The Audit and Resolution Fees Stack Up Fast: A Critical Analysis of ASQA’s Proposed 2026–27 Cost Recovery Model

An examination of the cumulative financial impact on Registered Training Organisations under the Draft Cost Recovery Implementation Statement

The Australian Skills Quality Authority (ASQA) released its Draft Cost Recovery Implementation Statement (CRIS) for 2026–27 on 28 January 2026, inviting public consultation on proposed changes to the fees and charges that will apply to Registered Training Organisations (RTOs) from 1 July 2026. The Draft CRIS, accompanied by a Consultation Paper, represents the first comprehensive review of ASQA’s cost recovery model since the agency transitioned to full cost recovery on 1 July 2022. While the stated objective is to create a simpler and more transparent charging model, a detailed examination of the proposed fee schedule reveals a structure in which costs can accumulate rapidly for providers subjected to multiple regulatory activities.

A Fundamental Shift: From Hourly Rates to Fixed Fees

One of the most significant structural changes in the proposed model is the move from hourly rate charging to fixed fees for application assessments, performance assessments (audits), and compliance resolution activities. According to the Consultation Paper, this shift is intended to provide greater transparency and predictability of costs for providers. Under the current model, performance assessments are charged at an hourly rate and billed directly to providers, meaning the final cost is unknown until the assessment concludes. The proposed model replaces this with a tiered fixed-fee structure across four performance assessment categories and four compliance resolution pathways. While predictability is a welcome improvement, the fixed charges themselves are substantial, and the layered nature of the fee structure means that a provider encountering multiple regulatory interactions in a single year could face a cumulative financial burden that warrants careful consideration.

Performance Assessment: Four Categories of Escalating Cost

The Draft CRIS proposes four categories of performance assessment charges, scaled according to the complexity and scope of the assessment. Category 1, described as a micro assessment against compliance requirements, carries a proposed charge of $900. Category 2, a small assessment determined by complexity and risk, is set at $4,000. Category 3, a medium assessment, rises to $7,300, while Category 4, a large-scale assessment, is proposed at $11,700. It is important to note that the Consultation Paper confirms that if the scope of an assessment expands during the process, the provider will be informed and the category (and therefore the cost) may be moved up the scale. This means a provider initially notified of a Category 2 assessment at $4,000 could ultimately be invoiced for a Category 3 assessment at $7,300 or higher if additional risks are uncovered during the course of the audit.

Table 1: Proposed Performance Assessment Charges (2026–27)

Source: Draft CRIS 2026–27, Appendix 1 – Non-Application Based Fees and Charges

Compliance Resolution: A Four-Pathway Escalation Model

Where a performance assessment identifies non-compliance, the provider enters the compliance resolution process. The Draft CRIS introduces a four-tier pathway structure for compliance resolution, replacing the current hourly rate model. Pathway 1, the entry-level compliance resolution charge, is proposed at $6,650. Pathway 2 escalates to $13,650, Pathway 3 to $22,250, and Pathway 4 reaches $33,300. According to the Consultation Paper, the pathway charges reflect the level of effort and complexity involved in reaching a compliance resolution, and providers move up the pathway as the regulatory effort required to resolve non-compliances increases. The Consultation Paper further states that providers requiring multiple evidence reviews will move up the pathway, incurring additional costs. This means that a provider struggling to demonstrate compliance, even where efforts are being made in good faith, faces a progressively steeper financial penalty with each escalation.

Table 2: Proposed Compliance Resolution Pathway Charges (2026–27)

Source: Draft CRIS 2026–27, Appendix 1 – Non-Application Based Fees and Charges

Additional Entity-Directed Charges: The Costs Beyond the Audit

Beyond performance assessments and compliance resolution, the Draft CRIS proposes several additional entity-directed charges that can be triggered independently or alongside other regulatory activities. An Onsite Performance Visit, defined as an ASQA-initiated in-person visit to review a specific provider risk that can only be assessed on-site, carries a proposed charge of $4,650. A Student Assessment Validation, involving targeted risk-based validations of student assessments, is proposed at $2,550. A Financial Viability Assessment, which involves an independent specialist assessment of a provider’s financial viability by an ASQA-appointed assessor, is set at $11,800. A Complaint Investigation Charge, triggered when ASQA investigates a complaint about a provider, is proposed at $15,700. Each of these charges is separate from and additional to any performance assessment or compliance resolution fees. The Draft CRIS cost breakdown confirms that ASQA has budgeted for significant activity volumes across all of these categories in 2026–27.

Table 3: Proposed Additional Entity-Directed Charges (2026–27)

Source: Draft CRIS 2026–27, Appendix 1 – Non-Application Based Fees and Charges

How the Costs Accumulate: Illustrative Scenarios

The critical concern for the sector lies not in any single charge viewed in isolation, but in how quickly multiple charges can accumulate when a provider is subjected to several regulatory activities within the same period. Consider a relatively straightforward scenario: a provider undergoes a small performance assessment (Category 2) at $4,000, during which non-compliance is identified, triggering entry into Compliance Resolution Pathway 1 at $6,650. The combined cost of that single audit and its immediate compliance follow-up is $10,650. If the non-compliance is not resolved at Pathway 1 and escalates to Pathway 2, the compliance resolution charge alone rises to $13,650, bringing the combined performance assessment and compliance resolution total to $17,650.

A more intensive scenario illustrates the compounding effect further. If, during or following a performance assessment, ASQA also initiates an on-site performance visit ($4,650), a student assessment validation ($2,550), and a financial viability assessment ($11,800), these charges are layered on top of the performance assessment and compliance resolution fees. In such a scenario, a provider facing a Category 2 assessment ($4,000), an onsite visit ($4,650), a student assessment validation ($2,550), a financial viability assessment ($11,800), and Compliance Resolution Pathway 2 ($13,650) would face a combined total of $36,650 in entity-directed charges alone—before any consideration of the Annual Registration Charge or application-based fees.

The scenario becomes even more significant when a separate complaint investigation is also triggered. The proposed Complaint Investigation Charge of $15,700 is an independent entity-directed charge. If a complaint investigation is initiated and further non-compliance is identified, the provider may enter an additional compliance resolution pathway. Taking the cumulative example above and adding a complaint investigation ($15,700) with a subsequent Compliance Resolution Pathway 2 charge ($13,650), the total entity-directed charges in a single regulatory cycle could reach $66,000 or more. These figures are drawn directly from the proposed fee schedule in Appendix 1 of the Draft CRIS.

Table 4: Illustrative Cumulative Cost Scenario – Multiple Regulatory Activities

Source: Compiled from Draft CRIS 2026–27, Appendix 1. All figures represent proposed charges. This is an illustrative scenario; actual charges depend on the specific regulatory activities undertaken.

The Annual Registration Charge: A Significant Baseline Cost

The entity-directed charges described above sit on top of the Annual Registration Charge (ARC), which all ASQA-regulated providers are required to pay. The ARC covers sector-wide regulatory activities and is calculated using a five-tiered matrix based on the number of qualifications on scope and the number of unique student enrolments. One notable change in the proposed model is the separation of ARC rates between providers holding only NVR registration (or only CRICOS registration) and providers holding both NVR and CRICOS registrations, reflecting what ASQA describes as the additional regulatory effort required for providers delivering to international students.

For a provider that could reasonably be described as an ‘everyday’ mid-sized domestic RTO, the ARC is approaching or exceeding $10,000. For example, an NVR-only provider with 11 to 25 qualifications and 100 to 249 students faces an ARC of $10,500. A provider in the same scope tier with 250- 499 students would pay $11,600. Even a smaller provider with 5 to 10 qualifications and 500 to 999 students faces an ARC of $9,000. For providers holding both NVR and CRICOS registrations, the charges are higher still: a provider with 5 to 10 qualifications and 500 to 999 students would pay $10,100, while a provider with 11 to 25 qualifications and 250 to 499 students faces $13,100. At the upper end, a dual-registered provider with 51 or more qualifications and 1,000 or more students would pay $32,400 in ARC alone.

Table 5: Proposed Annual Registration Charge – NVR RTO Only or CRICOS Only (2026–27)

Source: Draft CRIS 2026–27, Appendix 1

Table 6: Proposed Annual Registration Charge – NVR + CRICOS Registration (2026–27)

Source: Draft CRIS 2026–27, Appendix 1

The Total Picture: ARC Combined with Entity-Directed Charges

When the Annual Registration Charge is considered alongside entity-directed charges, the total financial exposure for a provider becomes considerable. A mid-sized NVR-only provider paying an ARC of approximately $10,500 (Tier 3, 100–249 students) that also undergoes a performance assessment (Category 2 at $4,000) resulting in non-compliance and entry into Compliance Resolution Pathway 1 ($6,650) faces a combined regulatory cost of $21,150 in a single year. If that same provider also has a complaint investigation initiated ($15,700), and the complaint findings lead to Compliance Resolution Pathway 2 ($13,650), the total reaches $50,500. For a dual-registered NVR and CRICOS provider in a comparable scenario, the ARC alone would be higher, pushing the total further. These figures do not include any application-based fees that may arise from renewal of registration, change to scope, or course accreditation activities during the same period.

Structural Concerns: The Potential for Disproportionate Impact

Several aspects of the proposed fee structure raise questions that the sector may wish to address through the consultation process. First, the escalation mechanism within the compliance resolution pathway, while intended to incentivise timely compliance, effectively penalises providers that require additional time or support to address complex non-compliance issues. Smaller providers with limited administrative capacity may be disproportionately affected, as the cost of moving from Pathway 1 ($6,650) to Pathway 2 ($13,650) or Pathway 3 ($22,250) represents a significant financial step for organisations with modest operating budgets.

Second, the layering of multiple independent charges—performance assessment, onsite visits, student assessment validations, financial viability assessments, and complaint investigations—all of which can be triggered at ASQA’s discretion, creates a fee environment in which the regulator holds substantial control over the total cost burden borne by any individual provider. While the Draft CRIS notes that ASQA’s regulatory scrutiny is always proportionate to the level of risk identified, the proposed charging model places the entire cost of that scrutiny on the provider, including in circumstances where the provider is ultimately found to be compliant or where non-compliance is minor and quickly rectified.

Third, the Draft CRIS confirms that reconsideration (internal review) fees are not fully cost recovered, with the proposed Reconsideration Application Fee set at $1,000 per registration type. While the CRIS acknowledges this is to ensure internal review is not prohibitive, it is worth noting that a provider holding both NVR and CRICOS registrations that seeks reconsideration of decisions affecting both registration types must lodge and pay for two separate reconsideration applications. The total cost of internal review for such a provider is therefore $2,000, in addition to all other fees and charges already incurred during the regulatory process that led to the adverse decision.

ASQA’s Financial Context and Revenue Projections

The Draft CRIS provides financial context for the proposed charges. ASQA’s total departmental expenses for 2026–27 are estimated at $50.3 million, of which approximately $42.7 million is classified as cost recoverable and $7.6 million is budget-funded (not recovered from the sector). ASQA’s projected revenue from fees and charges for 2026–27 is $41.2 million, representing a cost recovery rate of 97 per cent of recoverable expenses and 82 per cent of total expenses. By comparison, ASQA’s historical financial performance shows that actual revenue from fees and charges in 2024–25 was $25 million against cost recoverable expenses of $40.5 million—a cost recovery rate of only 62 per cent. The proposed fee increases, therefore, represent a substantial uplift in revenue collection from the sector, moving from $25 million in 2024–25 to a projected $41.2 million in 2026–27, an increase of approximately 65 per cent.

It is also noted that ASQA’s historical revenue has consistently fallen below Portfolio Budget Statement estimates. The Draft CRIS reports a cumulative variance between estimated and actual revenue of approximately negative $41 million over the period from 2020–21 to 2024–25. This historical shortfall suggests that either revenue estimates have been overly optimistic or that the agency has faced challenges in collecting the charges billed to providers. Whether the proposed fixed-fee model will close this gap remains to be seen.

Consultation Period and Stakeholder Engagement

The consultation period for the Draft CRIS is open from 28 January 2026 to 27 February 2026. ASQA has scheduled a webinar for 16 February 2026 at 2:00 pm (AEDT) to provide information about the proposed changes, covering the background and reasons for cost recovery, what the review included, and how fees and charges for 2026–27 will be applied to providers. Questions can be pre-submitted when registering for the webinar. Feedback can be submitted through ASQA’s online webform until 5:00 pm (AEDT) on 27 February 2026. Following the consultation period, ASQA will work with the Department of Employment and Workplace Relations to draft the legislative instruments necessary for enactment, with the revised cost recovery model scheduled for commencement on 1 July 2026. Ministerial sign-off on the CRIS, fees and charges determination instruments is anticipated in June 2026.

The Consultation Paper states that ASQA is seeking feedback on the impacts of the proposed changes and wants to hear directly from individual providers, course owners and other stakeholders on the proposed fees and charges, including any barriers to, or unintended consequences of, the proposed changes on providers and the broader VET sector. Discussions with the Skills and Workforce Ministerial Council (SWMC) and Skills Senior Officials’ Network (SSON) are also helping inform the review. ASQA will draw on the expertise of its VET Sector Strategic Forum (VSSF) and Provider Reference Group (PRG) to ensure feedback is comprehensive. An outcome report on key trends and issues identified from stakeholder feedback will be published following the close of consultation.

Implications for the Sector

The proposed 2026–27 cost recovery model represents a significant recalibration of the financial relationship between ASQA and the providers it regulates. The move to fixed fees provides welcome predictability, and the differentiation of ARC charges between NVR-only and dual-registered providers brings a measure of proportionality that was absent from the previous model. However, the scale of the proposed charges—particularly when multiple regulatory activities are triggered for a single provider—raises legitimate questions about the financial sustainability of smaller providers and the cumulative impact of a fee structure that places the full cost of regulatory activity on the regulated entity.

Providers and stakeholders are strongly encouraged to engage with the consultation process and provide detailed feedback on the proposed fees and charges. The Draft CRIS and Consultation Paper are available on the ASQA website. The consultation window closes on 27 February 2026, and the feedback provided will inform the final determination of fees and charges for the 2026–27 financial year and beyond.