it properly and assess whether students have the skills."

MIBT defaulted on the contract: department

Court documents show the contract between MIBT and the government was renewed in May 2020 for 12 months.

Under the contract, MIBT was entitled to payment in the form of subsidies and loading to comply with its obligations, including that MIBT would maintain "training activity data" for each student.

If the department believed an "event of default" occurred, they were entitled to suspend MIBT's rights and terminate the contract.

The department raised four events of default by MIBT, including allegations it had not satisfied record-keeping requirements. It also said there was a lack of engagement with students, a lack of face-to-face training, and a lack of quality training during practical sessions.

Supreme Court judge Francois Kunc found in favour of MIBT in April 2021. In his judgement, he said it was strongly arguable the department breached its obligations by terminating the contract and not giving MIBT time to respond to allegations it had defaulted.

You owe us: department

In a cross-claim, the department said it was entitled to withhold subsidy payments.

It claimed in May 2020 it offered MIBT the option to vary the 2019 contract to participate in its COVID-19 payment continuity strategy, which was designed to help businesses continue to run during the pandemic.

MIBT accepted and the department made four payments in advance installments, totaling $744,130 from May 18 to June 29.

According to the court documents, MIBT was required to repay the advance payments by way of nine equal monthly repayments from October 2020.

The department alleged MIBT paid it every second month and by virtue of failure to repay, is in breach of the COVID payment strategy.

As at October 2021, the Department claims the company is in arrears amounting to $413,405.

Pay us first: MIBT

MIBT said that some qualification certificates were issued to students who did not have the required assessments and that some overpayments were made.

Once the department had paid money it claims it is owed under the contract, MIBT said it would settle the outstanding overpayment.

A decision on the cross-claim is expected in the Supreme Court in coming weeks.