Purpose: Vocational education and training (VET) in Australia has for some time been driven by an agenda of "reasonable adjustment", in which practices are modified to ensure equitable access and participation by disadvantaged students. However, the growing marketization of VET has instead encouraged the use of more flexible approaches to attract and retain students from diverse backgrounds. They have thus paralleled and confounded reasonable adjustment practices for inclusive development. This study sought to identify the moral dilemmas experienced by VET teachers arising from implementing reasonable adjustment practices. Design/methodology/approach: This phenomenological research project used in-depth conversational interviews with 19 experienced VET teachers from a diversity of teaching fields to identify moral dilemmas experienced as arising from changes in their workplace contexts. Findings: One of the identified dilemmas was responding flexibly to heightened student diversity, to which study participants largely responded by prioritising the economic imperative over social inclusion. Well-intended actions thus led to unintentionally damaging outcomes, raising important ethical questions about the relative value of economic and social development outcomes and the role of reasonable adjustment in their attainment. The study also highlights the lack of appropriate VET teacher training in managing ethical conflicts to minimise risks to themselves and their employing organizations. Originality/value: As a case study of inclusive development policies in practice, this research may be seen as a cautionary tale for inclusive development policies in other countries with similarly strong VET economic and socially inclusive development policies for sustainability. The paper thus opens a dialogue for critical reflection on the current problems in a reasonable development approach in the field of comparative and international education. Those two parallel agendas have presented VET teachers and trainers with ethically challenging situations in which the economic and social development imperatives are experienced as being conflict with each other.