Commercial labour hire firms employed to find fill-ins for school teacher sickies are creaming millions of dollars each year from Victorian taxpayers — and teachers.

The agencies, drafted in by primary and secondary schools when regular teachers are ill or being trained, now control up to half of the state’s 10,000-strong weekly casual relief market. Critics say they make money by short-changing teachers and siccing principals with a service charge.

Where once substitutes were employed primarily by school councils, a boom in corporate middlemen means taxpayer cash is being hoovered out of already-stressed school budgets at an increasingly rapid rate.

A scathing Victorian Auditor General’s report into the Casual Relief Teacher (CRT) situation, released in April, documented a 39% explosion in the number of casual teachers over the 10 years to 2010. It acknowledged that the use of agencies had increased 36% between 2005 and 2010.

Not only are agency teachers paid about $50 less for a day’s work, schools pay an additional “premium” to their employer of up to $60. Directly employed casuals in Victoria receive just $268.80 a day — already the lowest rate compared to other states and territories. But agencies pay teachers as little as $210.

During a one-week census period in 2010, the Auditor General found government schools employed 8350 casuals. Assuming 40% agency penetration over 40 weeks of the teaching year — and assuming a conservative premium of $30 and stripping out administrative efficiencies– about $5 million in public cash allocated to schools is disappearing each year into private coffers.

Many schools have now signed exclusivity agreements which prohibit them from contacting relief teachers directly or going through another agency. In return, they receive a discounted rate.

The Australian Education Union, currently embroiled in a bitter battle with the Victorian government over a new enterprise bargaining agreement, says agency staff now number close to half of the total casual relief market. And many graduate teachers mugged by the cash grab are beginning to speak out.

One teacher, who did not want to be identified for fear of retribution, said her interview with one agency “was like being interviewed for a job at KFC, but they had fancy suits”.

“The contract they asked me to sign requested that I sign over all my intellectual property for the time I am working with them … they claimed this is a normal request when going for jobs generally, but I found it to be bizarre and worrisome.

“They said I wouldn’t be able to work at any of their schools independently unless the school paid them off…probably a tactic of most agencies, but still gives them a scary degree of power. They also made me sign that I would say “please” and “thank you” when leaving schools — the whole thing made me feel sick.”

CRTs also lack regular entitlements and have to organise their own compulsory professional development. Even if they worked every day of the year they would receive less than the most junior university graduate. The Auditor General also identified problems over who was responsible for WorkCover costs and said schools often found it difficult to verify whether teachers were properly registered and of an adequate standard.

The casual teacher concurs: “It shocked me to discover that this aspect of the public education system had been privatised in such a manner … it definitely doesn’t inspire me to want to teach at government schools, or any schools for that matter … whoever has let this happen is so frigging careless,” they said.

AEU president Mary Bluett told Crikey that agency staff were not covered by the union’s current enterprise bargaining agreement and that she was trying to approach firms to raise their standards.

“The issue of agencies since they came into that space has been an ongoing one … what we’re trying to do is get them into the agreement. The trend is for a lot more agency involvement in the profession, because it’s much easier for schools to just ring the one agency.”

The current CRT situation began after the assault on teachers launched by Jeff Kennett in the aftermath of the Victorian Liberals’ 1992 election victory. A previous system of “district relievers” employed by the education department was junked in favour of a direct employment agreement with school councils.

In NSW, a government system called Casual Direct still lets schools to tap the ranks of the 45,000 casual teachers registered in the system. But at the federal level, ideologues like Christopher Pyne are keen to embark further down the path of decentralisation with the support of former Labor leader Mark Latham.

The Auditor General said schools should take part of the blame for their attitude to CRTs: “CRTs are a significant and important part of the teacher workforce, yet schools use them in a very reactive way and give little thought to providing them with sufficient resources, managing their performance, and developing their skills. “Many schools perceive CRTs to be little more than classroom ‘babysitters’.”

Agencies active in Victoria include Tradewind, the seven agencies operating under the TanVic umbrella, and the fast-growing ANZUK.

ANZUK director McGregor Hall told Crikey  his firm “takes the pressure off schools … we can employ 13-14 consultants, we’re in at 5:45am in the morning … for teachers it’s the same thing. If they do a good job it takes the headache out of trying to find work. Schools receive good quality teachers through us that have been put through strict vetting and high expectations.”

Hall rejected the Auditor General’s findings, saying that the numbers were wrong at that investigators had failed to contact him.

ANZUK claims on its website to pay “the best agency rates in Melbourne” ($220.50 +9% superannuation), however Crikey understands at least two other agencies offer higher rates. Hall said the firm’s margin was $45 for each teacher placed.

James Rankin, the deputy vice president of the AEU who deals directly with the CRT issue, told Crikey that “for the schools there’s a benefit but for CRTs themselves there’s a huge cost. The whole nature of the way people are employed in casual positions is precarious. You don’t have any industrial agreement.”

Support staff and CRTs are expected to join teachers in a strike on September 5 in what is expected to be one of the biggest post-Kennett industrial actions.

The Department of Education and Early Childhood Development, which has agreed to implement the Auditor General’s findings, did not respond by deadline this morning. We will add its response when we receive it.