Changes in funding in Australian vocational education and ...

Introduction Today’s postsecondary education system in Australia is a complex tapestry of different types of institutions with different histories, governance structures, funding arrangements, serving quite different types of students and focusing on quite different sets of activities. For vocational education this makes for an especially murky picture complicated by the federated nature of the Australian system with different roles and responsibilities of the Commonwealth and State governments and further compounded by the lack of a coherent bi-partisan national vision.

Status of the Tertiary System in Australia, with a focus on Vocational Education At the apex of Australia’s postsecondary education system are 43 universities, of which 40 are designated as an “Australian University.” In addition, 133 Higher Education Providers (HEPs) are registered by the Tertiary Education Quality and Standards Agency (TEQSA), the national regulator for this part of the postsecondary system. While universities are self-accrediting authorities, the HEPs in the main are not. Of these HEPs, 11 are state-based public institutes for Technical and Further Education (TAFE) delivering higher education programs, predominantly at the bachelor degree level, with some masters degree programs.

The others are private providers, for-profit and not-for-profit, with a number being subsidiaries of Australian universities in the form of feeder or English language colleges catering to the substantial number of international students. Six universities are so-called dual sector universities that, in addition to higher education programs, offer vocational education programs.

As noted in the 2017 TEQSA Statistics Report, 52% of providers had fewer than 500 EFTSLs (Equivalent full-time student load) in 2015, and nearly a quarter had greater than or equal to 5,000 EFTSLs, with the largest universities having well over 40,000 students. Overall, Australian universities are significantly bigger than the non-university HEPs, accounting for 91% of postsecondary enrolments. 70% of higher education students study full-time and 30% part-time (all data: TEQSA 2017).

The Vocational Education (VE) sector is a significant part of the Australian postsecondary education system. A wide range of providers operate in this sector, again highlighting the diversity of provision across Australia: technical and further education (TAFE) institutes; adult and community education providers; private providers; community organizations; industry skills centres; and commercial and enterprise training providers. There are major variations across states in terms of governance arrangements and degrees of institutional autonomy, as well as in funding levels and arrangements.

The VE sector contains approximately 5000 (ASQA,2018) institutions, formally known as Registered Training Organisations (RTOs), the vast majority of which fall under the regulatory umbrella of the Australian Skills Quality Authority (ASQA). The VE sector is built around national curriculum building blocks known as training packages. In 2015 there were 76 endorsed training packages, containing 1,672 qualifications, 1,147 skill sets and 18,101 units of competency, and 1,145 accredited courses (ASQA 2015).

Given that VE students include school leavers taking VE subjects in secondary schools and adults wanting retraining and upskilling, the sector incorporates a very diverse student body. Summary statistics show that 23% of Australians aged 15-64 participated in VE training, that amounts to almost 4 million students.

In terms of types of providers, private providers comprise 62% of the sector, followed by schools (21%), community education (11%) enterprise-based (5%), TAFEs (1%) and universities (<1%). Student numbers, however are distributed quite differently, with private providers still catering to a majority of students (58%), but TAFE being the significant second player (28%), followed by community education and schools and enterprise-based training and universities (NCVER 2016).

There is significant movement of students between vocational education and higher education with many pathway agreements existing between providers and universities for students wanting to pursue higher degrees. But equally, many university graduates enrol in vocational education for some retraining, frequently for a skill set of units, and for whole diplomas or certificates.

Revisioning the system: A critical analysis and the way forward Friday, 3 August 2018

Dr Ruth Schubert, Professor Leo Goedegebuure, Professor Lynn Meek

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The challenge for vocational education While the Commonwealth was driving and funding higher education, technical tertiary education remained almost totally within state jurisdiction until the 1970s. Vocational education providers have had diverse beginnings with some created by acts of parliament, others evolved from schools of mines and mechanics institutes, and many were driven by local community interests and benefactors (Goozee, 2001). It was the 1974 Kangan Report that effectively created a national identity for TAFE with a series of reforms to build a national system. This culminated in the 1990s with the Commonwealth, states and territories reaching an agreement to establish shared responsibility in areas that have become synonymous with TAFE in Australia: nationally recognized competency training, a central role for industry, the development of a more open training market with competition between public and private providers, and national governance bodies for TAFE and vocational education. The system can be described as “nationally directed, jurisdictionally implemented and industry-driven” (Atkinson and Stanwick 2016, p. 8). As such it is built around two complimentary approaches, namely training young people through an extensive apprenticeship and traineeship system and providing skills to existing workers in the form of additional training, “upskilling” or reskilling (Atkinson and Stanwick 2016). Coinciding with the introduction of open training markets was a related reform for state governments to move away from being the owner-provider of public TAFEs to being increasingly distant. At this time across Australia TAFEs became less the local one town/one suburb college, and progressively larger entities across geographical/ metropolitan regions. The greater mingling of responsibilities between the states, territories and Commonwealth has been governed by a series of National Partnership Agreements. National reforms included the establishment of income contingent loans (VET FEE-HELP) allowing VET students to access loans for qualifications at the diploma and advanced diploma level, much along the lines of the original HECS for higher education. Beginning in Victoria in 2008, the states introduced reforms that allowed funding to follow the student, with TAFE becoming only one of many providers able to access government subsidies for the delivery of training services. The establishment of the Australian Skills Quality Authority (ASQA) in 2011 shifted greater regulatory power from the states to the Commonwealth. The establishment of ASQA was partly in response to the rapid increase in providers, now working across state jurisdictions and concerns about the capacity of states to manage the number and type of providers. The effectiveness of ASQA has been subsequently called into question, being held responsible for many of the concerns about quality and the massive misuse of public funds following the opening up of the training market. The reforms facilitated the rapid rise of

private providers as major players in the delivery of vocational education and training, and the formation of new models of corporate private providers with a national reach.

Training markets and regulation At an aggregate level there is little doubt that Australia has constructed a highly successful postsecondary system that delivers quality to its various stakeholders. It has catered to an increasingly mass clientele and has dealt admirably with the increased diversity of an ever-increasing student enrolment. Yet there are issues that warrant attention and, in some cases, significant policy action. In relation to quality assurance, the newly established regulators for both sectors have had a rough start. The tertiary education regulator from the start has been under severe criticism for being overly bureaucratic, out of touch with the dynamics of the sector and inflexible. Although it appears that under new leadership it is changing direction to becoming more responsive. The vocational sector regulator has proven to be fully unprepared (and underfunded) for the massive task of regulating 4,000 plus providers in the context of a deregulated, competitive market. While the move to a competitive market has been driven by ideology at both the state and Commonwealth levels, market strategy has been largely absent. Assumed efficiencies have been subsumed in wasteful competition, with particularly negative effects for the TAFE institutions across the board. This has been further compounded by a policy fiasco that resulted from a poorly developed implementation of VET FEEHELP policy. As summarized by Noonan (2016) the initial roll out of FEE-HELP for vocational courses was careful and prudent, however later changes in policy allowed the unscrupulous private providers to massively exploit the system. The scale of this was such that the regulator became completely overwhelmed. Notwithstanding closure of some colleges that were caught out with aggressive marketing, inappropriate targeting of vulnerable people, and widespread use of inducements (in Noonan 2016: 10) the overall cost to the public purse has been significant, both in the short and long term as many of the loans will never be paid back.

The question of policy and autonomy In terms of autonomy, there is a marked difference between universities and other public-sector providers. Universities traditionally have been autonomous and self-accrediting organizations and still are. Yet the public TAFEs have remained branches of the state public service. While in Victoria this has been accompanied by increased autonomy and appropriate governance arrangements, in New South Wales, Queensland, South Australia and Western Australia an opposite development has taking place, creating state-controlled, state-wide institutions with a broad mission and little to no autonomy for the

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constituent parts (Schubert & Goedegebuure, 2017). The effects of this remain to be seen, but the risk of not having agile, responsive and locally engaged institutions is real. Finally, the university sector has been confronted with a policy vacuum following the introduction of the demand driven system. Originating from a neoliberal policy disaster to introduce full fee-deregulation, no subsequent higher education policies have been passed by the Senate and the existing policy is devoid of any vision or strategy, despite an overall focus on innovation by the current government. A national vision Australia’s lack of policy clarity, inconsistency between States and political parties, chronic under-funding and endless tinkering means our vocational education system is no longer considered world class, even though despite the interference some institutions still meet this benchmark.

The system can be rebuilt and redesigned to be fit for purpose, this is partly demonstrated by Victoria, the self-proclaimed Education State, a State that has demonstrated the very worst excesses of a training market and yet now is again, the leading State in vocational education reform (Schubert, 2018).

For the last four years the Andrew’s Labor Government has systematically re-established and re-invested in TAFE to make it central to the system. Victoria alone has a governance model for TAFE institutions (originally modelled on the former Colleges of Advanced Education) that is more closely akin to university governance.

A new national vision needs to provide direction on key questions around the very structure of the system. What type and number of institutions are required to deliver the outcomes we need? How are these institutions to be funded? What is to be the governance or independence of these institutions? How will vocational education institutions relate to existing higher education providers? These are fundamental questions that other international jurisdictions have managed to address in redesigning their systems.

What are the issues to be addressed, and examples of international (and emergent local) best practice? Governance The centralisation in most of the Australian States with respect to TAFE governance and management sits in sharp contrast to the policy developments in the majority of tertiary education systems around the world (Goedegebuure et al, 1993). With the advent of mass and universal participation in tertiary education has come the realisation of many governments that such systems become too complex to be governed from “the top”. Starting in the mid-1980s in continental Europe, there has

been a continuous move to decentralise tertiary education systems by increasing institutional autonomy combined with requirements for increasing accountability. This does not mean that the State is relinquishing its control over the public system; the control remains due to the increased accountability arrangements. Rather it reflects the recognition that complex systems are best governed by allowing differential institutional responses to different contexts (Neave & van Vught, 1991). Whilst mergers certainly have not been absent from higher education policy globally they have invariably been accompanied by strengthening institutional autonomy so as to maximise the outcomes of these mergers in terms of both efficiency and effectiveness (Goedegebuure, 2012). In similar vein, there is broad acceptance in organisational theory that large, complex organisations are best managed by allowing decisions to be made at the lowest level where an issue can be addressed effectively. This is also known as the principle of subsidiarity. Linked to decentralisation and subsidiarity is the concept of diversity (Meek et al, 1996). There is a good deal of consensus in the research literature that diversity in tertiary education is a good thing (Coates et al, 2013). First, more diverse systems better meet the diverse needs of students. Second, a diverse system stimulates social mobility. More diverse systems allow for different access points and progression pathways and thus allow for increased participation from a variety of equity groups. Third, the potential for experimentation and to find different solutions to persistent problems is much greater in diversified systems, enhancing their effectiveness. All of the international experience referred to above would equally show that decentralisation, subsidiarity and diversity are not a panacea to solving all problems and issues for tertiary education systems and institutions. Yet, as also identified by the OECD in its comprehensive review of tertiary education “the governance challenge is … to achieve the appropriate balance between governmental steering and institutional autonomy in the pursuit of a better alignment between institutional initiative and the nation’s economic and social development goals. … The objective is to put arrangements in place which are effective and efficient in addressing national economic and societal needs” (Santiago et al, 2008, p.71). Whilst the review is explicit about the fact that there is no single model of effective tertiary education governance, nor a global best practice, it is equally clear that three major elements are required: the capacity to articulate a vision for the system, appropriate policy instruments to implement this vision, and a way of monitoring performance (ibid, p.143).

Innovation and Applied Research The established concept of innovation has focussed on process and internal control within enterprises and

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organisations. This paradigm is no longer fit for purpose in a rapidly transforming global economy; innovation is now best described as a network. Australia has long recognised the need to innovate, and the launch of the National Innovation and Science Agenda (NISA) continues this tradition, heralding the way for significant changes in our innovation system. However, the NISA has some significant limitations. Although it recognises the internationally well-established concept and practice of innovation ecosystems, it essentially fails to recognise the role of higher vocational education in these systems. Canada, Europe and other places in the world have transformed their economies particularly when key parties in regions have collaborated to create innovation ecosystems. These systems are frequently underpinned and initiated by Tertiary Education Institutions (Universities, Universities of Applied Sciences, Colleges, Institutes, and Dual Sectors) along with local and provincial governments. Novel-T (Enschede), Brainport (Eindhoven), and Polihub (Milan) are just some of the places with networks that capitalise on pure and applied research; specifically, the talent of staff and students as they form cross disciplinary research groups in open innovation models with enterprises, including spin-offs and start-ups and established companies. It is the dynamic collaboration between these actors and the co-location and facilitated interaction of the partners that further develops the capacity to collectively use the intellectual property generated by the different partners, resulting in the achievement of compressed timeframes in the race to commercialise ideas and products. (Goedegebuure & Schubert, 2017) Brainport is now considered the third pillar of the Dutch economy, equally as important as the international shipping port at Rotterdam and the international airport at Amsterdam, while Novel-T has fostered and supported at last count 380 innovative companies, which remain connected within the immediate innovation district. The social and economic growth of these three regions is self-evident as is the ongoing commitment by all parties to these models The governments in Canada and the Netherlands have recognised the need to involve higher vocational education institutions in innovation systems, partly as a means of engaging the capacity of these institutions (and their staff and students), and partly as a mechanism to involve small and medium sized enterprises. It is the small and medium sized enterprises identified as not sufficiently engaged in the innovation system, mainly because they were unable to navigate large complex institutions to reach university researchers and access their expertise. These reforms for Colleges and Institutes has built a highly effective, yet relatively low cost applied research capacity, supported by national funding grants and with in-kind contributions from enterprises both small and large. The results are

remarkable and underpin real economic growth. (Goedegebuure & Schubert, 2017) In the Australian context, traditional TAFE Institutes have in recent years developed capacity in the delivery of niche and targeted higher education, particularly at the bachelor degree level. A different situation exists for Dual Sector Universities who for much longer have been bridging both the vocational and higher education domains, and who also have longer history of basic and applied research compared to TAFE. In the last two years, several major TAFE Institutions across jurisdictions have supported the development of an applied research capacity. It is this combination of higher vocational skills and applied research with SMEs where TAFE Institutes, and Dual Sector Universities through their TAFE programs, can make an invaluable contribution to Australia’s innovation system. Victoria is the only State government to have an open competitive application round (Workforce Training and Innovation Fund) to fund applied research projects.

Training Packages and the case for change Our economy is transitioning away from its reliance on mining and traditional manufacturing, into a technology and innovation driven future focused on services and high-tech industries. In the five years from 2006 to 2011, firms less than three years old created 1.4 million jobs while employment in mature businesses dropped by 400,000. With the changes in the workforce already underway, so how then can we equip current and future students for the challenges and changes that they will undoubtedly face, and what does this mean for our current system of training packages and how to conceptualise these changes? Increasingly being used in the UK and European vocational education systems is the concept of a “T shaped student/graduate” with the “I” being the development of technical skills, and the “T” being the broad employability/core skills necessary for employment now and in the future. The analysis provided in the series of ‘Vocations’ reports illustrate the flow of employment over time with a churn for workers highlighting the urgent need to develop their capabilities to move between types of work within a vocational stream and to develop their ability to change. (Wheelahan, Buchanan, & Yu, 2015)

Training packages (TP) have been a cornerstone of the Australian vocational education system for the last 20 years, and by definition, training packages “detail the range of knowledge and skills (known as competencies) required by individuals to successfully operate in different industries and occupations”. TP also detail how the competencies can be packaged into nationally recognised qualifications that align to the AQF. They are also supposed to assist in the development of course curricula.

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Training package qualifications and competencies have become by design granular, and narrowly defined in terms of tasks and job roles. The narrow and very specific outcome focus for workers significantly limits their ability to move between occupations and to then upskill, when clearly the evidence points to an increasing requirement for workers to be able to move between employers, and to take on diverse roles within their working life.

Vocational education providers and TAFEs need to be at the centre of where skill development meets industry needs, however they are limited by funders who largely require providers to deliver state funded courses using training packages. Low risk, trusted and mature providers need the flexibility of being self-accrediting for their courses, equivalent to how universities operate.

The way forward

It is, of course, a challenge to suggest “the” way forward to further a tertiary sector that indeed can navigate the set of complex challenges that are facing us. But let us take a shot at this, focussing on actions that can be achieved in the short to medium term.

What we definitely do not need is yet another all-encompassing long-winded review of the tertiary sector. Leaving aside that we already know what is wrong, as elaborated throughout this volume and elsewhere (e.g. James, French & Kelly, 2017; but see also Productivity Commission, 2017; CEDA 2017). Frankly, we cannot afford to waste time in making the changes, as the world around us is moving rapidly. One needs only to look at the investments that are currently being lined up in Europe for tertiary education and innovation for the follow up to Horizon 2020 to realize that doing nothing will trigger increased marginalisation.

So, the first thing we need is a stable framework. Having tertiary education as the punching bag for every election and potential change of government is detrimental to the continued success of the sector. So far, what success that has been achieved has been almost “against the odds” as discussed before. But continued uncertainty breeds conservatism, and that is exactly what we don’t need. Almost irrespective of the actual level of funding – and it can be argued that the higher education part of the tertiary sector in effect is not underfunded, although this is not true for vocational education with a significant disparity and decline in funding (Goedegebuure & Marshman, 2017) – what is needed is a multi-year funding framework, say 5-7 years, that extends well beyond an election cycle to allow institutional strategies to be bold, visionary and focused on the innovations in teaching and learning and research that Australia needs for the 21st century.

Ideally such a mid-term funding framework would be accompanied by performance agreements that codify Commonwealth and State expectations and institutional ambitions and include a serious “end of term” evaluation

to assess performance and provide the basis for the next term funding allocation. Such a system provides stability at the sector level, allows for mission diversity, and has sufficient teeth through the evaluation component to be a serious incentive for the institutions.

With this comes the recognition that our tertiary institutions can be international as well as national and regional players. A knowledge society by its very nature is international in orientation, but we should not neglect the fact that innovation systems are place-based. This is of particular importance to Australia given its unique geography and the fact that its state capitals are bursting at the seams.

Key to effective innovation systems is an operating quadruple helix: state, industry, the knowledge sector and civil society collaborating, each from their own position of strength, to achieve something that is significantly bigger than the sum of its parts. Conceptually this is nothing new. Practically, Australia has a poor record of this type of institutional (in the neo-institutional sense of the word, see Powell & DiMaggio, 1991) collaboration and cooperation. It would require government, at both the federal and the state level, to take on more of the entrepreneurial government role (Mazzucato, 2013). It would require industry to recognize that competition and collaboration are the two sides of the same coin, that governments and the tertiary sector are not their common enemies, and that dialogue can actually be constructive and productive. It requires our tertiary institutions to be truly serious about their commitment to innovation, industry-engagement, in particular with respect to the small and medium sized enterprise sector, and community engagement. And it requires civil society to take a real seat at the table through self-organization and upscaling and upskilling of its action repertoire.

Very clearly the above cannot and will not be achieved overnight as it will have to be a learning process, with inevitable setbacks and misadventures. But we have some very inspiring models in other parts of the world. Culture change is not easy, but for Australia to truly become an innovation and knowledge-based society, it is an absolute necessity. Where we currently are may be the resultant of 29 years of uninterrupted economic growth, it also is the resultant of a complacency and a policy vacuum that we cannot any longer afford.

Finally, with respect to TAFE, it needs to be loosened from its centralised regulatory shackles, lead the change and earn the autonomy it so desperately needs to become a full partner in the afore mentioned quadruple helix. Mass tertiary education systems are too complex to be regulated and controlled from a state capital. Autonomous institutions with serious accountabilities in place as regards the use of public money are the only way forward. For this to be achieved, TAFE will have to get rid of its second-class status and claim its righteous place in the tertiary education landscape, with a strong focus on place-based innovation and community engagement. An inevitable component of this will have to be the demise of

https://pursuit.unimelb.edu.au/articles/setting-vocational-training-free

https://pursuit.unimelb.edu.au/articles/setting-vocational-training-free

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the competency-based training package as the basis for operation as this is totally unfit for the changes required to successfully address current and future challenges.

References Atkinson, G. & Stanwick, J. (2016). Trends in VET: policy and participation. Adelaide: NCVER.

ASQA (2018). http://www.asqa.gov.au/about/australias-vet-sector/about-rtos

Australian Skills Quality Authority [ASQA]. (2015). Annual Report 2014-2015. Canberra: Commonwealth of Australia.

Coates, H., Edwards, D., Goedegebuure, L., Thakur, M., Van der Brugge, E., & van Vught, F. (2013). Profiling diversity of Australian universities. Melbourne: ACER/LH Martin Institute.

CEDA (2017). Improving service sector productivity: the economic imperative. Melbourne: CEDA.

Goedegebuure, L. (2012). Mergers and More: The changing tertiary education landscape in the 21st century HEIK Working Paper 2012/01. University of Oslo.

Goedegebuure, L., F. Kaiser, P. Maassen, V.L. Meek, F. van Vught & E. de Weert (1993). Higher Education Policy: An International Comparative Perspective. Oxford and New York: Pergamon Press.

Goedegebuure, L. & I. Marshman (2017). Australian University Productivity: Some food for thought. In: Improving service sector productivity: the economic imperative. Melbourne: CEDA, pp. 65-76.

Goedegebuure, L. & R. Schubert (2017). Bridge to opportunity: TAFE as Key partners in Innovation Ecosystem. Canberra. TDA

Goozee, G. (2001). The development of TAFE in Australia. 3rd Ed. Adelaide. NCVER.

James, R., S. French & P. Kelly (2017). Visions for Australian Tertiary Education. Melbourne: Melbourne Centre for the Study of Higher Education.

Meek, V.L., L. Goedegebuure, O. Kivinen & R. Rinne (Eds.) (1996). The Mockers and the Mocked: Comparative Perspectives on Differentiation, Convergence and Diversity in Higher Education. Oxford: Pergamon Press.

Neave, G. & F. A. van Vught (Eds.) (1991). Prometheus Bound; The Changing Relationship between Government and Higher Education in Western Europe. Oxford: Pergamon Press.

Noonan, P. (2016). VET funding in Australia: Background, trends and future direction. Melbourne: Mitchell Institute.

Mazzucato, M. (2013). The Entrepreneurial State: Debunking Public vs Private Sector Myths. London: Anthem Press.

Powell, W. & P. DiMaggio (Eds) (1991). The New Institutionalism in Organizational Analysis. Chicago: University of Chicago Press.

Productivity Commission (2017). Shifting the Dial: 5 Year Productivity Review, Report No. 84, Canberra.

Schubert, R, & Goedegebuure, L. (2017). Strengths and Benefits of the Victorian TAFE model. Melbourne. Victorian TAFE Association.

Schubert, R. (2018). Finally, hope is on the horizon. AVETRA A-News, June 2018.

Santiago, P., K. Tremblay, E. Basri & E. Arnal (2008). Tertiary Education for the Knowledge Society. Paris: OECD.

Tertiary Education Quality and Standards Authority [TEQSA]. (2017). Statistics report on TEQSA registered higher education providers. Canberra: Commonwealth of Australia.

Wheelahan, L, Buchanan, J & Yu, S (2015), Linking qualifications and the labour market through capabilities and vocational streams. NCVER, Adelaide.

Viewed from the margins: navigating disadvantage and VET | [ Page 1 of 13

George Myconos Eric Dommers Kira Clarke

August 2018

Viewed from the margins: navigating disadvantage and VET

Viewed from the margins: navigating disadvantage and VET Page 2 of 13

Table of Contents

Abstract: .......................................................................................................................... 3

Introduction ..................................................................................................................... 3 Views of equity and access ........................................................................................................ 3

Equity and access as central to core business? ......................................................................... 3

A more expansive view of the sector ......................................................................................... 4

The experiences of young early school leavers in VET .............................................................. 4

Policy context ............................................................................................................................. 5

A socio-ecological reading ................................................................................................ 5 The private-proximate ............................................................................................................... 5

Service provision ........................................................................................................................ 6

The sector ................................................................................................................................... 8

The macro-systemic ................................................................................................................... 8

Conclusion: reforms needed ............................................................................................. 9 Understanding of and support for the (prospective) learners .................................................. 9

It takes a community … .............................................................................................................. 9

References ..................................................................................................................... 10 Author contact ......................................................................................................................... 13


Abstract: It is seldom acknowledged that Australia’s VET sector is now more than ever one part of a broader safety net catering for the needs of a large number of disadvantaged Australians. Although disadvantaged students are dependent on the sector to provide the skills, qualifications, networks and psycho-social resources they need, the sector struggles to respond effectively. Poor completion rates for ‘equity cohorts’ give rise to real concern. In this chapter we explore the experiences of young early school leavers undertaking vocational education to illuminate broader issues of equity and access. We argue that to overcome many of the sector’s shortcomings, policymakers and provider communities must first affirm equity and access as central to the sector’s core business. We see little recognition of this and, as a result, poor connectivity and integration of the VET sector with other community supports. There is a relatively weak commitment to ‘inclusion’, and a lack of understanding of the range of support needs of disadvantaged learners at key moments in their educational journeys. Our conclusion points to changes that might enable the VET sector to better respond to the needs of early school leavers and, indeed, all disadvantaged learners.

Introduction The past decade has been a period of turbulent economic and social change. It has seen dramatic shifts in employment opportunities away from heavy industry and manufacturing, and towards sectors such as finance, health care, social assistance, education and training, at the cost of traditional entry-level and blue collar jobs (CEDA, 2015). In this context, vocational education plays a vital role in equipping Australians with the skills and resources needed to clarify vocational options, access employment and participate meaningfully in their communities. For disadvantaged learners, the stakes have become high, and vocational education is of particular importance to early school leavers and ‘second-chance’ learners (ACFE, 2014; Skujins, 2016; Pfeiffer, 2014; te Riele, 2006; Brown, 2017).

In this chapter we focus on the experiences of the growing population of young early school leavers – now in excess of 230,000 (NCVER, 2016; ABS, 2016) – undertaking vocational education across Australia. While early school leaving is not in itself a marker of disadvantage, there are strong correlations and causal factors at play (discussed below). And while this cohort is the focus of much attention (Atkinson & Stanwick, 2016; Considine, 2005; Brown & North, 2010) it is by no means the only equity learner group of concern within VET policy, research or practice. Nevertheless, through a glimpse of the experiences of early school leavers we are able to raise many questions about the current state of equity and access in the VET sector. Lastly, while the subject of our attention is the younger cohort, the agent of change we have in view is the community of policymakers and actors who have sectoral (and sometimes system wide) influence. With ‘the national’ as our level of analysis, we necessarily omit some positive developments in state-based jurisdictions.1

Views of equity and access The contested notion of ‘equity groups’ has hindered the development of a clear political agenda for VET and its relationship to vulnerable learner groups. The past twenty years of shifting understanding of equity within VET policy have prevented consensus about which learner groups to prioritise (Schofield, 1999), the relevance of ‘structural barriers’ and/or ‘individual characteristics’ (Considine et al, 2005), and competing second-chance learner definitions (NVEAC, 2011; Atkinson & Stanwick, 2016). There has been tension between equity and free market agendas across state and territory entitlement arrangements (Fowler, 2017).

Before its dissolution in 2014, the National VET Equity Advisory Council (NVEAC) regularly published data on VET participation and outcomes of six groups of learners: indigenous Australians, people with a disability, people from culturally and linguistically diverse backgrounds, people living in remote areas, people from low socioeconomic status (SES) backgrounds, and women (Rothman et al, 2013). Since 2014, equity reporting of VET participation and outcomes data has focused mainly on indigenous learners, those in remote areas, and learners with disabilities. This more limited equity agenda appears to have lowered expectations of training providers and their potential to act as capacity building institutions.

Equity and access as central to core business? Much current analysis of the nation’s VET sector focuses on economic and education industry issues and does not consider that the sector is part of a sprawling but not always well aligned set of community institutions. These include schools, local government and community-based support agencies, adult education providers, vocational and welfare guidance staff, Centrelink and local employers.

1 For example, at time of writing reforms were being announced in Victoria aimed at bolstering TAFE institutions after a period of significant stagnation and decline. While many of the proposed reforms are to be commended, we see little of the profound systemic change suggested in the pages to come. See http://www.education.vic.gov.au/about/educationstate/Pages/training.aspx


Together, this complex arrangement of services acts as a kind of safety net for disadvantaged or second-chance learners: young people who for various reasons do not fit comfortably into secondary school or tertiary settings. When we assume the vantage point of disadvantaged learners, it becomes clear that the VET sector is part of an arena where VET and non-VET agencies meet and where sector alignment is critical.2 We argue, therefore, that there is a need to recognise that the VET sector is part of a much bigger site: one where health, finance, transport and wellbeing needs of young people intersect with their vocational interests and learning needs.

A more expansive view of the sector In re-casting our perceptions and expectations of vocational education we need to regard it not solely as a means of gaining utilitarian ends (the competency, job, ‘gig’), but also as a key to social inclusion. Reappraisal of what constitutes VET core business is called for. Such a revised narrative would place greater emphasis on equity and access, and affirm a more outward-looking, collaborative and community-wide orientation to better assist learners of all backgrounds (Lamb et al, 2018; Davis et al, 2002).

For too long, approaches to both governance and service provision across the VET sector have exacerbated the difficulties already faced by vulnerable learners. However, the sector – and particularly its TAFE institutions – can and should be playing both networking and ‘network anchoring’ roles within their broader communities, identifying students’ learning needs and matching both VET and non-VET local services to those needs in an explicit and deliberate way (Lamb et al, 2018).

Our own research into young people’s experiences of vocational education (conducted across Australia though focused on Victoria, Queensland, South Australia and Tasmania3) used a socio-ecological approach to identify and describe interactions between young people and community agencies, within and beyond the VET sector (see Myconos et al, 2016; Dommers et al, 2017). From this research we argue that policymakers should be better attuned to the encounters at the margins of the VET sector – where learners and prospective learners rely heavily on non-VET actors – and that without improved inter-sectoral collaboration, it will fail to realise its potential for the most disadvantaged learners.

The experiences of young early school leavers in VET VET undertaken by fifteen to twenty-four-year-old Australians falls into four main categories: within senior secondary certificate programs, school-based apprenticeships/traineeships, campus-based VET, and full-time apprenticeships/traineeships. The focus of the discussion in this chapter is the approximately twenty-six per cent of fifteen to twenty-four-year-olds (over 230,000) who leave or have previously left school prematurely and who undertake vocational education. Young people from low SES backgrounds are over-represented in this early leaving group, with forty per cent of low SES young people failing to complete Year 12 compared with twenty-five per cent overall (Lamb et al, 2015). Nationally, 47.8 per cent of early school leavers (fifteen to nineteen years old) are undertaking vocational education (Table 1). Participation in vocational education by the twenty to twenty-four-year-old cohort of people of who have left school early is slightly higher at 52.1 per cent nationally.

Table 1. Early school leavers in Australia’s VET sector, 20164

No. of 15–19 yo % of total 15–19 yo No. of 20–24 yo % of total 20-24 yo

110,736 47.8 120,666 52.1

2 We point to what are now mainstream discourses in primary and secondary schooling: e.g., where the philosophy of the New Public Health (REF) and the ‘health promoting school movement’ emphasises the importance to learning of inclusion, diversity, healthy eating behaviours, exercise and making community links. 3 Primarily through the Brotherhood of St Laurence’s Research and Policy Centre, in collaboration with the University of Melbourne’s Centre for Vocational and Educational Policy. See Myconos et al (2016); Dommers et al (2017) (Note: Funding and support for these projects was provided by the Australian Government Department of Education and Training, through the National VET Research program managed by the National Centre for Vocational Education Research. The views and opinions expressed in this chapter are those of the authors and do not necessarily reflect the views of the Australian Government, state and territory governments or the NCVER. 4 These figures are drawn from the Total VET Activity (TVA) Program Enrolments data and include learners in the two age ranges who have not completed Year 12 and are no longer enrolled in a school. It excludes fifteen to twenty-four-year-old early school leavers undertaking apprenticeships or traineeships, as the focus of discussion here is on campus and institution-based programs. This data also does not include fifteen to nineteen-year-old learners who may be undertaking VET studies alongside or within senior secondary programs.


Source: NCVER (2016) ABS 2016 Census, Community Profiles, table G16.

The 2015 VET completion rate for those aged under twenty-five (without prior post-school qualifications) is 58.3% (NCVER, 2017). Despite a rise from the 2014 completion rate (54.9%) for this cohort, the low completion rate remains a cause for concern.5

It is well documented that early school leavers are significantly more likely to have experienced severe hardship, raising a myriad of barriers that can all too easily bring their education to a premature end. This in turn has a direct impact on their capacity to obtain meaningful and secure employment, as well as their economic participation, social connectedness and health (OECD, 2008; Lamb, 2015).

Policy context Among the most important recent policies affecting vulnerable young learners have been those emerging from the National Partnership Agreement on Youth Attainment and Transitions (NPAYAT, 2009-2014), the National Agreement for Skills and Workforce Development (NASWD, 2009 ongoing), and the National Partnership Agreement on Skills Reform (NPASR, 2012-2017).

The effect of the NPASR was to extend and entrench demand driven, contestable and market driven provision; and of the NPAYAT to induce unprecedented numbers of young people to undertake vocational education within or beyond the established TAFE sector. This occurred at a time when influential advocates for vulnerable learners were gradually being marginalised: for example through the decommissioning of NVEAC; and a reduced and negligible role for trade unions and community groups in the Industry Skills Councils and their successors, the Industry Reference Committees.

A socio-ecological reading Engagement with vocational education and successful completion are both affected by a complex interplay of factors, within and beyond the confines of any given training provider, and this is particularly evident in relation to disadvantaged learners (Dommers et al, 2017; Schoon et al, 2017). Our socio-ecological approach (informed by Bronfenbrenner, 1994) considers student engagement factors distributed across four domains:

• private-proximate: the young person and their immediate social environment • service provision: VET providers, and non-VET services and actors, such as health, community, youth and

employment services, schools, public amenities and business/community groups • sector: VET governance and funding regimes, provider types, training products and qualifications, or modes of

delivery, as well as prevailing educational and youth policy frameworks, the mental health system and labour market policies

• macro-systemic: factors that impact on attitudes and values that in turn influence practices. This domain includes socio-cultural perspectives, gender, ideologies and organisational, political and economic trends.

This schema helps to show the ways in which VET sector fits into a broader context, and intersects and overlaps with mainstream education services (secondary and tertiary/‘higher’), alternative/re-engagement, non-accredited community-based services; as well as employment, welfare, health, disability, housing and other support services.

The private-proximate Disadvantaged learners face a range of barriers: low literacy and numeracy skills, unstable housing, physical/mental ill health, low self-esteem and confidence levels, abuse and violence, caring responsibilities, confusion and anger issues, poor access to transport (lacking driver’s licences) and difficulties with personal finances and low income. For many, educational pathways and career goals are uncertain, and most are in need of intensive assistance to successfully navigate post-secondary, ‘second chance’ education.

Disadvantage and hardship impact directly on a learner’s capacity to engage fully with vocational education. For example, training provider staff interviewees in our research commented about the number of ‘couch-surfing’ young people they encounter and about young people’s mental health and self-esteem issues:

They often go ‘No, I’m not going to tell you that, but I’m too dumb. I can’t do it. I’m not smart enough. I don’t understand this. I don’t get it. I’m stressed … Nah, not going to do it’. A lot … suffer from anxiety, so [if] you put them into something that they’re not going to be able to cope with, because they don’t understand it or they can’t read it, boom! Anxiety levels just rise and then that’s it.

5 It is important to acknowledge that there continue to be data collection dilemmas in relation to marginalised and disadvantaged learners which mean that it is hard to collate a comprehensive picture of the VET activities of early school leavers.


(Marie, provider staff, metro Tas; quoted by Dommers et al, 2017)

[we hear] “mum’s on drugs, dad’s in jail, I’m living with grandma”, or “I’m couch surfing”

(anonymous provider staff, SA; quoted by Myconos et al, 2016)

Family members’ opinions about VET can also play a pivotal role. One trainer recalled how one young person was afraid that their parents would learn of their intentions to undertake vocational education:

We had to actually keep [their] books at the office for them because they felt like they couldn’t take them home.

(Irene, provider staff, metro Tas; quoted by Dommers et al, 2017)

One young mother noted in an interview that family and friends discouraged her from undertaking vocational education “because apparently being a mother is all I’m allowed to be” (Katherine, young person, regional Vic; quoted by Dommers et al, 2017).

The financial imposts are also significant for those with low incomes. Without adequate financial support (from government or family), disadvantaged learners struggle to pay course fees or to meet the costs associated with relocation to preferred providers. Interviewees for our research point to course costs as a major impediment:

I’d like to go do the course but it’s just their fee … if the fee was about 100 bucks or something that’s fine, I’d be able to do that. But 355 bucks? That’s pathetic for a 12 week course … that’s breaking my budget a bit.

(Billy, student, metro Tas; quoted by Dommers et al, 2017)

Even if they’ve got a Concession Card and with fee waivers and things, once you start talking anything over $300 to a kid of that age, it’s too much. It’s surprising that more people don’t walk away when we start talking cost.

(Kathleen, provider staff, regional Vic; quoted by Dommers et al, 2017)

Service provision Even though the share of (government funded) students has fluctuated between provider types, until recently enrolments in TAFEs have been in steady decline. Until 2015 this corresponded with growing numbers of learners gravitating towards the ‘for profit’ and community-based providers, many of which were precarious businesses. Those who need help to navigate the VET sector are frequently those whose education takes place at commercially driven providers least able to offer or access support.

Our research suggests that few training providers – even among the TAFEs – are able to assist in overcoming personal barriers. Most are simply ill-equipped or oblivious to the issues impeding a learner’s progress:

We often only hear that they have something going on in their lives from their youth worker or someone else. Often they won’t tell us.

(anonymous private RTO staff, Vic; quoted by Myconos et al, 2016)

Non-VET players exert influence over whether, when or even how a person’s vocational education experience unfolds. These include schools and referral agencies such as jobactive providers, group training organisations and services funded to assist second chance learners to access and benefit from vocational education (e.g., alternative education providers, Transition to Work or Victoria’s Reconnect). In many respects such actors are gatekeepers for those navigating through the vocational education and labour market landscape. Yet, many of these players are themselves grappling with the ever-changing nature of the VET sector.

It is concerning to learn from interviewees that the best interests of the prospective students are not always paramount during encounters with these services, even though it is their responsibility to assist vulnerable people to make decisions about vocational pathways. Further, we learn that many of the actors within and beyond the VET sector are at cross-purposes, operating to differing timescales (e.g., course scheduling, school census dates, etc.), financial interests, and markers of success (e.g., differing performance indicators such as referrals, enrolments, completions etc.).

Young participants in our research were often unable to access information about VET at school, some others felt they had to initiate conversations with guidance counsellors. Many participants – young and older – believed that careers guidance for students was either inadequate or offered belatedly. Training provider staff and those from community support services bemoaned the state of career guidance in schools:


Your careers teacher in the school has a teaching load or that person may be the welfare facilitator. Gone are the days where you had dedicated teachers to work with these kids.

(Judy, support services, regional Vic; quoted by Dommers et al, 2017)

We cannot underestimate the difficulties some second chance learners have in adapting to unfamiliar educational settings. Many young people are very reticent and at times experience acute anxiety when undertaking vocational education in large institutions such as TAFEs, and more so when trainers are not fully equipped to cater for ‘high needs’ learners:

I actually did the whole test you do in TAFE and I got in, but then I was too scared to actually go … because of my anxiety. [So] I haven’t actually been to TAFE.

(Alice, student, outer metro, Vic; quoted in Myconos, 2012)

I haven’t been [to the training provider] yet because I was scared last week … I was scared to go, I was just scared to go. Yeah, it was really scary and I was sitting like, should I go? I was that scared, I made myself sick and I just didn’t go.

(Meg, student, outer metro, Vic; quoted in Myconos, 2011)

Perennial issues for learners and providers are low levels of language, literacy and numeracy (LLN) skills. Interviewees from training providers in our research expressed concern at the demands and pressure this places on trainers. LLN issues were regarded by some as “the biggest hurdle and the root of most other problems” (private RTO staff, Qld; quoted by Myconos et al, 2016). The task for providers is made more difficult as such barriers are often undisclosed at the time of enrolment, and the associated needs only become apparent as the training or work placement proceeds (Myconos et al, 2016).

Young people with limited LLN skills often experience the adult education setting as foreign and daunting:

Because it’s worded differently, they’re using bigger words, and it’s like I don’t know what that word is, and I have to keep going back to the dictionary … It’s taking me extra time to do it, because I’m so confused … it’s the same as what I’ve done, but it’s just so different … so I’ll read a sentence and I’ll understand two words in the whole sentence.

(Julie, student, outer metro, Vic; quoted in Myconos, 2011)

For very many people – particularly those residing in outer metropolitan or regional centres – poor transport links and the uneven range of local provider options are serious barriers.

I was doing bricklaying. I didn’t really get my certificate because I’d wake up at 5 of a morning just to get there [by 8am] because it takes two hours from Frankston station to Holmesglen … I was supposed to do that for four months or something and I couldn’t cope.

(James, student, outer metro, Vic; quoted in Myconos, 2012)

From those in rural centres we hear of infrequent public bus and rail services. In Colac,6 for example, only three services were provided to the larger regional centre of Geelong each day, and those were at times that often did not align with TAFE teaching:

So, going to Geelong, you’re either there at 8 o’clock in the morning, okay, or you’re there at 2.30 in the afternoon. There is a bus that comes around 5.30 or 6 o’clock. If not, you have to wait until the 8.30 or 9 o’clock train at night.

(Employment support staff, regional Vic; quoted in Myconos & McKenna, 2016)

For young women, late evening public transport services involve risk of physical abuse.

Our research also revealed that the seemingly innocuous moment of enrolment is one in which the disadvantaged prospective learners experience a level of discomfort that deters many from undertaking vocational education. Early school leavers experience enrolment processes as intimidating and at times humiliating: particularly when the prospective learner’s low levels of literacy, confidence or general awareness are exposed. The administrative requirement to reveal aspects of one’s life may pose few problems for many students, but hesitant young people who have experienced much failure and disappointment often recoil. Many see enrolment documentation as another set of tests they are destined to fail.

6 A regional town of approximately 12,000 people, 150 kilometres south-west of Melbourne.


The sector The bewildering and seemingly ad hoc nature of state and national policy changes affecting eligibility for subsidies and other concessions has further complicated an already opaque educational setting, and made it difficult for learners of all ages to make informed decisions (Bowman et al, 2016).

Participation rates in various courses and qualification levels have been shaped by student entitlement models (i.e., the VET FEE-HELP scheme and its successor, VET Student Loans) (Atkinson & Stanwick, 2016). While such initiatives were intended to improve access to the sector, they have also exposed learners to predatory behaviour by many providers (Bowman et al, 2016). In this context the young have been particularly vulnerable.

Moreover, funding has generally supported vocational education in higher-level qualifications (certificate III or higher), with less funding support for those in need of certificates I and II (Atkinson & Stanwick, 2016). This approach to funding compounds an already low regard for lower-level VET qualifications (Davies et al, 2011).

While it is true that many learners respond well to competency-based training (CBT) – a system that can provide a clear indication of incremental progress – CBT can limit the capacity of the educator to build the relationships required to understand and meet broader student learning and development needs. For many, a strict adherence to CBT actually limits a deeper understanding of students and development of skills or aptitudes for contemporary work.

By extension, training packages themselves do not pay due regard to the needs and interests of disadvantaged learners7 and, moreover, can restrict learning to a narrow and distorted range of skills (Beddie et al, 2017). This issue is particularly important given the need to enable mobility and portability of skills for learners across sectors and an every changing labour market (Wheelahan et al, 2015).

Another concern is that pedagogies may pre-suppose a relatively high level of readiness: that is clear intent, relevant experience and adequate motivation on the part of the learner. Yet many young learners – and particularly early school leavers, who are increasingly reliant on the VET sector – have levels of dependence and inexperience that training providers struggle to address. Exacerbating this problem is the capacity of the VET workforce across all provider types to respond adequately at a time when their professional status and access to skills and resources have been so diminished.

The macro-systemic Much has been made in this volume of the effects of marketisation and the demand-driven model of service provision. One of the worst effects of this tendency has been the erosion of training providers’ capacity to assist disadvantaged learners. TAFEs have suffered severe cutbacks, undermining their commitment to the already nebulous notion of community service obligation. Numerous – perhaps most – private providers have baulked at creating learning environments that include the welfare supports so vital to disadvantaged learners (Dommers et al, 2017; Myconos et al, 2016).

Far from empowering learners, the wholesale commercialisation of vocational education has not only fostered predatory or even criminal behaviours on the part of a small group of providers, but has also confused decision-making among vulnerable learners as they consider their pathway options (Yu & Oliver, 2015; Wheelahan, 2005, 2006). Policymakers have embraced the assumption that learners are better able to choose their providers when information is delivered through marketing (Myconos et al, 2016). Suffice to say, however, that those young people with the fewest resources, the least experience and with over-optimistic expectations were also those most vulnerable to marketing half-truths.

The resulting vocational education landscape is mystifying for disadvantaged learners. Its complexity is problematic not only to learners but also to a great many providers, employers, referral agencies, careers guidance staff, community services and family and relatives, upon whom disadvantaged learners rely heavily.

In addition, the sector and indeed the very concept of vocational education, now suffers a low status vis-à-vis ‘higher education’. Participants in our research spoke of the low status that secondary schools gave to VET pathways:

A lot of people from the schools think that TAFE is for dropouts and I was getting a lot of that … I got a lot of attitude from them.

(John, young person, metro Qld; quoted by Dommers et al, 2017)

It’s more like they threaten you in a way, as in, ‘Hey, if you don’t finish school, you’re going to TAFE!’(Timothy, young person, regional Vic; quoted by Dommers et al, 2017)

7 With the possible exception of the Foundation Skills Training Package, a framework that is designed to strengthen generic skills across multiple domains and sectors.


Our vantage point also prompts us to reconsider measures taken by policymakers across Australia affecting those who would most rely on vocational education to mitigate hardship and social exclusion. Policies premised on ‘mutual obligation’, ‘earn or learn’ or ‘legitimate access’ are too often experienced as punitive, and do little to help prospective learners to comprehend, let alone successfully undertake, vocational education. Thus vulnerable learners are often ill-equipped to gauge the suitability and value of both qualifications and providers.

Conclusion: reforms needed Our focus on young early school leavers has necessitated omitting much about the experiences of the broader equity group population. Nevertheless, general observations emerge. It is clear that much of what transpires within the VET sector is determined by what occurs beyond it and, indeed, what has happened before the learner has even encountered a training provider, large or small, public or private. While this should surprise no-one, there is a noticeable absence in VET policymaking circles of conversations about the need to promote collaboration on the boundaries of the VET sector. The metaphor of the safety net is useful here, with the threads of that net ideally woven through and beyond the sector. From the vantage point of the vulnerable learner – young or old – we see the need for reform of the kind outlined below.

Understanding of and support for the (prospective) learners The notions of student welfare and well-being support have been neglected across parts of the VET sector – and particularly within the community of private for profit providers. This notion, familiar to educators elsewhere, must now be embraced by the whole VET sector. Coordinated vocational education and service delivery models should be created that meet the students’ learning and broader needs. This could be achieved by linking those learners experiencing severe hardship with health services, community supports and employers. For this to succeed, advisory and enrolment regimes must be overhauled so that they are concerned as much with needs assessments as with boosting student numbers.

While the notion of needs-based funding has gained purchase in mainstream primary and secondary school education, it remains foreign to the VET sector. Such funding could help providers better to meet the needs of disadvantaged learners (Davies et al, 2011).

It takes a community … There is an urgent need for more meaningful and sustainable collaboration between training providers of all hue and other agencies and services that advise and facilitate disadvantaged learners to move towards the VET sector. Clearly the TAFEs are well placed to foster such collaboration and to establish hubs of interaction and exchange between, say, secondary schools, jobactive providers and sundry support services to assist the marginalised better to navigate towards and through the sector. Fundamentally there is a need to ensure important stakeholders’ interests are brought into closer alignment and then to create more malleable and nimble services.

If we are concerned with achieving success for disadvantaged learners in VET we need to think beyond the narrow confines of the sector. Facilitating this shift first requires the embrace of a more comprehensive notion of equity and access as central to the sector’s core business.


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Author contact George Myconos, Research Fellow Research and Policy Centre, Brotherhood of St Laurence, Melbourne [email protected] (03)9483 2439

Eric Dommers, Principal Researcher Research and Policy Centre, Brotherhood of St Laurence, Melbourne [email protected]

Kira Clarke, Lecturer in Education Policy Melbourne Graduate School of Education, The University of Melbourne [email protected] (3)8344 5828

mailto:[email protected]



Abstract For most of the period under review, New South Wales (NSW) was a comparatively resistant adopter of national VET market policy, particularly reforms instigated through intergovernmental funding agreements. For this resistance NSW drew criticism, largely due to perceived inefficiency, limited programs and funds open to competition, and the ongoing dominance of the public provider, TAFE NSW. This hesitance began to shift around 2005, with a series of state-initiated reviews pushing for changes in funding market arrangements and TAFE NSW governance. The year 2012 was significant, with the new Coalition Government introducing what was arguably the state’s most detailed and sophisticated VET marketisation platform to that point, Smart and Skilled. The policy was implemented in 2015, and was accompanied by significant structural changes in TAFE NSW, with the ‘OneTAFE’ policy delivering anticipated amalgamations, staff cuts and savings, but contradicting earlier policy directions towards increased devolution of authority to local institutes. The story of the development of the training market in NSW is also a narrative of TAFE NSW and the tensions of redistributing reduced state funding among a broader range of providers. What has been clear over the period is the difficulty that successive state governments have had in letting go of the public provider as a flagship of their social justice commitment, but more pragmatically as their mechanism for timely regional funding injections and political influence.

1 Robin Shreeve, Adjunct Professor of Education at Western Sydney and Federation Universities and Honorary Senior Fellow, LH Martin Institute for Tertiary Education Leadership and Management | Melbourne Centre for the Study of Higher Education. Joanna Palser is a former employee of the NSW Department of Education and Communities and TAFE NSW.

Cautious and reserved to maintain state control

Overview

The NSW response to VET marketisation, indeed to national reforms generally from the 1990s, can be characterised as often cautious and reserved, with the overriding concern of sequential state politicians to remain in control of their own state system. As early as 1987 the then NSW Education Minister, Rodney Cavalier, refused to sign off on new TAFE funding arrangements being promoted by the Commonwealth Minister, John Dawkins (Goozee, 1995, p. 109). In 1997 NSW reserved its position on ‘user choice’ for modern apprenticeships, one of the strategies of the Australian National Training Authority (ANTA) to increase competition within the VET sector (Selby Smith, 1998).

It is fair to say that until around 2005 NSW was a resistant adopter of the fully developed and comprehensive approach to the marketisation of training over the preceding ten years, advocated through national funding agreements. For a large part of that period NSW policy change could be seen as defensive of the position of the public provider, as the state adopted what was argued to be ‘selective’ and ‘constructive’ competition (Goozee, 2013, p. 411),2 confined to robust markets, avoiding the risk of perceived market failure, especially in thin regional, industry or occupational markets.

Tensions existed within NSW between state government bodies sympathetic to marketisation and TAFE NSW, especially during episodes of significant bureaucratic restructures both internal to TAFE and in the larger ‘parent’ departments. In negotiation with Commonwealth agencies these differences were, however, minimised. Criticism of TAFE NSW was largely rejected as were the

2 Goozee notes that the State Training Authority, BVET and TAFE NSW jointly produced a statement of principles for development of the NSW training market. It proposed that competition should be ‘strategic’ and that TAFE NSW would be supported as a leading provider in the NSW training system. See Goozee, 2013, Appendix 17, p. 466.

Email address: [email protected]

Phone: 613 8344 0756

Marketisation of VET: The

New South Wales response

1990s–2017 16 July 2018

Robin Shreeve and Joanna Palser 1

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more severe aspects of training market policy. There was a shared resistance bordering on recalcitrance by both purchaser and provider towards external – particularly Australian government – censure of NSW and its position on market reform.

This began to change around 2005-2006 due to both state and national policy shifts. The NSW Independent Pricing and Regulatory Tribunal (IPART) report made recommendations on the state training market, investment in skills and necessary changes to TAFE NSW, while TAFE NSW became convinced that it would need to drive and deliver internal change in maintain control of its governance and budget.

At the national level, VET funding agreements were transferred from the siloed confines of the ANTA agreement framework into the more muscular apparatus of inter-governmental Council of Australian Governments (COAG) agreements, upping the ante on marketisation. In 2009 the Commonwealth negotiated new federal financial arrangements with the states, rolling several agreements into Specific Purpose Payments (SPPs), including those for VET. This came with the more direct engagement of central agencies such as the Premier and Cabinet and Treasury departments and the specialist oversight of the COAG Reform Council. These central agency bureaucrats exerted scrutiny and accountability that hitherto had been handled on more familiar terms between education and training department specialists.

Sequential national funding agreements over the period emphasised the introduction of a VET training entitlement and gradually extended income contingent loans to VET students undertaking higher qualifications. The policy intention was to put VET on a similar footing with higher education, shifting the purchasing power to consumers by creating a more demand-driven system in contrast to the institutionally oriented supply focus which had dominated the system for most of the previous decade. These policy decisions had a tsunami of unintended consequences including intensive competition among many rent-seeking private RTOs, huge loss of enrolments across TAFE systems nationally, widespread RTO quality concerns – amounting to fraud in a number of high-profile instances, the trashing of VET reputation and spiralling government budgets.

Under these turbulent conditions, the NSW government attempted to hold a steadying rein. From 2009, the NSW government continued to drag its feet and was the slowest state to implement the national training entitlement outlined in the National Agreements on Skills and Workforce Development and Skills Reform. Slower adoption of market policy meant that it could look to the good and bad examples of what was occurring elsewhere – especially Victoria – and travel a safer middle path – aware of the pitfalls of budget blow-outs around entitlement places, quality concerns and proliferation of qualifications in occupations with little market demand.

In 2011, following the election of the Coalition Government in NSW under the premiership of Barry

O’Farrell, and with Adrian Piccoli, a National Party MP, as Minister for Education, NSW issued a consultation paper, Smart and Skilled, mapping out questions and possible approaches to market reform around entitlement funding of training places and the place of TAFE NSW in this new landscape. Smart and Skilled was implemented in 2015 and paved the way to a more transparent and evidence-based pricing and purchasing market model. In the context of these developments, TAFE NSW has undergone tumultuous change, albeit in unexpected directions in the past two years, contradicting almost two decades of national and state policy reviews urging greater devolution and increased authority for local institutes.

Early reform years – local restructures

Though its approach to VET was often shaped by and linked to national events, NSW also instigated its own VET reforms and restructures during this period. TAFE NSW was shifted between different portfolios and agencies within the NSW government, leaving it with varying degrees of autonomy and independence. This was disruptive, distracting and costly. TAFE NSW began the 1980s as a separate, conventional (inner sector) government department having separated from the department that ran public schools in 1949. The department ran over 100 colleges of greatly varying sizes and a state-wide faculty system of over twenty teaching schools. Following the management review of 1990 chaired by Brian Scott (Management Review, 1990), it was set up as a commission. Two years later operational management was devolved to eleven TAFE institutes. In 1995 the TAFE Commission became a controlled entity of the Department of Training and Education Coordination (DTEC) until another change in the machinery of government in 1998 saw it subsumed under the umbrella of the Department of Education and Training – reversing the separation of 1949 (Goozee, 2013). It ended up in 2016 still a Commission operating as a centralised bureaucracy, branded ‘OneTAFE’ (TAFE NSW, 2016), without institutes, within the broader ambit of the Department of Industry, having severed its ties between 2014 and 2017 with the Department of Education and Training. In every case these machinery of government changes were justified in terms of eliminating duplication and allocating more resources to the front line of students, teachers and courses.

The autonomy of both TAFE NSW and its constituent institutes was fiercely contested throughout this period. While the economic rationalists of the NSW central agencies like Premier’s and Treasury and national bodies such as ANTA often wanted eleven autonomous institutes competing with one another as in Victoria, NSW government ministers were reluctant to let go. TAFE NSW executives and TAFE unions wanted to maintain TAFE as a collaborative network rather than promote competition between its institutes. This was not a popular view with national ministers and officials in the 1990s. It was seen as a limiting factor in the establishment of a national training market (Allen Consulting Group, 1994).

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Reasons for this response

There are several explanations for this resistance by New South Wales. Certainly states’ rights was an issue. To an extent, NSW was prepared to go along with marketisation as a means of accessing Commonwealth (growth) funding. It was less prepared to commit state funds. Thus, in the 1990s user choice for traineeships was not contested as they were Commonwealth-funded labour market programs. Apprenticeships were a different matter. The off-the-job training component had traditionally been part of the state’s core funding of TAFE. It would take an external report from Charles Sturt University and an internal report from DTEC and TAFE NSW into ‘thin markets’ to shift to even a limited implementation of user choice for traditional apprenticeships (Goozee, 2013).

Culturally, NSW had come to embrace the 1974 Kangan Report on TAFE with its emphasis on education in developing the whole individual, on access and equity and on lifelong learning (ACOTAFE, 1974). Until 1995, with one short interlude, senior TAFE NSW managers were largely educationalists. One captain of industry had been tried as a managing director for barely a year in 1989-1990 but had not been as successful in terms of change management as the state government had hoped. A competitive training market was seen as incompatible with the more collaborative Kangan vision. Another plank of the reforms, competency-based training (CBT), if delivered without an underpinning of theoretical knowledge, was viewed sceptically in the early 1990s by TAFE NSW executives with an educational background (Allen Consulting Group, 1994). Indeed, some saw it as a tayloristic dystopia incompatible with an institution that saw itself as being about education as much as training. Gregor Ramsey, managing director of TAFE NSW from 1991 to 1995, once said he wanted TAFE NSW certificated plumbers to be fully literate, numerate and understand the concept of gravity as well as being competent in pipe fitting. In the early 1990s the Liberal State Education Minister was Virginia Chadwick, herself a former teacher. When the ALP won in 1995 she was replaced by another teacher, who had also worked part time in TAFE, John Aquilina. Both these ministers shared some of the educational concerns of TAFE NSW staff, though among their other concerns was constraining budgets.

This resistance to national VET reforms diminished but did not disappear after Ramsey was sacked in 1995, when TAFE became part of a new Department of Training and Education Coordination (DTEC) after a bureaucratic ‘putsch’ provoked by a change of government. Reluctance fully to embrace the marketisation of funding continued, partly to preserve a large TAFE system, especially one that reached ‘thin markets’ in the constituencies of National Party MPs in rural NSW, and partly because central agencies thought it might end up more expensive for the state with extensive duplication. Most importantly state government ministers wanted to remain in control. Though the Scott Review in 1990 recommended that the TAFE Commission be directed by a decision-making board so that it could act more independently and more

commercially, this was never implemented. To this day the TAFE Commission Board remains simply advisory to the relevant minister.

Role of the NSW Teachers’ Federation

The NSW TAFE teacher unions vehemently opposed marketisation, corporatisation and any change to a state-wide employer (Kronemann, 2001). They did this partly on ideological grounds, as they were firmly committed to public provision and the Kangan educational vision. But they also did it as a tactic to help preserve NSW TAFE teachers’ contractual conditions. Having eleven autonomous institutes as employers would have been a greater negotiating challenge than dealing with one employer from whom they could quickly escalate the argument to the political arena.

The incorporation of the English Further Education Colleges which led to the end of national pay negotiations through the Burnham Committee process in the 1990s was a set-back for the teacher unions as it resulted in increased teaching contact loads and pay scales that varied between colleges. Over this period there were many attempts to increase the teaching load of NSW TAFE teachers. Only marginal changes were ever achieved by management. On many occasions ministers baulked, fearing the political consequences of a protracted industrial dispute with a union that also represented school teachers – a group posing a higher risk of negative publicity.

The failure to shift from a total of around 720 teaching contact hours per year with eleven weeks leave or agreed non-attendance for base grade TAFE teachers has had significant consequences. ANTA and bodies such as the Productivity Commission consistently pointed out that TAFE NSW’s unit costs were higher than most other TAFE systems and private providers (Productivity Commission, 2011). ANTA viewed TAFE NSW’s costs negatively when compared to the highly contestable Victorian TAFE system with its more autonomous institutes. Management in NSW responded tactically by employing cheaper casual staff rather than permanent teaching staff. The teacher unions have argued that this impaired sustainability and quality.

Over the long haul, the failure of industrial relations reform in TAFE NSW has been a significant factor in national and state governments’ perceptions of the efficiency of TAFE NSW, thus encouraging them to increase competition and diversity among VET providers. It could also be argued that the lack of industrial reform deepened a reluctance by governments of all political persuasions to invest in TAFE and VET generally.

Educationalists and generic managers

From the late 1980s onwards, national bodies seemed determined that it should not be as Kangan had envisaged a TAFE sector, but rather a VET sector where TAFE was just a provider (albeit the main public provider) within that sector. The VET sector would be industry led to meet the needs of the economy. The power and control of

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‘educationalists’ would be diminished. Accordingly the formerly highly influential Australian Conference of TAFE Directors was abolished in 1990. It was replaced by a weaker National TAFE Chief Executives Committee which was a subcommittee of the Vocational Education Employment and Training Advisory Committee. With the formation of ANTA in 1992 TAFE chief executives lost most of their national influence as there were no providers on the ANTA Board. In NSW after Ramsey most managing directors of TAFE NSW were career bureaucrats rather than long-term educational leaders. An exception in one sense, though his background was in schools and teacher training, was Dr Ken Boston, who added the title of Managing Director of TAFE NSW to that of Director-General of Education and Training when in 1998 TAFE NSW became a controlled entity of his education department. It would be another decade before someone else with a teaching background, Pam Christie, was ‘promoted’ to be Managing Director of TAFE NSW, having previously been Deputy Director-General (TAFE) within the wider Department of Education and Training. Other Deputy Directors General (TAFE) with an educational background like Robin Shreeve and Marie Persson served under managing directors who were career ‘generalist’ bureaucrats such as Andrew Cappie-Wood and Michael Coutts-Trotter.

Kangan Report

The 1974 report of the committee to consider the future development of technical and further education, chaired by the public servant, educationist and Jewish community leader Myer Kangan, was a seminal moment in the history of vocational and post-compulsory education in Australia (ACOTAFE, 1974). Twenty years after the publication of the Kangan Report, Prime Minister Paul Keating wrote:

It will become increasingly difficult for TAFE students in the 1990s and beyond to imagine how bad things often were before Kangan … The achievement of the Kangan Report was to present the Commonwealth Government with a series of principles and strategies to transform the system. (Kearns & Hall, 1994, Foreword)

These principles were an emphasis on life-long learning, on education of the whole individual and on access and equity for all. Also, and contrary to claims by critics, the Kangan report did not minimise the contribution TAFE could play in providing a skilled workforce for industry.

Kangan ushered in what is often seen in retrospect as a golden age for TAFE, with new buildings, better staff development opportunities and better student support facilities in terms of libraries, child care centres and student counsellors, all leading to increased enrolments in a wide variety of course areas. It established TAFE as a sector in its own right. Kangan was enthusiastically embraced in New South Wales. New teachers were recruited with university degrees more often than in the past. A major building program resulted in spectacular

new campuses such as the specialist Hospitality and Horticulture College at Ryde.

Impact of Hawke and Keating governments on skills development system

The 1980s saw major concern in Australia about the country’s economic performance and future. The Hawke and Keating governments from 1983 embarked on a program of economic and industrial reform. By the end of the decade, under Education and Employment Minister John Dawkins, skills and vocational education had become a focus of this process. Linking the education and employment portfolios was significant: education was to be the servant of industry and support the process of award restructuring. The trade unions were to become integral to this process under ACTU leaders Bill Kelty and Laurie Carmichael, and it is significant that one of the catalysts of VET reform was the 1986 report Australia reconstructed: ACTU/TDC Mission to Western Europe (ACTU, 1986).

The 1990 report of the Training Costs Review Committee, chaired by Ivan Deveson, on the training costs of award restructuring, was in many senses as significant as Kangan (Deveson, 1990). It certainly marked a change of direction to an overtly industry-led system. While supporting a massive expansion in the publicly and privately funded skills training effort it recommended an end to the existing TAFE near monopoly on both accredited training and public funding. While the report did not specifically recommend an open training market for public funds, it cleared the way for that development. Significantly the chair of the committee was the CEO of a car manufacturer, Nissan Australia, and Lord Mayor of Melbourne, unlike the ascetic public servant Myer Kangan.

Australian National Training Authority established

An abortive attempt by the Keating government to take full financial control of VET led to the establishment in 1992 of a tripartite body of the Commonwealth, states and industry named the Australian National Training Authority (ANTA). ANTA’s role was to lead development of the national VET system and allocate Commonwealth growth funds. Under its CEO Terry Moran, later to become head of the Department of Prime Minister and Cabinet, ANTA led what became known as the National Training Reform Agenda. An open training market was a major objective. All the elements of this agenda were neatly summarised in a 1994 report by the Allen Consulting Group (Allen, 1994, pp. 18–19) as:

• competency-based training

• competency standards

• national recognition of training

• curriculum, delivery and assessment

• entry-level training

• training market

• access and equity and

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• funding for training.

As part of the ANTA agreement, NSW was required to establish a State Training Authority to manage VET funds and establish training priorities through a training profile. It duly introduced the Board of Vocational Education and Training (BVET). Parallel to BVET was a Vocational Education and Training Accreditation Board (VETAB) to accredit publicly and privately delivered VET programs. Both these small agencies, though reporting to independent boards, were administered by the Department of Industrial Relations, Employment, Training and Further Education.

End of TAFE NSW monopoly on public funding and accredited courses Though TAFE NSW remained by far the largest VET provider in the state, its monopoly on accredited training and public funds was now ended. The policy architecture for the eventual split between the government funder and the government provider was in place.

BVET began contestable funding in 1994, starting with a small Contracted Training Program, in which private providers could bid for public funds to run VET courses (Goozee, 1994). As the program was about funding providers rather than students or employers, it was sometimes characterised as a ‘funding market’ rather than a true training market.

This distinction was picked up by the Allen Consulting Group’s report on the implementation of the national VET reform agenda (Allen, 1994). Allen argued that the major concern was the lack of buy-in to the reforms by industry itself. The reform process was, according to Allen, being driven more by bureaucrats and trade unions than industry. Their solution was a greater emphasis on the demand side, with industry allocating public funds directly to individual public and private providers through a system they called ‘user buys’. This was in effect a voucher system. It would be enthusiastically adopted by ANTA, initially only for apprentices and trainees, but named ‘user choice’ rather than ‘user buys’. In terms of marketisation, the rest of the decade would be dominated by attempts to implement user choice nationally along with the continuing ‘funding market’ outsourcing of VET courses to private providers.

Scott Review and its impact on TAFE NSW

While this was going on nationally the NSW system was subject to major reform. The Liberal Party Premier Nick Greiner came into office in 1988 and appointed the controversial Dr Terry Metherell as his Education Minister. The government moved swiftly to appoint Dr Brian Scott to review the operations of the entire education portfolio including TAFE. Scott produced two reports on TAFE NSW, the initial TAFE Restructuring and the final more detailed TAFE’s Commission for the 1990s

(Management Review, 1990). Scott was highly critical. He characterised TAFE NSW as a slow, inflexible and unresponsive centralised bureaucracy. The Kangan vision, Scott argued, had meant TAFE becoming “all things to all people” rather than concentrating on skills training for industry and the community. The large head office for centralised decision-making had made the system inefficient. Though not advocating the tendering out of public funds, Scott did talk about the inability of the publicly subsidised TAFE NSW to compete in the training market even when its competitors charged commercial fees.

Scott’s solutions were to reduce dramatically the size of head office and devolve operational decision-making to twenty-four networks of TAFE colleges each headed up by a network manager to whom college principals would report. Industry training divisions would develop curriculum but not have any line management responsibilities for TAFE teachers, unlike the teaching schools (state-wide faculties) they would replace. TAFE NSW should become a commission with its own board rather than continue as a government department, so it could act more commercially. There would be far greater effort on marketing, business development and connections with industry. Initially Scott suggested that commercial activities could be undertaken by a subsidiary body to be known as TAFECorp as opposed to its parent TAFECOM but this was never implemented.

Scott proposed that the NSW TAFE Commission should become fifty per cent self-funding by the end of the decade. TAFE NSW’s educationalists saw this as the most significant and disturbing step towards the corporatisation and possibly eventual privatisation of TAFE. The initial report gave no details of how this self-funding income should be achieved. This led to speculation about a massive increase in ‘fee for service’ activity or that TAFE NSW could achieve the fifty per cent more easily by shrinking in size. The final Scott report said (foreword, p. xiv) that the self-funding would consist of three elements: efficiency gains from the proposed reforms, increased fee for service activities including educational exports and, finally, rather undefined industry contributions – with a notion of more ‘user pays’ on the part of industry.

The Scott reforms were formally adopted but within two years had been sufficiently modified for Dr Scott to wash his hands of what had actually been implemented. Dr Metherell was removed as Education Minister – the process by which this was done eventually bringing down Premier Greiner. For a short time TAFE became part of the Industry and Industrial Relations Minister, John Fahey’s, portfolio. When Fahey replaced Greiner as Premier, TAFE returned to Education with Virginia Chadwick as Minister. Chadwick somewhat controversially appointed Dr Gregor Ramsey, the Chair of the National Board of Employment, Education and Training, as Managing Director of TAFE NSW.

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Gregor Ramsey and the institute structure

Ramsey supported devolution and an expansion of commercial activities. He was less than impressed with what he thought was an expensive and confused network structure, so he abolished them and created eleven institutes. Institutes were designed to be largely autonomous educational institutions but would operate in a state-wide collaborative framework. Eight institutes in regional NSW and suburban Sydney would be known as institutes of TAFE, characterised by a ‘federated college structure’. Three in central Sydney, Newcastle and Wollongong would become institutes of technology and organised on a faculty basis. The three institutes of technology were to be sufficiently specialised that they might eventually offer programs at ‘masters diploma’ level, along the lines of the German Meister program.

The Institute structure would last twenty-five years. Eventually all the institutes would become institutes of TAFE and would be organised on a faculty basis. Southern Sydney Institute would merge with Sydney and South Western Sydney institutes and the Open Training Education Network (OTEN) would become part of Western Sydney Institute, though OTEN retained its separate RTO status. The ongoing debate would be about how autonomous institutes should be. Training divisions had a far shorter life-span. Shrinking in numbers, they were merged into Educational Service Consortia in 1996 then Curriculum Centres in 2004 until finally disappearing due to budget restraints. Phoenix-like they re-appeared as Skills Points in the OneTAFE structure of 2016-2017, though the new management of TAFE has played down any heritage of previous curriculum and learning resource development structures.

Expansion of contestable funding

Nationally the expansion of a contestable training market was reinforced at ministerial councils, in ANTA strategic plans (ANTA, 1994) and in two national reviews of ANTA and the reform agenda by firstly Vince Fitzgerald and the Allen Consulting Group (Allen, 1994) and then one for ministers, chaired by Rae Taylor, looking at the operation of the ANTA agreement (Taylor, 1996).

The training market continued to develop in NSW for the next decade. In 1996 the BVET and TAFE Commission embarked upon a consultation on The development of the Vocational Education and Training (VET) Sector in NSW and the role of TAFE within a competitive framework. The principles that emerged were endorsed by both boards and the Minister for Education. These stated that competition was not an end in itself but a strategy to drive efficiency, innovation and responsiveness. Collaboration between providers, both public and private, should also be encouraged. Most important, they set out a role for TAFE and thus protected it from some of the more aggressive marketisation policies playing out in Victoria and Queensland. In NSW it was still the via media (Goozee, 2013, p.466).

Outsourcing course funding and user choice

So outsourcing of course delivery continued, with private providers tendering for a growing pool of Contracted Training Program funds from the Commonwealth Growth allocation. User choice for apprenticeships was however considered problematic in NSW. NSW participated in the early user choice pilots with BVET in 1994, commissioning a review of the principles by Wilkie and Gray, which comprehensively canvassed all the issues, highlighting the need to define the role of TAFE in this training market (Wilkie & Gray, 1995). NSW was prepared to apply user choice principles to Commonwealth-funded traineeships but not to extend it to the training component of state-funded, more traditional apprenticeships. The election of the Howard Government in 1996 gave new impetus to the extension of user choice, with Commonwealth Minister Kemp making it a centrepiece of his Modern Apprenticeship And Traineeship System (MAATs). At a VET Ministerial Council meeting in 1997, NSW Minister John Aquilina reserved his state’s position on user choice for apprentices, citing concerns about thin or non-viable markets and provision of apprentice training in rural NSW. NSW had instigated two reports on user choice by Charles Sturt University looking at ‘markets at risk’ and a joint study by the Department of Training and Education Coordination and TAFE NSW on thin markets (Goozee, 2013). Eventually a limited apprenticeship user choice program was started but with restrictions on certain trades and on its implementation in non-metropolitan locations.

Quality reviews of traineeship programs

Around 1999 the quality of traineeship programs operating under the user choice model nationally was causing concern. A number of states including Tasmania, Victoria and Queensland, but not NSW, engaged the universally respected VET expert Kaye Schofield to review the operation of their traineeship and, in some cases, apprenticeship programs (Schofield, 1999). Her findings were disturbing, especially on the quality and training outcomes achieved by wholly on-the-job traineeships. Her conclusions for Queensland were:

Notwithstanding some strengths and some quality characteristics, the investigation has concluded that, on the whole, Queensland's traineeship system is only partly effective, is not fit for its purpose, is inefficient and its accountability framework is not as strong as it needs to be. In short, it cannot reasonably be described as a quality system. (Schofield, p. ii)

Regulations were tightened in all states she reported on. In 2004 BVET engaged Peter Noonan to review the traineeship system in NSW, ostensibly because of the huge growth in traineeship numbers (Noonan, 2004). Noonan also questioned the quality of wholly on-the-job traineeships, especially where existing workers rather than new entrants were being trained. He made the

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observation that rather than being driven by the demands of employers for training, the system was actually driven by RTOs selling wage subsidies to employers with little training involved. It is a pity these lessons were not learnt so as to avoid the VET FEE-HELP scandals ten years later. There an ostensibly demand-driven, user choice system was corrupted by rogue RTOs selling training, offering computers and sometimes cash incentives to uninformed consumers. Governments have failed with market design in VET more than once. BVET did tighten up traineeship regulations and contracts, but still put untested faith in accreditation and quality bodies.

In NSW the exit in 2002 of Dr Ken Boston as Director-General of Education and Managing Director of TAFE NSW robbed TAFE of a leader who believed in it strongly. Boston was replaced by one of his deputies, Jan McClelland, whose background was in corporate services. She wanted greater integration between the school regions and TAFE NSW management structures. TAFE fiercely resisted this. The matter was resolved when a new minister, Dr Andrew Refshauge, replaced McClelland with the career bureaucrat Andrew Cappie-Wood. TAFE institutes remained and were notionally still on a path to greater autonomy.

Abolition of ANTA

The year 2005 brought a significant change to the national VET framework. After the re-election of the Howard Coalition Government came a surprise announcement in late 2004: the functions of ANTA were to be transferred to the Department of Education, Science and Training (DEST) with effect from 1 July 2005 – ostensibly to reduce bureaucracy.

Since ANTA’s creation in 1992 it had been responsible for leading the foundation and construction of the various pillars of the national training system. These included shared national objectives, plans and priorities for funding; competency-based training and a national skills, recognition and quality assurance framework; avenues for clearer connections between industry and business leaders, and trainers at the national and enterprise level; and – by encouraging competitive funding – the idea of a more responsive system, linked to labour market and consumer needs.

In hindsight, it could be argued that ANTA brokered change to a more mature and unified national system. Further developments were to follow, but it was no small feat to herd the often-truculent agendas of jurisdictions of varied political stripes in a single national direction.

The press release announcing ANTA’s demise also announced the creation of a ministerial portfolio responsible for vocational and technical education. Though this marked the end of a federalist experiment, it did not signal a change to the philosophy of greater marketisation and competition. For NSW the end of the ANTA era also meant more head-on collisions with the Commonwealth minister, the rather pugnacious Gary Hardgrave, particularly over his proposal to direct capital funds to establish Australian Technical Colleges – a class

of senior secondary school – which was perceived as an intervention in the state’s school sector.

Commonwealth bureaucrats recognised the demise of ANTA as an opportunity to reinforce the Commonwealth’s position and drive a harder bargain with states in funding negotiations, and to manage and monitor the sector more closely. Quin (2008) noted that the new arrangements allowed the Australian Government to make more effective use of its funding lever in enforcing change in VET. A senior federal bureaucrat she interviewed observed that it no longer had to pursue its aims through a third party:

It is a better process to extract trade from our state and territory colleagues, to keep them in the tent. We give them one third of their recurrent budget and two thirds of the capital budget for VET. By the end, ANTA was seen as an impediment to rapid change. (Quin, 2008, p. 6)

NSW reviews its position In 2005 the competition and regulatory body, the NSW Independent Pricing and Regulatory Tribunal (IPART) undertook extensive public consultation and review of the NSW VET sector and made its final report in late 2006. This also signalled a change in NSW VET policy at the state level. IPART was a new player in the VET policy scene. The report’s drafting and recommendations were firmly under the direction and control of the chairman, economist and former top Commonwealth bureaucrat, Dr Michael Keating AC, whose personal interest in the linkage of training, skills growth and increasing labour market participation were evident in the report’s focus and findings. A foundation of the report was Access Economics forecasting to scope the higher skill levels and demand for training in NSW. This identified the need for increased Commonwealth and state investment of an additional 2.5 per cent per annum for twenty years, with a focus on workforce re-entrant training. The Rudd Government in 2007 made an additional commitment to this through the Productivity Places Program, but states did not follow. IPART noted that:

Less than 10 per cent of total public funding for VET services in NSW is allocated on a competitive basis. Over half of this proportion is provided through the User Choice program; DET also purchases a small amount of VET services through competitive tendering (typically to address skill priority areas). In 2005, DET spent $28.5 million on purchasing VET services through the Strategic Skills Training program on a competitive basis. In 2003 and 2004, it spent around $7 million on tenders for pre-vocational training. In 2004, 4.6 per cent of recurrent government expenditure on VET services was

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allocated to non-TAFE providers. This is considerably less than the expenditure allocated to non-TAFE providers in Queensland (10.2 per cent) and Victoria (8.4 per cent). (IPART, 2006, p .96)

While some in the public training sector had feared that IPART, as the NSW Government’s competition authority, would recommend a wholesale opening of the NSW training market, the report actually took a more moderate approach. It did recommend allocation of more public funding for VET on a competitive basis, but also greater operational flexibility for TAFE NSW – especially in industrial relations negotiations – and greater autonomy for TAFE institute directors, “to develop the entrepreneurial culture and innovation and collaboration capabilities they need … Sheltering TAFE institutes from competition will not help them to develop such a culture.” (IPART, 2006, p. 99) TAFE NSW welcomed these recommendations as grounds to free itself from the constraints of the parent department.

The backdrop to this period is the Howard Government’s Commonwealth-State Agreement for Skilling Australia’s Workforce (SAW) 2006-2008, the new national funding framework established after the abolition of ANTA. Persistent intergovernmental tensions underlaid the new arrangement. States claimed that funding shortfalls were an ongoing obstacle to meeting skill demands. The Australian Government’s focus on the other hand was removal of systemic and structural jurisdictional impediments to achieving skill needs. Not surprisingly, features of this agreement included “develop(ing) the training market by enhancing competition through user choice targets, making TAFEs more commercial, levelling the playing field by making public infrastructure available to private providers and changing industrial relations and

management practices in the TAFE sector” (Parliament of

Australia, 2005, p. 5). The intrusion into jurisdictions’ management of their TAFE sectors was patent.

NSW was obliged under the 2006-2008 SAW agreement to increase the user choice budget (and expenditure) by at least five per cent a year over the life of the agreement and progressively to extend user choice to more apprenticeship trades. While NSW was meeting the five per cent requirement, the Australian Government criticised the limited extent of its application of user choice to apprenticeships: at that point user choice covered fourteen NSW apprenticeship areas and NSW still restricted it to robust markets. With an eye to the renegotiation of the next national agreement, the NSW Board of Vocational Education and Training (BVET) undertook consultations to review the principles of its policy, which had been in place since 1998 (NSW Department of Education and Training, 2007).

In this context, NSW came under fire in the Boston Consulting Group’s (BCG) mid-term review of the agreement, commissioned by the Department of Education, Science and Training (DEST) in preparation for developing the next (2009-2012) funding agreement. BCG reviewed jurisdictions on their performance against the

SAW market reform obligations, which included increased level of trainee and employer choice, competition among providers, autonomy, workforce flexibility and commercial management of publicly owned providers, and third party access to public infrastructure. Overall the review found that while the efficiency of the sector had improved, the “VET market remains largely non-competitive and State based”. In the case of NSW the report found that:

While competition for available contestable funds appears relatively open, the scope of NSW user choice and contestable funding is lower than many jurisdictions. NSW public provider models for Institutes exhibit somewhat less autonomy, workforce flexibility and commercial freedoms than many of their interstate counterparts have or … are planned to have. (Boston Consulting Group, 2007, p. 51)

The report recommended that “to provide the basis for genuinely competitive purchasing arrangements, the State/Territories should clearly separate their roles as purchasers of VET and owners of VET providers and provide for more arms-length governance arrangement for owned providers”. (Boston Consulting Group, 2007, p.6)

Joss Ross reported that reactions in ‘fortress NSW’ to the BCG report were vitriolic. John Della Bosca, then minister, said the report should be “junked” and that “[a] free market will not deliver the training needs of NSW” (Campus Review, 22 April 2008). Verity Firth, the next Labor Minister, remarked: “The state government has no intentions to privatise TAFE”.

NSW user choice policy was loosened from 2009, but not fully: it was extended to 24 apprenticeship occupations in the ‘open competition regions’, and pricing incentives were applied to new entrant traineeships in an attempt to match funding more closely to delivery costs and also to skill demand areas (BVET, 2009, p. 18).

For TAFE NSW at this period, changes of Minister, Director-General (also Managing Director TAFE NSW) and Deputy Director-General (DDG) TAFE and Community Education produced a change in chemistry within the department. In 2007 the DDG of TAFE implemented purchasing and performance agreements with institutes to buy training effort (Department of Education and Training, 2007, p. 38). Tactically this move was an attempt on TAFE’s part to take some control of the agenda around purchaser/provider separation being urged nationally and also within the state and to implement change on TAFE’s terms. This involved a shift from block funding to institutes and clearer business rules for planning, funding, required performance outcomes. It introduced incentives for increased commercial revenue and stakeholder satisfaction outcomes. The aim of the new internal purchasing mechanism was to implement purchaser/provider separation through a more arm’s length arrangement between the government as funder,

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DDG TAFE as purchaser and institute directors as individual providers.

Over the period 2007-2008, TAFE NSW also ran a comprehensive internal review under the title Exploring a new vision for TAFE for the 21st Century (TAFE NSW, 2007). The series of discussion papers, consultations and review reports were an attempt to start an internal as well as a public dialogue about the need for change, particularly around take up of business opportunities, red tape reduction, devolution of authority, speed to market and responsiveness. At the time the TAFE NSW executive believed it needed to demonstrate the capacity for self-critique and modernisation or risk other agents taking charge and driving the TAFE reform agenda. However, there was little traction with or buy-in from government/central agencies for a reform that was seen to be self-led by TAFE. Among other things the review led to a restructure in 2008-2009 that abolished centralised product development in an effort to speed up responsiveness. But this wasn’t the sort of change that governments at state and national levels were looking for.

Shift of gear – a new national financial framework builds marketisation impetus

In 2009 the new National Agreement for Skills and Workforce Development commenced. Unlike predecessor agreements that were negotiated under the auspices of ministerial councils and signed by state and territory ministers responsible for VET, the new agreement was a product of the Council of Australian Governments and subject to the provisions of the Intergovernmental Agreement (IGA) on Federal Financial Relations introduced by the Rudd Labor Government. Performance against the targets and proposed outcomes of the IGA and related agreements was monitored annually by the COAG Reform Council, a body independent of federal and state governments and which reported to COAG.

Unlike the previous national agreement, the IGA did not prescribe system reforms within jurisdictions, such as competition or commercialisation of public providers, but allowed greater flexibility to states in achieving targets. There was an expectation nonetheless that the market reform agenda would proceed, and the Australian Government did not disguise its interest in the far-reaching market reforms that were under way in the Victorian system with the introduction of the Victorian Training Guarantee (Leung et al., 2014). A comparative international study of VET undertaken by the OECD, Learning for Jobs, made a series of recommendations, predictable at the time, that were to become the core platform of the Federal Government’s next wave of VET market reforms (Hoeckl et al, 2008). Policy discussions about market design in vocational education reached fever pitch in Julia Gillard’s time as education minister and prime minister (Uren, 2010). Competition in the training market also became a research priority for the National Centre for Vocational Education Research (NCVER), and Karmel noted that “‘Competition’ and

‘contestability’ are now part of the vocational education and training lexicon” (Karmel, 2009, p. 3).

Nationally driven policy proposals for a student entitlement to subsidised places and income-contingent loans for VET study, incrementally agreed to by states and eventually NSW, would prove to have far-reaching consequences. Policy debate was intensified by the Bradley review’s recommendation of a student entitlement for both higher education and VET. In 2011

COAG adopted a new framework of objectives and principles for a reformed national VET system, ultimately embodied in the 2012 National Partnership

Agreement on Skills Reform. At the heart of these reforms was commitment by governments to a national training entitlement, greater contestability of funding and a more open and competitive training market.

NSW Coalition Government introduces comprehensive market reform agenda In this context, in 2011, the newly elected NSW Coalition Government, recognising the national momentum for contestability, began public consultations on the future direction and development of the NSW training market. The resulting policy, Smart and Skilled (2012), marked the state’s most significant and comprehensive policy statement on the NSW VET market since the early 1990s. It introduced a subsidised training entitlement, a significant shift from the position of previous NSW governments towards those of Victoria and South Australia. Remarkably, it offered greater independence and commercial authority for the public provider, separating purchaser and provider by carving off the role of the Managing Director TAFE NSW (at that time held by Pam Christie) from the functions of the Director-General of the Department of Education and Communities. The policy established a distinct budget for TAFE NSW and proposed giving TAFE institutes greater autonomy with capacity to manage revenues, expenditure and assets, and to retain and reinvest earnings. It endorsed workforce reform under the framework of enterprise bargaining, based on the legislative amendment to the TAFE Act in late 2011, which meant that TAFE NSW was once again the employer of its own staff and, as a corporation, operated under the provisions of the Fair Work Act 2009. This would allow TAFE NSW to push for workforce productivity and efficiencies more suited to the nature of its increasingly commercial orientation.

The findings of the NSW Commission of Audit report (known as the Schott report) also increased momentum for greater TAFE NSW independence. A key theme of the report was devolution of accountability and authority, noting that “experience of front line public servants needs to inform the development and delivery of government policy”. In relation to TAFE NSW, the report noted that “there is simply not enough flexibility for the institute and too much central control to allow … opportunities to be pursued easily or in a timely manner” (Commission of

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Audit, 2012, p. 76). Schott recommended legal autonomy for the TAFE NSW Commission; for TAFE institutes to be established as separate corporate entities, reporting to the Commission; greater autonomy for institute directors in managing institutes, including financial and staff management and remuneration.

These recommendations were not a bolt out of the blue. Various internal reviews of TAFE NSW had investigated alternative models for TAFE governance, considering legal and/or legislative changes to achieve greater separation from government, so that TAFE might operate either as a state-owned corporation or as a general government business. This potential was suggested in the first Statement of Owner Expectations for TAFE NSW issued by Minister Piccoli in 2013. The Statement went as far as saying that “The NSW Government has agreed that TAFE NSW Institutes are to be established as separate entities, wholly owned and controlled by TAFE NSW.” (Piccoli, 2013, p .5) Down the track, however, the NSW Government, while hungry for efficiencies and greater productivity in its public provider, would never have the appetite for legislative or related change to give TAFE distance from government oversight, even though this had been recommended by multiple international, national and state-level reviews.

While separation from the department structurally guaranteed administrative independence and purchaser/provider separation, TAFE NSW had actually been moving incrementally to less reliance on government funding and a greater proportion of commercial revenue. The Schott report noted that in real terms, government investment in TAFE NSW had been declining, and at the time represented about sixty-five per cent of revenue. The 2010–2011 allocation to TAFE NSW, $1.1 billion, was $141 million less in real terms than that in 1996–1997 (Commission of Audit, 2012, p. 75). TAFE fee for service revenues had grown from $198 million to $305 million, by fifty-four per cent, over the period 2005 to 2009 (based on NCVER, 2010, p. 9). This success meant TAFE NSW had been an ongoing source of cross-subsidy to departmental budgets, a situation that was accentuated in 2013 with the NSW Government budget of that year requiring a four year ‘efficiency dividend’ of 1.5 per cent per annum from TAFE, while exempting schools. This would result in multiple reviews of institutes and central support functions in TAFE, leading to cuts of around 800 positions over the following four years (Australian Financial Review, 29 April 2013).

The NSW IPART again played an influential role in VET Smart and Skilled policy refinement with its extensive and sophisticated work on the pricing and fee-setting model adopted for government-subsidised VET and student contributions (IPART, 2013). In particular it dissected the ‘efficient cost’ of delivering a VET enrolment. This excluded costs that would not be incurred by a non–public sector RTO in a competitive environment, and which TAFE incurs “as a result of the competitive disadvantage it faces due to its public ownership”, which would “in future be funded through its operational base

funding”. IPART’s work comprised base prices, loadings for higher cost learners (location-based and needs-based) and community service obligation funding for TAFE and community education sector providers.

Interrelated work undertaken on the VET Funding and Budget Model managed through the NSW Treasury gave further detailed scrutiny to TAFE’s costs. It identified the additional costs incurred by TAFE to be funded through operational base funding, specifying workforce costs due to public sector industrial agreements, the costs of compliance with public sector reporting and the costs of maintaining heritage assets (IPART, 2013, p. 58).

The Statement of Owner Expectations for TAFE NSW reflected IPART’s and Treasury’s analyses and flagged new arrangements for TAFE’s budget, carving funding from government into various segments including operational base funding to offset the additional costs incurred as the public provider, community service obligation funding to support disadvantaged students and thin markets, and a direct allocation to deliver certificate IV and higher qualifications. To date there is still no transparency regarding the quantum of the components of TAFE’s direct funding, a point noted in the 2015 Legislative Council review of VET and there has been much speculation about the efficiencies expected from TAFE NSW in its use of operational base funding, with the expectation that TAFE would reduce dependency on this source of funding over time - especially its workforce costs. Enterprise bargaining within the constraints of NSW Government’s public sector wages policy (NSW Treasury, 2011) which caps public sector wage increases to 2.5 per cent a year unless offset by employee-related savings, restricts TAFE’s capacity to achieve substantial role innovation or productivity trade-offs in order to achieve negotiated savings.

A further structural change in the NSW sector was the demise of the Board of Vocational Education and Training after nearly twenty years, and the establishment of the NSW Skills Board – a fresh look to match the roll-out of the new Smart and Skilled policy, but with functions not unlike those of its predecessor. Under the chairmanship of Philip Clark, the board was charged with overseeing VET system reform including the move to greater contestability. As well as endorsing the NSW Skills List, which specifies the qualifications eligible for government subsidies under Smart and Skilled, the board reviewed pricing methodology developed by IPART. It recommended a staged transition to IPART’s recommended student fees, with lower fees in 2015.

Actual implementation of the Smart and Skilled policy did not occur as planned in 2014 and was held off until January 2015.This was largely due to the delays in resolving funding and governance arrangements in the new purchaser-provider framework (NSW Auditor General, 2015, p. 14). It also related to capability issues associated with the NSW Government’s $750 million investment in the Learning Management and Business Reform (LMBR), a project commenced in 2006 to replace legacy finance, HR and IT systems. The LMBR system

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experienced significant problems with the integration of both Smart and Skilled and TAFE NSW enrolment systems (IT News, 2016).

July 1, 2014 was a landmark for TAFE NSW as it once again resumed its status as a separate government agency, after nineteen years of mergers with various iterations of parent departments and alignments with school education. The purchaser-provider split was finally achieved but only temporarily. Machinery of government changes after the 2015 state elections were to bring TAFE NSW into the newly created portfolio cluster of Industry, Skills and Regional Development from 1 July of that year under the National Party minister John Barilaro. It was together once again with State Training Services, the unit responsible for administration of purchasing under the Smart and Skilled policy.

Implementation of Smart and Skilled

The NSW VET landscape has looked significantly different since 2015. The roll-out of Smart and Skilled from that year has had teething problems and critics, and changes for TAFE NSW have been tumultuous, both in relation to the policy and more broadly.

Smart and Skilled included a government-subsidised entitlement to qualifications up to certificate III level to help people gain skills for employment, career advancement or further study. Subsidised qualifications were limited to those identified on the NSW Skills List as eligible and in demand. For other or higher VET qualifications students had the option of taking out a Commonwealth-funded loan. State Training Services managed the portion of the VET budget dedicated to contestable entitlement training and to targeted subsidies for higher level training in priority areas. A fixed price was paid for qualifications on the NSW Skills List, and TAFE NSW along with private and community training providers competed to attract students to this subsidised training. Students paid the same fee for government-subsidised training regardless of whether they studied at TAFE NSW or another approved provider. Providers approved to deliver under Smart and Skilled had to meet the new and stricter requirements of the Smart and Skilled NSW Quality Framework, over and above ASQA national regulatory requirements.3

It seemed, however, that NSW was still treading the cautious path in terms of the quantum of investment in VET as well as proportion of funds going to non-TAFE providers. The NSW Auditor General noted that, unlike Victoria’s, the NSW policy was to be ‘budget neutral’ and, to ensure this objective of the Smart and Skilled reforms, the contestable portion of the state’s vocational education and training budget was funded by reallocating some of TAFE’s direct funding (NSW Auditor General, 2015, p. 17).

3 Smart and Skilled NSW Quality Framework: https://www.training.nsw.gov.au/forms_documents/smartandskilled/quality_framework/quality_framework.pdf

From 2015 to 2016, NSW payments to non-TAFE providers increased from $96.3 to $175.5 million, but this was still considerably lower than was paid to non-TAFE providers in 2016 by both Victoria ($554.3 million, down from over $800 million in 2012) and Queensland ($376.3 million, up from approximately $200 million in 2012). Increased payments to non-TAFE providers occurred in the context of a reduction in VET operating revenue from NSW government sources over the period 2012 to 2016. This funding fell substantially, from $1.165 billion to $877 million (NCVER, 2017 pp. 14-15).

The roll-out of Smart and Skilled was problematic for the NSW Government on multiple fronts. Principally, course price increases were the focus of a barrage of political attacks as well as criticism from continuing and intending students and industry. Declining enrolments in TAFE NSW were reported, as well as the slow uptake of entitlement places across the board (Swinton, 2015; Needham, 2015; Becker, 2015). The 2015 state budget attempted remedies including $48 million over four years for fee-free scholarships for 200,000 fifteen to thirty-year-olds, to overcome some of the disincentive of elevated course prices, as well as free places for people in social housing.

For TAFE NSW the start of Smart and Skilled was disastrous as it coincided with the roll-out of the new Student Administration and Learning Management system (SALM) – an offshoot of the costly and ill-fated LMBR inherited from the Department of Education and Communities – as well as the start of the new fee structure. The TAFE NSW Managing Director was forced to issue a public apology for prolonged delays and uncertainty about enrolments being registered or fees paid. Staff had to undertake onerous manual work-arounds. This system failure led to the NSW Audit Office finding in the 2014–2015 annual audit report that “serious system limitations prevented TAFE NSW from providing sufficient and appropriate evidence to support recorded student revenue of $477 million, student receivables and accrued income of $47.6 million and unearned revenue of $398 million”. Following an extensive remediation and data cleansing exercise costing over $10 million, the audit qualification was lifted in the 2015-2016 annual financial report (TAFE NSW, 2016), although the Audit Office reported continued costs to TAFE to produce reliable financial information due to deficiencies in its student administration system (Patty, 2016). TAFE NSW subsequently announced it would replace the problem-plagued system.

In a remarkable move at a time when TAFE NSW’s revenue recognition systems were in disarray, Treasury undertook to apply its cash management policy for government agencies by clawing back over $200 million from the Commission, removing its capacity to operate outside the Treasury banking system and retain cash (NSW Treasury, 2015; McNally, 2016). TAFE NSW was

https://www.training.nsw.gov.au/forms_documents/smartandskilled/quality_framework/quality_framework.pdf

https://www.training.nsw.gov.au/forms_documents/smartandskilled/quality_framework/quality_framework.pdf

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excluded from special consideration – surprisingly, given the expectation of TAFE’s progressive shift from operating as a budget-dependent entity in the general government sector, to a more commercial footing as a government business. The 2013 Statement of Owner Expectations had allowed greater business flexibility to TAFE including “being enabled to retain surpluses and reinvest earnings … to decrease reliance on NSW Government Funding and invest in capability building”. This was not to be.

The Smart and Skilled era in NSW has proved to be a policy juggling act, reversing earlier moves for VET market reform and to apply competition policy to the public provider. On the one hand it embraced contestability among providers, yet on the other it apparently rejected TAFE separation and independence from government. One thing was clear: government appeared to want to hold TAFE close, driving efficiencies, exercising authority over its funding and determining its reach into regions – an obvious continuing interest of National Party ministers.

Issues with stability of the new market framework in NSW

One year down the track of Smart and Skilled implementation, an independent review was commissioned by the NSW Skills board from the Nous Group. The review focused on two aspects of the Smart and Skilled start-up: the effectiveness of selecting appropriate RTOs to be eligible providers, and the impact of the policy on the VET market. This review coincided with an Inquiry into VET by the NSW Legislative Council. The majority parliamentary report identified numerous problems in the way Smart and Skilled had been implemented, including inadequate pricing and high student fees. In an echo of earlier NSW training market policy restricting competition to robust markets, the inquiry concluded that the contestable training market was problematic in rural and regional areas and that this approach “wasn’t working in thin markets”. The report called on government:

to modify the funding arrangements under Smart and Skilled to limit contestability for regional, rural and remote areas. This could be done by placing a cap on the level of contestable funding available in areas deemed to be thin markets, and by allocating the relevant TAFE institutes additional direct funding. Nothing less than the long-term sustainability of regional, rural and remote communities is at stake. (NSW Legislative Council, 2015, p. xii)

The report recommended a constrained approach to marketisation. It found that:

there should be no ceiling or cap on the overall level of government funding that is contestable; rather, the level of contestability should be determined gradually over time, as TAFE becomes a seasoned competitor in the market. In considering increasing the level of

contestability in the future, the government should exercise caution and restraint to avoid the mistakes of other jurisdictions. (NSW Legislative Council, 2015, p. xi)

The Nous Group reports to the NSW Skills Board noted the difficulty of isolating the effects of Smart and Skilled policy, which accounts for roughly one third of the public funding in the NSW training market, the rest being NSW direct funding to TAFE NSW and Commonwealth funding arrangements – which included the highly disruptive effect of the VET FEE-HELP loans to students. The reports indicated that objectives of the policy were partly met, but identified a significant underspend and a decline in training activity, rather than the increase envisaged by the policy. The reviewers’ explanations of this were related to the tight reins or ‘over-regulation’ of the policy to avoid the negative or unintended consequences experienced though market design elsewhere. No region achieved the targeted enrolments and in all regions the allocations were not fully spent. Strict financial capping of providers meant that thirty-two per cent of funding for full courses and eighty-seven per cent of targeted priorities had not been spent (Nous Group, 2016, Stage 1, p. 21).

The outcomes of these investigations led to both a Statement of Expectations for Smart and Skilled Providers, designed to assist the integrity of the NSW training system and deal with the ‘dodgy provider’ issues highlighted in the Legislative Council report, and publication of the July 2016 Directions Statement for VET, which set out refinements to the Smart and Skilled framework including simplifications, smoother student application processes, pricing reviews and stronger controls over subcontractors and brokers.

TAFE NSW developments since Smart and Skilled

TAFE NSW could see the effect Smart and Skilled would have on the organisation. At the TAFE Directors Australian Conference at the end of 2014, the then managing director said:

In TAFE NSW we’re realistic about the impact of … Smart and Skilled … and recognise that without transformational change, we won’t survive – or at least not thrive and survive in the future. (Christie, in Wilkinson, 2014. p. 21)

Before and in the period since 2015, TAFE NSW’s funding, finances, assets, commerce and structures were the subject of intense internal examination, external review by independent consultants and by Treasury, Parliamentary Estimates Committees and Cabinet. Of significance was TAFE NSW’s commissioning, and ultimate release in a modified version in 2016, of the study by Boston Consulting Group (BCG). Despite some clumsy and embarrassing comparisons with failed RTOs, the BCG report reinforced the view that TAFE NSW would have difficulty surviving financially without fundamental

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changes to its business model and governance structures. The BCG report proposed a reduction in the number of institutes but increased business authority and a greater degree of autonomy for their future operation.

The year 2015 was a watershed for TAFE NSW in more ways than the start of Smart and Skilled. Significant changes in the executive structure started with government’s appointment of a new TAFE Commission board chairman, Terry Charlton, in June 2015. This was coupled with the departure of Managing Director Pam Christie and the appointment of Jon Black to this position from December 2015 (Ross, 2015). New NSW TAFE Commission board appointments also followed in early 2016. Heralding a shake-up, the new board chairman levelled a scathing public critique at TAFE NSW, claiming the organisation was struggling under “bloated management structures” and was “traditionally intimidated by change” (Ross, 2016).

Chairman Charlton signalled that the ‘inefficiency subsidy’, as he labelled TAFE NSW operational base funding (OBF), could be progressively removed by government and channelled into other activities, such as community service obligations. He also flagged a program of asset sales and recycling, centralisation of administrative services and amalgamations.

These comments reflected government’s desire to shift OBF savings into contestable funds. Once again, the state appeared to be exercising its budget-neutral approach to marketisation, in this case shifting funds from TAFE NSW into contestable programs (Needham, 2015).

Despite wage restraint and several rounds of enterprise bargaining since 2012, TAFE NSW executives had been unable to win staff agreement to workforce reform and the potential life-raft of significant productivity or efficiency improvements. New, more versatile paraprofessional roles had been introduced, but savings from such roles were still to be realised. Teaching staff stubbornly guarded their generous working conditions of extensive leave, limited face-to-face hours and non-teaching weeks.

The new Vision for TAFE NSW – the ‘OneTAFE’ model – was announced in July 2016 by the TAFE Commission board, entailing amalgamation of institutes and centralisation of functions. TAFE NSW is in the process of transitioning from ten institutes to one. The ‘vision’ arguably returns to an older version of TAFE NSW critiqued in the Scott report in the late 1980s. With the removal of institutes, increased central functions and reporting lines, including the return to a single registered training organisation status and one point of product development, rather than the dispersed institute model, it is a notable divergence from previous proposed directions, such as the Statement of Owner Expectations with its intention of a more devolved structure and more independent institutes that could better position themselves for Smart and Skilled. It also contradicted recommendations made in NSW reviews such as those of IPART (2006) and the NSW Commission of Audit (2012).

NSW 2016 data indicated some reversal of the notable 2015 downturn in government-subsidised student enrolments (NCVER, 2017). This change in direction however would not prove to be a consistent trend, with 2017 data showing that NSW experienced a decline in student numbers, falling from 454 000 students in 2016 to 423 100 students in 2017 — a decline of 30 900 students or 6.8% (NCVER, 2018).

NSW enrolment data overall mirror the national downward trends since 2012 in students, hours of delivery and full year training equivalents, as discussed by Burke in this publication.

The jury is still out as to whether marketisation of VET and the OneTAFE model will deliver both the enrolments and other policy outcomes designed through Smart and Skilled and TAFE NSW system changes, as well as the longer term solutions for NSW skill needs.

Conclusions and looking ahead By 1990 the idealistic optimism of the Kangan era reforms that in 1974 had established TAFE as an educational sector in its own right committed to maximising the potential of the whole person, was being replaced with a narrower and more instrumental world view. Over the following twenty-five years this would see TAFE NSW cast as just one provider in a VET sector whose main purpose was to compete for a role in skilling the workforce. Politicians and bureaucrats in NSW took such a cautious approach to these nationally driven reforms that they were often accused of recalcitrance and protectionism of the public provider. This response to national policy initiatives did not stop the state of NSW, however, from regularly reforming TAFE’s internal management structure and shifting it via a number of “machinery of government” changes around different State Government departments. The times were turbulent for TAFE NSW staff.

Why was NSW so cautious in its response to both competency-based training and what was originally called “user choice” and the establishment of a competitive training market for such a long time? Part of it was “state rights” and a desire for the State Government to remain in control especially of the budget and where the money was allocated. Contestability was tactically embraced as a means of accessing Commonwealth funding. State funding would be controlled by the state. Politicians on the left supported the “access and equity” approach of Kangan while politicians on the right saw the impact as well as political value TAFE’s role in rural and remote communities. They were not going to pass control of a system that was important locally to national agencies.

The NSW Teachers’ Federation continued to be a powerful factor in this tussle. The Federation was ideologically opposed to marketisation and fiercely resisted any attempts to change comparatively generous leave conditions and face to face teaching hours. TAFE NSW management failed in its attempts to persuade

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governments to force change. The result was even more pressure by Commonwealth bodies to shift provision to a cheaper private sector and the replacement of full time teachers in TAFE NSW with part time casuals. Yet, even when late in the first decade of the 2000s NSW finally signed on to the national agreement for a student entitlement to training, the Minister responsible, Adrian Piccoli, remained a strident defender of TAFE NSW. He wanted to ensure his Smart and Skilled policies were implemented cautiously avoiding some of the disasters for TAFE emerging in other states. More public provision remained in NSW with TAFE NSW than in any other jurisdiction.

If the response to national initiatives was restrained, this did not stop both Coalition and Labor governments – outward defenders of the public provider – from changing management structures in TAFE NSW. In nearly all cases the stated rationale was the same - to reduce management costs, shift resources to the teaching front line and reduce reliance on public funding. NSW would have change on its own terms. Central agencies like the NSW Treasury and department of Premier and Cabinet were often the unseen guiding hands behind these initiatives, especially following the 2012 COAG agreement, when their intervention in TAFE NSW and the VET sector intensified. For most of the period these agencies had a focus on reducing public expenditure and increasing efficiency. They were classically neo-liberal in outlook and thus generally believed in competition as a means of improving efficiency.

Reviews headed up by luminaries such as Brian Scott, Michael Keating and Kerry Schott all recommended devolution of responsibility away from head office. Keating and Schott recommended greater autonomy for TAFE NSW institutes, especially in relation to industrial relations and by implication reform of teachers’ employment conditions. There was a sudden reversal of this position, unsupported by earlier research and public reviews, when in 2016 the Minister responsible for TAFE NSW, John Barilaro, announced TAFE was abolishing its institutes and recentralising under a strategy known as ‘OneTAFE’. Economies of scale now trumped competition as a means of improving efficiency, flexibility and responsiveness. Once again part of these reforms would be financed by TAFE delivering more training on a “fee for service” basis to enterprises and governments but with no real analysis of how big this market was and whether TAFE had the capability and capacity to service it.

It will be interesting to see how effective the NSW OneTAFE structural reforms turn out to be.

So where to from now? Regulation is being tightened (some say over tightened) in response to the VET Fee Help scandals. Publicly funded TAFE enrolments continue to fall and NSW is part of that trend. This is ascribed to falling government, particularly state, VET funding in contrast to generous, “demand led” public funding to the university sector in Australia. The labour market is changing with increased demand for many university trained occupations and less demand for VET trained ones,

although some VET proponents challenge this. They admit that a lot of this is to do with the image of TAFE and VET which is not seen as sufficiently aspirational, especially for some who seek resilient career opportunities in the digital economy.

Many insiders feel VET and TAFE need better public funding and a period of organisational stability. Competency based training is increasingly being seen as a product of the 1990s, unsuitable for the highly dynamic labour market of this century where many future jobs do not currently exist. Wheelahan and others have argued for it to be replaced by a more flexible notion of vocational streams or pathways (Wheelahan, Buchanan & Yu, 2015).

In response to these challenges some TAFE experts like Bruce McKenzie and Ruth Schubert have argued for further structural change and a transformation of VET institutions into polytechnics or “applied universities”. These would be part of an integrated tertiary system with common funding and regulatory arrangements with the university sector. They would offer a comprehensive range of programs from foundation to applied degree levels. Another alternative is for TAFE to concentrate on its long established core business – foundation programs and applied training principally at the Certificate 3 and 4 levels. Currently TAFE’s growth areas in NSW in industry terms are construction, care and health. This is entirely in line with growth areas in the state’s economy.

Contestability and marketisation of VET also are being questioned as a dominant ideology that may have run its course in the sector’s development. Terry Moran, inaugural CEO of ANTA and former head of the Prime Minister and Cabinet department, has reflected on an “unhealthy reliance on neoliberal microeconomic reform” smothering creative public policy development (Moran, 2017). Future governments might not so slavishly pursue this policy in the VET sector as they have in the past.

To resolve these issues and the conflict between States and Australian Government agencies over TAFE and VET policy, TAFE needs a national review as far-reaching as the one led by Myer Kangan in the early 1970s. That heralded a golden age not just for TAFE and but also for the individuals, enterprises and the communities TAFE served.

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1. Introduction Creation of a ‘training market’ for publicly funded but privately delivered vocational education and training (VET) is one of the most transparent failures of neoliberal public policy over the last three decades. It is an exemplar of the great damage inflicted when a naive and idealised neoliberal conception of how markets work is the basis for public policy. Over the last decade or so I have sought to highlight a key paradox. For forty years orthodox economics has been the primary justification for introducing the training market and designing its operation. But orthodox economics is also an immensely powerful tool for explaining widespread and persistent concern over quality and malfeasance in the publicly funded but privately delivered training market (Toner 2011, 2014, 2018). The paradox arises because advocates of the training market, either wilfully or through ignorance, failed to apply economic analysis to VET in Australia to determine its suitability for contracting out and the incentives driving participation and behaviour of many training market members. Such analysis demonstrates that widespread quality diminution and malfeasance are an inexorable outcome of publicly funded but privately delivered VET. This chapter provides a brief summary of these arguments. This has been a unique perspective on the training market complementing the dominant educationist explanation of failure in the training market.

In summary quality problems in the VET market arose with the introduction in the 1990s of contracting out publicly funded VET to private providers based on a grossly inadequate analysis of the economics of the private training market, the scope for efficient contracting and the actual level of demand for quality training amongst students and employers. Second, concomitantly a new pedagogical system, Competency Based Training (CBT) and Training Packages, was introduced to realise the core objectives of the training market in terms of flexibility and customisation of training to the needs of individual students and firms. The degree of flexibility and poor specification of training and assessment standards facilitated diminished quality and malfeasance among

market participants. Third, a key objective was to make the VET system ‘industry-led’ by shifting from a supposedly ‘supply-side’ model dominated by the self-interest of TAFE teachers and education bureaucrats, to a ‘demand-side’ VET system focussed on the needs of VET users. However, fundamental ambiguity remains in key policy documents and practice as to whose interests the new VET system is actually intended to serve. Is it the individual student, the firm, the industry or even the taxpayer investing billions annually in publicly supported VET? The interests of these four stakeholders converge but also diverge in key respects. Four, because of these design flaws, and the sheer number of private providers who entered the market and number of courses and qualifications permitted in the VET system, efficient regulation is exceedingly difficult or impossible. Finally, greatly reduced real public VET spending per student hour has also reduced quality.

The training market created both the opportunity and incentives for quality diminution and malfeasance by many market participants exploiting strategic ambiguities in the design of the system. Orthodox economics provides a useful analytical toolkit to explain why publicly funded but privately delivered VET should not have been contracted out and why the large scale adverse outcomes were inevitable. This is paradoxical as orthodox economics was also used to justify introducing the training market. This paradox is explained in part by a commitment to neoliberal ideology by training market advocates and powerful financial incentives to market participants who benefitted from the ‘flexibility’ the new training system permitted. Private providers lowered cost and increased profitability; students lowered cost and effort; and employers had taxpayers fund firm-specific training and some sought to suppress wage rises by increasing the supply of trained labour.

2. Origins of the Training Market A chief advocate of neoliberalism, Milton Friedman (1955), first outlined the arguments for separating the role of government as a direct producer of educational services and VET from its role financing education and training. Making public training funds contestable through means such as a voucher system would better meet the needs of

How Economics Explains Failure of the Publicly Funded Privately Delivered Training Market Friday, 3 August 2018

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students and employers, lower costs and improve pedagogical innovati2on.

It was not until the early years of the UK Thatcher government in the 1980s that a fully integrated neoliberal training market was introduced. There were four key elements: competition between public and private providers through contracting out publicly funded VET; establishing a VET quality regulator; a new pedagogy Competency Based Training (CBT) and a new national system of qualifications (National Vocational Qualifications) based on CBT principles (Bates 2002). Following these ‘reforms’ the English VET system has continued to be widely recognised as the worst among advanced European nations: a barrier to efficiency in industry; a key source of persistent skill shortages and failure to integrate disadvantaged groups (Finegold and Soskice 1988; Ryan and Unwin 2001; Leitch 2006; Brockmann et al 2011).

As part of the broader neoliberal revolution in economic and public policy over the 1990s, the UK VET system was replicated in Australia virtually ex integro.i The intellectual rationale for this revolution was bipartite support for ‘micro-economic reform’, institutionalised through National Competition Policy, encompassing deregulation of labour, product and capital markets. For government neoliberalism meant privatisation of profitable government businesses and subjecting the supply of remaining government services to competition between public and providers by contracting out (Hilmer 1993). ((In the new system both types of training provider are known as Registered Training Organisations or RTOs).

A re-designed training system was to be an essential complement to the broader push for labour market deregulation as greater ‘flexibility’ in training delivery would be critical to achieving the supposed productivity gains from enterprise bargaining and award restructuring (Dawkins 1989). ii Opening public training funds to competition in a ‘training market’ would improve technical efficiency by creating incentives for public and private training providers to minimise costs. It would also raise allocative efficiency by more closely tying training provision to user demand. It would lift dynamic efficiency by promoting innovation in service delivery. The combination of competition and the new pedagogy CBT would permit training providers to customise training to the needs of an individual student and employer by giving priority to flexibility in training content, delivery and assessment (Deveson 1990: 9). The new system would be ‘demand-led’ serving the needs of students and employers not ‘supply-led’ serving the needs of teachers and education bureaucrats.

It is crucial to note introduction of the training market into Australia was based neither on detailed evidence regarding the performance and efficiency of the status quo ante or on a detailed analysis of the economics of a training market and the characteristics of VET users to determine the suitability of contracting out publicly funded VET. Rather, its introduction relied solely on a priori reasoning that is the foundation of neoclassical economics. Allocating public

training funds through a market based system and introducing competition between providers would, by definition, create a better system.

It is also important to note that from the beginning of the training market private RTOs were given equivalent status with TAFE in terms of being able to deliver training based on Training Packages, assess students and issue nationally recognised qualifications. RTOs are registered with the national regulator, the Australian Skills Quality Authority (ASQA) established in 2011, to deliver a specific range of courses at a given level of qualification, typically a range between Certificate 1 to Diploma level, and even degrees. This equivalent status gave private RTOs access to an essential and economically highly valuable commodity, the right to issue qualifications that are frequently a pre-condition for work in many occupations.iii

3. Implementing the Training Market Since the early 1990’s Australian governments have been incrementally instituting a training market by increasing the share of public funds diverted from the public provider, mainly TAFE to private RTOs. From a few earlier pilot programmes the training market commenced officially with the introduction in 1998 of User Choice policy, or the 'the flow of public funds to individual training providers which reflects the choice of individual training provider made by the client' (Selby-Smith 1998: 7). Under User Choice all public funding for off the job apprentice and traineeship training was ‘contestable’. In 2008 Australian governments moved to make all public VET funds contestable (COAG 2008), though the degree to which this has occurred differs substantially across the states. For example, Victoria has for many years been a particularly enthusiastic supporter of the training markets regardless of the ‘colour’ of government.

Various mechanisms have been used to allocate public training funds such as tendering for the delivery of courses nominated by government; ‘entitlement’ funding whereby specified courses are subsidised but students and/or employers are free to chose an RTO and a voucher system where courses and providers are decided solely by students. Various mechanisms have also been used for pricing publicly funded training including tendering to deliver a fixed number of specific qualifications; some jurisdictions use detailed research into the ‘efficient cost’ of delivery for different qualifications to fix prices with students able to choose their preferred RTO; prices can be determined by set nominal (anticipated) hours of delivery for a given qualification and uncapped or fully market based pricing has also used, most notably and to disastrous effect, in the former VET Fee Help programme.

Over the 20 years from 1996 to 2016 the Australian publicly funded VET market has undergone a radical transformation (Figure 1). At the outset of the training market almost all publicly funded VET was delivered by TAFE colleges, and other public institutions like government business enterprises and agricultural colleges. Not-for-profit Adult and Community Education (ACE) providers were also important in the system. In 1996 98% of students receiving

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publicly funded VET were in TAFE (83%) or not-for-profit community education providers (15%) but, by 2016 this had fallen to 52% and 6% respectively (NCVER 2016: Table 11).iv The number of students in for-profit or other RTOs receiving government funds increased from 23,000 in 1996 or just 2% of students to 532,000 in 2016, or 42 % of publicly funded VET students. This is an annual compound rate of growth of 18 per cent per year over 20 years.

This large shift in the distribution of students across providers is attributed by proponents of the training market to the rational decision making of students and employers exercising their newly found choice to select new, mostly private for-private providers. The latter, newly incentivised, delivered flexibility in training content, assessment, teaching equipment, teacher qualifications and training duration. The training market, it was claimed both transformed the demand-side and supply-side of VET. This proved to be an optimistic assessment of the change.

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4. Quality Problems in the System This section examines the nature, extent and causes of quality problems in the publicly funded VET system.

4.1 Nature of Quality Problems A persistent finding in academic and regulatory evaluations is lower quality of training in many private providers in the

contestable market compared to standards in public delivery. The following practices in some non-public providers are claimed to give rise to lower quality. Enrolling students with very low educational attainment precluding successful course completion and poor assessment standards (Schofield 2000:viii, Productivity Commission 2011: 122; Halliday-Wynes and Misko 2013: 32;); short training duration raising concerns about the ‘volume’ of both training delivered and skills acquired by students (National Strategic Industry Audit 2010; Productivity Commission 2011: XLV; Halliday-Wynes and Misko 2013: 20-21); low level of qualifications held by teachers (Productivity Commission 2011: Table C.16; Halliday-Wynes and Misko 2013: 26) and inadequate teaching resources (Allen Consulting 2013: 10). Private RTOs provide misleading marketing to students as to graduate outcomes and industry recognition of qualifications (ASQA 2013). Mitchell (2012) documents providers offering inducements to students to undertake training ranging from cash payments (the provider ‘splits’ the government training subsidy with the student), free Ipads and holidays in Bali.

4.2 Scale of Quality Problems There are no published official data that permit an estimate of the overall scale of the quality problem in the training market. There are however several indicators that show the problem is significant.

4.2.1 Regulatory sanctions and audits To date the prime locus of regulatory concern regarding the quality of VET provision has been private providers. The national training market regulator ASQA undertakes audits of RTOs to determine compliance against minimum standards. It exercises considerable discretion so that typically sanctions are applied only on RTOs who persistently fail to meet audit standards or where particularly serious breaches occur. Sanctions issued by ASQA include immediate cancellation of an RTOs registration; cancellation of RTOs registration upon renewal every three or so years; suspension of an RTO from operating for a specified time or restricting the range of courses it can deliver. In 2011 19 RTOs were subject to regulatory sanction but the number increased regularly so that in the first six months of 2017 187 RTOs were sanctioned (ASQA 2017). It could be objected that the large rise in sanctions indicates the regulator is removing the ‘rotten apples’ from the system and that, given sufficient time, the average quality of provider should be rising. Against this is the sheer scale of malfeasance recently revealed under VET Fee Help and the continuing flow of adverse findings from ASQA regarding ‘systemic risks’ to quality. (Detailed below).

Aside from recording sanctions ASQA also reports the outcomes of compliance audits. Over the 4 years 2012-13 to 2015-16 approximately 1200 to 1500 RTO audits were conducted each year (ASQA 2016: 48). The outcome of two different RTO audits are reported; the initial audit after RTOs operated for 12-18 months and a final audit where RTOs initially not compliant are given 20 working days to rectify the problem with advice from ASQA. Over the four years 2011-12 to 2015-16 the average level of initial RTO

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compliance against national standards was just 22%. In other words, on initial audit only 1 in every 5 RTOs are compliant. After rectification the average level of compliance was only 76.0%. After rectification only 3 in 4 RTOs on average are compliant. ASQA expressed particular concern at the high level of non-compliance with standards that ‘relate to meeting the needs of industry and learners and ensuring the quality of training and assessment’ (ASQA 2016: 55). ASQA does not report what happens to the nearly quarter of audited RTOs that fail to pass the final audit.

4.2.3 Regulator Reviews In addition to audits of individual RTOs ASQA (2017b) undertakes investigations ‘where systemic risks are identified. ASQA seeks to prevent damage to the VET sector by undertaking strategic reviews of these training areas or issues’. ASQA identified systemic risks in training for the following industries, aged and community care in Australia; Construction Industry; equine, early childhood education and care and security. In addition highly critical strategic reviews were made into RTO marketing and advertising; minimum prescribed VET teaching qualifications; the duration of training and VET FEE Help (ASQA 2018). It cannot be inferred that ‘strategic’ concerns are restricted to these industries and issues; rather the number of reviews is limited by a range of factors such as regulator resourcing and changing priorities of the regulator and government.

The latest strategic review into the duration of training provided by RTOs ‘found that the long-term quality of Australia’s vocational education and training (VET) sector is at risk unless the issue of unduly short training is definitively addressed’ (ASQA 2017c). The fact that the Mandarins acknowledge that systemic risk exists on a matter so fundamental as the duration of training and volume of learning more than three decades into the life of the training market speaks eloquently as to the scale of the quality problem and difficulty of regulatory solution to these problems.

In addition, the NSW Independent Commission Against Corruption (ICAC) undertook several damming reviews into VET provision in NSW over the first half of the 2000s. Using its extraordinarily powerful investigatory powers it revealed extensive low quality training and corruption across several sectors. (These are dealt with in section 5). The ICAC ceased its investigations not because it had exhausted the scope of malfeasance but simply because it believed it expended sufficient resources to illuminate the scale of the problems and expected government to remedy the problem.

4.2.4 Employer Associations Major employer associations, including the Australian Industry Group (AiG) and Australian Chamber of Commerce and Industry, that were key architects of the present system, argue that due to fundamental problems with the design of the training market, contracting-out has reduced the quality of provision; fails to meet industry skills needs and reputational damage to the training

system reduces the incentive of employers and workers to acquire VET qualifications (Mitchell 2012: 34-35; 38-39). More recently in a submission to an Australian Senate (2015) inquiry into private VET providers the AiG stated it ‘has experienced disquiet from employers concerning inadequate time in the delivery of courses by providers, inadequate assessment of competence and poor quality training outcomes’ (Senate 2015: 54).

The Housing Industry Association, also a key supporter of the training market, finds the system of training and assessment for apprentices in the construction industry to be fundamentally unfit for purpose. A key function of qualifications under the CBT system in the current industrial relations system introduced with award restructuring is to tie the acquisition of qualifications to increments in award wage levels given that the former is intended to signal a certain level of worker competence and productivity. Such wage setting ‘requires a comprehensive, well-structured framework within which the competencies of apprentices can be accurately assessed: such a system does not currently operate’ (Housing Industry Association 2015: 4.3.18).

It is important to note however, that like the VET Mandarins, these employer associations continue, in general, to support the current system. The reasons for the persistence of this commitment are taken up in section 6.

5. Causes of Quality Failure Many explanations of widespread concerns about quality and malfeasance in the training market are to be found in the literature. Following Toner (2014), these may usefully be divided into economic and pedagogical conditions.

5.1 Economic Factors

5.1.1 Sovereign Consumer An efficient market assumes buyers be adequately informed, if not perfectly informed. This assumption in turn relies on the condition that consumers have sufficient rationality or capacity to process this information to make optimising decisions. It also assumes information about the VET market is valid, accessible and obtainable at low cost. Further, it is in the self-interest of consumers to choose a high quality producer. For many students these three conditions, separately or collectively, do not hold.

First, the orthodox economics model of optimal decision-making under risk (in the absence of perfect information) relies on unrealistic and empirically refuted assumptions about how humans choose between two or more options. But neoliberal policy, including the training market, assumes the orthodox model is true. Over the last three to four decades major advances in the economics of choice, broadly known as behavioural economics, have revealed the profound inherent limitations and biases in human decision-making. ‘[T]he deviations of actual behaviour from the normative [orthodox] model are too widespread to be ignored, too systematic to be dismissed as random error, and too fundamental to be accommodated by

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relaxing the normative system’ (Tversky and Kahneman 1986: 252).

Second, there are no reliable official indicators of RTO quality. Toner (2011b) outlines the profound methodological issues in developing quality metrics for VET given its diverse objectives and extensive statistical adjustments required to construct valid comparisons of RTOs. The Productivity Commission (2011: XLIII) finds ‘there are no unequivocal indicators of teaching quality in VET’. There are also compelling practical problems given there are around 4,500 RTOs (1931 of whom deliver publicly funded VET) teaching over 2000 different national training package qualifications and 943 nationally recognised accredited courses (Korbel and Misko 2016: 13). Developing valid quality indicators for each qualification at each RTO is impossible.

Third, RTOs can engage in obfuscation by misinforming potential students as to the quality of training and its labour market outcomes. A recent Department of Education (2016b: 24) review of the student loan scheme VET Fee Help found that ‘an essential challenge to the scheme has been dealing with uninformed, poorly informed or misinformed consumers who may not understand their options or the implication of these options. Critical to understanding this is the scale and breadth of unethical practices undertaken by some providers and brokers employed to attract and enrol students’.

Four, a large proportion of VET students have low initial educational attainment, limited literacy, numeracy and problem solving capacity.v This is not unexpected given that increased participation of disadvantaged groups is an explicit objective of publicly funded VET.

Severely bounded rationality for many VET students calls into question the efficacy of constant demand by government and the VET regulator to improve student choice of RTO by increasing the volume and quality of information about RTO performance.

Recent evidence for these problems is provided by the stark differential in pricing (up to 2-3 times) that emerged between private and public providers when prices were uncapped under VET Fee help (Department of Education 2016). The latter pricing method constituted a ‘natural experiment’ regarding the efficiency of unregulated markets for government funded VET training forces in the real world.

Finally, improving the quality of information is irrelevant for many students and employers as a large number are indifferent to the quality of training. (This is explained below).

5.1.2 The market for low quality training Toner (2014) identified market conditions creating ‘perverse incentives’ for students and employers not to demand quality training and for providers to supply this low quality training. Three such conditions are identified here.

First, participation in VET can be induced by ‘students enrolling in courses to meet mutual obligation requirements associated with welfare support. For example, income support payments such as Newstart Allowance, Youth Allowance and the Work for the Dole programmes require recipients to apply for jobs, train or study to remain eligible for support. In these instances, people enrol in a VET course…to meet their obligations (Department of Education 2016b: 21)’. These students are likely to be less focussed on their studies than other students who are intrinsically motivated to participate in VET to improve their position in the labour market or for interest.

Second, perverse incentives arise, when there is a legislated requirement to attain a VET qualification to work in a specific occupation but, students and employers view the mandated training as an unnecessary bureaucratic impost. This negative attitude is reinforced when acquisition of the qualification is required of workers already working in the occupation (possibly for many years) and there is no economic return to such workers via higher wages for attaining the qualification. ASQA strategic review of training in the security industry found a prevalence of courses with a duration much less than that recommended in the Training Package, and that this was due to a lack of demand for quality training by trainees and employers. This was demand that found a ready supply. ‘RTOs reported that shorter programs…were delivered for a range of reasons, including student and employer pressure for fast training in required qualifications to gain a licence, and market pressures to reduce the time taken and the cost of programs (ASQA 2016: 9)’. Toner (2014) summarises ICAC inquiries into the NSW training market which revealed some students also lack the prior educational attainment or English language proficiency to legitimately attain occupational licences and seek out compliant providers.

Some idea of the scale of compulsory this problem is provided by an NCVER annual survey of employers’ use of the VET system and VET trained workers. It encompasses employers that do and do not use the VET system. In 2015 36.6% of all employers, excluding employers with apprentices and trainees, had jobs that ‘required a vocational qualification’ (NCVER 2015: Table 1). Of this group 62% of employers stated the qualification was needed to ‘provide the skills required for the job’. This is closely followed in importance by ’legislative, regulatory or licensing requirements’ (52.1%), and ‘to meet and maintain professional or industry standards’ (27.9%).The next most important reason was ‘to improve the quality of goods and services provided’ (3.6%) (NCVER 2015: Table 10).vi In other words, some form of compulsion was a dominant reason for requiring employers to have workers with a VET qualification. What is unknown is what proportion of this large potential pool of firms colludes with employees and/or RTOs to reduce the burden of mandated training.

Third, ICAC reports reveal some employers are indifferent to quality of training during periods of high labour demand

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and may otherwise seek to encourage an over-supply of ‘qualified’ labour (Toner 2014).

Just how large is the demand for low quality training? Some studies suggest it is very large indeed.

In a recent report for NSW TAFE Boston Consulting (2015) provided a market segmentation analysis based on the priority students give to quality in the selection of a provider against other factors that may influence their choice such as price; short course duration; location and mode of delivery and assessment (on-line versus class-room). The purpose was to show where TAFE stands in the market as ‘providers are defining their competitive advantage by identifying and tailoring their offerings to specific customer segments’ (Boston Consulting 2015: 54). Between 40%-55% of the student market are willing to trade quality for lowest price and convenience. For these students a ‘primary concern is obtaining a qualification, rather than necessarily the quality of that qualification’ and ‘price is very important... [they are] willing to trade quality for it’ and/or they ‘have limited agency... [or are] highly susceptible to aggressive recruitment strategies’.

5.1.3 Barriers to enter and exit the VET market A key assumption in the creation of the training market over the last three decades is that competition would lift quality. At least in many fields of teaching, this has not happened. A prime reason for this is that entry by RTOs into the training market requires minimal investment in buildings and equipment and there are inadequate standards relating to teacher qualifications and teaching resources. These characteristics can be exploited by opportunistic providers. In the five years to 2015 the annual combined rate of RTO exit and entry was 13% (Korbel and Misko 2016: 15). At this rate the total stock of RTOs would, in theory, turnover every 7.6 years.

The public funding system also reduces the incentive of private providers to invest due to the relatively limited duration of some government training contracts, which can be as short as one semester, and uncertainty over continuity of funding in a competitive market (Allen Consulting Group 2011: 10). Also government funding of training in the competitive market does not make explicit allowance for capital costs. Government could redress these disincentives by increasing the duration of contracts but this would contradict a key objective of contracting out which is to maximise competition between providers and increase supply flexibility in meeting fluctuations in demand for training. Explicit allowance for capital costs could be made but this creates a potentially massive administrative problem of estimating capital costs per course or qualification; accounting for and disposing of capital goods after exit of a private RTO and ensuring an RTO receiving publicly funded capital did not used it to deliver privately funded training.

An alternative solution is to require private providers to lodge a large monetary bond to be forfeited if the regulator takes successful action against the RTO. Imposition of a bond of sufficient scale to generally deter provider

opportunism would be administratively complex requiring a period of trial and error to find an efficient bond price for various types and levels of qualification (as different qualifications receive differential public funding). It would raise prices in the market.

Low barriers to entry and exit greatly reduce the risk of business failure due to an inability to attract or retain students or adverse action by regulators against opportunistic providers. Under these conditions, even where some providers seek to act ethically, the force of competition can drive them from the market if ethical provision results in higher costs (ASQA 2017a). The problem of low barriers to entry is now widely acknowledged, but its solution in the private training market remains elusive.

5.1.4 Limits to VET regulation There have been a variety of regulatory bodies and systems over the decades since the training market was instituted. Currently, the Australian Skills Quality Authority (ASQA), established in July 2011, regulates all federally and most state funded training. ASQA regulates 1931 government funded RTOs and another 3300 or so other registered providers as well as a multitude of qualifications and courses. In this total VET market there are around 4 million VET students but 42% of providers had fewer than 100 students enrolled in 2014 (Korbel and Misko 2016: 19). This large and complex market structure is not conducive to efficient regulation and is indicative of very low barriers to entry and exit (Korbel and Misko 2016: 23).

Aside from problems with the efficacy of regulation caused by the sheer number of RTOs and qualifications and loose specification of standards there are other limits to the effectiveness of regulation. These include constrained regulatory resources. Second, the need for ASQA to adhere to principles of natural justice and administrative law which can lead to protracted enforcement action. ‘A significant restraint on the regulator’s capacity to take swift action at present is the availability of significant, protracted and potentially expensive review processes’ (Department of Education and Training 2016c: 25). Third, limits are also imposed by the legislated requirement for ASQA (2016c: 4) ‘to achieve a reasonable balance between the responsibility to deliver protection to the community and the burden imposed by external intervention’. Finally, the regulator is in the invidious position of being responsible for enforcing standards but not being in control of these standards. Ultimate control over all VET standards rests with Council of Australian Governments (COAG) Industry and Skills Council, a body comprising mainly VET Ministers. Relatedly, Harris (2015:28) laments the constant turnover and re-invention of national policy making bodies in VET causing loss of continuity and corporate memory.

5.1.5 Reduced government funding Due to a combination of contestability, government funding restraint and rising number of people participating in publicly funded VET, resources for VET teaching have fallen perilously. Using a different methodology to the earlier estimate of Pilcher and Torri (2018) by one standard

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measure real government recurrent funding on VET fell by 39 per cent between 2005 and 2014 (Productivity Commission 2017: 5.34). It is disingenuous of the Commission to suggest that ‘low or decreasing unit costs can indicate efficient delivery of VET services per successfully completed load pass hour’ without considering that such a large reduction in resourcing can have the opposite effect.

Previous research indicates under-investment in TAFE is a chronic problem and this has reduced the capacity of the system to keep up to date with new technologies and maintain the currency of teacher skills and knowledge (Toner 2005). This declining capacity is likely to have worsened in the last decade.

A large reduction in real government funding per hour of teaching will arguably restrict the scope for investment in improving the quality of ethical RTOs and reinforce incentives by other RTOs to maintain profitability through quality diminution.

5.1.6 A market or state controlled system? A key objective in introducing the training market was to make the system more ‘responsive’ to the needs of industry, employers and individual students. If the publicly funded system was actually driven by the needs of the labour market overall enrolments would on average grow steadily by around 2% a year, in line with annual growth in the labour force. But this is not the case, as annual student enrolments are quite volatile (Figure 2). For example, from 2010 to 2012 they increased by 20% but then fell by 22% between 2013 and 2015. The average annual number of enrolments over the period 1997 to 2016 was 1.3m students, so quite large shifts in the absolute number of students were required to elicit these proportional changes.

These fluctuations are driven overwhelmingly, not by the needs of the labour market, but by changes in government policy governing overall funding, the opening and closure of specific training programmes and change to rules governing student eligibility for government funding.

These huge swings in student numbers induced by government fiat have major implications for quality in the system. First, large fluctuations make rational planning and resourcing difficult for ethical providers. Second, great uncertainty over the anticipated level of student demand reinforces the short-term investment horizon of for-profit RTOs, reduces the incentive to invest in equipment and staff and increases incentives for opportunism by RTOs. Finally, huge swings in enrolments expose the tenuous connection to the labour market of many publicly funded courses. The sensitivity of annual student enrolments to changes in government student eligibility and government training subsidies suggests that, at least for many students and employers, the benefits they perceive participating in training are marginal. An implication of this is that students and employers who are only marginally attached, or indifferently committed, to training will be undemanding of RTOs to provide high quality service.

5.2 Pedagogy The pedagogical system, Competency Based Training, developed for the training market is a central cause of quality diminution. All nationally accredited VET training has been in the form of Training Packages based on CBT principles. Put simply, Training Packages are developed by representative bodies in major industries and set out the training content and assessment methods and standards for qualifications covering many occupations in each industry.

From the beginning educationists in the UK and Australia have been critical of Training Packages and CBT. They argue CBT is focussed on training for, and assessment of, discrete tasks with inadequate recognition of underpinning knowledge; the content of Training Packages is developed by industry representatives with little if any involvement of professional TAFE teachers; and standards are loosely specified (Cornford 2000; Wheelahan and Moodie 2011). Imprecision in Training Packages affects virtually every aspect of training including volume of learning, assessment, performance standards, duration of training, student entry standards, teacher qualifications and learning resources.

Imprecision in the volume and assessment of learning flows directly from an elemental flaw in the original design of the training market which persists to this day. This is tension between the principles of ‘flexibility’ and ‘standardisation’ which underpin the system (Toner 2014). Flexibility in all aspects of VET was sought to allow customisation of training to the needs of individuals, workplaces and industries. Standardisation was applied to create national as opposed to state based qualifications and regulation, but the principle was not applied to form

-15%

-10%

-5%

0%

5%

10%

Figure 2 Annual change in government funded VET Students. PercentAustralia

Source: derived from NCVER 2016: Table10

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prescriptive, detailed content and assessment methods. At key moments in the formation of the training market, when the principles of standardisation and flexibility have conflicted, priority has been given to the former. An identical argument was later made by Bowman and McKenna (2016) who focussed on the ‘dynamic tension, built into the system, to achieve both national consistency and sufficient flexibility to ensure that training meets specific local, industry and learner needs’. The resulting ‘lack of standardised national assessments means that there is no standard to ensure that a particular set of skills has in fact been acquired’ (Guthrie 2009: 13).

Giving priority to flexibility also created fundamental ambiguity as to whose needs VET is intended to serve. ’Training packages do not prescribe how an individual should be trained. RTOs use training packages to help design curriculum and/or learning and assessment methodologies that assist individuals to gain and/or demonstrate they have the skills and knowledge specified in training packages. Training is tailored to individual learner needs and can be contextualised to the specific circumstances of an employer and/or industry sector’ (Australian Industry Skills Committee 2016: 5-6, italics added). Is it the individual, the employer or industry?

Arguably each of these three entities has differing perspectives on the content and assessment of training. Meeting these diverse interests requires a degree of ‘elasticity’ in the system that is incompatible with prescriptive standards. Arguably each entity has differing perspectives on the content and assessment of training. Meeting these diverse interests requires a degree of ‘elasticity’ in the system that is incompatible with prescriptive standards.

Given the presence of perverse incentives these ambiguities can be exploited by RTOs, employers and students to collectively lower their costs respectively, in granting a qualification, receiving a qualification and increasing the pool of qualified labour.

6. Why it Persists Why has a system so widely recognised as deeply flawed persisted for more three decades and proven so resistant to change?

Ideological commitment among national and state government economic Mandarins to neoliberalism, the market and contracting-out public services is pervasive. The Productivity Commission for example, (2016) re-committed its support to the training market subject to vaguely specified improvements in ‘stewardship’.

But a successful ideology always has strong material foundations. The rationale for taxpayer support of VET training is that it redresses the market failure of employer reluctance to invest in industry-level or general skills as opposed to firm-specific skills. Employers cannot ensure workers remain with the firm to recoup the cost of providing industry level or general skills. However, the degree of customisation permitted under the training

market enables employers to have taxpayers fund their firm-specific training. The AiG note that ‘employers and individual students, wherever possible, need to have training delivery and outcomes shaped to meet their organisational and individual needs. There is considerable flexibility built into the application of qualifications to meet employers’ or individuals’ needs’ (Commonwealth of Australia 2015). This contradicts the orthodox economic case for taxpayer support of the current training market.

Second, the private training market is also very big business with public spending generating billions in revenue each year (Oliver and Wu 2015). Industry associations, both employers and unions, have for decades operated RTOs often integrated with other employment services such as Group Training and pre-apprentice training. In many industries the associations are major training providers. Clearly, concerns from industry associations, echoing their members, regarding declining quality is insufficient to offset the economic gains the associations accrue from these operations. Aside from private RTOs, global capital markets, such as private equity, have in the last decades seen education, including VET, as an important new asset class (Shubber 2017).

Conclusion This chapter sought to highlight the profound paradox that introduction and persistence of the training market was justified on orthodox economic terms but orthodoxy also explains widespread quality diminution and malfeasance. This paradox was resolved by claiming training market advocates were either ignorant and/or wedded to a neoliberal ideology which, like all forms of a priori reasoning, cannot be empirically refuted. Persistence of the training market is explained primarily by a very broad range of factors including financial rewards to many key market participants.

A concerning possibility is that a low quality VET training system over several decades can feed-back onto firms whereby the latter gradually adjust their production processes and quality of output to accommodate the rising supply of low-skill labour. This process known as a ‘low-skill equilibrium’ has been shown to apply in the UK (Finegold and Soskice 1988). Australia has closely emulated the UK training market.

References Australian Skills Quality Authority (2013) Marketing and advertising practices of RTOs

(2016a) Regulatory Risk Framework https://www.asqa.gov.au/sites/g/files/net2166/f/ASQA_Regulatory_Risk_Framework.pdf

(2016b) Training in security programs, 2016

(2017) A review of issues relating to unduly short training

(2018) Strategic reviews https://www.asqa.gov.au/about/strategic-reviews

https://www.asqa.gov.au/sites/g/files/net2166/f/ASQA_Regulatory_Risk_Framework.pdf

https://www.asqa.gov.au/sites/g/files/net2166/f/ASQA_Regulatory_Risk_Framework.pdf

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Brockmann Michaela, Clarke Linda, Winch Christopher, Hanf Georg, Méhaut Philippe and Westerhuis Anneke (2011) (eds) Knowledge, Skills and Competence in the European Labour Market: What’s in a Vocational Qualification? Routledge

Council of Australian Governments (nd) Industry and Skills Council https://industry.gov.au/AboutUs/Pages/COAG-Industry-and-Skills-Council.aspx

Department of Education (2016) Redesigning VET FEE-HELP Discussion Paper

Tony Featherstone (2014) ‘’Top-Performing Education Stocks’’ thebull.com.au

Finegold David and Soskice David (1988) The Failure of Training in Britain: Analysis and Prescription, Oxford Review of Economic Policy, Vol. 4, Issue 3, pp. 21-53

Korbel, P & Misko, J 2016, VET provider market structures: history, growth and change, NCVER, Adelaide.

Mitchell, J, 2012, From unease to alarm: escalating concerns about the model of “VET reform” and cutbacks to TAFE, John Mitchell and Associates, Sydney, viewed 05 Mar 2018, <http://www.jma.com.au/upload/pages/home/_jma_vet-reform-document.pdf>.

Pilcher S, and Torri K. (2017) Expenditure on education and training in Australia 2017,

Mitchell Institute, http://www.mitchellinstitute.org.au/reports/expenditure-on-education-and-training-in-australia-2017/

Productivity Commission Report on Government Services 2016, Volume B, Chapter 5 Vocational education and training,

http://www.pc.gov.au/research/ongoing/report-on-government-services/2016/child-care-education-and-training/vocational-education-and-training

i There are many excellent histories of the training market, for example Ryan (2011). ii The Byzantine process of negotiation between unions, employers and political parties required to introduce the training market and the eventual disenchantment of some unions with the new market is provided in Brown (2006) Ewer et al (1991) and Hampson (2002). iii Prior to the introduction of Training Packages detailed and uniform curricula, textbooks, learning materials, assessment methods and standards were produced by specialist professional TAFE teachers in well resourced centralised Curriculum Development Centres. An explicit goal of the system was uniformity and consistency in training content and assessment in training for each occupation within each state. Uniformity was also promoted by the use of moderation of standards for marking. For example, all head teachers in a given field in the state would meet occasionally at a central location to agree on a standard of practical and theoretical work to grade students. Uniformity was also assisted by long average tenure of TAFE teachers and agreement between teachers and industry that the prime objective of training,

Ryan, Paul and Unwin, Lorna (2001) Apprenticeship in the British ‘Training Market’, National Institute Economic Review, Vol 178, Issue 1, pp. 99 - 114

Senate (2015) Inquiry Into the Operation, Regulation and Funding Of Private Vocational Education and Training Providers In Australia

https://www.aph.gov.au/Parliamentary_Business/Committees/Senate/Education_and_Employment/vocationaled/Final_Report

Tversky, Amos and Kahneman, Daniel (1986) Rational Choice and the Framing of Decisions

The Journal of Business, Vol. 59, No. 4, Part 2: The Behavioral Foundations of Economic Theory. (Oct., 1986), pp. S251-S278.

National Centre for Vocational Education Research (2015) Australian vocational education and training statistics: employers’ use and views of the VET system 2015, Adelaide

(2017a) Australian Vocational Education and Training Management Information Statistical Standard. Data element definitions Edition 2.3

(2017b), Australian vocational education and training statistics: government-funded students and courses 2016, NCVER, Adelaide.

(2018) Historical time series of government-funded vocational education and training in Australia, from 1981, NCVER

Noonan, P. (2016). VET funding in Australia: Background trends and future directions, Mitchell Institute, Melbourne

Vocstats (2018) Government-funded students and courses, unpublished data, NCVER

at least in the trades, was to impart skills and knowledge for a ‘representative’ trade occupation in a given industry. Skills and knowledge were to be of sufficient breadth and depth to facilitate transferability of the occupation across firms in a given industry. Employer preference for trades with broad skills was due to the average small size of firms which lacked the scale to permit the use of specialised labour. Unions liked transferable, as opposed to firm-specific skills, due to the bargaining power it gave their members (Curtain 1987). In summary, TAFE served both the occupation and the industry. Imparting high quality transferable skills allowing entry to skilled occupations was implicitly assumed to serve the interests of the student. (In the new system the level of analysis is much more fluid). It was this uniformity and absence of provider choice that were particular targets of training market advocates. iv The 1996 data includes both publicly funded and fee for service students attending VET. v Standardised international tests of adult literacy, numeracy and problem solving reveal significant educational disadvantage among many VET students.

http://www.pc.gov.au/research/ongoing/report-on-government-services/2016/child-

http://www.pc.gov.au/research/ongoing/report-on-government-services/2016/child-

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Between 50-77% of all persons with a Certificate 1-IV are classified to the lowest 2 levels of the 5 level scale used (derived from Australian Bureau of Statistics 2008: Table 10). Level 3 is the "minimum required for individuals to meet the complex demands of everyday life and work in

the emerging knowledge-based economy" (Australian Bureau of Statistics 2008: 5). vi Multiple choice was permitted.

Abstract Any attempt to improve or reform Australia’s system of vocational education and training (VET) should address the model of curriculum that is at the heart of the system. This model is often referred to as ‘competency-based training’ (CBT) although most stakeholders are probably more familiar with CBT in the form of ‘training packages’. CBT is not only central to the way Australia’s VET system works, it has been a constant for over twenty-five years. For many who work in the system, CBT is the only curriculum model they know for vocational education. This discussion describes the attractions of CBT to make clear that the architects of training reform had good reason to make CBT the cornerstone of a new system. This survey is followed by a systematic look at criticisms and shortcomings of CBT as articulated by researchers and other stakeholders. Finally, two questions are presented which would be useful to ponder in any attempt to shift away from CBT.

Introduction Australian VET is a dynamic product of complex drivers. Among the factors shaping the sector is competency-based training (CBT), a model of education and training that translates industry demand for skills into the educational activities of providers, teachers, trainers and learners. Introduced as a key element of training reform in the 1990s, the model is familiar to many stakeholders in the guise of training packages. The appeal of CBT to the architects of training reform is readily appreciated. As conceptualised for the Australian context, the model ensures a pivotal role for employer representatives and governments in determining the content of learning in VET. It gives providers and educators clear roles in teaching, assessment and quality control. In principle, the model also makes the outcomes of learning accessible to learners, parents, employers and other stakeholders, enhancing transparency of the system. But it has also been criticised. The conceptualisation of CBT has been questioned since the model was first articulated in America in the 1960s, while the Australian variant has

attracted its own critics. Indeed, at this time, criticism of the model and its expression in training packages perhaps has never been more widespread. From formal, academic criticism through to misgivings voiced by providers, educators, learners and even industry interests, it may be that a tipping point in consensus around CBT is near.

This chapter briefly considers the role of CBT in Australian VET, making clear that the model is central to the everyday work of the sector. The attractions of the model are detailed and analysed before criticisms are considered. The discussion concludes with some questions that might be useful to debate as new ways of formulating vocational curriculum are evaluated.

Some attractions of CBT To judge by policy, practice and the literature, competency-based training (CBT) is many things. On the face of it, CBT is an educational model based on work tasks that guides curriculum, teaching and assessment. A framework or model for understanding the competency approach proposed in a study of aviation industry training by the author and colleagues differentiates three aspects: (i) competence, (ii) competencies and (iii) competency-based training (Kearns, Mavin & Hodge, 2017). The first part of the model acknowledges that the focus of curriculum and training should be the competence with which effective workers carry out their occupational roles. This competence will have social as well as individual aspects and will have tacit and explicit dimensions. It can be acquired in many ways, and historically, there has never been a problem with the development of competence: for millennia it has been acquired effectively without the intervention of formal educational design work.

The second aspect of this model refers to the representation of competence for formal educational purposes. If learning is to be taken out of the uneven, locally effective context of close interaction with work and other workers, then some sort of formal documentation will be necessary. CBT is distinctive for its use of competency documents at this level. It opts for a special

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The problematic role of CBT in Australian VET

Friday, 3 August 2018

Steven Hodge

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genre of text that embeds into modules or units, among other things, conventions for the segmentation of occupational competence and for representing knowledge and skills. In the Australian VET implementation, units of competency texts are of a roughly comparable size across occupations and levels of expertise, and all represent occupational competence in terms of performance (elements, performance criteria) and lists of concepts and principles that are intended to capture the knowledge and other attributes believed to be necessary for the performance.

The third aspect of the model draws attention to the fact that all further curriculum development, teaching and assessment revolves around competency documents. CBT is marked by its constant reference to units of competency. In Australian VET, it is a fundamental expectation that what students learn, how they are assessed and the credentials they are awarded all refer in a systematic way to competency documents. Here’s a basic representation of the model:

1. Competence

Skilled and knowledgeable practice of an occupation. Has social and individual facets, and tacit and explicit levels of

knowledge.

2. Competencies

Documents that represent competence for educational purposes. The texts embed conventions for segmenting

and representing competence.

3. Competency-based training

Learning, teaching, curriculum development, assessment and credentialing that systematically refer to

competencies.

Figure 1. A model of the competency approach to education and training (adapted from Kearns, Mavin & Hodge, 2017)

However, the reality of CBT in Australia is far from captured in this model. That is because in Australian VET, CBT is more than an educational endeavour. It is also a social and political concern that brings in a range of stakeholders and interests apart from educators and students. Social interest in VET includes opportunities for mobility and recognition. The Australian implementation of CBT afforded unprecedented portability of credentials. Because the specifications of qualifications are national and the underlying units of competence are the same across Australia, a VET credential is in theory a known value everywhere within the nation. In contrast, before training reform, there were cases where a vocational education credential would be recognised only within one jurisdiction. People moving or working interstate could face frustrating barriers as no mechanism existed to formalise comparison between credentials offered by different providers in different locations. At a stroke, CBT

overcame this problem. A related CBT-enabled benefit is the regulated principle of ‘mutual recognition’ whereby one provider must acknowledge the competency-based attainments of a student who possesses evidence of competency assessed by another provider. Not only do whole credentials become nationally recognised, but studies commenced with one provider can (in principle) be completed at another. CBT also enables the recognition of competence without regard to the particular way it was developed. In principle, an individual can expect a registered provider to assess and formally credential them for competence that may have been gained via experience. Units of competency are the yardstick for such recognition.

To these systemic and socially valuable features of CBT must be added a different set of attractions for governments, employers and industry. Since the reform era, VET has increasingly served as a policy tool for governments. In this context, CBT is an effective mechanism for bringing employers and industry into a close nexus with VET. Specifically, giving employers and industry responsibility for guiding development of competency texts represents a strong measure to ensure providers and educators focus squarely on employer and industry needs. And by setting the foundations of curriculum – the units of competency – outside the influence of particular providers and educators, there is scope to bring private providers into a public VET system if they are willing to adopt the competencies as the basis of their provision. Further, it becomes possible to construct a VET market with government and employer representatives presiding above the fray, controlling the bases of curriculum, while promoting competition among providers. CBT is the linchpin of these innovations, effective in this setting because the model allows the decoupling of curriculum and provision. In other words, in the diagram above, steps 2 and 3 can be allocated to different parties. In the Australian case, a great deal of common sense is on the side of such an allocation of roles (even though it took some time for educators to come around to the idea). Who better to guide specification of competencies than those who use the skills of VET graduates? And who better to effect the teaching, learning and assessment based on competencies than providers and educators?

Yet other interests can be accommodated through the CBT model. From a government perspective, CBT enables a transparent and rational way to disburse public funds for VET. Instead of channelling funding to providers for them to spend at their discretion, funding for learner completion of units of competency or qualifications is possible. Apart from the gain in accountability this shift represents, more fine-grained funding policies can be formulated that direct funding to perceived areas of skill needs. At the same time, employers, industry associations and unions find that units of competency and the administrative apparatus of training packages can be included as factors in broader industrial relations negotiations and strategy. In negotiations surrounding changes to industrial awards, alterations to qualification

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requirements, content or level are sometimes crucial to wage setting. Again, changing industry licensing requirements may spark arguments over the inclusion or exclusion of certain units of competency in a qualification or skill set. VET educators are often unaware that political motivations lie behind some changes to units, qualifications and training packages. By allocating competency development and educational practice to different parties, the politicking of each party can also enter VET, and here again the unique characteristics of the CBT model allow more interests to shape the increasingly complex field of Australian vocational education.

Some problems with CBT Although a range of attractions of CBT can be identified that make it a logical choice for those with certain priorities, there have been numerous criticisms. These come from a range of interested parties, from education researchers, to practitioners, through to industry and policymakers. Criticisms can be grouped into those that contest the efficacy of CBT to develop job-specific skills, and those that step back from the assumption that job-readiness should be the sole or main focus of a vocational education system. There are other criticisms that concern the system in which CBT is a central component and ways the system interacts with society and the economy.

Some of the criticisms can be understood with reference to the model of CBT presented above. The down-pointing arrows between the three levels of the model each represent a distinctive act or process of translation. The real work of competent workers must be translated into competency documents, and competency documents must be translated into teaching and assessment practices. In the first case, rules are needed to guide the creation of competency documents. One of the longest-standing lines of criticism of CBT amounts to a complaint that we cannot translate competence into competency documents without distortion, omission and/or over-simpification. In part, this criticism concerns the behavioural understanding of competence that is the default stance of many implementations of CBT including the Australian VET version (Hodge, 2007). The behavioural approach is to focus on what is observable about competent work: the performances that are evidence of competence. Elements and performance criteria are a direct legacy of the behavioural objectives approach, which emphases the importance of observable behaviour over underlying knowledge when specifying learning goals. The critical argument is that observable performances cannot convey all that is important to convey about an occupation in curriculum, for teaching and measurement in assessment. Understanding, moral reasoning, knowledge and intuition can all be important ingredients in occupational competence but will be difficult or impossible to express in terms of immediately observable behaviours. By the same token, insisting that only performances of competence will be recorded in the documents and according to a specific structure means that assumptions about what is important and how to

represent that importance may override what occupational experts would say is important and is the best way to document it.

In part, this same line of criticism concerns the splitting of the representation of competence into multiple units of competency. The frequent reference to ‘fragmentation’ found in criticism of CBT is a sort of ‘Humpty Dumpty’ narrative about the adverse impact of separating and modularising representations of occupational competence (Buchanan, Yu, Marginson & Wheelahan, 2009). The underlying assumption of such criticism is that competence is a holistic achievement. To be a competent worker is not simply a matter of completing one procedure after another, but rather of acting upon a fundamentally unified understanding of the work that manifests in particular acts. Competence is supposed to be more than the sum of these acts. According to this criticism, ‘atomised’ curriculum in the form of a collection of units of competence both misrepresents occupational competence as a holistic achievement and leaves open the question of whether through teaching and learning the various parts of competence can be assembled into a whole in the heads of learners.

Both aspects of this criticism – that the observable does not necessarily capture competence, and that compartmentalising competence into multiple units disrupts the holistic nature of competent work – can be understood as a challenge to the assumption that translating occupational competence into a set of documents is a straightforward process. But there is a second arrow in the model presented above that signifies the process of translating the competency documents into programs, teaching and assessment practices. There is reason to think that this second phase of translation is problematic in its own way. This vulnerability of the CBT approach has not received as much critical attention as the translation indicated by the first arrow (from occupational competence into units of competency). A study by Hodge (2014) involved interviewing thirty Australian VET educators and designers about the way they read and used units of competency. The findings of this study suggest potential problems with the assumption that VET educators are well equipped to interpret the documents. An overall finding of the research was that most of the educators felt that the language of the documents was not clear. Given that all of the participants were appropriately qualified to work as VET educators (i.e., they held at least a Certificate IV in Training and Assessment and had demonstrated competence at least to the level of that presented in relevant units of competency), if the language of the documents was not completely transparent to them, there is reason to doubt the efficient transmission of the intents of the unit writers to VET students.

What could be happening here? Several theories may apply to the translation process in question. The most developed field of research and theory is hermeneutics or interpretation theory. Modern theory of interpretation describes a complex process invoked by any encounter

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with a meaningful document. In this process, the interpreter brings a great deal of prior knowledge to the processes of reading and understanding. In other words, a lot is ‘read into’ any text we encounter. The resulting interpretations are always a mix of prior knowledge and meanings found in the text. In this context it seems wise to demand that educators possess at least a certain type and level of competence in the occupation so that the prior knowledge brought to the interpretation by diverse educators will be similar. However, the reality is that educators come to the competency texts with highly individual experiences of the occupation in question and apparently read quite different things into the units. From the perspective of theory of interpretation, then, it comes as no surprise to discover diverse readings and interpretations of units of competency by educators. But this is at odds with the assumptions of the system. The Australian implementation of CBT demands high levels of uniformity among interpretations. This, then, constitutes another criticism of CBT.

Stepping back from criticisms of CBT that cast doubt on the assumptions internal to the model, there are concerns about broader impacts. A line of argument based on the sociology of Basil Bernstein draws our attention to the societal impacts of purported flaws of CBT. Leesa Wheelahan (2007) has developed this critique. The argument has two sides. The first has been indicated already. Translating occupational competence into documents has the effect of sidelining important features such as occupational narratives, value systems, and the disciplinary knowledge mixed into at least some occupations. For example, mathematical knowledge is required by electricians. The development of the discipline of mathematics has taken thousands of years and has produced a powerful body of knowledge that underpins almost every aspect of our engagement with technology. Electricians need to access some of this body of knowledge as an essential ingredient in the practice of the occupation. But units of competency break up the occupation into tasks without regard for larger knowledge structures such as mathematics. This discipline cannot be taught on the basis of brief statements scattered through multiple documents. In other words, Wheelahan details a problem related to the first arrow of translation. But there is a strong social dimension of this criticism that goes beyond the coherence of the internal CBT model. If certain social groups gravitate to VET, and if VET is based on a curriculum model that undermines engagement with powerful bodies of knowledge, then there are social groups (working class, or of low socioeconomic status, or disadvantaged in other ways) that are denied access to this kind of knowledge. Through CBT, they may be given the ability to enact certain procedures that are, for instance, of a mathematical kind, but that is different to understanding some part of a body of disciplinary knowledge. Wheelahan’s critique, then, steps outside the argument regarding the capacity of CBT to do what it is designed for and warns us of broader social impacts.

Another argument that steps back from questions of the objective and internal coherence of CBT has been

articulated sporadically through the literature and has emerged in public debate about Australian VET. For example, in recent keynote addresses by Craig Robertson and Jenny Dodd (ACDEVEG 3rd Annual Conference, 2017), the question has been posed whether Australia’s version of CBT – associated with the system of training packages – is addressing the right goal. This criticism might be understood as questioning the economic purpose of CBT. If that purpose has been to give graduates the ability to enter an occupation and competently assume a work role with minimal delay – essentially, to save the employer the effort of training the new employee – then the criticism is that such a purpose does not take into account workforce needs that go beyond existing tasks. If the predictions of governments and supra-national bodies such as the OECD of rapid changes in industries and the economy are correct, then preparing workers for today’s tasks fails to come to grips with the reality of contemporary work. In other words, vocational education should also be about equipping workforce entrants for change and continual learning. It should instil capacities for responding flexibly to transformations in work and contributing to those transformations. But the current regime of training packages is rooted in the present or recent past (sometimes years into the past). The criticism is that CBT and the training package framework cannot keep up and certainly cannot give learners the kind of thinking abilities and background knowledge that could prepare for a creative contribution to a rapidly changing work landscape. That work environment is sure to be different to the realities envisaged by competency standard writers and to be fluid enough sooner or later to reconfigure or dispense with those tasks described in competency documents.

To conclude this discussion of criticisms (by no means a comprehensive survey of the critical literature) we see there are those directed toward the internal coherence of the CBT model (e.g., that competency texts fragment holistic work practices) and those that question the goals and contribution of the model to society and the economy (e.g., learners are not prepared for a rapidly changing work environment).

Where to next? If Australian VET is at a tipping point, and if CBT is in question as part of the next transformation, how do we move forward? We can assume that if the pressure for change is great enough, policymakers and influential VET stakeholders will do something. An important question for all with an interest in Australian VET is how knowledge of curriculum models and analysis of current practices can contribute to a well-informed transformation. That is, a transformation that leverages the significant amount of creative and critical thinking that has gone on in relation to vocational education curriculum. It must be acknowledged that Australian CBT was a creative response to complex pressures. At the same time, the critical literature has the interests of learners and society as a whole at heart, and the benefit of careful analysis and weighing of the needs of learners, industries, the

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economy and society. In this concluding section two questions are proposed as important to consider if the basis of curriculum in Australian VET is to move beyond CBT.

One question that seems central to the debate is the extent to which we really require a standardised, cross-occupational curriculum model. As argued in Hodge, Atkins and Simons (2016), CBT is unique in that it offers a cross-occupational way to construct curriculum. Put another way, in Australian VET, the units/elements/performance criteria format is applied to a very wide range of occupations. From community services to manufacturing to business services to health, diverse occupations are rendered in terms of this uniform approach to creating documents that go on to serve as the central reference point for programming, teaching and assessment. On the one hand, this high level of standardisation is a boon for stakeholders with oversight of the whole system and for mobile learners. It is a key attraction of the CBT model. On the other hand, not all occupations are necessarily well served by this type and granularity of standardisation. Criticisms were considered above that suggest for some occupations the model leads to fragmentation as well as distortion and omission. The breaking up of occupational practices and knowledge may lead to difficulties for teachers and students in reconstituting the holistic reality of the occupation in question. And in the process of rendering in terms of elements and performance criteria, aspects of occupations may be lost, such as larger knowledge structures, broad processes, ethical systems, historical narratives and future trends.

In the light of this question about standardisation, the concept of ‘epistemic neutrality’ may serve as a yardstick for evaluating alternative curriculum models (Hodge et al., 2016). Any generic curriculum model or framework – such as CBT – is created or mandated without detailed knowledge as to what and how it will be applied. At face value, this does not sound problematic. But if the model or framework contains assumptions about the kinds or the structures of knowledge that can be legitimately represented in future curriculum, then there are epistemic features of the model that may not work well with the kinds and structures of knowledge in some occupations or disciplines. The implication of the principle of epistemic neutrality in this context is that when devising and evaluating alternative curriculum frameworks for vocational education, care is taken to ensure that there is scope for allowing unique features of the knowing practices making up individual occupations to be represented in curriculum without forcing a given framework over them. Different occupations have different ways of looking at and valuing the world, have their own understanding of their history, trajectory and future challenges, and of their contribution to the economy and society. Understanding, knowing, affect and practice have unique contours from occupation to occupation. The principle of epistemic neutrality is about allowing the uniqueness of occupations to emerge in future curriculum models.

A full implementation of this principle in the vocational education context would require that each occupation devise and evolve its own curriculum model. For the bulk of human history, this is exactly what took place. ‘Vocational education’ was a tapestry of local practices directly guided by what occupations needed. But the world of work is different now. Since the industrial revolution, occupations have broken out of the boundaries of purely local practices while, in parallel, governments and industrial stakeholders have taken an interest in vocational education in a new work landscape. The forces of standardisation soon follow. Adam Smith famously analysed pin-making to show that the division of labour would result in larger numbers of pins being produced. Frederick Taylor argued that management needed to extract the knowledge of the shop floor to organise labour scientifically. Manuals produced by the American military during the First World War attempted to standardise large-scale industries such as shipbuilding (Allen, 1919) and this approach expanded in the Second World War. Mass markets promote occupational standardisation and training follows suit. From the perspective of public investment in vocational education, different types of standardisation emerge that facilitate consistency among teaching, curriculum and assessment practices and practices surrounding credentials. While it may be questioned how far bureaucrats require standardisation of curriculum content in the interests of making vocational education a tractable instrument of economic policy and provider of social mobility, there can be no doubt that the public interest is served when standardisation leads to the portability of qualifications, mutual recognition among providers and scope for recognition of skills developed outside formal credential frameworks.

From the perspective of public utility, some standardisation of vocational curriculum seems legitimate, creating a tension between this interest and the goal of epistemic neutrality. It is beyond the scope of this paper to propose an optimal position in relation to this tension. However, the tension does help us to ask useful questions when it comes to evaluating alternatives. Specifically, the question that arises from the paired goals of public utility and epistemic neutrality is how much standardisation needs to be imposed on the expression of particular occupations in curriculum to secure benefits such as qualification portability and recognition of skills? Possibly the bureaucratic and industrial relations interests in VET currently served by CBT could be met in other ways than by curriculum standardisation that does not address this essential tension between public utility and epistemic neutrality.

A second question that may be useful in debate about post-CBT models is to what extent should the ability to undertake job tasks immediately on graduation be the objective of vocational education? The implementation of CBT in Australian VET represents a definite stance on this question. A graduate is someone who has been deemed competent to perform a particular range of specific tasks. It is assumed the graduate will be able to undertake

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actual tasks with minimal adjustment. However, as indicated above, such a focus has been challenged by critics. In brief, it is claimed that a focus on today’s tasks leaves learners without a deep, knowledgeable grasp of their intended occupation and without the breadth of understanding to enable agility within rapid occupational change. By these criticisms, the focus of Australian CBT is too narrow in the context of complex jobs and a dynamic workforce. Yet it appeals to common sense – and surely a great many VET students and teachers – to learn about the actual tools, techniques and settings of the target occupation. This common-sense notion has a theoretical correlate in one side of a long-running debate in education research about the development of generic skills such as ‘critical thinking’ (Pithers & Soden, 2000). In this debate a strong argument has it that a learner requires ‘domain knowledge’ – specific knowledge of and practice in a particular area of learning – before the more free-floating capabilities of something like critical thinking can develop. To bring this claim into relation with vocational education, even if something other than facility in current job tasks is desirable, it would be helpful or necessary to develop deeper and/or broader abilities and knowledge on the basis of engagement with such tasks. There would perhaps be a legitimate role for exposure to today’s tasks even if competence in these was not the overarching goal (as it currently is in Australian VET). The question then would shift to exactly how a focus on learning known tasks would form part of a curriculum devoted to some broader objective.

If the main focus of vocational education should not be on preparing graduates for today’s tasks, what should be the focus? One way of thinking about an alternative is implied in the criticism of CBT that what it focuses on within an occupation is too narrow. If an occupation is more than the sum of activities observable to an outsider, then what else does it comprise? According to some commentators, knowledge or theory is sidelined or omitted in the CBT model (Broudy, 1972; Wheelahan, 2007; Gamble, 2016). The claim here is that although ‘required knowledge’ or ‘knowledge evidence’ can be listed in units of competency and thus taught and assessed in VET, the development of disciplinary knowledge is hampered by the need to prioritise starting and completing individual units of competency. A possibility, then, is to foreground formal knowledge when it is required by the occupation – whether mathematics, sociology, physics or psychology – and pursue development of it in a concentrated way. For these occupations, vocational education might then involve knowledge subjects and as well as units that address tasks.

A different way to think about alternatives is to step back from the assumption that vocational education should be about preparing for current occupations. If today’s students are going to be entering occupations subject to more or less rapid transformation, or can be expected to change their jobs many times, then maybe vocational education should be framed around knowledge and skills common to occupational groups and/or to knowledge and skills that can reasonably be expected to endure. There

are already analysis and theory that seek to distinguish occupational clusters with a view to determining either the patterns of labour market mobility or ‘vocational streams’ (Yu, Bretherton & Buchanan, 2013) or the knowledge and skills common to related occupations. These approaches to conceptualising workforce engagement have implications for vocational education. For example, it could be imagined that the Foundation for Young Australians (AlphaBeta, 2017) conceptualisation of job clusters might give rise to vocational education curriculum. Or the vocational streams research could conceivably translate into prescriptions for curricular structures. Yet again, analyses of ‘future skills’ could offer prescriptions for vocational curriculum (CSIRO, 2016). Implications can also be more personal. For example, the ‘capabilities’ approach introduced by Amartya Sen and championed by researchers such as Wheelahan (2016) moves the focus to empowering individuals to flourish in a fluid job market. Capabilities can be thought of as mapping approximately to job clusters and involving development of knowledge and skills shared among several existing occupations.

A challenge for these approaches is posed by limits on our ability to predict change in jobs and job markets. Although unprecedented computational power is available along with big data sets for analysis, basing today’s vocational education curriculum on such analysis must be risky. And then there is the challenge of explaining to prospective students and other users of the VET system that job clusters, vocational streams or future skills should be regarded as a viable substitute for a learning focus on recognisable jobs. Here again, it is beyond the scope of this discussion to argue for an optimal position as to what should be the focus of vocational education if it is not to be facility in the job tasks of current occupations. But it is important to systematically identify and consider alternative curriculum goals and, if a future vocational curriculum can have more than one focus, then consider what blends are possible and with what likely benefits.

So, two questions for future vocational curriculum in Australia are posed: one about how much curriculum standardisation is necessary across diverse occupations, and another about alternatives to a focus on today’s job tasks that set broader goals for vocational education. These questions are prompted by reflection on the advantages and challenges of Australia’s existing competency-based VET system. Obviously, transformation of this system poses many questions, but the shape of future vocational curriculum requires at least as much thought and creativity as that which accompanied the introduction of CBT nearly three decades ago.

References AlphaBeta (2017). The new work mindset: 7 new job clusters to help young people navigate the new work order. Melbourne: Foundation for Young Australians.

Allen, C (1919). The instructor, the man and the job: A handbook for instructors of industrial and vocational subjects. Philadelphia: J B Lippincott Company.

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Broudy, H S (1972). A Critique of Performance-Based Teacher Education. Washington: American Association of Colleges for Teacher Education.

Buchanan, J, Yu, S, Marginson, S & Wheelahan, L (2009). Education, Work and Economic Renewal: An issues paper prepared for the Australian Education Union. Sydney: Workplace Research Centre, University of Sydney.

CSIRO (2016). The VET Era: Equipping Australia’s workforce for the future digital economy. Canberra: CSIRO.

Gamble, J (2016). From labour market to labour process: finding a basis for curriculum in TVET. International Journal of Training Research, 14(3), 215-229.

Hodge, S, Atkins, L & Simons, M (2016). Towards an epistemically neutral curriculum model for vocational education: from competencies to threshold concepts and practices. International Journal of Training Research, 14(3), 230-243.

Hodge, S (2014). Interpreting competencies in Australian vocational education and training: Practices and issues. Adelaide: National Centre for Vocational Education Research.

Hodge, S (2007). The origins of competency-based training. Australian Journal of Adult Learning, 47(2), 179-209.

Kearns, S K, Mavin, T J & Hodge, S (2017). Competency-based education in aviation: Exploring alternate training pathways. Milton Park: Routledge.

Pithers, R T & Soden, R (2000). Critical thinking in education: A review. Educational Research, 42(3), 237-249.

Wheelahan, L (2007). How competency-based training locks the working class out of powerful knowledge: A modified Bernsteinian analysis. British Journal of Sociology of Education, 28(5), 637-651.

Wheelahan, L (2016). Patching bits won’t fix vocational education in Australia – a new model is needed. International Journal of Training Research, 14(3), 180-196.

Yu, S, Bretherton, T & Buchanan, J (2013). Defining vocational streams: insights from the engineering, finance, agriculture and care sectors. Adelaide: National Centre for Vocational Education Research.

Abstract This discussion paper aims to foreground other papers in this series by defining what policy is and providing an outline of the ‘ideal’ approach to its development and translation into practice in the VET context. To do this we define the VET sector and its missions. We then move on to describe the key stakeholders in the sector and the sorts of policies that have been enacted from 1998 onwards using the VET policy timeline developed by the National Centre for Vocational Education Research (NCVER).

We then introduce a series of propositions regarding VET policy and its implementation. These propositions include that VET policy developments and implementation are often too rapid and focused too much on the short term. We contend they tend not to be developed holistically. We also suggest that VET policymaking at present is in the hands of officials and others who lack contextual knowledge, especially of the VET system and how it actually works. This compromises the likelihood of successful policy implementation. Policy initiatives and changes also come so hard and fast that there is incomplete implementation and change fatigue. This is coupled with a critical lack of effective policy analysis, program monitoring and evaluation.

Ways forward include creating agency with a role similar to that of the former Australian national Training Authority and establishing a comprehensive review of the sector: a ‘Kangan revisited’ to provide a strong basis for making the necessary changes to ensure that the sector survives, grows and develops in positive ways.

Introduction This discussion paper aims to provide a base for all the other papers in this series to build upon. It will do this by defining what policy is and how, ideally, policy solutions and initiatives are developed. We use Australian and other government-based literature to inform the ideal, and then contrast this with the actuality of practice in VET policy development at both national and jurisdictional levels. The National Centre for Vocational Education Research’s (NCVER’s) compendium of VET policies over

the past 20 years (NCVER, 2018) helps identify areas on which VET policy and other initiatives have focused. We and other authors have concentrated on seminal national and jurisdictional policy initiatives and issues. We recognise that these influence policy development and practice at the provider level also.

We will examine the role of the multiple stakeholders that contribute to policy development in VET. If nothing else it is the diversity of these and the breadth of VET’s remit that create challenges for the sector’s policymakers. These challenges take a number forms: first, it is that aspects of the sector and its missions are also part of the roles of other education sectors. Its missions and borders are porous. The second is the effects of federalism and stakeholder views with their attendant shared and conflicting interests, priorities and powers. This is particularly so when these effects are manifested in levels of funding, support and fidelity of implementation. Federalism’s advantage is the checks and balances it imposes on policy and its implementation. Its downside is that the VET policy that is actually developed is more likely to be compromise than innovation and vision.

Finally, we will examine a range of propositions and issues that challenge the effectiveness with which VET policies and their attendant initiatives are developed and enacted. The other papers in this series highlight areas of policy and other factors that restrict the extent to which the VET sector can fulfil its overall mission. These issues include funding (Burke), VET FEE-HELP (Saccaro), teaching quality and qualifications (Guthrie & Jones), competency-based training (Hodge), contracting out and market design (Toner) and VET’s role in ameliorating disadvantage (Myconos, Dommers & Clarke). NSW offers a case study of more measured and cautious response to free market VET policy (Shreeve & Palser).

This paper will conclude with considering how to ensure that in future VET policy is better developed and more effectively implemented and reviewed. Before doing this we must briefly describe the VET sector and the wide range of things it tries to do.

VET policy: processes, stakeholders and issues

Hugh Guthrie, Hon. Senior Fellow, Centre for Vocational and Educational Policy, Melbourne Graduate School of Education, University of Melbourne Emeritus Professor Berwyn Clayton, College of Arts and Education, Victoria University

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Defining Australian VET and its missions To set the policy agenda involves defining what VET is and what missions it seeks or is charged to fulfil. This is no easy task, but is one that Anne Jones’s paper attempts by looking both back and forward. As in other countries VET in Australia is more complex and broadly focused in terms of its missions than either the schools or university sector. Policymakers, politicians and their advisors have generally had little direct experience of vocational education at the sub-degree level. They comprehend traditional VET missions such as apprenticeships, but their understanding of its other roles, we contend, remains more elusive. At worst, they are ignoring a resource for action and change.

The VET sector’s roles are diverse, especially when it is seen as acting in consort with the roles of private, community and school-based providers and those enterprises that train formally but internally. Its number and range of provider types is great. They range in size from very small to very large. With over 4000 VET providers registered in 2016 (NCVER, 2017), the majority of these private, regulating the sector is problematic.

The rhetoric is that the sector is industry led. We contend that this is only partly true. While peak industry bodies play an important role in the process of policy formulation (and they can be fierce advocates for the importance of the sector – though also often critical of it), a more accurate description is that the sector is government led but industry advised. Moreover, the policy and practices advocated by industry peak bodies can often be at odds with local industry and individual employer views about what is desirable. This means that those implementing policy at a local or regional level face challenges in turning broader policy rhetoric into reality in the face of local, more specific issues.

Towards an understanding of what VET means in the Australian context, the glossary of terms of the National Centre for Vocational Education Research (NCVER) describes the sector as providing:

Post-compulsory education and training, excluding degree and higher level programs delivered by further education institutions, which [provide] people with occupational or work-related knowledge and skills. VET also includes programs which provide the basis for subsequent vocational programs.

As is often the case in VET, this description defines VET by what it appears to be rather than by what it actually is. It hides a range of other important roles. The sector has vocational and economic roles, certainly, but it is also vitally concerned with promoting access, social justice and equality, helping to overcome disadvantage. These latter roles are often less well understood. In addition, a number of VET providers are active in higher education, particularly dual sector institutions. The VET sector has been described as the educational “middle child” (CEDA, 2016) in Australia, permeable and squeezed from both sides by the secondary and higher education sectors.

Arguably, it has trouble finding its niche in the broader education family.

While seen as a legitimate part of the tertiary sector following the Bradley Review (Bradley et al., 2008), VET suffers from a parity of esteem problem, in contrast to European countries such as Switzerland, Austria, Germany and Finland. In these cases the middle child is seen as equal but different to the other two, and no less loved.

The policy agendas that influence VET’s roles are not only national in their scope, but also of local importance and even at times cross-sectoral. States and territories see the sector as both an economic tool and a means of addressing social issues confronting their jurisdictions (see NCVER, 2018). At the same time as this role is acknowledged, VET has suffered funding cuts (Burke & Toner) in stark contrast to the other education sectors. In addition, national and state and territory (jurisdictional) policy priorities can be at odds, and the ways they translate their respective interpretation of policies and initiatives from national concept to jurisdictional reality can differ. Likewise, local and regional issues can affect VET priorities and what its providers are called on to do to support their local community and employers. This diversity of its missions and potentially competing policy agendas and priorities can be problematic as policies are implemented.

What policy is Public policy can be defined as:

… the expression of what a government wants to achieve – whether it be about the ‘means’ or the ‘ends’ or both. In other words it provides the rationale or the driver for [g]overnment initiatives and programs. ‘Public policy’ refers to policy by governments, as distinct from the policy of a business or other organisation. (Department of Premier and Cabinet, South Australia, 2015, p. 2)

Governments implement policy through new or revised laws, regulatory processes, programs, budget allocations or by tasking agencies or other organisations with particular functions that will effect the policy.

Australian governments, both state and federal, have guidelines for policy development (for example: Commonwealth of Australia, 2014; Department of Premier and Cabinet, South Australia, 2015). These represent ideals. We contend, however, that the rhetoric of these policy ideals is often not matched by the reality of their development, implementation and management. Indeed, Terry Moran, a former head of the Department of Prime Minister and Cabinet and the inaugural head of the Australian National Training Authority (ANTA), has described Australia’s delivery of policy as “in palliative care” (Moran, 2017).

Moran’s thesis is that policy development and implementation are too disconnected from what people really want, are economically driven, focused on the short term and outsource delivery too much. Policy, he suggests, needs to be bolder and more focused on long-

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term challenges. On the other hand, he was reported by Banks (2009, p.19), then chair of the Productivity Commission, as saying that:

… for civil servants, a capacity to analyse problems rationally and empirically and to advance options for action by [g]overnments is a basic ethical duty.

He is talking about an ideal that calls for provision of frank and fearless policy advice devoid of politics and spin.

Another former senior bureaucrat, Peter Noonan, now a professor at Victoria University’s Mitchell Institute, has raised concerns about the efficacy of some VET policy. Policies fail, he contends, because those developing and implementing them do not ‘war game’ them. He means that there is too great a concentration on desired outcomes and too little on how organisations and circumstances may subvert what at first appears to be a noble policy intent. The most recent and classical example of this is the rise and fall of the VET FEE-HELP scheme (Saccaro) and its re-engineering. On the other hand, and more positively, Jones’s paper in this series “reimagine[s] vocational education in Australia as it could be to increase inclusivity, innovation and prosperity.”

The ‘ideal’ policy development process Policymaking by government is a dynamic process in terms of policy’s development, implementation, review and change. The Department of Prime Minister and Cabinet suggests the following six building blocks: governance, managing risk, engaging stakeholders, planning, resources; and monitoring, review and evaluation, as the basis of active policy management. The foreword to the Commonwealth Government policy implementation guide (Commonwealth of Australia, 2014) contains a series of messages about how to ensure that policy development and implementation are as effective as possible:

• The criticality of strong leadership, no matter whether implementation is the responsibility of one agency or several

• Successful implementation requires an inclusive approach, sound processes, the effective use of resources and the consideration of implementation at every stage of policy development.

• The assessment and management of risk needs to be [ongoing], and

• Policies and programs, when implemented, require active management to be successful. This requires measurement, analysis, consideration of feedback and complaints, evaluation and review, calibration and adjustment.

The Department of Premier and Cabinet in South Australia (2015, p. 9) asked the question: What does a good policy process look like? Their answer was that it:

• fits the circumstances and issues

• provides the opportunity for analysis from all important perspectives

• involves appropriate consultation and transparency • is publicly defensible in terms of how the process

proceeded and who was involved • leads to informed decision[-]making, and • builds in the best opportunities in the circumstances

to ensure commitment and implementation.

These ideals will be used as the basis for not only drawing some conclusions later in the paper, but also raising a series of propositions and issues relevant to VET policy development and implementation in Australia. If anything, the experience of those charged with implementing policy at the grass roots level of the VET sector is in dramatic contrast to these ideals. Rightly or wrongly VET policy is often perceived as piecemeal, short-term, disconnected and enacted to ‘put out fires’ that better and more evidence-based approaches would have avoided lighting in the first place.

Australian VET policy over the past 20 years The NCVER has developed a timeline of VET policy at both the Commonwealth and jurisdictional levels, and presents this through its VET Knowledge Bank in the Centre’s international tertiary education research database, VOCED Plus (NCVER, 2018). It covers the 20 years from 1998 to 2017. The timeline is searchable by state and territory, as well as nationally.

As well as being searchable, the timeline offers information in a number of topic categories. These include VET reform, economic imperatives, regulation, participation, VET in schools and apprentices and trainees. It also charts government events at both the federal and jurisdictional levels.

The policy issues over this period are many and various, including:

• national agreements through the Council of Australian Governments (COAG), including skills policy and workforce development

• VET sector reform at both federal and jurisdictional levels

• training initiatives directed at particular groups and sectors, including Indigenous people, small business, green skills, international education, regional needs, women and young people, and

• numerous initiatives directed at apprentices and trainees.

Players in the policy game The stakeholders in vocational education are diverse. They include:

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• politicians, policymakers and planners and government departments and agencies, including not only those with responsibilities for vocational education but others whose remit and clients may be affected by VET policies

• industry, a broad group with diverse interests that includes peak employer and employee representative bodies (including teacher unions at the national and jurisdictional levels), but also bodies with more focused interests whose views on particular policies and practices may be in conflict with those of other industry bodies

• individual employers, whose views on policies, practices and their implementation may be even more specific and may conflict with the group immediately above

• professional and regulatory bodies, which advise on the content and focus of VET programs, and monitor their quality

• regional development and community bodies, which are keen to ensure that appropriate VET programs are available to meet local needs

• education and training providers, including those in the public and private sectors, in the community, and in universities, enterprises and schools

• teachers and trainers, no matter what type of provider they work for

• students, apprentices, trainees, and their families, carers and other advisors.

This wide range of stakeholders have a diversity of interests and views on policy and how it is put into practice. The challenge for the VET policymaker is reconciling an often diverse set of views and coming up with policy solutions that are workable. This reconciliation process, too, is problematic. The reason is not only the diversity of voices but the weight each voice should be accorded by policy developers. Particular voices may be silent, or there is a deafness to their views, or their views are not sought, although their advice would be most relevant. In part, this may be due to the difficulty of identifying and engaging with a spokesperson or group who can offer a comprehensive and coherent view on a particular issue.

Of all the groups above, those whose views tend to be under-represented or ignored are those at the bottom of the VET policy food chain: the community and VET providers, practitioners and students. Paradoxically, however, these can be the groups most directly affected by policy, and whose advice might help to ensure sound and enactable policies are developed: especially when providers and VET practitioners are the organisations and individuals that actually have to turn VET policy intents into viable practices on the ground.

Propositions about VET policy development and implementation In this section we raise and attempt to suggest, and defend, a series of propositions. Some of these might be seen as provocative, but have a ring of truth. Banks (2009) suggests that half the problem in developing and implementing policy is understanding the nature of the problem needing a policy solution. Added to this is understanding complexities, as well as costs and benefits, in framing potential solutions.

VET policy development and implementation are often too rapid and focused too much on the short term In its 2012 policy discussion paper, the Institute of Public Administration Australia (IPAA) advocates a business case approach to public policymaking. By this they mean gathering facts and known views, identifying alternative policy options, weighing their pros and cons and sharing those findings with stakeholders to get their reactions before taking a final policy position. However, they point to a spectrum of practice in policy development (IPAA, 2012, p. vi). On the one (and worst) extreme it is represented by:

Policies … developed ‘on the run’ and introduced ‘by fiat’ often to exploit or react to a burning political issue – developed in haste and secrecy without proper investigation and designed to get maximum publicity without genuine stakeholder engagement.

Yet these sorts of mistakes continue to occur, perhaps because they give the appearance that politicians, policymakers or government departments are reacting and that something, even something less than adequate, is being done. Policy developed and implemented in such a way may not be as sustainable as policy developed through more rigorous and comprehensive processes. But such processes often take longer, and so the downside is that they may not have the appearance of timeliness.

Banks (2009) points out that a rapid approach to policy development often relies too much on ‘quick and dirty’ surveys or focus groups, or a reliance on overseas studies where the contextual detail underpinning the work and the initiative is not fully understood. In short, it may over-consult, but under-

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design (see later). It may also ignore collective knowledge and experiences of certain key and knowledgeable stakeholders, and the history of previous related policy initiatives. In addition, Banks (2009, p. 5) points out that, without evidence:

… [policymakers] must fall back on intuition, ideology, or conventional wisdom – or, at best, theory alone. And many policy decisions have indeed been made in those ways. But the resulting policies can go seriously astray, given the complexities and interdependencies in our society and economy, and the unpredictability of people’s reactions to change.

An example of this proposition is VET FEE-HELP, where there were clear lessons to be learned from a previous review of international education (Baird, 2010) and concurrent practice, including the Victorian Training Guarantee (see Guthrie et al., 2014 in relation to service skills qualifications), and South Australia’s Skills for All program.

There is a nexus between national policy and initiatives and their jurisdictional implementation. This proposition also apples to the implementation of national policies in local jurisdictions. (See Shreeve & Palser in this series of papers) While other papers in this series examine this proposition in greater detail, it is worth highlighting a few instances here. The first is the adoption of competency-based training which, while widely accepted, has probably been most questioned in New South Wales. For example, in 2011 the Board of Vocational Education and Training (BVET) commissioned a paper by Wheelahan and Moodie, which focused on the development of personal capabilities rather than occupational competence (Wheelahan & Moodie 2011).

The move to more market-based models for VET delivery was also promoted nationally, and taken up with considerable zeal in both Victoria and South Australia. Yet other jurisdictions, and again particularly New South Wales, dragged their feet on implementation. This proved wise, as they did not suffer the VET budget blowouts of the two leading jurisdictional early adopters.

Another example is VET in schools, where close inspection of the approaches adopted in different states shows significant differences in policy and implementation approaches. The range is described in a review of VET in ACT public schools (CIRES, 2016).

VET policy and programs tend not to be developed holistically, compromising their likelihood of successful implementation In a paper on VET teacher education and professional development the authors (Clayton & Guthrie, 2013) drew on a quote from Yes, Prime Minister. Hacker in the episode ‘A real partnership’ (vol. 1, p. 140) laments: “In government, many people have the power to stop things happening but almost nobody has the power to make things happen. The system has the engine of a lawn mower and the brakes of a Rolls Royce.”

Sadly this is true of many policy initiatives: in that particular case, teacher education, training and development in Australian VET. What we argued there, and believe is more broadly applicable, is that the same issues emerge time and time again with no apparent progress in terms of coherent policy or tangible outcome. We suggested that the issues, while recognised, never seem to be really resolved. Rather those solutions proposed involve tinkering at the edges of the policy issue. They do not address the root causes of the policy problem. One of the reasons we put forward for this is that:

… no one body or group has the power to make things happen, or to enact comprehensive solutions. Rather, any attempted solutions have been piecemeal, or have turned into battles between jurisdictions or a variety of interest groups over whom, precisely, has responsibility for carriage of the issue. (Clayton and Guthrie 2013, p. 8)

There is a critical lack of effective policy analysis, program monitoring and evaluation Policy analysis is about clear specification of issues and identification of the range of choices that government might consider. This requires bureaucrats and associated advisory bodies to formulate briefs on the issues and in particular on the consequences of enacting the choices available to them. To do this effectively, they need technical know-how that they may not have or be able to lay their hands on. The other things they need are good data and information.

Gary Banks in his paper on evidence-based policymaking (2009) pointed out that good data is prerequisite to effective monitoring and evaluation:

A major failing of governments in Australia, and probably worldwide, has been in not

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generating the data needed to evaluate their own programmes. In particular, there has been a lack of effort to develop the baseline data essential for before-and-after comparisons. (Banks, 2009, p. 12)

Banks also suggests that policy must be monitored and evaluated, as required, and then over time corrected or terminated if it turns out to be a failure. The issue here is that, on occasion, by the time decision-makers realise that corrective action is needed, the cure they propose is as bad as, if not worse than, the disease. Examples of this are, again, VET FEE-HELP and the marketisation of VET in Victoria.

The way to proceed, Banks suggests, is to start gradually, learn by doing, and monitor a trial of policy before full implementation. Increasingly, however, policy trials have been skipped in favour of immediate, full roll-out. This is, most likely, because those in government believe they have just one shot at getting the budget they need to implement the initiative fully. Moreover, a monitoring and evaluation process needs to be established and funded at the start. This requires an evaluation and research capacity within government, or the use of outsourced services with which government works closely. When staffing cuts are required, however, such research and evaluation resources within government are often the first casualty as they are not seen as core business Once lost, such capability takes time to rebuild.

Policy initiatives and changes come so hard and fast that there is incomplete implementation and change fatigue Those charged with implementing policy at the coalface report that they are often part way through the process of implementing a policy or initiative when another becomes flavour of the month. The previous initiative is downgraded in priority, with two important consequences. The first is that the previous policy may not have been completely implemented, reducing its effectiveness. The second is that the continual change and realignment of policy and priorities leads to change fatigue among those charged with turning policy conception into reality.

Constant policy change and change fatigue are an outcome of poorly informed VET bureaucrats, under-consultation and too little listening, or a lack of understanding about what exactly they are being told. This is compounded by a serious lack of policy analysis, monitoring and evaluation activity and skills. Thus, throwing the baby out with the bath

water or just tinkering at the edge of a policy issue become easier than tackling the problem comprehensively. They also fail to monitor the program and its attendant risks effectively. In sum, those charged with management of policy implementation lack the breadth of experience and knowledge to translate policy conception to reality. This issue is explored in the next proposition.

VET policymaking is in the hands of officials and others who lack contextual knowledge, especially of the VET system and how it actually works Both authors have worked in vocational education for over 30 years. That period has seen considerable changes to those in government who are required to develop and implement policy. First, the number of officials and advisors making a long-term career in vocational education has declined dramatically. Impermanence and rotation are now far more evident than permanence. This has led to a significant loss in corporate knowledge and expertise, which means that policymakers may lack contextual knowledge and appreciation of the consequences of the VET policies they develop. This lack of knowledge and understanding of the sector comes into play in internal policy analysis and decisions about what policy instruments to use (for example, the carrot, the stick, or both) and the implications these may have in effective implementation by those on the ground. In short, they cannot ‘war game’ effectively without a strong knowledge base or access to those able to provide dispassionate advice. Some of these advisors, having or representing vested interests, provide advice that needs to be balanced with that of others and/or treated with extreme caution. Thus the quality of the people researching and helping to formulate policy is critical. As we have already suggested, these research skills are, regrettably, often the first casualty when the public service cuts staff.

Contracting work out to consultants is increasingly employed to help develop or advise policy. This process often involves the use of large consultancy organisations. Banks (2009, p.16) argues that there are positives and negatives to this approach:

… new ideas, talented people, on-time delivery, attractive presentation and, possibly, cost — although some of the payments have been surprisingly large. But there are also some significant risks. Consultants often cut corners. Their reports can be superficial. And, more fundamentally,

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they are typically less accountable than public service advisers for the policy outcomes.

Academics are potentially more dispassionate, but have their drawbacks too: policymakers may believe their ability to understand the policy is developed and enacted in the real world an impediment to engaging them. Policy advice is often, however, drawn from wise old former bureaucrats acting as consultants, and this may be the more preferable approach. Indeed, these ‘wise old bureaucrats’ are often associated with these larger consulting organizations as experts. A final issue is the extent to which they and other consultants just do the consulting job. Preferably, however, part of their consulting role should be to help educate the current crop of politicians, advisors, policy developers and bureaucrats. Carefully defining the task and choosing the right consultants with a strong reputation in the field are fundamental (Banks 2009).

VET policy involves over-consultation for some, but still be under-designed There has been an increasingly heavy emphasis in recent times in the VET sector on consultation. There is clear evidence of consultation overload for both industry bodies and representative bodies, such as TAFE Directors Australia, and the Australian Council for Private Education and Training. They are small organisations with limited personnel and financial resources, yet this consultation process places a substantial burden on them. In addition, often the same people and voices always seem to be consulted, and this may mean that news ways of thinking and doing are not considered.

There is also increasing use of e-consulting with its associated problem of what weight to give which voices. As we have already suggested, not all respondents, groups or industry spokespersons are legitimate representatives of their particular segment of the VET community. Finally, “[P]olicymakers should not presume they already know the issues or the answers” (Althaus, Bridgeman & Davis, 2013, p.130).So consultation is important in the policy process, but who, how, how much and about what are also important considerations.

VET has become over-regulated Many stakeholders in VET complain frequently of the level of regulation in the sector, and the regulatory burden of being a provider or offering a service. Programs funded under particular policy initiatives

have their own reporting requirements on top of broader sectoral ones. This imposes additional regulatory burden and is compounded when data definitions and requirements differ from those of the national VET collection.

To be fair, there have been attempts to reduce regulatory burden and its cost to the sector. Also, the national regulator, the Australian Skills Quality Authority (ASQA), has an exceptionally difficult task given the number and diversity of providers it must monitor. ASQA’s approach to regulation is criticised, however, for being a compliance-based process rather than focusing on real quality and its improvement (especially the quality of teaching, learning and assessment – the core business of the sector) and for ASQA’s auditors taking varied approaches.

The final issue here is that governments, whether state/territory or federal, contract out services. While this issue is covered elsewhere in this series, the point here is that these contracts also have a regulatory component. Agencies should and do monitor that contracted services are being delivered properly. The ineffectiveness of this monitoring, however, has led to a number of policy failures. These require strong corrective action once the extent of the policy failure or budget blowout is recognised. This, in turn, can be harmful to the sector in two ways: first, erosion of public confidence through media exposure of scandals, and second, detrimental effects on organisations who act ethically but are nevertheless caught up and punished in the net with those that have not.

Conclusions and ways forward Our first conclusion should be that all is not doom and gloom, despite the tenor of this paper. There are successes, but regrettably they go unheralded. Policy development and implementation might also be regarded as a something of an experimental process, so it is the effectiveness of the experiment, its development and implementation, which determines on which side of the ‘pass or fail’ ledger the policy finally rests. However, the number and frequency of policy and implementation failures resonate with VET’s stakeholders. These create an image of the sector which suggests that it is unusually susceptible to poor policy decisions. Actual or perceived policy failure conveys a widely held sense of crisis in the policymaking system (IPAA, 2012) and in the sector itself.

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Second, the ideals of policy development outlined earlier in this paper (Commonwealth of Australia, 2014; Department of Premier and Cabinet, 2015) suggest the process needs to be well led, inclusive, analytical and actively managed – including management of risk – to be successful. It also needs to be collaborative, forward and outward-looking, innovative and creative, and learn the lessons of history: what does and does not work. This requires continuity of capacity. In addition, success involves gaining the commitment of stakeholders and effective processes of implementation and review.

We believe, however, there is a general view among many with a long history and deep regard for VET and all it does, that the sector is being let down by many of those in politics and government charged with making it successful and helping it to do its work effectively. This requires they understand the diversity of the sector and its missions, and properly weigh all the stakeholder voices and lobby groups involved in, and affected by, a particular policy or initiative. For this policymakers need to be engaged and inclusive.

We would argue, however, that at present Olympian detachment and secretiveness appear more common than deep engagement. Policy is also more effective when it is strategic not tactical, and when its intents are clear, transparent and well communicated. It really is an information-intensive process, but it can be argued that well-informed and well-grounded intuition has its place too.

Some ways forward We believe that policy development and implementation have to become less secretive and more transparent. Policy makers also need to take the time necessary to do it once and do it right. They need to define what policy success looks like, build the measures and collect the data and other information needed to establish that evidence base. They need to have ‘carry through’ rather than chopping and changing their policy priorities.

A second way forward is to rebuild a policy capability, and enrich government with VET knowledge as well as research and evaluation skills, to set up effective monitoring and evaluation processes from the beginning of the policy cycle.

More radically, we believe it is time for a comprehensive review of the sector, including its role and place. We envisage ‘Kangan revisited’, and a review process that will provide a strong basis for making the necessary changes to ensure that the sector survives, grows and develops in positive ways. If nothing else, this is required to repair the

reputational damage which is as much the responsibility of poorly conceived and executed policy as those who have exploited the loopholes poor policy and its implementation have opened.

Finally and most radically we contend that winding up the Australian National Training Authority (ANTA) was a mistake. We propose that the sector would be well served if an agency with a role similar to that of ANTA were to be re-established. If nothing else, this would ensure that there was a national agency devoted exclusively to the VET sector. It would be a basis for rebuilding a strong national foundation of VET knowledge and policy expertise. It would also be a tangible acknowledgement of the importance of the sector in much government and other stakeholder rhetoric, and help ensure that rhetoric better matches reality.

References Althaus, C, Bridgman, P & Davis, G (2013). The Australian Policy Handbook, 5th ed.. Sydney: Allen & Unwin.

Baird, B (2010). Stronger, simpler, smarter ESOS: supporting international students: review of the Education Services for Overseas Students (ESOS) Act 2000: final report, February 2010 [Baird review]. Canberra: Commonwealth of Australia. Retrieved April 2018 from http://www.voced.edu.au/content/ngv%3A36098.

Banks, G (2009(. Evidence-based policy making: What is it? How do we get it?’(ANU Public Lecture Series, presented by ANZSOG, 4 February 2009). Canberra: Productivity Commission, Canberra. Retrieved April 2018 from https://www.pc.gov.au/news-media/speeches/cs20090204/20090204-evidence-based-policy.pdf.

Bradley, D, Noonan, P, Nugent, H & Scales, B (2008). Review of Australian higher education: final report [Bradley review]. Canberra: Department of Education, Employment and Workplace Relations. Retrieved April 2018 from http://www.voced.edu.au/content/ngv%3A32134.

Centre for International Research on Education Systems (CIRES) (2016). Review of Vocational Education and Training in ACT Public Schools; Future Directions. Melbourne: CIRES, Victoria University. Retrieved April 2018 from https://www.education.act.gov.au/school_education/transitions-careers/review-of-vet-in-act-public-schools.


https://www.pc.gov.au/news-media/speeches/cs20090204/20090204-evidence-based-policy.pdf




https://www.education.act.gov.au/school_education/transitions-careers/review-of-vet-in-act-public-schools



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The Committee for Economic Development of Australia (CEDA) (2016). VET: Securing skills for growth. Melbourne: CEDA. Retrieved April 2018 from http://www.ceda.com.au/research-and-policy/research/2016/08/vet-skills-for-growth.

Clayton, B & Guthrie, H (2013). Tell me the old, old story or new messages?: five decades of inquiry into VET teacher development., paper presented at the 16th Australian Vocational Education and Training Research Association Conference. Melbourne: AVETRA. Retrieved April 2018 from http://www.voced.edu.au/content/ngv%3A78028.

Commonwealth of Australia (2014). Successful Implementation of Policy Initiatives: Better Practice Guide. Canberra: Department of Prime Minister and Cabinet, and the Australian National Audit Office. Retrieved March 2018 from https://www.anao.gov.au/sites/g/files/net4181/f/2014_ANAO%20-%20BPG%20Policy%20Implementation.pdf.

Department of Premier and Cabinet (2015) Developing policy: Turning ideas into action. Adelaide: Department of Premier and Cabinet, Adelaide. Retrieved March 2018 from https://www.dpc.sa.gov.au/__data/assets/pdf_file/0005/16880/Policy-Development-Guide-2.pdf.

Guthrie, H, Smith, E, Burt, S & Every, P (2014). Review of the effects of funding approaches on Service Skills qualifications and delivery in Victoria. Melbourne: Victoria University, Melbourne. Retrieved 15 April 2018 from http://behc.com.au/REPORT.pdf.

Institute of Public Administration Australia (IPAA) (2012). Public Policy Drift: Why governments must replace ‘policy on the run’ and ‘policy by fiat’ with a ‘business case’ approach to regain public confidence Public Policy Discussion Paper. Canberra: IPAA. Retrieved March 2018 from http://www.ipaa.org.au/documents/2012/05/public-policy-drift.pdf/.

Lynn, J & Jay, A (1986) Yes, Prime Minister, vol. 1. London: British Broadcasting Corporation.

Moran, T (2017). Senior public servant says Australia’s delivery of policy “in palliative care”. The Guardian, 21 November, 2017. Retrieved March 2018 from https://www.theguardian.com/australia-news/2017/nov/21/senior-public-servant-says-australias-delivery-of-policy-in-palliative-care.

National Centre for Vocational Education Research (NCVER) (2017). Total VET students and courses 2016. Adelaide: NCVER. Retrieved April 2018 from https://www.ncver.edu.au/publications/publications

/all-publications/total-vet-students-and-courses-2016.

National Centre for Vocational Education Research (NCVER) (2018). Timeline of Australian VET policy initiatives 1998-2017. Retrieved April 2018 from http://www.voced.edu.au/vet-knowledge-bank-timeline-australian-vet-policy-initiatives-1998-2017.

Wheelahan, L & Moodie, G (2011). Rethinking Skills in Vocational Education and Training: From Competencies to Capabilities. Sydney: Board of Vocational Education and Training. Retrieved April 2018 from https://www.skillsboard.nsw.gov.au/sites/default/files/rethinking_skills.pdf.

http://www.ceda.com.au/research-and-policy/research/2016/08/vet-skills-for-growth

http://www.ceda.com.au/research-and-policy/research/2016/08/vet-skills-for-growth


https://www.anao.gov.au/sites/g/files/net4181/f/2014_ANAO%20-%20BPG%20Policy%20Implementation.pdf



https://www.dpc.sa.gov.au/__data/assets/pdf_file/0005/16880/Policy-Development-Guide-2.pdf

https://www.dpc.sa.gov.au/__data/assets/pdf_file/0005/16880/Policy-Development-Guide-2.pdf

http://behc.com.au/REPORT.pdf

http://www.ipaa.org.au/documents/2012/05/public-policy-drift.pdf/

http://www.ipaa.org.au/documents/2012/05/public-policy-drift.pdf/

https://www.theguardian.com/australia-news/2017/nov/21/senior-public-servant-says-australias-delivery-of-policy-in-palliative-care



https://www.ncver.edu.au/publications/publications/all-publications/total-vet-students-and-courses-2016



http://www.voced.edu.au/vet-knowledge-bank-timeline-australian-vet-policy-initiatives-1998-2017

http://www.voced.edu.au/vet-knowledge-bank-timeline-australian-vet-policy-initiatives-1998-2017

https://www.skillsboard.nsw.gov.au/sites/default/files/rethinking_skills.pdf

https://www.skillsboard.nsw.gov.au/sites/default/files/rethinking_skills.pdf

VET FEE-HELP – Its Inception The VET FEE-HELP scheme commenced in 2008, after the 2007 amendments to the Higher Education Support Act (2003) extended the Commonwealth Higher Education Loan Program (HELP) to full fee-paying students undertaking high level vocational study (Diploma, Advanced Diploma, Graduate Certificate and Graduate Diploma qualifications). VET FEE-HELP was promoted widely by the Commonwealth as an equity measure, allowing anyone, including those on low income and disadvantaged learners, to participate in high level fee-for-service vocational courses, without upfront fees and financial barriers. Loans for VET students would also facilitate the marketisation of vocational education, to allow students to move students to private providers if they chose. It was felt it would create a more level playing field where public providers, subsidised by states, lost their obvious costing advantage, and user-choice, along with user-pays, is supported by the system.

Initially, however, the number of approved courses was small, and approval was only on a single, provider-by-provider basis. Each provider was required to hold a formal, guaranteed credit agreement with a Higher Education provider towards a higher education award. This drastically limited the number of eligible courses and providers, but it did build into the scheme the ideal of the “vocational pathway” through VET to Higher Education.

There were other restrictions to provider approval. Providers, apart from being RTOs, were required to be body corporates, though public providers could be exempted from this. They were also required to show financial viability and to provide adequate tuition assurance for their courses and students. These limitations were seen as unfair by some providers, especially small or niche providers, and the requirements too harsh or onerous. Initial uptake of the income contingent loans was low (37 providers and 5262 students with an average loan size of $4674 in 2009).

In the main, the stringent provider and course eligibility criteria had acted to protect students, though as loans were only available for Diploma and above qualifications, there was an obvious funding vacuum for fee-for-service students in lower level courses. Some students were tempted, or perhaps encouraged, to leap to a qualification beyond their current skill or knowledge level, especially as entry requirements had been scrapped in many training packages.

VET FEE-HELP was used by the Commonwealth as the carrot to move the states to a fully contestable VET market, giving access to loans to students at both public and private institutions. There were no limits set on fees, as it was considered that natural market forces would keep prices low, a naïve assumption in hindsight. With the slow start to the scheme, no alarm bells rang to consider capping fees, nor to scrutinise provider marketing behaviour, student participation nor loan repayment rates. Student debt, expected to be repaid, was not seen as a budget issue. The only limitation was the individual student’s lifetime HELP loan limit, set at the time at over $80,000. No-one really seriously contemplated this ever being reached!

The original scheme did not provide access to loans for state government subsidised students, (except for the ‘reform state’ of Victoria) only for full fee-paying students. Many public VET providers felt that this was inconsistent with universities, where loans were available to students in subsidised (Commonwealth supported) places as well as fee-for-service.

VET FEE-HELP 2012 Review The relatively low take up of the scheme (by 2011 the scheme had grown to 84 providers, and 39,124 students with an average loan of $5208) and the slowness of the states in implementing the Commonwealth’s Government Reform agenda encouraged the Commonwealth to review of the scheme in 2012. There was strong pressure from the sector to make the scheme more accessible to all. It had become clear that there were inequities both in provider access to the scheme and in course approval. Some practical courses, for example, were unlikely to ever

VET FEE-HELP: What went wrong?

Friday 3rd August 2018

Francesca Saccaro & Robyn Wright

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be given credit towards a degree, and it was often difficult, particularly for small providers, to negotiate sufficient credit with Higher Education institutions to meet the Commonwealth requirements, especially for Advanced Diplomas. Courses were left out, even in valuable skills shortage areas.

The review led to major changes, including a reduction of VET FEE-HELP restrictions on eligible courses, removal of the credit transfer requirement and weakening of conditions to become a VET FEE-HELP provider. Expansion of the program was explicitly linked to VET market reforms, which included requiring states to offer subsidised training places to private providers. Loans were then extended to state government subsidised students in Diploma and Advanced Diploma programs in those “reform states” those that implemented the National Partnership Agreement on Skills Reform. Access to VET FEE-HELP was subsequently used by some states as the rationale to reduce their funding of higher level VET qualifications.

Provider Behaviour Post 2012 Amendments to the HESA legislation enabled substantial growth in the number of approved VET FEE-HELP providers from 37 in 2009 to 254 in 2014, a huge increase in eligible courses and a massive increase in VET FEE-HELP loans by both private and public providers. Large scale business opportunities were seized. Private providers went ‘public’, selling shares which over time became worthless. The “no upfront fees’ and “pay later” slogans, sometimes translated to “free courses”, was an easy sell, especially to those who were cash poor and living for today.

The opportunity was ripe for marketing brokers to move in with sophisticated client management software, purchased client lists, generous inducements and rewards for those who signed up, and easy, “no wait” streamlined enrolment processes. From 5,262 students with a VET FEE- HELP loan in 2009 the number jumped to almost 234,100 in 2014 (Australian Government Department of Education). The total value of VET FEE HELP loans accessed in 2014 ($1,757 million) “…was more than double the amount accessed in 2013 ($699 million)” (2014 VET FEE-HELP Statistical Report – Summary). While both private and public providers grew their reliance on VET FEE-HELP, by far the biggest recipients were private, for-profit providers. Of the $770m in VET FEE-HELP payments up to I July 2014, 77% of payments were to for- profit providers. “Funding growth to for-profit providers has more than doubled each year between 2009 and 2013”. (Workplace Research Centre).

With no upfront price signals, consumers became insensitive to the cost of their training. It seems that price sensitivity in actual fact, was playing little part in user choice. In general, there were fee increases across the board, particularly with private providers seeking to maximise profits and value adding with inducements or promises of better customer/student experiences.

Enrolment numbers in “soft” courses with no prerequisite education or training requirements, exploded, regardless of skill shortage or employment expectations.

The final report into the operation of private providers released in 2015 highlighted examples of the unscrupulous practices that became commonplace, as illustrated below.

Final Report - The operation, regulation and funding of private vocational education and training (VET) providers in Australia

Private Vocational Education: Business models, marketing practices and unethical practices

Unscrupulous marketing techniques employed by private providers

Excerpt

3.42 In other cases, students were explicitly encouraged by the RTO or broker to think of the loan required to undertake a course as one that they would never have to repay, as in the following case study presented by the TAFE Community Alliance:

An older woman in her early 70s was at the Bankstown Central shopping centre having lunch with her bible group when they were approached by a young man asking them if they would like a free laptop and a "free" Diploma in Community Services. He assured them that though they had to sign up for a government loan they would never have [to] repay it as they would need to [earn] over $50,000 (and this was a group of pensioners) and they agreed they would never be earning that much. The whole group signed up and got their laptops.[28]

3.43 Similarly, the Canterbury Bankstown Migrant Interagency reported:

In March 2014, a group of senior citizens from Bankstown (all from Culturally and Linguistically Diverse background and little English) were talked into enrolling in 'computer classes' with Unique International College in Granville and Aspire College in Parramatta. It turned out that there was no computer class and they were all enrolled in different diploma courses and filled out forms to take out VET FEE-HELP. They were each offered a free computer/ipad or $1000 cash by taking out the loan. They were told there no need to come to class, but if they wish, they could come and free lunch will be offered. They alleged in Aspire College, they had a canteen that could accommodate a couple of hundred people and on the day it was packed with senior citizens enjoying their free lunch.[29]

Impact of the changes on VET The revised VET FEE-HELP scheme resulted in a shift of funding for higher level VET qualifications from states to individuals and a massive windfall for private providers. Profits were high, barriers to entry were low and with

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little accountability, unscrupulous behaviour was rampant. Vocational training was a commodity to be sold just like any other product and it became clear that many marketing brokers, driven by profit, sales targets and commissions, were blatantly using unethical tactics, including specifically targeting disadvantaged people. Adverse newspaper headlines became frequent and distressing for those providers genuinely concerned with student welfare.

Yet, given the exponential increases in loans and loan amounts, still only minor changes were made at the national level. In November 2014, the Senate referred the matter to their Education and Employment References Committee for inquiry and report nine months later.

The business model used by some private providers was detailed in a September 2015 article published in The Age and Sydney Morning Herald.

“To put the rorting in Australia's vocational education system in context, consider this.

Signing up to Phoenix Institute for a 10-month business diploma will cost a new student $18,000. This course, which is delivered online at a college with no reputation, costs $8000 more than a year's on-campus tuition at the School of Medicine at Melbourne University. In both cases the learner finishes the year with a debt to the Commonwealth. But the Melbourne University student is significantly more likely to have been given something of value and is much more likely to eventually repay the debt.

… [VET] prospective students are much more likely to be unemployed, less educated, older and poorer. They need training to fill the demands of industry for skilled workers.

Instead, though, many are being lured by door-to-door salesmen, fake job advertisements or shopping mall spruikers into dubious online courses in private colleges run by people who are not educators.

… The Commonwealth spends this money upfront, handing it to the colleges. It expects to see it repaid through a HECS-style delayed repayment scheme called VET FEE-HELP.

As for quality, unlike in the heavily regulated university sector, there is no minimum course length, no standardised testing at the end, and precious little oversight of the colleges.

And the industry is growing exponentially.

… The industry, by design, is "demand driven". But it's colleges, not students, driving the demand. They employ an army of salesmen (known euphemistically as "brokers") who can earn millions in profits from taxpayer subsidies.

The dodgy brokers, such as some of those working for Melbourne's Phoenix Institute, specifically target people

living in public housing, the intellectually disabled, the drug addicted and non-English speakers.

They offer a free laptop as an incentive to get the signature of a new "student", then fill out the literacy and numeracy test themselves (or coach the client through it). A number of former salesmen have confirmed to Fairfax Media that, at Phoenix at least, most "students" are signed up to two courses each, generating $36,000 in revenue for the college's publicly listed owner, Australian Careers Network (and a $36,000 cost to the government).

The salesman then comes back to the house to sit in the room and coach the new student as the college makes its post cooling-off period confirmation phone call.”

It wasn’t only private providers who profited. TAFEs also benefited (though not through using the same aggressive sales tactics as private providers), but, given their government-owned, not-for-profit status, there were restrictions on how their funding was used. There were generally low course completion rates across providers and students accrued debts, in many cases with little to show for it. The Grattan Institute in their submission to the Senate Committee indicated that NCVER statistics (2014) estimate that the qualification completion rate of people enrolled in vocational education Diplomas had consistently been less than half. They concluded “The available data gives no reason to believe that VET FEE- HELP borrowers will achieve higher rates than this, and considerable concern that they will achieve lower rates.” The loan conditions that students had signed up to had been based on a higher education model of delivery, and not adequately adapted to vocational education. They had little recourse to review or recompense.

With VET FEE-HELP debt continuing to increase, the likelihood of repayments shrinking, a growing list of providers, almost daily exposes on the bad behaviour of some private providers or their marketing brokers, and the inability of ASQA to deal with the problems, the Commonwealth Government acted in 2015 to rein in the VET FEE-HELP scheme. Progressively, over the next two years stronger measures, many of them recommendations from the Senate Committee, were implemented. These included putting a halt to aggressive marketing practices, banning the use of brokers and cold calling. Students wishing to apply for a loan needed to undergo literacy and numeracy screening. Rules around provider approval were tightened and the National Training Complaints Hotline was established, giving students recourse to appeal. Measures were also taken to improve the capacity for information sharing between Commonwealth agencies, giving ASQA greater access to VET provider data.

In releasing the 2016 VET FEE-HELP Statistical Report on Wednesday 16 August 2017 the Assistant Minister for Vocational Education and Skills, the Hon. Kevin Andrews, claimed some wins:

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“The number of students accessing VFH loans fell by nearly 30 per cent in 2016, showing the Government’s reform measures were proving effective ahead of the failed scheme being abolished and replaced in 2017,” Minister Andrews said.

“A total of 235,236 VFH eligible students enrolled in 2016, down 24.1 per cent from 2015. Of these students, 193,868 received VFH assistance, which is a 28.7 decrease.

“Students borrowed $1.47 billion in VFH loans in 2016, which was $1.445 billion or 49.6 per cent less than the $2.915 billion in 2015.

“The Government took a number of steps in 2015, and again in 2016, to curb unsustainable growth, address unscrupulous behaviour, and to protect and better inform students ahead of a redesigned program.

“These figures clearly show our actions were effective.”

The 2016 changes resulted in numerous private providers ‘going to the wall’ as their business models broke down. Unethical or even sometimes, illegal behaviour of private VET sector providers became even more evident. The Department of Education and Training and the Australian Competition and Consumer Commission (ACCC) launched action in the Federal Court of Australia against four former VET FEE-HELP providers that are alleged to have breached various provisions of the Australian Consumer Law by engaging in misleading, deceptive and unconscionable conduct. These are Unique International College, Cornerstone Investment Australia Pty Ltd trading as Empower Institute, Australian Institute of Professional Education Pty Ltd (AIPE) and Phoenix Institute of Australia Pty Ltd. Other spectacular falls include Vocation and Careers Australia, which is facing a class action from its investors. The ACCC site provides a litany of actions being taken against private VET providers. -

However, good as well as poor providers were caught up in the fallout, and the whole VET sector appeared to have been brought into disrepute, or at least tarnished. The collapse of some providers left students unable to complete courses. The course and tuition assurance that had been mandatory for all providers, was often found to be ineffective or insufficient. In some cases, students were unable to retrieve documentation of their study record.

It was, by now, obvious to the Government that much of the debt incurred by students was bad debt and difficult, or impossible, to recover. It was not going to be repaid by those students would never reach the income threshold for repayment, nor recouped from providers who were no longer operational. At the end of 2016, the Government drew the line and abandoned the VET FEE-HELP scheme completely. The concept of loans for vocational educational students, however, was now entrenched in the system and couldn’t be scrapped altogether. The entirely new, overhauled VET Student Loan scheme was released in January 2017, breaking most, but not quite all,

links with its predecessor. Each provider was given a financial cap, courses were limited (generally to those in skills shortage or STEM areas) and loans limits were set for each qualification. Loans became a transaction between the student and the Commonwealth, with students required to prove ongoing course participation before payment is made to providers.

While these changes were widely supported in principle, there was increased administrative burden and risk to providers who remained in the new scheme. Student loan uptake reduced, and there was a shift from fee-for-service places back to (state) government subsidised. This was, in part, caused by the loan caps imposed on each qualification, which often made it uneconomic to deliver a course without substantial, additional out of pocket expenses for students. Price signals, and inhibitors, returned to the VET market. In this environment, students frequently find it easier to opt for university, especially with the proliferation of University Colleges.

Reflection on ASQA as a Regulator Given that it took three years to even begin to tackle the rorts, by the time action was taken, extreme measures were required. VET FEE-HELP had become a major political issue and unpaid debt a concern for the budget. All VET providers were caught in the net and tainted to some extent, irrespective of their performance. The continuing retro-fit of band aid solutions has been confusing for the public and made the administrative load on providers extreme. The reputational damage done to VET through the VET FEE-HELP saga will take many years to reverse. This is especially so in the international market where a once highly valued VET system was seen as being amongst the best in the world.

The student website, Campus Morning Mail picked up on this issue noting that:

While international demand for Australian education is booming, the collapse of private training providers in the aftermath of the VET FEE-HELP scandal is starting to have an impact overseas. “People abroad don’t understand what VET FEE-HELP was all about but they just sense that something was not quite right with Australia’s education system. Ironically, overseas students were never able to access VET FEE-HELP course places but our international education sector appears to have been made guilty by association”, a senior industry observer warns.

The Senate enquiry into the operation, regulation and funding of private vocational education and training providers in Australia also identified the extreme pressure that had been put on VET regulators.

“5.36 … ASQA, and the Department of Education and Training which regulates access to VET FEE HELP, has faced severe challenges dealing with the abuses of some private providers. The committee is of the view that there is every reason to doubt that ASQA is fit for purpose, and

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that the regulatory architecture of VET may need a revamp.”

ASQA continues the task of auditing and taking action against those who providers who cashed in on the windfall from student loans.

With the reduction in access to VET Student Loans, the overall funding for VET has been reduced even further. Loans are now restricted, with many courses unfunded and course loan caps leaving students in some cases, with large gaps to self-fund.

VET FEE-HELP had started as a well-intentioned scheme to promote equal access to study for all. However the design was badly flawed, and it enabled an environment where VET fees increased, unscrupulous providers flourished, students were burdened with debt without commensurate outcomes and budgets of government were drained. This has not surprisingly has caused the public to be cynical and cautious about vocational education.

It also makes us reflect on how governments effectively regulate the VET market. With currently over 5,000 VET providers, regulators face a difficult task to address the issues of quality and integrity across them all at any one point in time. Should the barriers to being a VET provider be higher, as they are in Higher Education, to weed out weak performers? Given the current rhetoric around skill shortages, maintaining a strong, fair and sustainable VET system is critical. Accessibility is still an important issue for VET but what is required is strong and clear direction, based on sound policy to strengthen and not undermine it at every turning point.

References Final Report- The operation, regulation and funding of private vocational education and training (VET) providers in Australia. 15 October 2015.

2016 VET FEE-HELP Statistical Report, Commonwealth Department of Education and Training

2015 VET FEE-HELP Statistical Report, Commonwealth Department of Education and Training.

2014 VET FEE-HELP Statistical Report, Commonwealth Department of Education and Training

Australian Competition and Consumer Commission, https://www.accc.gov.au; March 2018

Bachelard, Michael; Vocational Education – How the shonks and shysters took control; Sydney Morning Herald; 25 September 2015. https://www.smh.com.au/education/vocational-education-how-the-shonks-and-shysters-took-control-20150925-gjujt5.html

Yu, Serena and Oliver, Damian; Workplace Research Centre, The University of Sydney Business School’ The Capture of Public Wealth by the For-Profit VET Sector, A

report prepared for the Australian Education Union; January 2015

(http://campusmorningmail.com.au/grand-alliance-ends-atar-smoke-and-mirrors/)




https://www.education.gov.au/vet-fee-help-statistics






https://www.accc.gov.au/

https://www.smh.com.au/education/vocational-education-how-the-shonks-and-shysters-took-control-20150925-gjujt5.html



http://campusmorningmail.com.au/grand-alliance-ends-atar-smoke-and-mirrors/

http://campusmorningmail.com.au/grand-alliance-ends-atar-smoke-and-mirrors/

Introduction The crisis in Australian vocational education2 is more than a funding, marketisation or system design issue: it is a question of the fitness of our vocational education model for our times. In the context of revolutionary digital technologies, continued globalisation, population ageing and changes to work patterns such as the emergence of the gig and post-work economies, we are failing to repurpose our vocational education resources to develop the twenty-first century capabilities needed by individuals, communities and industries.

This paper starts with history, looking at how late twentieth-century vocational education revolution and counter-revolution trapped Australia’s vocational education sector in a pre-digital time warp. The discussion will go on to reflect on promising concepts of vocational education emerging in some other countries as they grapple with twenty-first century challenges: what we can we learn from them and from our own experience. Finally, we will reimagine vocational education in Australia as it could be to increase inclusivity, innovation and prosperity.

Kangan: the lifelong learning revolution To understand the origins of our current neo-liberal3 vocational education model, it’s useful to understand this model as a counter-revolution, a backlash against the Kangan revolution that preceded it. The paradigm shift from Kangan to the Training Reform Agenda and beyond was a struggle between two conflicting sets

1 1 Emeritus Professor Victoria University Melbourne. Grateful thanks to Francesca Beddie, Linda Simon, Hugh Guthrie and Berwyn Clayton for their advice. 2 The term vocational education is used to designate both vocational education as a category of education and what is known as the VET sector.

of ideas about what vocational education ought to be, evolving in two very different economic and social milieux.

The Kangan revolution was part of the Whitlam government’s (1972-1975) extensive education transformation program. Myer Kangan, and the Australian Committee on Technical and Further Education he chaired, proposed an inspirational, inclusive program of reforms for what had long been the “under-valued and under resourced” Cinderella of the education system (Fooks, 1994; Goozee, 1995, p. 6). The eponymous Kangan report gave us much: the word TAFE, the beginnings of a national system, better data, upgraded facilities, improved curriculum quality, greatly improved teacher training and more (Schofield, 1994). It envisaged what was then, largely, TAFE as an education sector, equal to universities and colleges of advanced education, focusing on access and lifelong vocational education to enable individuals to fulfil their potential and for the broader benefit of society (Schofield, 1994).

The publication of the Kangan report coincided with “…a golden era of educational growth, both in Australia and overseas” and reflected the optimistic, humanistic ideals prevalent in OECD countries at the beginning of the 1970s (Kearns & Hall, 1994, p. 5). It was greatly influenced by a seminal UNESCO report, Learning to Be: The World of Education Today and Tomorrow, which gave the Kangan committee its whole of life-course approach to vocational education (International Commission on the Development of Education, 1972; Kearns & Hall, 1994).

3 Neoliberalism refers ”… to an economic system in which the ‘free’ market is extended to every part of our public and personal worlds. The transformation of the state from a provider of public welfare to a promoter of markets and competition helps to enable this shift.” (Birch, 2017)

Vocational education for the twenty-first century

Friday, 3 August 2018

Anne Jones 1

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The decade following the Kangan report’s publication saw TAFE grow enormously in enrolment numbers and in the scope of its provision. It became the largest post-secondary education sector and, although certainly not the best funded, attracted new federal and state funding for curriculum development, teacher education, facilities, vocational education research and for specialist programs targeting groups such as women, Aborigines and multicultural communities (Goozee, 1995). TAFE in the late 1970s was an exciting and optimistic sector; one that attracted this author along with many others to work in vocational education.

Regime change: The Training Reform Agenda Sadly, this golden era soon ended. Shifts in international trading patterns through the 1970s and 1980s and the emergence of strong new producers and markets in Asia and the Pacific rim undermined economic policy and industrial practices in the United Kingdom, United States, Western Europe, Australia and New Zealand. Through the 1980s, Australia slid towards what then Treasurer Keating referred to, in 1990 as “…the recession we had to have” (Smith, 2016).

Once again Australia looked to European models for remedies. The Australian Council of Trade Unions (ACTU), working with the Hawke government and acknowledging the symbiosis between skills and economic prosperity, suggested a fact-finding mission to European countries that were thriving in the new economic environment (Goozee, 1995). The resulting reports and policy initiatives recognised the need to make industries more competitive through floating the dollar, tearing down tariff walls, restructuring industrial awards and reforming vocational education.

Vocational education was reformed through a change program that became known as the Training Reform Agenda (TRA). This reform program reflected the open, competitive market approach implemented to reform Australia’s industries and also addressed a strong conviction that TAFE was inflexible and unresponsive, incapable of delivering the skills needed to reconstruct Australia.

There was a view that competitive pressure would make TAFE more responsive to industry, less mired in rigid educational practices (Seddon & Angus, 2000). The TRA worked to reduce the influence of teachers

and educational thinking through deliberate suppression of educational language and oversight of curriculum development. Curriculum was replaced by training packages, learning outcomes became elements of competence, assessment criteria became performance criteria, responsibility for the development of qualifications was transferred from educators to industry. In the early days of the TRA, policymakers, industry stakeholders and even educators believed that training package documentation could be so explicit that anyone with minimal training could deliver and assess (Jones, 2003). Consequently, the preparation needed to deliver vocational education was reduced from a bachelor or postgraduate teaching qualification to what is now a certificate IV qualification. The TRA of the late 1980s and 1990s created the industry-led, competency-based, privatised training sector that continues to this day, symbolised by the widespread use of the acronym VET as an ever-present reminder of the sector’s shift in focus from education to industry training.

The two competing world views of vocational education represented by the policy regimes prevailing in 1974 and 1994 reflect the dualisms that have dogged vocational education throughout its history in Australia, and in many other countries (Fooks, 1994; Goozee, 1995; Schofield, 1994). These can be summarised as the tensions between:

• vocational education that prioritises the development of the individual as a social good versus vocational education that directly addresses manpower needs

• vocational education institutions that regard themselves primarily as educational institutions versus those that see themselves as vocational training centres

• vocational education that delivers broad humanistic curriculum versus a competency-based approach driven by industry-developed national competency standards

• the state as the custodian and funder of vocational education versus the state as a purchaser.

Manpower on steroids Today, after forty years of training reform, policymakers, industry stakeholders and even many educators regard vocational education primarily as a means of producing manpower as cheaply as possible. Successive state/territory and federal governments have managed vocational education as a cost to be reduced rather than as an investment in the individual or in social good. Analysis by Noonan and his colleagues from the Mitchell Institute demonstrates that public funding for vocational

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education has declined while that available to the more valued and influential school and university sectors has grown (Noonan, 2016). Continued training reforms by successive state and federal governments have intensified the manpower focus of technical education and by some measures these reforms have been successful. Over the period the national qualifications and national quality systems have been consolidated, industry leadership is now well entrenched and private training provision has mushroomed to enrolment of 58.7% of students in 2016 (National Centre for Vocational Education Research (NCVER), 2018). The understanding that the vocational education sector exists primarily to serve industry rather than individuals or communities is almost universally accepted in the public policy and polemic concerning the sector.

Yet, over the past five years there has been growing evidence that the vocational education sector has suffered from an excess of training reform. Growth in for profit private provision has siphoned government and individual investment into private pockets with little return to industry or community. Belated regulatory intervention forced several large providers to close, abandoning tens of thousands of students with incomplete qualifications (Superina, 2018). Vocational education continues to be the Cinderella of the education system despite the fact that in 2016, 4.2 million Australians participated in it.4 Lack of esteem and political clout have allowed uncapped growth in undergraduate enrolments in universities to erode participation in vocational education (Karmel, Roberts, & Lim, 2014). Declining funding and public confidence in vocational education have reached such a critical point that, as Noonan and Pilcher have recently shown, vocational education enrolments have dropped beyond what can be explained by growth in the university sector, to the point where vocational education is at risk of becoming a residual sector (Noonan & Pilcher, 2018, p. 10).

Reduced funding has meant less investment in teaching practice and vocational education research, greatly affecting the capacity of the sector to maintain its knowledge, renew its educational practices and adapt as society and industry change. Despite their best efforts, vocational education providers, even the enduring public institutions, are

4 (https://www.ncver.edu.au/data/collection/total-vocational education-students-and-courses) 5 The term TAFE institution refers to publicly owned TAFE institutes, community colleges, polytechnics and vocational education sections of dual sector universities

not resourced to innovate. Given the public ownership of, and historical investment in, TAFE institutions5, these ought to be leading the development of new vocational education knowledge and innovative practices. However, TAFE institutions have lost much of their capacity to evaluate and renew their educational practice and thinking.

The financial and regulatory systems considered necessary to manage 50006 RTOs have reduced and redirected effort. Significant public institutions that ought to be trusted to manage their own quality must instead devote resources to the satisfaction of overly burdensome external compliance requirements and continual requests for information. These resources could otherwise be invested in the innovation increasingly needed to adapt to changing learner and industry needs. Meanwhile, Australia’s vocational education sector remains in the past, painstakingly preparing people to perform known, narrowly defined tasks for yesterday’s industries. Vocational education and the vocational education system are not positioned to meet the needs of twenty-first century industries let alone individuals and communities.

We do not know how work and employment opportunities will change in the near future. Predictions range from “forecasts that nearly half of jobs in advanced economies may be automated out of existence” to confidence that high-level vocational skills will be more important than ever in the digital world (Baker of Dorking, 2016; European Centre for the Development of Vocational Training, 2015; European Centre for the Development of Vocational Training (Cedefop), 2017; Pfeiffer, 2015). What we do know is that people will need educational breadth as well as occupational depth to adapt and thrive as industries and society change. Researchers who have looked specifically at how vocational education can prepare people for digital disruption emphasise the importance of acquiring broad technical skills that can be adapted and applied in novel contexts, complemented by what have become known as twenty-first century capabilities (Baker of Dorking, 2016; Committee for Economic Development of Australia, 2015; Figel, 2008; Gardner, 2006).

Capabilities are much broader than the combinations of skills and knowledge specified by the Australian

6 https://www.asqa.gov.au/about/australias-vet-sector/about-rtos

https://www.ncver.edu.au/data/collection/total-vet-students-and-courses)

https://www.ncver.edu.au/data/collection/total-vet-students-and-courses)

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Qualifications Framework: capabilities also encompass dispositions and attitudes (Barnett & Coate, 2005; Hager & Holland, 2007). Twenty-first century capabilities, in particular, represent the knowledge, skills, attitudes and dispositions individuals must acquire to adapt to complex and unknown circumstances (Barnett & Coate, 2005). For example, European Union countries have identified the capabilities they consider necessary to remain globally competitive and to best prepare individuals for lifelong employment. These comprise high-level technical skills, core skills and a range of capabilities referred to in the EU as transverse capabilities – “the ability to think critically, take initiative, problem solve and work collaboratively will prepare individuals for today's varied and unpredictable career paths … particularly entrepreneurial skills” (European Commission, 2012, p. 3).

Compared with the EU approach, there are some obvious problems with our vocational education sector’s development of Australia’s twenty-first century workforce. Below, I discuss five critical gaps in the preparedness of Australian vocational education to support the preparation and ongoing education of individuals for twenty-first century life and work:

• There is insufficient capacity to ensure learners graduate with the strong core literacy, numeracy and digital skills needed to underpin all other learning.

• Australian vocational education curriculum and teaching do not address the twenty-first century capabilities needed for long-term employability and community engagement.

• The applied and workplace-situated pedagogies required to develop high-level technical skills are not regarded as distinctive pedagogies requiring research and development to keep pace with workplace change.

• Our vocational education institutions and systems are not well prepared to respond to disruptive change.

• Vocational education institutions have neither capability nor capacity for innovation.

Inattention to core skills Australia’s significant problem with adult core skills literacies is a barrier to education generally and contributes to the nation’s unpreparedness for digital disruption. There is much evidence for this including the 2013 OECD report Programme for the International Assessment of Adult Competencies, which is based on a survey of Australians from 15 to

7 https://www.education.gov.au/core-skills-work-developmental-framework

74 years-old. The OECD found that 43.7 per cent of Australians – around 7.3 million people – had below-proficiency level literacy. Numeracy scores were worse, with around 53.5 per cent of the population below proficiency levels. High levels of early school leaving (almost 18 per cent of 15 to 19 year olds according to 2011 census data) no doubt contribute to this problem (Dommers, Myconos, Swain, Yung, & Clarke, 2017). Despite government requirements for vocational education providers to test core skills before enrolment and to address gaps, there are insufficient resources to deliver the substantial remedial programs needed to develop core literacy, numeracy and digital skills to proficiency level. Surely we should stop providing core skills ‘lite’ to vocational education learners, but rather ensure that all young adults, including apprentices, enter the workforce with substantial mathematics and English skills equivalent to senior secondary certificate level.

Inattention to twenty-first century capabilities Australian vocational education qualifications are based on impoverished curricula which fail to address the capabilities needed by adults in a twenty-first century democracy, let alone prepare them to contribute to innovation. Historically, attempts to enrich vocational education qualifications with substantial general capabilities have been reduced to inclusion of narrow, short-term proficiencies. For example, senior secondary and most university curricula address the broad twenty-first century capabilities needed to be ethical and responsible global citizens, creative contributors to innovation, adaptable lifelong learners able to navigate the changing worlds of life and work (Ministerial Council on Education Employment Training and Youth Affairs, 2008; Wagner, 2008)). In training packages these important lifelong capabilities are reduced to a much less ambitious series of ‘employability skills for’ immediate use in the workplace, such as “problem solving, collaboration, self-management, communication and information technology skills”.7

Underdeveloped pedagogies Many of the problems associated with poor development of vocational education teaching staff are discussed in the paper in this series written by Guthrie and Jones. Here, the discussion emphasises that the sector’s capability to innovate and prepare for an unknown future has been diminished by low

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expectations and standards for vocational education teaching. Vocational education teaching is not recognised and valued as a distinctive pedagogy, related to both secondary and higher education, but with its own specialised set of teaching and assessment methods relying on hands-on applied learning and the workplace as a context. There is minimal investment in the scholarship of vocational education learning and teaching. This, combined with the low teaching qualification level required and other constraints such as limited investment in digital technologies, means that vocational education institutions have little capacity to develop innovative educational solutions to meet new learning needs arising from disruptive industrial changes.

Unpreparedness for disruption The vocational education sector has limited capability to foresee and respond quickly to disruptive changes in the nature of work and workforce. A good example of this comes from an industry not previously associated with disruption, Aged Services. This industry is experiencing multiple pressures due to the ageing of both its client population and its workforce, at the same time as consumer-directed care policies disrupt the sector’s business models and employment modes. It is hard to imagine the current workforce – ageing, of low socioeconomic status, many from non-English speaking backgrounds – easily adapting to an industry already being interrupted by new Uber style services providers (Aged and Community Services Australia, Leading Age Services Australia, the Aged Care Guild, UnitingCare Australia, & Australia, 2016). Multiple reports have warned of the need to scale up the quantity and quality of training for the sector and to address new skills requirements (Aged and Community Services Australia et al., 2016; Productivity Commission, 2011; Skills IQ, 2017). These changes have been imminent for years, yet the vocational education sector has not prepared for them. NCVER data show that the numbers in training for this sector declined significantly from 2014 to 20168 despite accelerating growth in the aged care workforce (Productivity Commission, 2011). Most concerning, further disruptive changes in the nature of work for this sector are looming as digital technologies currently being developed transform residential and home-based services and the skills needed to provide them. Last year, Flinders University’s Medical Device Research Institute published a technology roadmap

8 Based on data extracted by the author from the NCVER VET students by industry statistical compendium

for the aged services industry. The researchers pointed out that digital literacy is becoming important for this industry posing challenges for a workforce with low language, literacy and digital skills (Medical Device Research Institute Flinders University, 2017, pp. 47-48). The skills needed to work in consumer directed and technology enhanced services are not explicitly reflected in the current aged services qualifications (Certificate III in Individual Support and Certificate IV in Ageing Support). Nor do these or other vocational education qualifications explicitly prepare learners to adapt to and navigate change, to think critically, to be – as they increasingly need to be - entrepreneurial.

Vocational education and innovation These four failings underlie the most serious gap in vocational education policy in Australia, the failure to recognise the contribution of vocational education graduates to innovation. Industrial innovation has always relied on technical and trades skills. For example historians have attributed Britain’s leadership in the first industrial revolution to the greater availability of skilled technicians and tradespeople in the UK compared with other countries. Technicians took the inventors’ ideas and created the countless small innovations needed to get the bugs out of big inventions, and constructed, installed and operated new technology (Meisenzahl & Mokyr, 2011).

In Australia, Phillip Toner and his colleagues from the University of Sydney have studied the contribution of workers with trade and technical qualifications to the country’s innovation effort, showing that such workers make up 30 per cent of Australia’s research and development workforce (Toner & Dalitz, 2012). Their analysis shows that “the Australian pattern of innovation is, arguably, more dependent on vocational education skills than other OECD nations … the dominant form of innovation is incremental and particularly oriented to the adoption and adaptation of products, processes and services developed locally by other firms and industries or sourced from overseas” (Toner & Dalitz, 2012, p. 16). Further evidence comes from Beddie and Simon’s analysis of the Melbourne Institute’s 2007 Australian Inventor Survey of Australian patent applicants from 1986 to 2005, concluding that over 50 per cent of inventors were likely to have vocational education backgrounds (Beddie & Simon, 2017). Finally, evidence of the vocational education contribution to innovation

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comes from the Office of the Chief Scientist, which in March 2016 reported that “… people with vocational education level qualifications had a much higher level of business ownership compared to those with university level qualifications” and “… of the STEM-qualified population, approximately two-thirds held vocational education and training (vocational education) qualifications, while one-third were higher education graduates with bachelor degrees or higher … The vocational education sector makes a critical contribution to Australia’s STEM skills base, a contribution yet to be fully reflected in the evidence base for policy development.’ (Office of the Chief Scientist, 2016, p. 158)

Nonetheless “‘… in Australia skills, particularly VET, are almost entirely excluded from government innovation policy reports and bodies” (Dalitz & Toner, 2016). This contribution is invisible to policymakers, the media and the general public. For example, the vocational education sector did not initially feature in the Australian Governments National Innovation and Science Agenda. After intense TAFE lobbying two recommendations have been included in the Federal Parliament’s report Innovation and Creativity — Inquiry into innovation and creativity: workforce for the new economy: “expanding the National Innovation and Science Agenda to include the vocational education sector” and “adopting elements of the Canadian Applied Research and Innovation Services model to strengthen connections between vocational education providers and small and medium-sized enterprises”.9 Lack of recognition of vocational education’s role in innovation means that we have neglected to build the capability needed to optimise that contribution. In their recent study of the Australian vocational education sector’s role in innovation, Beddie and Simon concluded that the sector’s participation in innovation depends on its “… capability to identify, nurture and impart … applied research skills” (Beddie & Simon, 2017). As already discussed, recent policies have failed to build the capacity of vocational education institutions and their graduates to undertake research and foster innovative capability.

International exemplars Many countries recognise the need for high quality, high-level technical education to underpin the delivery of technologically advanced products and services and are scaling up their vocational education

9https://www.aph.gov.au/Parliamentary_Business/Committees/House/Employment_Education_and_Training/Innovationandcreativity/Report_-_Innovation_and_creativity

curriculum and sectors accordingly (Pfeiffer, 2015). The United Kingdom, Canada, Germany, Austria among other countries are focusing on building strong, innovative vocational education sectors to support their future workforce strategies.

In Canada, the national government has established a program to support business innovation based on co-investment and collaborative applied research between community colleges and polytechnics and enterprise partners. This program has been so successful that now more than CAD$50 million is allocated to it annually supplemented by industry partner contributions. Demonstrated benefits include increased productivity, new product development and increased sales for the participating businesses. The colleges and polytechnics also claim improved capability and employment outcomes for students.

New Zealand Institutes of Technology and Polytechnics (ITPs) are able to apply for national research funding equally with universities and other providers. As a result, in 2016, the ITP sector received over NZD$7 million from the national Performance Based Research Fund.10 New Zealand polytechnic websites describe many examples of innovation driven by applied research, as can be seen in an example from New Zealand’s largest polytechnic, Unitec at https://www.unitec.ac.nz/research-and-enterprise.

TAFE institutes, as permanent public institutions, ought to be the natural leaders for developing and sustaining applied vocational education research and innovation in Australia. Despite limited resources, some are working towards this, such as Holmesglen Institute with its Centre for Applied Research and Innovation and TAFE Queensland, which is building an applied research portfolio. However, lack of resources, means that TAFE institutes and the vocational education sector generally are not achieving their potential contribution to innovation. Significant investment in applied research and innovation infrastructure and staff capability is needed to enable Australian TAFE institutes to create the organisational cultures that will produce future adjusters and implementers of innovations.

Kangan redux? There seems little doubt that Australia’s current vocational education model is not delivering the

10 http://www.tec.govt.nz/funding/funding-and-performance/performance/financial/

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capabilities needed in the twenty-first century workforce. Individuals require a broad combination of strong core skills, twenty-first century capabilities and high-level technical skills to assure them of lifelong employment, enabling them to navigate their own way in an unpredictable and changing labour market and in society more generally. Twenty-first century industries will increasingly rely on individuals who have developed the potential to manage their own career and learning pathways, adapting to new workforce challenges. The Kangan Report prioritised individual development and social purpose alongside workforce relevance (Kangan & Australian Committee on Technical and Further Education, 1974). Now, industries need vocational education which prioritises individual development and social purpose as a precondition for workforce relevance; a Kangan 4.0 approach for the industry 4.0 era.

How can we redesign Australian vocational education to address the critical gaps discussed above? I suggest that the following changes would be needed.

Strong core skills

First, there must be a genuine, adequately funded commitment to ensuring all adults have strong core literacy, numeracy and digital skills as a basis for ongoing participation in work and community. This commitment must acknowledge the specialised needs of significant groups such as early school leavers, Aboriginal and Torres Strait Islanders and recently arrived migrants.

Qualifications for twenty-first-century industries

Our narrow, behaviourist vocational qualifications need to be broadened for the twenty-first century to ensure that technical skills are transferrable and complemented by twenty-first century capabilities such as critical thinking, creativity, adaptability and entrepreneurship. A number of researchers have suggested models for doing this, typically developing skills and capabilities appropriate for large industry sectors or otherwise for a range of occupations (Billett, 2016; Hodge, Atkins & Simons, 2016; Wheelahan, 2015). Our experience supports the view held by these researchers that it is possible to design curriculum that develops transferrable technical skills in a context that also develops twenty-first century capabilities.

The range of qualifications levels available through vocational education must expand. Developed

11 http://www.apprenticeshipguide.co.uk/higher-apprenticeships/

countries aspiring to continued high standards of living need more workers with vocational education at levels equivalent to Australia’s AQF levels 5 and 6 (Baker of Dorking, 2016; Brown & Hesketh, 2004; Pfeiffer, 2015). Other countries have accepted that high-level technical skills are important in the digital world and have developed higher-level vocational education qualifications, including postgraduate degrees, to deliver these. The recent changes to vocational education in the United Kingdom are an example, with the successful development of many higher and degree level apprenticeships.11 Australia has taken initial steps, piloting higher apprenticeship models through a program coordinated by Price Waterhouse Cooper.12 Vocational education of the future could offer vocational qualifications ranging from AQF 1 to 10 designed for applied and workplace-situated learning. Higher, including degree level, apprenticeships could be expanded to cover a much larger range of industries, recognising the valued of situating vocational education in real workplaces. Incentives may be needed to encourage reluctant employers to host on-the-job learning.

In the future even more than in the past, vocational education qualifications must meet the needs of individuals seeking to reskill or upskill throughout a lengthened working life as well as new entrants to the workforce; some of these will be seeking new employment opportunities after interrupted lives. These many circumstances require an expanded range of qualifications, skill sets, micro-credentials and pathways. Skilful curriculum design will be necessary to ensure that that individuals are able to achieve the mix of core skills, technical skills and capabilities needed at each critical life and employment stage.

To address this complexity, many are arguing for a localised approach to ownership and development of vocational education qualifications, giving providers ownership and allowing them to respond agilely to local needs (Billett, 2016; Wheelahan, 2015). Such a change would mean an end to industry ownership of national qualifications, but not necessarily of vocational standards. The development of national industry standards to frame technical skills development in locally developed qualifications could maintain the qualification portability and recognition which has been so useful in Australia.

12 https://www.pwc.com.au/careers/student-careers/higher-apprenticeship.html

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Twenty-first century teaching

There is a need to recognise and resource high quality, self-renewing vocational education teaching. This requires serious initial and continuing teacher education in applied and workplace-situated pedagogies. To develop and maintain its relevance in a changing workforce environment, vocational education teaching practice must be based on applied research into the development and evaluation of the applied and workplace-situated pedagogies required to develop high-level technical skills and twenty-first-century capabilities in context. Twenty-first-century vocational education must operate within a lifelong learning context, respond to digital disruption in education as well as industry and nurture innovation. It will take much more professional development than a certificate IV to meet these needs. Simon and Beddie have developed a framework for supporting innovative practice and institutions which could become part of a comprehensive initial and ongoing professional development program (Simon & Beddie, 2017).

Future ready vocational education providers

To deliver future-focused vocational education qualifications we need a strong vocational education sector centred on applied and workplace-situated knowledges, traditions and practices (Billett, 2013; Wheelahan, 2015). Such a sector would consist of durable, independent institutions with strong innovation and applied research cultures, capable contributors to tertiary education alongside universities. We need a network of ‘grown-up’ institutions, each with its own sense of purpose related to its aspirations for its students, not to current government policy. TAFE institutions, as large, enduring public providers are the natural anchor institutions for such a network (Wheelahan, Buchanan, Goedegebuure, Mallet & McKew, 2017). There is no reason why TAFE institutions could not become the repositories for excellence in vocational education practice on behalf of all education institutions.

Autonomous twenty-first-century vocational education providers should develop their own qualifications and quality standards reflecting local needs and national industry standards as appropriate. TAFE and other vocational education institutions already deliver mixes of vocational qualifications from foundation certificate to postgraduate level (AQF 1-9) depending on local 13 Certificate, diploma, advanced diploma, associate degree.

needs and the availability of other providers. Large vocational education providers could be supported to become self-accrediting by an adequately resourced integrated national regulator.

Preparation of a future ready vocational education sector must be attentive to the certainty of uncertain disruptive change. Innovation capability is central and, among other strategies, it is important to implement Federal Parliament’s recommendation that Australia adopt the Canadian Applied Research and Innovation Services model to build vocational education applied research and innovation capability.

An integrated tertiary education sector

It is time to rethink the language used to characterise vocational education as a category of education and as a sector. Today, primarily higher education institutions such as universities often deliver sub-degree13 qualifications and many TAFEs and other registered training organisations deliver higher education as well as vocational education qualifications. The traditional distribution of vocational qualifications between university and vocational education institutions in Australia is largely an artefact of our tertiary education history. For example, degree-level nursing in New Zealand is mainly delivered by ITPs but by universities in Australia. Given that the workforce will need more higher-level vocational qualifications in future, perhaps we no longer need to designate qualifications as vocational and higher education. In future it may be more useful to differentiate what we now think of as VET institutions on the basis of their specialist expertise in applied and workplace-situated learning, understanding that increasingly learning will take place in and around workplaces.

It is time to fulfil the Bradley (and Kangan) vision of an integrated tertiary education sector (Beddie, 2015; Billett, 2013). As the need for higher-level vocational education increases, it becomes increasingly nonsensical to retain hard sectoral and funding boundaries between institutions that primarily deliver vocational education and those that primarily deliver higher education. Parity of esteem can only come with parity of policy and resourcing. Why not follow the example of New Zealand and other countries that fund delivery of qualifications according to qualification level rather than classification of the delivery institution?

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An integrated tertiary sector would require a number of regulatory and policy changes to ensure that vocational education practice and institutions are future ready:

• development of integrated national tertiary education policy overseen by a single policy authority with vocational and higher education expertise and commitment to parity of policy esteem for both arms of the tertiary sector. This could be formed on the basis of a compact between Federal, state and territory governments, university and vocational education sectors.

• merging vocational and higher education regulation based on a single quality system which allows all self-accrediting vocational and higher education institutions to self-regulate as recommended by the Bradley Report (Bradley, Acquah, Noonan, Nugent & Scales, 2008). Stronger autonomous providers should require a lighter regulatory touch. The size of the provider market should better reflect what can be realistically regulated.

• recognition of the role of TAFE institutions as the long-term anchors of vocational education within a merged tertiary sector and of the need to conserve them as public assets with responsibility for developing and maintaining innovative vocational education curriculum and teaching practice.

• implementation of a model of tertiary funding by AQF level.

The creation of an integrated tertiary sector must be matched with some specific investments in building the capability of vocational education institutions to generate innovation:

• sufficient investment in digital technologies to bring large vocational education institutions such as TAFE to digital parity with universities with respect to learning and teaching and to support innovation projects with industry partners

• a vocational education innovation program fund, as recommended by the Parliamentary Innovation and Creativity report

• significant, sustained investment in dedicated research into innovation in workplace-situated curriculum and pedagogy to ensure that Australia develops the lifelong vocational learning opportunities needed by individuals, industries and communities

• specific investment to remedy the reputational damage caused by the unethical practice and collapse of a large number of private providers. This should inform the public that the TAFE brand is reliable and only used by public providers.

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L H Martin Institute | Changes in funding in Australian vocational education and their effects i

— L H Martin Institute Graduate School of Education

Changes in funding in Australian vocational education and their effects Gerald Burke Honorary (Principal Fellow) L H Martin Institute Graduate School of Education University of Melbourne Adjunct Professor Faculty of Education Monash University 31 July 2018

)

L H Martin Institute | Changes in funding in Australian vocational education and their effects ii

Table of Contents

Overview .......................................................................................................................... 1

Funding changes in context .............................................................................................. 3

Funding and enrolment changes ....................................................................................... 5 1. Public spending on providers ........................................................................................... 6

2. VET Student Loans ............................................................................................................ 7

3. Support for apprentices ................................................................................................... 8

4. Student assistance ............................................................................................................ 9

5. Support for the national training system ....................................................................... 10

6. Programs for access to training ...................................................................................... 10

7. Commonwealth funding for labour market programs ................................................... 10

8. Domestic fees to public providers from students and employers ................................. 10

9. International students’ expenditure .............................................................................. 11

10. Other private fees to private providers .......................................................................... 11

Pricing policy, concessions and exemptions, subsidy rates and contracts.............................. 11

Effects of funding changes .............................................................................................. 12 Efficiency .................................................................................................................................. 13

Equity ....................................................................................................................................... 13

Effectiveness ............................................................................................................................ 13

Aspects of quality ..................................................................................................................... 14

Concluding comment ...................................................................................................... 16 More comprehensive analysis of funding ................................................................................ 16

Improved governance for stable and efficient funding ........................................................... 16

Quality and external assessment ............................................................................................. 17

The public provider, effectiveness and equity......................................................................... 17

References ..................................................................................................................... 19

Appendix: Tables and Figures ......................................................................................... 24

L H Martin Institute | Changes in funding in Australian vocational education and their effects 1

Overview1 The paper considers changes in funding for vocational education and training (VET) from the early 1990s when the move towards a market in vocational education began.

Government funding to non-TAFE provider began to grow in the 1990s with provision by the Commonwealth government to the states of ‘growth funds’ of which a proportion had to be allocated to private providers. User Choice was introduced for the training of apprentices and trainees which allowed the employer to choose the public or private training provider who then received public funding. Commonwealth incentive payments to employers of apprentices were extended to traineeships and to existing and part-time workers. From 1995 there was a rapid increase in international students, associated with permanent migration, and very substantial fee revenues mainly received by private providers.

Some additional Commonwealth programs under the Howard and Rudd governments increased the funds to private and public providers. In 2008 the Council of Australian Governments (COAG) considered an entitlement for all Australians to at least Certificate III. Victoria led the way from 2009 and all states agreed to it from 2012. Under the scheme funds for non-apprentice/trainee courses would be more generally available to non-TAFE providers. There was also agreement in 2012 to extend availability of VET FEE-HELP loans for diploma and higher level vocational courses.

Each of these developments while extending the provision of training was associated with waste and fraud. The largest overall waste of funds was VET FEE-HELP where outlays reached nearly $3 billion in 2015. However there were problems reported by 1999 for traineeships. Fraud in the award of qualifications to international students to enable permanent migration led to the removal of several VET related occupations from the migration occupations list in 2010. The entitlement scheme in Victoria led to a huge budget blow out by 2011, a sharp contraction in TAFE and expansion in private providers and extensive fraud. Other states schemes were introduced later. They were mostly more limited and better monitored.

Against this background the paper reviews the funding to vocational education from the early 2000s.

Government funding paid to providers of training recently totalled about $5 billion:

• Total real government funds for VET providers changed little in the early 2000s, increased from 2008 to 2012 and then fell 20 per cent to be lower than in 2003.

• The Commonwealth share rose until by 2011, fell briefly with a short-lived expansion of states’ spending and then, with a fall in states’ funding, rose to nearly 40 per cent in 2016.

• Real government funds per hour of training tended to fall over a long period and vary substantially among states.

• The share of public funds going to non-TAFE providers increased from 10 per cent in 2007 to 25 per cent in 2016, with large variation across states.

Public funding paid to providers is only part of public funding. Other public funding is now about $2 billion:

• Support for apprentices and trainees, including Employer Incentives, about $0.7billion

• Support for the national training system, access and Migrant English programs funds, share to VET approximately $0.3 billion.

• VET Student Loans, an annual cost about $0.3 billion, a fraction of the cost of VET FEE-HELP.

• Means tested grants to VET students such as Youth Allowance, approximately $0.7 billion.

Private funding is in excess of $2.3 billion and includes fees from Australian students, from Australian enterprises and from international students.

The main types of funds are discussed in relation to numbers in training, to participation by equity groups, to efficiency and to effectiveness:

1. Advice from Michael Keating, Mike Long, Joanna Palser, Robin Shreeve and Phil Toner is much appreciated. They do not necessarily agree with the views expressed.


• The number of students in government funded vocational education grew to 2012 and then fell by over 20 per cent to be lower than in 2003.

• The rapid extension of funding to for-profit providers led to a decline in quality, fraud and waste.

• Vocational education remains easily the major provider for less advantaged students but the equity indicators for government funded VET showed average to poor performance recently.

• Measures of effectiveness such as employer satisfaction fell; student satisfaction changed little.

• Employment outcomes declined though this could in part be due to the growth in part-time employment and underemployment for young people; university graduates were also affected.

• Only a small proportion of vocational graduates other than trade apprentices obtain employment in the occupation of their training, raising questions on the nature of vocational education.

• Quality issues remain affected by the quality of teachers, courses provided in unduly short time, excessive use of on-line delivery and thousands of providers carrying out assessments and awarding qualifications.

The analyses in the paper are drawn on to suggest matters for more detailed consideration:

• A comprehensive and regular evaluation of the whole range of funds for vocational education.

• A need for a state and Commonwealth agreement for national oversight of funding of vocational and higher education as a means of rationalising subsidies across tertiary education.

• A need for improved confidence in quality, including an extension of external assessment.

• Development of more autonomous public vocational providers well supported at state and national level.


Funding changes in context The early 1990s was a time when belief in market systems compared with command economies was at its peak – the West’s Mercedes compared with the East’s Trabant.

In education, government support for markets bloomed but its introduction was concentrated on the vocational sector. In schooling, funding for private providers increased but was confined to not-for-profit providers. In higher education almost all public grants were reserved for public providers though students in approved private providers could receive loans.

Critics of TAFE saw it as provider-led, not sufficiently responsive to the needs of employers and, with its unionised teaching workforce, relatively expensive. The new Australian National Training Authority in 1994 said:

“Competition is less comfortable and more challenging than monopoly or protection. It is now, however, universally recognised as the most effective way to improve services, contain or reduce costs and focus an organisation’s efforts away from its own preoccupations toward those of its customers” (ANTA 1994).

Facilitating the move to competition was the development of a national system of vocational education and national qualifications with mutual recognition of the qualifications awarded in all states. The Australian Qualifications Framework (AQF) was developed to improve pathways in education and from education to work. Training was more closely aligned to industry needs. Skills Councils developed nationally endorsed competency standards for occupations and progressively from the late 1990s assembled these into ‘training packages’ (Smith, 2010). The packages included units of competency, assessment procedures and the qualifications that could be awarded. A training organisation wishing to deliver nationally recognised training had to be registered against national standards by (then) state-based qualifications authorities. This broad structure persists, though with a dominant quality assurance body, the Australian Skills Quality Authority (ASQA), and a new advisory structure for the development of training packages.

In the 1990s a small proportion of additional ‘growth funds’, provided for several years by the Commonwealth, was made available to private providers. ‘User Choice’, whereby the employer of an apprentice or trainee could choose an approved public or private provider for the (mainly) off-the-job training, was introduced from 1998 but with variations across the states.

The Commonwealth from the 1970s provided incentives to employers of trade apprentices. From the mid-1990s these were extended to the traineeship system including for part-time trainees and apprentices and also to existing workers (those employed for three months or more). Traineeships had been established in the late 1980s to provide apprentice-type training for young people in non-trade occupations with the aim of capturing “the benefits of the ‘dual system’ operating in German-speaking countries” (Kirby, 1985).

Together with the introduction of a (lower) training wage for trainees, the incentives and User Choice led to a very rapid expansion in the numbers of trainees in the late 1990s and to new training modes including fully on-the-job training. There was a sharp increase in the number of providers delivering training, the total swelling rapidly to near its recent level of over 4000 registered training organisations (RTOs), including over 3000 private providers (Korbel and Misko, 2016; NCVER, 2017e)2. Several reviews of the traineeship system were carried out by Kaye Schofield. A strong finding was the inadequacy of quality assurance. She also found that the traineeship system was “in many cases a de facto source of wage subsidies to firms, with very little or no structured training provided” (Schofield, 1999).

The experience with the market up to the early 2000s was reviewed by Damon Anderson (2006). Based largely on a survey of public and private providers he found outcomes on balance to be negative. They were positive for choice and diversity, for responsiveness (to medium/large enterprises and fee-paying clients), flexibility, and innovation. He found negative outcomes in relation to efficiency (e.g., high transaction costs and complexity), responsiveness (to small enterprises, local/surrounding communities, and government-subsidised students), quality, and access and equity (Anderson, 2006).

2 ASQA recently said there are about 5000 providers though the NCVER showed only a little over 4000 registered training organisations reporting delivery of training in 2016 (ASQA, 2018; NCVER 2017f).


In the period 2005 to 2010 the private training market expanded due to an extraordinary growth in numbers of international students: from just over 50,000 to over 200,000 enrolments. This was fuelled by the then easy access to permanent migration for those who held a qualification on a list of occupations in demand. However, as reviewed by Baird (2010) some or even many providers engaged in fraudulent behaviour and awarded qualifications while providing little training. Migration lists were amended and many occupations associated with vocational education removed. International student enrolments in vocational education fell by 70,000 or some 35 per cent to 2013. Easing visa conditions since then have seen the numbers recover (DET, 2018e).

An OECD review of Australian vocational education in this period strongly advocated national assessment procedures, preferably exit tests, to ensure that students had achieved the required standards (Hoeckel et al., 2008). Its advice on assessment was not taken.

The Howard Government in 2007 with its Work Skills Vouchers allocated some additional Commonwealth funding directly to training providers, as did the Rudd Government from 2008 with its Productivity Places Program which operated until 2011–2012. The latter was partly funded by states, which took over administration. The funds were available to public, community and private training providers with most taken up by private providers. Doubts were expressed about the balance of courses undertaken and quality of training but considerable deficiencies in data severely hindered evaluation of the program (Allen Consulting, 2010).

Access by private providers to the major part of vocational funds in the states came with the implementation of an entitlement to government funding of training for qualifications up to certificate 3. This idea was considered by COAG in 2008 though only Victoria was clearly on-side, already initiating its own scheme to start in 2009.3 In Victoria there was a huge expansion in enrolments, largely with private for-profit providers, some in courses little related to job prospects (Figures 1 and 2). Budgetary problems were quickly evident along with quality issues, summed up as “college collapses, student exploitation, sham qualifications, ineffective regulatory intervention” (Mackenzie, 2015, 2016). By early 2012 the Victorian Government had announced severe cuts to funding rates in many fields of education and tightened contracts with providers.

Seemingly ignoring the Victorian experience and advice on quality from Skills Australia (2011), all governments signed the National Partnership Agreement on Skills Reform on 12 April 2012, which committed them to:

“introducing and strengthening a national entitlement to a government subsidised training place to a minimum of the first Certificate III qualification … which… is accessible through any registered training organisation (RTO), public or private, which meets state-based criteria for access to the national training entitlement” (COAG, 2012).

That agreement also provided for increased availability of VET FEE-HELP income-contingent loans to vocational students in diploma and higher level courses. The blow-out and vast misuse of those loans is outlined in the government’s own review (DET, 2016b) and by Saccaro & Hall (2018) in this series of papers.

The states differed considerably in their implementation of the national partnership agreement of 2012. An overview of developments to 2015 was provided by Bowman and McKenna (2016). No state went as far as Victoria in implementing an entitlement scheme and some including Victoria have since modified or reversed the privatisation of vocational education.

Where the entitlement model in higher education was seen as demand-driven (by students), the vocational entitlement scheme was seen fairly quickly to be ‘provider-driven’. States then reverted to tailoring the distribution of places to estimates of industry needs, which could be considered ‘government-driven’.

The market for vocational education was unlikely to work well for many reasons: fees paid, if any, for subsidised courses were often very low; easy loans were available for higher-level courses; information on the quality of providers was limited; potential students had little relevant knowledge or ‘skin in the game’; and (of considerable importance) the assessment of students leading to the award of a qualification was done by thousands of providers, making regulation of quality a daunting task.

The Grattan Institute (2016) summed up:

3 The final COAG agreement only required a commitment to “driving further competition in current training arrangements” but left the implementation to the states (COAG, 2008). Victoria was labelled a ‘reform state’ by the Commonwealth and provided with some additional funding.


“…taxpayer funding of for-profit entities to provide services at the behest of individual citizens inherently creates opportunities for poor outcomes, or even fraud that must be carefully managed”.

Management of quality has been tightened over several years. A former head of the Prime Minister’s Department, Michael Keating, recently concluded that:

“ public funding can be rorted if there is inadequate regulation. However, with experience governments have found out how to regulate the training market so that quality is preserved, while competition can reduce costs and increase choice and responsiveness to customer needs.” (Keating, 2017).

However, Terry Moran, the foundation CEO of ANTA which actively promoted competition and the funding of for-profit providers began a recent speech with a quotation from John Maynard Keynes: “When the facts change, I change my mind.” While not referring specifically to vocational education, he said:

“The policy pendulum is swinging away from a consensus on the primacy of light touch regulation of markets, the unexamined benefits of outsourced service delivery, a general preference for smaller government… (Moran, 2017).

Funding and enrolment changes Much of the discussion of funding for vocational education has concentrated on government money paid to for the provision of training by RTOs. The total of such public spending in 2016 was about $5 billion.4 In real terms this is lower than in the early 2000s.

The downward trend has not stopped. The Commonwealth and states in 2017 agreed to a national agreement and a national partnership. The two agreements commit the Commonwealth to about $1.9 billion per annum for five years. This represents a fall in real terms from the 2012 agreements and, as noted by the Treasury (2018a):

“Expenses under the vocational and other education sub-function are expected to decrease…by 3.1 per cent in real terms from 2018-19 to 2021-22.”5

In addition to $5 billion of public funding paid to providers there is a range of other revenues for vocational education. They vary considerably over time. Currently they exceed $4.3 billion (Table 1):

Other public support of $2.0 billion annually:

• A range of support for apprentices and trainees, including Employer Incentives which were cut substantially early this decade, the Apprenticeship Support Network, and Trade Support Loans, $0.7billion (DET, 2018c, DJSB, 2017).

• Support for the national training system, programs for job seekers, Migrant English programs, estimated $0.3 billion received by RTOs (DET 2018c).

• VET Student Loans projected at annual cost of $0.3 billion, a fraction of the cost of VET FEE-HELP which they replaced (DET, 2018c).

• Means tested grants to students for Youth Allowance, Austudy and ABSTUDY approximately $0.7 billion to VET students annually (DSS, 2018)

Private funds, exceeding $2.3 billion annually:

• onshore international student’s fees, $1.4 billion in 2016–2017 and rising (ABS, 2018)

• domestic student fees and other fees-for-service received by public providers, $1.0 billion in 2016 (NCVER, 2017c)

• other private income of private providers, not reported.

4 Excluding user cost of capital but including fee-for-service payments from government agencies (Productivity Commission, 2018). 5 The decline is partly due to the low rate of indexation for price changes in the National Agreement and no adjustment for prices in the National Partnership Agreement.


Government funds to providers are a major factor driving the number of publicly supported students, though demand-driven funding for higher education from 2012 has drawn some potential students away from VET. Total numbers may also have been driven down by the reduction of subsidies to providers for courses seen as low priority or at diploma and higher levels where student loans were available.

Total publicly funded students numbered about 1.3 million in 2003, stagnated to 2009, rose sharply and briefly to 2012 but then fell back in 2016 to the level of 2003 (Figures 1; NCVER, 2018a)6. For comparison, in this period the population in relevant age groups grew more than 20 per cent and will continue to grow (Noonan & Pilcher 2018, ABS 2013). There were large differences among the largest states (Figure 2).

The distribution of students changed sharply. In 2009 TAFEs had three times the number of students as private providers, in 2012 they had 50 per cent more. In 2015 they had equal numbers. TAFE student numbers contracted by a third from 2012 to 2015 before beginning to grow again.

A third sector is Adult and Community Education. Its numbers are shown to have contracted this century from around 13 per cent of total students to about 6 per cent. This sector is important for the education of adults and for the less advantage. It needs separate consideration.

Even though student numbers in 2016 were at the 2003 level, the number of hours of training provided was 25 per cent higher (Figures 3 & 4). This was due to an increase in hours per student. A factor in this is the growth in students classified as full-time – those taking more than 75 per cent of a full year’s load (considered to be 720 hours). Among publicly funded students the proportion full-time grew from 12 per cent in 2002 to 22 per cent in 2014, then falling a little. Other factors affecting hours per student are multiple enrolments per student or students taking courses with more hours. Among private providers, average hours per student in 2016 were 50 per cent more than in 2003 (Table 2). For TAFEs the hours were 10 per cent more. Some of these changes in hours may have been due to gaming the system where public funding was provided per hour of training.

A data collection on students and courses for the total vocational system was started in 2014. For 2016 there were an estimated 4.2 million students, over 50 per cent with private providers (Table 3)7. Publicly funded students make up about 33 per cent of the total: they make up 75 per cent of students with public providers and 20 per cent of students with all other private providers (Table 4)

1. Public spending on providers Public spending on vocational education is first considered relative to spending on schools and higher education. The only financial data allowing comparisons across sectors are the aggregated data the Australian Bureau of Statistics (ABS) compiles as part of its government finance statistics (ABS, 2017b).

Real public funding of providers of vocational education (excluding any private revenues) fell substantially in the ABS estimates in the fourteen years to 2015-16 (Figures 5, 6 & 7, Pilcher & Torii, 2017). For schools there was an increase of over 40 per cent in real public funds. For universities real public funding rose 60 per cent, with recent growth supported by demand-driven funding.

For more detailed consideration of the funds for vocational education the NCVER financial information on publicly funded vocational education is used (NCVER, 2017c). These data show the same trends as the ABS data though there are differences in the absolute levels due to different data sources and definitions. In summary the NCVER data as used by the Productivity Commission (2018):

• Total real government funds for VET providers increased in real terms from 2008 to 2012 and then fell 20 per cent to $5 billion in 2016, lower than in 2003.

• The Commonwealth share of these funds was around 25 per cent in the early 2000s, grew to over 30 per cent by 2011, fell briefly with a temporary expansion spending especially in Victoria and then rose to nearly 40 per cent in 2016 largely because of a fall in states’ spending.

6 Data released in July 2018 showed numbers of publicly funded students fell by six per cent in 2017 and the fall was concentrated in private providers (NCVER, 2018a). 7 The Australian Bureau of Statistics each year publishes Education and Work from a sample survey of households in May (ABS 2017 6227.0). It provides estimates of students aged 15 to 64 in schools, higher education, TAFE and in other educational institutions. The total for TAFE and other was less than a million for 2016. This in part is due to it being a point in time estimate. The NCVER data are for the total students enrolled in a calendar year. Some of the difference may also be the ABS survey being answered by a ‘responsible adult’ and not necessarily the person studying. It does mean we have wildly different estimates.


• The average share of public funds going to non-TAFE providers increased from a little over 10 per cent in 2007 to over 25 per cent in 2016, but about 40 per cent in Victoria and Queensland and 10 per cent in NSW (Figure 13).

• Real government funds per hour of training fluctuated and trended down over a long period and they vary across states e.g. NSW $18 per hour and Victoria $12 in 2016 (Figure 10).

In Victoria public expenditure increased 65 per cent in real terms from 2009 to 2012. It then fell to 2016 as much as it had risen. Notable expansions and contractions also occurred in Western Australia and South Australia (Figures 8 and 9). As mentioned earlier, to rein in the budget in Victoria from 2012, the funding rates for ‘low priority’ courses were cut substantially. The average funding rate per hour of training in Victoria fell by 25 per cent from 2012 to 2014 (Figure 10). It recovered somewhat to 2016 in part due to a shift in course mix away from the now low-funded courses in business and administration (Figure 11). The fall in student numbers in these courses was exacerbated by the Commonwealth’s removal of incentives for existing workers in most traineeships after 2012. Student numbers in business and administration in Victoria totalled over 130,000 in 2012 but fell to around 30,000 in 2016.

The expansion of spending in Victoria was concentrated on private providers. From $150 million in 2009 the outlay on non-TAFE providers rose to over $800 million in 2012, $850 in 2014 but then fell to $550 million in 2016. Queensland doubled its spending on non-TAFE providers from $180 million in 2013 to $380 million in 2016. South Australia more than doubled its outlay on non-TAFE providers from 2011 to 2013 but then cut it to below the 2011 total (Figure 12).

2. VET Student Loans VET FEE-HELP loans were provided by the Australian government for VET diploma, advanced diploma and graduate certificate/diploma courses. They were introduced in 2009 but vastly expanded after 2012. As mentioned, VET FEE-HELP was seriously flawed and wasted a huge amount of money and students’ time (DET, 2016b; Saccaro & Hall, 2018). The Department of Education in 2017 reported a ‘fair value’ loss of over $6 billion on its higher education loan program, of which a substantial part was for VET FEE-HELP (DET, 2017b p. 45).

VET Student Loans replaced VET FEE-HELP in 2017. VET Student Loans are available to a much smaller number of providers and students than was VET FEE-HELP. They are available for about 300 courses, in general ones for which at least two states provide subsidies, an indicator that they have relevance to employment. There are three loan caps, $5000, $10,000 or $15,000, based on course costs where the classification draws on recent analysis for NSW TAFE. Providers need a strong track record of training outcomes and financial management. They need evidence that the students are qualified for diploma and higher courses for which loans can be made. The Commonwealth Ombudsman can investigate complaints. The Australian National Office of Audit is undertaking a review to be completed later this year.

Warburton (2017) warned that the new VET Student Loans scheme was under-developed and its implementation had been rushed. This may be behind the very small level of loans in 2017 – less than $200 million compared to the loans of $2.9 billion VET FEE-HELP loans in 2015 (Table 5). Under VET FEE-HELP about eighty per cent of loans went for courses with private providers. In contrast only 30 per cent VET Student Loans in 2017 went to private providers. Nine of the top ten providers ranked by loans granted in 2017 were public providers (DET, 2018f)8.

Students in Diploma and higher level programs in government funded education fell 8 per cent in 2017 (NCVER, 2018a). For private providers program enrolments at Diploma and higher levels suffered a heavy fall. They fell in 2017 by over 100,000 or 20 per cent accounting for nearly all the fall in total program enrolments of 5 per cent (NCVER 2018d).

8 The annual expense of these loans is not the amount borrowed but an estimate of the amount that will not be repaid and any interest subsidy (Norton & Cakitaki, 2016). This expense for VET Student Loans is shown to expand substantially in the forward estimates to around $0.3 billion annually (DET, 2018c). This seems too high an estimate given the low total value of loans in 2017.


3. Support for apprentices Trade apprenticeships are the section of vocational training that receives the most public attention. Apprentices and trainees recently made up nearly 25 per cent of publicly funded vocational students with the trade apprentices now the larger proportion at about 15 per cent (NCVER, 2018a&b). Trade apprentices are important in providing workers in skilled trades which have often been in shortage (DJSB, 2018). Most trade apprentices on completion work in the areas for which they trained. In some licensed trades there is industry assessment of training to ensure quality is maintained.

As mentioned above, the Commonwealth has provided incentive payments to the employers of trade apprentices from the early 1970s. These incentives are currently provided to some 57,000 employers. A typical payment, unchanged in nominal terms for more than ten years, is $1,500 as a commencing incentive and $2,500 as a completion incentive.

Some states also provide support to apprentices: NSW for example offers travel concessions, travel and accommodation assistance and a rebate of part of car registration, and employers can get a rebate of payroll tax for a new entrant-trainee and a reduction in workers compensation insurance. No estimate of states’ spending is available. State subsidies to providers of training to apprentices appear to be well above levels for non-apprentice training (Victoria DET, 2018).

The national partnership agreement in 2017, the Skilling Australians Fund, is to operate for five years with a focus on apprenticeships (DET, 2018d). New South Wales has announced it would scrap fees for new apprentices in 2019. It is not clear how much this will affect the number of apprentices rather than diminish the cost to employers and apprentices.

NCVER has undertaken a wide range of studies on apprenticeships and traineeships. Notable findings included:

• “Australia is the only country that pays government incentives and subsidies on a large scale to the employers of apprentices and trainees to offset wage costs (Knight et al, 2011).

• “The government incentives are relatively unimportant for apprenticeships of three to four years duration but are significant for the shorter-duration traineeships” (Karmel & Rice 2010).

• For non-trade traineeships Karmel, Blomberg and Vnuk (2010) found “The evidence for increased skill levels is not, on average, convincing.”

An Expert Panel on Apprenticeships (McDowell, 2011) drew on the NCVER work and suggested a redirection of the funds:

“Australian Government support should focus on occupations that have tangible and enduring value for the economy – both in the traditional trades and the newer forms of apprenticeships and traineeships, such as community services, health services and information technology.” Recommendation 5

“Reinforce the need for a shared responsibility for the Australian Apprenticeships system by establishing an Employer Contribution Scheme in which employer contributions will be matched by the Australian Government. Employers who meet defined benchmarks for training and support of eligible apprentices and trainees would have their contribution rebated, either in part or in full.” Recommendation 6

The Commonwealth government responded mainly to recommendation 5. It left the incentive system in place for trade apprentices. Except for specified priority care occupations, it removed incentives from traineeships for existing workers (those who had been in the job three months or more). This, together with the cutting of state subsidies to training providers for courses deemed to be non-priority areas, had an expected large effect on traineeships (Table 6). The impact was larger on females, who had been the majority in the targeted traineeships. Total Commonwealth outlay on incentives is now around $400 million a year, about half the level at the beginning of the decade. This represents a substantial decline in funds for the vocational sector.

The expert panel’s recommendation for an employer contribution scheme could be given further consideration. However, the changes in the nature of employment and greater effects of technology suggest it is time again to consider the apprenticeship system and the associated training packages. We may need a system where investments in technical skills are augmented by:


“an increased commitment to providing future workers with a broader set of competencies – in areas such as communication, teamwork, and empathy – which remain uniquely human skills, and the foundation for our advantage over even the most sophisticated of machine” (Healy, Nicholson and Gahan, 2017).

Trade support loans and LAFHA A new system of income contingent loans, Trade Support Loans, replaced a previous grant, Tools for Your Trade, in 2014. The loans, which can total $20,000, are spread over four years, the largest sum in the first year. On completion a 20 per cent discount is applied to the amounts borrowed.

These loans are provided to 45,000 trade apprentices each year. The government’s outlay in the early years could be over $200 million. The annual expense to budget (largely the projected non-repayment of loans) is projected to total $65 million annually.

So far little is known of the effects of Trade Support Loans. A review of non-completion of apprenticeships found the major reasons given as “interpersonal difficulties with employers or colleagues, being made redundant, not liking the work and changing careers” (Bednarz, 2014). If these factors are not well addressed it is possible that Trade Support Loans will not have much effect.

There are other forms of support for apprentices for which a total outlay figure is not readily accessible. An important one is the Commonwealth grant of a Living Away From Home allowance (LAFHA), worth up to $4000 in the first year and smaller amounts in the next two years. A research study of incentives found that those paid to employers made little difference to apprentice retention and completion but the LAFHA did show a positive effect on completions (DAE, 2012).

Australian Apprenticeship Support Network (AASN) There is additional support for apprentices. The Australian Apprenticeship Support Network costs $190 million annually: eleven Apprenticeship Network providers deliver support services to employers, apprentices and trainees from around 400 locations, including in rural and remote areas. An evaluation found support for the model system but the possibility of improvements to services and indicators of performance (DET, 2018a).

Summing up support for trade apprentices Trade apprentices are now to receive extra support via the national partnership. They are already supported by incentive grants to employers, by the AASN, by trade support loans and LAFHA, by minor access to the student assistance grants discussed below, by a variety of state support and by a better rate of subsidy to the providers of their training.

This is a considerably higher level of support than other areas of vocational training, a matter that could be subject to review.

4. Student assistance Youth Allowances, Austudy and ABSTUDY are means tested grants for full-time students. They are provided annually to 55,000 vocational students including some apprentices and to about 5,000 indigenous vocational students (DSS, 2017 & 2018). Separate from these allowances are a range of funds, not readily quantified, provided by states and Commonwealth governments for Indigenous persons and persons with disability.

Student assistance appears to be provided to about 20 per cent of the total full-time VET students in eligible course as full-time and about 40 per cent of the full-time Indigenous students. For comparison, in higher education about 200,000 students are assisted, equal to about 30 per cent of full-time domestic undergraduates.9 The relatively low percentage of full-time vocational students receiving student assistance is surprising, as vocational students tend to come from lower socioeconomic backgrounds than higher education students.

In the absence of separate data on student assistance to vocational students, is assumed that they receive on average the same amount as higher education students. This leads to an estimate of approximately $650 million for vocational students and $2,400 million for higher education students (DSS, 2017a).

9 Some postgraduate coursework students also access these grants.


It is hard to find analysis of effectiveness of this assistance. A study for all of tertiary education indicated that students receiving assistance had an improved rate of completion (Karmel, 2014). Financial assistance for higher education students has been subject to some scrutiny (Lee Dow, 2011; Bexley et al., 2012). Bradley et al (2008) had recommended

“That the Australian Government undertake a regular process of triennial review of the income support system to assess the overall effectiveness of the support payments in reducing financial barriers to participation of students in need.”

Data are needed on the vocational students assisted, their characteristics and progress, as a first step in the review. Youth allowance, Austudy and ABSTUDY could be considered along with other forms of support available to indigenous persons and persons with a disability.

5. Support for the national training system The Commonwealth allocates over $80 million to support a range of bodies to underpin the national system including the Australian Industry and Skills Committee (AISC), whose work includes approval of training packages developed by Industry Reference Groups with the support of Skills Services Organisations (SSOs). The Commonwealth also supports the National Centre for Vocational Education Research and its data collections, and the Australian Skills Quality Authority.

6. Programs for access to training Additional Commonwealth government funding is provided for the Adult Migrant English Program and for Skills for Education and Employment which is focussed on job seeker groups with literacy and/or numeracy training needs. These cost $0.4 billion in 2017–201810. The funds are allocated by tender usually to a limited number of providers in each state.

7. Commonwealth funding for labour market programs Youth Jobs PaTH is a major part of a four year Youth Employment Package of over $200 million a year (DJSB, 2017). It is managed by employment services providers. For job applicants who need it, Youth Jobs PaTH firstly prepares (P) them in employability skills and helps them understand the expectations of employers. The training in employability skills is delivered by RTOs. The remaining parts of the program are trial (T) – a subsidised internship – and then hopefully the hire (H) of the applicant. So far there is no information on the extent of the funds directed to vocational providers or the effects of the activity.

8. Domestic fees to public providers from students and employers Fees paid by domestic students to public providers were about 4 per cent of total revenues of government-supported training over a long period, but rose rapidly in share for a few years after 2012 to about 7 per cent or $500 million in 2016. Evaluating student fees raised would need to focus on fairness, the effects on the size and distribution of training, and to take account of loans, concessions and levels of subsidies.

‘Other Fee-For-Service’ including payments by employers rose from 5 per cent in 2002 to about 6.5 per cent and stayed at about that level – much less than predicted in the 1990s (NCVER, 2017c; Shreeve, 2018).

Employers’ spending on training is much larger than the amounts seen to be received by public providers. The Australian Bureau of Statistics undertook several surveys of employer training expenditure and practices up to 2002 (ABS, 2003). The estimated total employer net expenditure on structured training in 2001–2002 of $3.6 billion was about the same as total public expenditure on vocational training at that time. Expenditure was made on in-house training (about a third of total net expenditure was for dedicated trainers) and on external providers especially TAFE and private providers with the latter the more used by larger employers.

These surveys were discontinued because of cost and the difficulty of obtaining good information from employers, who often did not keep records of training. A review of ways of measuring employer expenditure argued the importance of a survey yielding approximate data which could be supplemented with qualitative research (Smith, Burke, Dumbrell & Long, 2008).

Employer expenditure on training can be boosted by training levies on employers. Australia has a number of sectoral levy schemes. An example is the Construction Training Fund. It operates in five states and territories. 10 That part of the expenditure on these programs received by public providers is counted in government recurrent expenditure by the NCVER and the Productivity Commission.

http://ministers.employment.gov.au/smorrison/creating-path-real-jobs-young-people


Such schemes have been initiated with industry support but enforced through legislation in the state or territory in which they operate. A levy of approximately 0.2 per cent is paid on the full cost of the building and construction activity. The levy is used primarily to support the training of apprentices and trainees (McDowell, 2011). There is little public evaluation of such schemes.

9. International students’ expenditure International students are a major source of revenue for education. Vocational education received $1.4 billion from onshore international student fees in 2016–2017, well above the level of $0.9 billion in 2012–2013 but lower than the peak level of $1.7 billion in 2009–2010 (Figure 14).

International students also contribute to the economy through their spending on ‘goods and services’, their living expenses. For vocational students these were estimated at $3.4 billion in 2016–2017, much larger than the fee revenues (ABS, 2017c). 11

In 2016 TAFE and other public and community providers delivered about 40 per cent of the hours of training to international vocational students and private providers about 60 per cent (NCVER, 2017f). Public providers reportedly received $210 million from onshore students or less than twenty per cent of the total international fee revenue, less than might be expected from the share of hours delivered (NCVER, 2017c).

The vocational sector received about 12 per cent of the total fee revenues from international students compared with the higher education sector’s 70 per cent (Figures 14 to 16). Vocational education providers also receive some of the fee revenue for English language intensive courses for overseas students (ELICOS) and for non-award courses that may provide entry to higher education and vocational courses.

Students studying outside Australia but with Australian providers are an important source of revenue. Their payments to public vocational providers totalled $68 million in 2016 (NCVER, 2017c). No information is available for private providers.

While the issue of fairness is raised in relation to fees paid by domestic students, it is not mentioned in relation to full-fee international students in vocational education. For higher education a range of problems have been identified by Ziguras (2016). Attention has been drawn to ‘wage theft’, the underpayment suffered by many temporary migrants including students (Berg & Farbenblum, 2017).

Government scholarships such as the Australia Awards are provided for higher education and vocational students, particularly for those from the Pacific Islands (DFAT, 2018). These awards cost over $300 million a year, but funds from these are not discussed further in this chapter.12

10. Other private fees to private providers As mentioned, most of the funds outlaid on VET-FEE-HELP were received by private providers. Of the small total outlay on VET Student Loans in 2017 only about 30 per cent went to private provides (DET, 2018f).

As discussed above private providers may have received fees from international students of over $1 billion in 2016–2017. Other private fee revenues of private providers are not reported. This is in contrast to private schools and private higher education providers. Private (not-for-profit) schools reported fees and other private revenues of $10 billion in 2015 (ACARA, 2017). All private higher education providers are required to submit their revenues and expenditures, and the data are analysed and reported for the major-sub-sectors (TEQSA, 2017a).

Pricing policy, concessions and exemptions, subsidy rates and contracts States provide concession or exemptions from fees for certificate courses. For example, in New South Wales those eligible for concession pay $240 for a course whatever the fee prescribed (which may be up to $2400 for a Certificate III in Automotive Electrical Technology). Full fee exemption is provided for Indigenous persons or 11 Some of this spending is financed through part-time work as well as funds brought from overseas (Birrell & Smith, 2010). Some of the revenue received by providers is spent on recruiting agent fees. Some tertiary institutions, particularly universities, provide accommodation for international students and hence receive part of the expenditure on living expenses 12 . In higher education most international research students are supported from government and university research funds, involving outlays of at least $340 million a year. Some funds are from the surplus on other international students’ fees. Some are from the government’s Research Training Program of over $1 billion annually which limits spending on international research students to 10 per cent of the total allocated (Olsen, 2014; DET, 2016c).


persons who meet disability criteria. Additional allocations are made to providers for special needs students and for students in remote and regional locations. States’ policies vary.

Every state still reserves part of its funds for the public provider. By 2015 Queensland and Victoria had fully deregulated fees, whereas in New South Wales they remained fixed and largely so in other states (Bowman & McKenna, 2016). In 2018, however, Victoria designated twenty non-apprenticeship courses and eighteen apprenticeship courses to be provided without fees in TAFEs in 2019. New South Wales (2018) has announced that fees will not be charged for new apprentices in 2019. Federal Labor has announced it will if elected abolish fees for 100,000 vocational students.13.

Bowman, McKenna and Griffen (2016) considered that:

“Overall, the original concept of a student ‘entitlement’ now sits in some contrast to what has evolved, this being several different ‘managed demand-driven systems’, needing to satisfy industry and jobs demand within constrained public budgets.”

John Ross argues that the changes to subsidies and their elimination from some courses mean that the reforms post-2012 provide an entitlement in name only (Ross. 2018).

Subsidy and fee policies in VET and higher education State subsidy rates for courses vary, with lower rates for courses seen as low priority for the economy and higher rates for priority areas, notably trade apprenticeships. In Victoria the rates for apprentices vary but are often around $13 per hour of training, perhaps 50 per cent higher than for non-apprentice courses (Victoria DET, 2018; NSW DI, 2018). With the extension of VET FEE-HELP from 2012, states reduced their subsidies to courses at diploma and higher, a form of cost-shifting from state to Commonwealth (DET, 2016b). Recent subsidy rates in Victoria for diploma courses are around $6 per hour but with a higher rate for a priority course such as Building and only $2 per hour for a Diploma in Fitness14..

Whereas in vocational education subsidies are highest for courses with the best economic rewards a different approach is taken to subsidies in higher education. There the subsidy is reduced for courses with higher expected earnings, e.g. the subsidy in 2018 for business is $2,100 and a fee of $10,800 and for humanities a subsidy of $5,900 and a fee of $6,400 (DET 2018g)15.) This is seen to be more equitable..

Vocational courses vary considerably in the number of funded hours. The Australian Qualifications Framework (AQF), currently being reviewed, says that the volume of learning of a Diploma is typically 1-2 years. In Victoria a Diploma of Building and Construction (Building) has 2090 payable hours. The Diploma in Business has 500 payable hours (AQF 2013).

The differences in course length, subsidy and fee policies are matters for further consideration in any attempt to align higher education and vocational funding policies. Along with concessions and exemptions the fee and subsidy policies can be assumed to be important for participation by less advantaged persons and for the distribution of training across fields (Figure 10).

Effects of funding changes Funding changes are of major importance to total enrolments, their distribution across equity groups, their distribution by fields and levels of qualification and the extent to which they meet the skill needs of individuals and industry. The changes affect the resources provided and through that the quality of teachers and training.

Some of the effects of funding changes on the total number of students, hours of training provided and on apprenticeships and traineeships have been discussed already. Here consideration is given to some indicators of efficiency, equity and effectiveness – especially quality of education and training, and employment

13 Note that no tuition fees are charged for year 12 courses in government schools, and these courses are ranked at AQF level 3. 14 For example in Victoria a Diploma of Building and Construction (Building) has 2090 payable hours allocated at $7 per hour, the Diploma of Early Childhood Education and Care has 1998 hours at a rate of $6 per hour, a Diploma of Community Health has 1,115 hours and a subsidy rate of $6.50, a Diploma of Fitness has 1110 hours at $2 per hour. A Diploma of Business has 500 hours with a subsidy rate of $4 per hour. 15. A funding review for higher education recommended a subsidy of 60 per cent of cost across all fields but this was rejected by the government on equity grounds (Lomax-Smith et al 2011).


outcomes. Effects of funding are not however easily separated from other influences such as the quality assurance system, the nature of competency-based training, technological change and the relative increase in part-time work.

Efficiency The Productivity Commission uses real government expenditure per hour of publicly funded training as an indicator of efficiency. As discussed above this has tended to fall, is very different across states, and has moved erratically over time (Figure 10). It was 25 per cent lower in 2014 than in 2007. Rather than indicating efficiency has occurred it could reflect the lack of government support for vocational education relative to schools and higher education. Without reference to the output and its quality real spending per hour is a very limited indicator of efficiency.

Equity The decline in total publicly funded vocational students of about 20 per cent from 2012 to 2016 per cent along with population growth meant a fall in participation rates for vocational education (NCVER 2017d). There was also a decline in participation in several equity groups:

• The participation rate of Indigenous people remained twice that for non-Indigenous but fell 2012 to 2015 with a small recovery in 2016.

• The participation rate of persons from remote and very remote areas is much higher than for persons in major cities but it fell in this period.

• The number of persons with a disability remained constant while total VET students declined.

• The numbers from the most disadvantaged quintile fell about the 15 per cent 2012 to 2016, almost the same rate as the fall for all vocational students.

• Female student numbers fell more than male, with the decline in traineeships a particular factor.

• Students aged fifteen to nineteen fell by a larger percentage than total students.

The growth in students in higher education in this period offset some of the fall in vocational education. The expansion in domestic undergraduates in higher education 2012 to 2016 was just over 100,000 compared with a decline in publicly funded vocational students of over 250,000 students16. Equity groups in higher education improved their share in the growing student numbers 2012 to 2016 (DET, 2017c).

Vocational education, however, remains the major destination for disadvantaged students. In 2016 in government funded VET there were 84,000 Indigenous students, 114,000 with a disability and over 300,000 from the lowest quintile of SES (socioeconomic background). Among undergraduates in higher education there were 13,000 indigenous students, 50,000 with a disability and around 140,000 in the lowest SES quartile (NCVER, 2017d &e; DET, 2017c). For the total vocational sector there are much higher number of students in the less advantaged categories.17

The cessation in 2018 of demand-driven funding of higher education could curtail equity in universities and could reduce enrolments across tertiary education as a whole (Noonan & Pilcher 2018).

Effectiveness The level of satisfaction of students and employers is an indicator of effectiveness. For graduates and subject completers in vocational education, overall satisfaction has changed very little over time, remaining at about 85 per cent satisfied. It is similar across provider types (NCVER, 2017e).

The proportion of employers satisfied with all forms of training they ‘engaged with’ declined from nearly 78 per cent in 2009 to a little over 71 per cent in 2017 (NCVER, 2017b).

Course completion rates are a measure of training effectiveness. The rate has increased substantially in recent years and the increase was greater with non-TAFE providers (NCVER, 2017h). This was however the period of 16 2012 was an atypical high year for vocational education because of the temporary expansion in students in VET in Victoria. 17 For Total VET for 2016 an estimated 170,000 Indigenous students, 180,000 student with a disability and 777,000 in the lowest quintile of SES (NCVER 2017f).


rapid expansion students with private providers and concerns about the standards achieved by their graduates.

Labour market outcomes are key objectives of the vocational system. Skill shortages are often cited in policies for vocational education and especially for trade apprentices. Skill shortages are often not as pervasive as in popular reports (Shah & Burke, 2005). Skill shortages exist where employers are unable to fill or have considerable difficulty filling a position. The list of shortages compiled by the Department of Jobs and Small Business shows several trades in shortage in recent years but only four, automotive electricians, motor mechanics, sheetmetal workers and arborists were reported in shortage every year from 2010 to 2017 (DJSB, 2017b).

Young vocational graduates are in a labour market where unemployment and underemployment rates and the proportion in part-time work have grown in the past ten years (Dhillon & Cassidy, 2018). Newly graduating apprentices can face competition from skilled migrants (DI, 2018). Less skilled workers may face some competition from temporary migrants including international students, who in total contribute about 10 per cent to the 15 to 24 year olds in the labour force (Dhillon & Cassidy, 2018).

In this context it is not surprising that the outcomes of vocational graduates have declined in recent years. In 2008, 68 per cent of vocational graduates reported improved employment outcomes after training, but 56 per cent in 2017. The proportion of vocational graduates employed in May following completion fell from 82 per cent in 2008 to 74 per cent in 2017. The proportion progressing to further studies has also fallen, from 36 per cent in 2008 to 30 per cent in 2017. However, the employment outcomes for university graduates also deteriorated, with the proportion employed falling by about the same percentage as for vocational graduates (NCVER, 2017e; QILT, 2018).

Of particular concern is that while 70 per cent of persons completing trade apprenticeships work in their area of training, for vocational graduates as a whole only 30 per cent obtain work in the occupation group for which they trained. Another 30 per cent who are employed in an occupation different to their training area indicate that their training is relevant to their job. These matters were the subject of an important article, ‘Is VET vocational?’ (Karmel, Mlotkowski & Awodeyi, 2008; see also Wibrow, 2014). Key messages which still apply ten years on are:

• With the exception of the trades, there is no neat match between courses and the occupations in which most people end up working.

• Those developing training packages need to be aware that many graduates will not work in their intended occupation.

These findings on the low match of training area to the job entered and the recent growth of part-time employment for young people add weight to the case for vocational education to develop the capacity to enter and learn in a range of employments.

Aspects of quality Quality has been a major issue for many years. As discussed above, this was highlighted with traineeships from the turn of the century, the rorting in delivery to international students, the experiences were in Victoria, especially in 2011–2012, and Australia-wide with VET FEE-HELP in 2013–2016. What proportion of training is still a little or a lot below the required standard remains a major concern but cannot be estimated. Four issues are considered here.

External assessment Possibly the biggest issue for quality is whether students assessed by a provider as meeting standards for a qualification have actually done so. The requirements in relation to independent validation of the process of assessment have been lifted. But this concerns the process, not the assurance that any group of students have met the required standard.

In some of the licensed trades assessment is undertaken by the industry. For example, in Victoria, to be recognised as a plumber you must pass the plumbing licence exam conducted by the Victorian Building Authority. But other than in licensed occupations it is nearly always the provider that carries out the assessment of students.


The Australian government discussion paper on quality of assessment canvassed a range of external forms of assessment (DET, 2016a). Responses to this paper were considered by the government’s Training and Assessment Working Group. The following comment indicates a divide in opinion on external testing.

“The majority of respondents indicated that industry endorsed, externally administered tests are not viable as this undermines competency-based training and would rely on a level of industry engagement that is often difficult to achieve. It was noted by some respondents that externally administered tests are important and are already in place in some circumstances for licencing purposes or high risk qualifications”. (TAWG, 2016)

An OECD Review of Australian VET (Hoeckel et al 2008) had drawn attention to practice in other countries and that exit examinations could be used with competency based teaching—as they are for plumbers here.

“National exit examinations are used in countries that maintain a relatively centralised system of qualifications in VET such as Japan and Korea. Several less centralised countries with competence-based training also require national or external exit tests to obtain a VET qualification (Hoeckel 2008).

One objection to external testing is the cost. Gillis et al. (2015) noted that:

“such costs would be significantly less than the collective costs associated with nearly 5000 providers duplicating human and financial resources to design, administer and validate their own assessments at the local level and then for the national regulatory body to monitor such RTO based assessments”.

It seems likely that where good performance was demonstrated in external tests a provider might be exempted from some other aspects of regulation, offsetting some of the costs.

There is movement in the direction of external assessment. The Productivity Commission (2017) suggested:

“The Australian Government, in conjunction with employers, the Industry and Skills Committee and the Australian Skills Quality Authority, should investigate areas of vocational education and training where an independent certification model could robustly test a person’s skills.”

The recent review of the VET Regulator Act includes a recommendation for a teacher position called Master Assessor, whose role includes providing:

…”a service in what is essentially external assessment for high risk VET industries in the sector. ASQA can interrogate an RTO’s success in delivering desirable student outcomes through engaging the services of a Master Assessor” (Braithwaite, 2018).

Cost cutting As mentioned above, the long-term decline in total funding and funding per hour of training may affect quality. It may be a major cause of provision of courses in an unduly short time, with TAFEs as well as private providers cited for this (ASQA, 2017). A review is under way.

Cuts in funding may also be a stimulus to online teaching, which can be effective or be just cost cutting--the review of VET FEE-HELP noted that 45 per cent of courses were delivered on line, often with very low completion rates (DET, 2016b p. 22).

Quality of staff Cuts to funding tend to promote the use of part time or casual staff, costing less than full-time ongoing staff. The most recent review of the TAFE workforce was by the Productivity Commission (2011) which had quite limited data. It found that the proportion of vocational education staff working part-time or as casuals was higher than for the whole workforce. The qualifications required for vocational teachers have been strengthened but remain fairly low, and the number of teachers their employment status and qualifications is not known. The extent of professional development is again not known but believed to be inadequate especially for casual teachers.

The importance of these issues is considered in the paper by Guthrie and Jones (2018). It is good news to hear that NCVER is undertaking a survey of the current VET workforce on behalf of the Commonwealth Department of Education and Training that may in 2019 provide much of the missing data.


Training for a specific qualification or related occupations A higher-level question about quality relates to training packages where a qualification relates to the competencies identified for a particular occupation. Are they appropriate when the proportion of graduates employed in their training area is so low as discussed above? Instead consideration could be given to education for related occupations, vocational streams. This is discussed in a range of authoritative papers by Wheelahan, Buchanan and Wu (2015) and in the papers by Hodge (2018) and Jones (2018) in this collection. More consideration can be given to the role of vocational education in developing citizens who can fully participate in the community, a matter often raised in relation to schools and higher education.

Concluding comment Issues for further consideration have been are raised in the paper. It is important to acknowledge that the data presented are fairly aggregated. The paper does not provide analysis for a wide range of matters such as vocational education in schools, the role of adult and community education, the role of group training companies, the uses of different course levels including those for and literacy and numeracy.

Based on the matters discussed in the paper and in other papers in this series four areas are raised here for consideration in policy and research.

More comprehensive analysis of funding This paper indicates a need for more comprehensive evaluation of the total public and private funding of vocational education. Particular issues include18:

• Effectiveness of means tested grants such as Youth Allowance, Austudy and ABSTUDY; data are needed on students assisted, their characteristics and progress.

• The level of support for trade apprentices versus non-apprenticeship training taking account of: the new national partnership; incentive grants to employers, the AASN, trade support loans, LAFHA, student assistance grants, state government support to employers and apprentices; higher rates of subsidy for trade apprentice courses.

• Analysis of subsidies and fees by levels of education and fields of education taking account of concessions and exemptions and the availability of loans.

• Implications of course subsidy policies in vocational education compared with higher education — the higher rate of subsidy in vocational education for courses seen as high priority for the economy and a lower rate of subsidy in higher education for courses with better earnings prospects.

Improved governance for stable and efficient funding The past decade in particular has seen a decline in government funding and the erratic changes among the states and shifting of shares of funding from states to Commonwealth. There was an extraordinary expansion in the funding to private providers and now some contraction.

It is hard to be optimistic, given that policy has often been arbitrary, poorly developed and badly implemented (Shreeve and Palser, 2018). This may be due in part to the lack of staff in government departments with knowledge and experience of vocational education, its relationships to schools and higher education and its functions in providing education and training for all, to benefit the economy and society. Use of consultants rather than building departmental capacity may have contributed to this. John Hewson (2018) has pointed to the need to restore the talent in government departments that had been eroded over the years so that “many departments are now referred to as gutted shells”.

It has been obvious for a long time that Commonwealth and State responsibilities need to be reformed. The Bradley committee‘s recommendations included:

• that all governments agree to establish a single ministerial council with responsibility for all tertiary education and training;

18 Some further suggestions are in Table 11.


• that the Australian Government negotiate with the states and territories to introduce a tertiary entitlement funding model across higher education and vocational education and training (VET) commencing with the upper levels of VET (diplomas and advanced diplomas) and progressing to the other levels as soon as practicable, to ensure that student choices are not distorted by different levels of public subsidy for similar education and training depending on the sector in which it is delivered. (Bradley et al 2008).

If these proposals had been implemented much of the current variations in funding across the states might have been justified or eliminated. If vocational education had been considered in the same political process as higher education the funding decline might have stopped. The extent of differential funding of vocational and higher education diplomas and advanced diplomas could have been addressed.

Recently the Business Council of Australia proposed a national framework where subsidies to providers would be drawn from a Lifelong Skills Account and a continuing system of income-contingent loans (BCA. 2017). The BCA recommended development of a single platform of market information to compile new data and make existing data accessible.

Noonan (2016) and Croucher, Noonan and Chew (2017) consider relevant issues. Croucher et al stress that governments need to agree on the aims for financing, regulation and incentives before considering the financial arrangements. They saw the need for an expert advisory body. Such a body would be needed whatever new structure of Commonwealth and state relations is established.

Quality and external assessment The declining rate of funding, the sharp cuts in in allocation to TAFEs and the expansion to for profit providers contributed to the concern with quality. Factors signalling poor quality included:

• delivery of courses in unduly short time and excessive use of on-line delivery and assessment

• the extraordinary expansions and contractions in the quantity of delivery

• increased instability in staffing and the casualisation of teachers.

A repeated claim is that providers have awarded a qualification to graduates who have received little or no training. On the other hand in several licensed trades external assessment is carried out, as it is in many other countries.

There would be confidence that graduates had achieved the standards required if external assessment was the norm. It seems that support for this is growing. Substantial work is needed on how it could be done and how its considerable cost might be offset by reductions in other forms of quality control.

The public provider, effectiveness and equity The case for the redevelopment of the TAFE system includes the need for large institutions for:

• delivery in critical areas, with stable and experienced staffing

• likelihood of and capacity for more internal quality control

• a prime role with trade apprenticeships and the integration of education with industry

• greater integration with the local community

• coverage of regional and remote areas

• adult literacy and numeracy

• overall support for the less advantaged including early leavers

• ongoing links with schools and universities and community providers (Mackenzie, 2016; Skills Australia’ 2011).

A revival of TAFE does not mean it will be costly and unresponsive. Competition can continue with strong public providers. Arguably in the last twenty five years the large Victorian TAFEs, which had considerable autonomy, were more entrepreneurial and responsive than TAFEs in states with more centralised arrangements. They were competitive in ways that were more usual in the universities.


Autonomy must be put in context. Tucker (2018b) argues this in relation to the top-performing school system in Finland. A coherent state and national policy framework should underpin relatively autonomous education institutions and professionals and avoid setting oversimplified performance targets that can distort behaviour (Gittens, 2018).

The findings of the recent report for UNIVERSITAS 21 by the Melbourne Institute on rankings of higher education systems may have relevance. Countries were graded on four modules, resources, output, connectivity and environment. Australia, where not-for-profit universities dominate the system, came tenth of fifty countries in the overall rankings but it was second to the US on environment:

A well-designed policy environment is needed to ensure that resources are used well. A consensus is emerging that the preferred environment is one where institutions are allowed considerable autonomy tempered by external monitoring and competition (Williams & Leahy, 2018).


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Appendix: Tables and Figures

Tables

Table 1 Approximate funds received for vocational education by providers, students and employers 2017 ($billion ...................................................................................................................................................... 33

Table 2 Publicly funded hours per student by provider type, Australia 2003 to 2016 ......................................... 33

Table 3 Total students and hours of delivery by provider type, Australia 2016 ................................................... 33

Table 4 Total and publicly funded vocational students by provider type, Australia 2016 (‘000) ......................... 34

Table 5 Students assisted and outlays on VET FEE-HELP, Australia, 2009 to 2016 ($billion) .............................. 34

Table 6 Apprentices and trainees in-training at 30 June by occupation (trade/non-trade), 1995–2017 ............. 35

Table 7 Trade and non-trade apprentice and trainee commencements 2012–16 (’000) .................................... 35

Table 8 Publicly funded VET students by age, Australia 2003 to 2016 ('000) ....................................................... 36

Table 9 Proportion of employers satisfied with all forms of VET, Australia 2009 to 2017 ................................... 36

Table 10 Vocational and university graduates, Australia 2008 to 2017, percentage employed .......................... 37

Table 11 Some data and research issues ............................................................................................................. 38

Figures

Figure 1: Government-funded vocational students by main provider type, Australia, 2003–2016 ('000) ........... 25

Figure 2: Government-funded vocational education, students, larger states, 2003–2016 ('000) ....................... 25

Figure 3: Government-funded vocational education, hours of training by main provider type, Australia, 2003–2016 (million) ............................................................................................................................................ 26

Figure 4: Government-funded training, hours of training, Australia and larger states, 2007–2016 (million) ...... 26

Figure 5: Public Expenditure on education plus the private revenue of public institutions, Australia, 2001–2002 to 2015–2016, ($billion) (2015–2016 dollars) ........................................................................................... 27

Figure 6: Public expenditure by sector, Australia, 2001–2002 to 2015–2016 ($billion) (2015–2016 dollars)...... 27

Figure 7 VET total operating expenditures, and revenues from States, Commonwealth and ‘Sales’, 2001-02 to 2015-16, Australia, ($billion), (2015-16 dollars) ........................................................................................ 28

Figure 8 Government expenditure on VET, Australia and large states, 2002 to 2016 $ billion (2016 dollars) ..... 28

Figure 9 Government expenditure on VET 2002-16, WA, SA and Tasmania, $ billion (2016 dollars) .................. 29

Figure 10 Government recurrent expenditure per hour of training, Australia, NSW and Vic, 2002 to 2016 (2016 dollars) ....................................................................................................................................................... 29

Figure 11 Publicly funded vocational students by main field of education, Victoria 2003 to 2016, ('000) .......... 30

Figure 12 Government payments to non-TAFE providers, larger states, 2007 to 2016, ($m) (2016 dollars)....... 30

Figure 13 Government payments to non-TAFE providers as a proportion of total government expenditure, Australia and larger states, 2007 to 2016.................................................................................................. 31

Figure 14 International onshore students fee revenue by sectors 2000-01 to 2016-17, Australia ($billion) nominal prices ........................................................................................................................................... 31

Figure 15 International onshore enrolments by sector, Australia, 2001 to 2016 (‘000) ...................................... 32

Figure 16 Approximate fee revenue per international enrolment by sector, Australia, 2002-03 to 2016-17, ($'000) nominal prices ............................................................................................................................... 32


Figure 1: Government-funded vocational students by main provider type, Australia, 2003–2016 ('000)

Source: NCVER (2018c)

Note: Government-funded students include l students for whom the provider is subsidised directly. This does not include students who are fully fee for service even where supported by a government student loan.

Figure 2: Government-funded vocational education, students, larger states, 2003–2016 ('000)


Note: As for Figure 1

1266 1244

1543

1266

905 877 882

660

170283

567

570532

190116 79 730

200

400

600

800

1000

1200

1400

1600

1800

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Total

TAFE andother public

Private andother

Adult andcommunity

483

329

454

322306

494

338

196

254

216

110 119

89

150

71

0

100

200

300

400

500

600

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

NSW

Vic.

Qld

WA

SA


Figure 3: Government-funded vocational education, hours of training by main provider type, Australia, 2003–2016 (million)


Figure 4: Government-funded training, hours of training, Australia and larger states, 2007–2016 (million)


301

359

485

377

256

292 311

262

198 204

32 53

155188 180

157

13 13 160

50

100

150

200

250

300

350

400

450

500

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Total

TAFE andother public

Private andother

Adult andcommunity

325

485

377

89 92 99114

146

187 186 184156

129

–

100

200

300

400

500

600

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Aust

Vic

NSW

Qld


Figure 5: Public Expenditure on education plus the private revenue of public institutions, Australia, 2001–2002 to 2015–2016, ($billion) (2015–2016 dollars)

Source: ABS (2017b); see also Pilcher & Torii (2017)

Notes: The data have been adjusted to 201516 dollars using the ABS chain price index of the GDP. The price index used can have an effect particularly on year-to-year changes (Burke & White, 2003). Private revenue is very largely domestic and international fees paid to public institutions.

Figure 6: Public expenditure by sector, Australia, 2001–2002 to 2015–2016 ($billion) (2015–2016 dollars)

Source: As for Figure 5.

31.4

42.7 41.145.2

14.9

20.022.5

25.9

6.6 6.4 6.7 6.3 5.7

05

101520253035404550

Schools

Universities

VET

30.6

44.2

6.8

11.0

5.54.1

0

5

10

15

20

25

30

35

40

45

50

Schooslminus sales

Universityminus sales

VET minussales


Figure 7 VET total operating expenditures, and revenues from States, Commonwealth and ‘Sales’, 2001-02 to 2015-16, Australia, ($billion), (2015-16 dollars)

Source: as for Figure 5

Figure 8 Government expenditure on VET, Australia and large states, 2002 to 2016 $ billion (2016 dollars)

Source: Productivity Commission (2018).

Notes: These data are for the government-funded activity including grants to private providers. The Productivity Commission (2018) provides estimates of public expenditures including and excluding the user cost of capital. The data here exclude the User Cost of Capital. The estimates including it are approximately 15 per cent higher. The estimates are for calendar years.

6.57 6.76

5.65

3.66

2.56

3.36

2.24

1.81 2.27 2.011.88

1.101.58 1.39 1.54

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

TOTAL Operating

STATES (minus salesand transfers)

COMMONWEALTH

'SALES'

5.15.4

6.3

5.0

1.721.46

1.18 1.42

2.181.93

1.35

0.93 0.95

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Australia

NSW

Vic

Qld


Figure 9 Government expenditure on VET 2002-16, WA, SA and Tasmania, $ billion (2016 dollars)


Figure 10 Government recurrent expenditure per hour of training, Australia, NSW and Vic, 2002 to 2016 (2016 dollars)


Note: Includes user cost of capital

The large changes in NSW 2014 to 2016 are related to the fall in recorded hours of training in 2015 shown in Figure 4. In NSW Hours for continuing students were not included in 2015 (see NCVER 2017d).

0.550.50

0.76

0.69

0.56

0.36 0.340.39

0.47

0.31

0.12 0.12 0.15 0.140.12

0.00

0.10

0.20

0.30

0.40

0.50

0.60

0.70

0.80

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

WA

SA

Tas

16.415.5

24.7

18.017.118.0

13.5

15.715.3

14.4

15.6

14.413.4 12.9

11.6

9.510.3

11.8

7.0

9.0

11.0

13.0

15.0

17.0

19.0

21.0

23.0

25.0

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

NSW

Aust

Vic


Figure 11 Publicly funded vocational students by main field of education, Victoria 2003 to 2016, ('000)


Figure 12 Government payments to non-TAFE providers, larger states, 2007 to 2016, ($m) (2016 dollars)

Source: Productivity Commission (2018) and earlier reports

Note: Victoria has a break in series starting 2014

64

132

34

54

60

27

-

20

40

60

80

100

120

140

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

08 -Management/Commerce

03 - Engineering andrelated

12 - Mixed fields

09 - Society/culture

04 - Architecture/building

11 - Food, hospitality etc

161

301

515

815 810 852

715

554

102

255

187

376

176

22

130

41 0

100

200

300

400

500

600

700

800

900

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Vic

Qld

NSW

WA

SA


Figure 13 Government payments to non-TAFE providers as a proportion of total government expenditure, Australia and larger states, 2007 to 2016

Source Productivity Commission (2018)

Figure 14 International onshore students fee revenue by sectors 2000-01 to 2016-17, Australia ($billion) nominal prices

ABS (2017c)

0.53

0.41

0.15

0.39

0.26

0.21

0.06

0.13

0.06

0.12

0.00

0.10

0.20

0.30

0.40

0.50

0.60

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Vic

Qld

Aust

WA

SA

NSW

1.1

4.8

8.4

0.4

1.7 1.4

0.60

0.47

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

Higher

Vocational

Non-Award

ELICOS

Schools


Figure 15 International onshore enrolments by sector, Australia, 2001 to 2016 (‘000)

Source: DET (2018e)

Note: In the Vocational sector there were recently about 1.36 enrolments per student compared with 1.05 in higher education. ELICOS is English Language Intensive Courses for Overseas Students; Non Award are course that may provide entry to Higher Education or Vocational courses. ELICOS and Non-Award courses can be provided in vocational and higher education sectors.

Figure 16 Approximate fee revenue per international enrolment by sector, Australia, 2002-03 to 2016-17, ($'000) nominal prices

Source ABS (2017c), DET (2018e)

86

242

307

40

208

134 188

49

151

44

1523

0

50

100

150

200

250

300

350

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Higher

Vocational

ELICOS

Non-award

School

27.3

20.1

14.0

7.6

4.0

0

5

10

15

20

25

30

Higher

Schools

Non-Award

Vocational

ELICOS


Table 1 Approximate funds received for vocational education by providers, students and employers 2017 ($billion

1. Recurrent public spending on providers 5

2. VET Student Loans projected annual expense to budget 0.3 3. Apprenticeship support, Trade Support Loans and Australian Apprenticeship Support Network 0.7

4. Student assistance 0.7 5. Support for the national training system 0.1 6. Programs for access to training by migrants and job seekers** 0.2 7. Labour market programs e.g. Youth Jobs PaTH na 8. Domestic fees and charges and domestic fee-for service payments received by public providers 0.9

9. International students fees, most paid to private providers 1.4 10. Other fees for private providers (excluding fees covered by items above). na

TOTAL* 9.3

Source: Various ABS, DET, DSS, DJSB, NCVER and Treasury

Notes:* A further factor affecting the use of public funds are the various arrangements for price and fees including exemptions for priority courses and for equity groups. ** The total for this item is about $400 million but the part paid to public providers is already included in item 1 recurrent public spending,

Table 2 Publicly funded hours per student by provider type, Australia 2003 to 2016

Hours per student 2003 2007 2009 2011 2013 2015 2016 2016/2003 All providers 238 262 281 298 317 322 298 1.25 TAFE and other public 282 306 333 341 361 345 309 1.09 Private and other 198 181 197 262 286 325 305 1.54 Adult and community 69 113 117 149 166 194 219 3.17

Source NCVER (2018 c)

Table 3 Total students and hours of delivery by provider type, Australia 2016

Hours of delivery

Students

Provider type (’000) Per cent (’000) Per cent Hours per student

TAFE 273,414 34% 740 18% 370 University 26,608 3% 60 1% 442 School 29,878 4% 91 2% 327 Community education provider 31,494 4% 379 9% 83 Enterprise provider 18,567 2% 85 2% 218 Private training providers 435,907 53% 2,471 59% 176 Attending more than one provider type - - 382 9%

TOTAL 815,868 100% 4,208 100% 194

NCVER (2017f)


Table 4 Total and publicly funded vocational students by provider type, Australia 2016 (‘000)

Total Publicly

funded Publicly

funded %

Public institutions 891 660 74

Community education provider 379 73 19

Enterprise and private 2556 516 20

Students attending various providers 382 16 4

Total 4208 1266 30

Source: NCVER (2017f)

Table 5 Students assisted and outlays on VET FEE-HELP, Australia, 2009 to 2016 ($billion)

2009 2010 2011 2012 2013 2014 2015 2016

Private full-fee paying new loans $ billion 0.02 0.07 0.13 0.22 0.49 1.37 2.44 1.13

All loans $ billion 0.03 0.12 0.2 0.32 0.7 1.74 2.92 1.47

Private Full-fee paying students (‘000) 2.8 10.2 19.1 29.6 57.5 132.7 192.3 123.5

Total students ‘000s 5.2 25.9 38.7 54.2 98.0 192.6 272.0 193.9

Average loan per student $ 4,858 4,520 5,281 5,962 7,101 9,054 10,717 7,582

Source: DET (2017d)

Note. Private full-fee paying students’ new loans refers to loans for courses without public subsidy conducted by private providers. All loans includes those to students for fees when undertaking publicly subsidised courses


Table 6 Apprentices and trainees in-training at 30 June by occupation (trade/non-trade), 1995–2017

Trade Non-trade Total

('000) ('000) ('000)

1995 118 21 139

1997 123 49 172

1999 127 124 251

2001 132 178 309

2003 147 255 402

2005 169 229 399

2007 195 219 414

2009 203 221 424

2011 214 245 459

2013 209 195 404

2014 193 152 345

2015 186 118 304

2016 176 106 282

2017 168 101 269

Source: NCVER (2018b)

Table 7 Trade and non-trade apprentice and trainee commencements 2012–16 (’000)

2012 2013 2014 2015 2016 Change 2012 to

2016

Trades

Engineering, ICT and science technicians 8 7 4 3 2 -73%

Automotive and engineering trades workers 21 19 17 16 16 -27%

Construction trades workers 17 18 20 24 22 31%

Electrotechnology and telecommunications trades 13 17 14 15 13 -2%

Food trades workers 10 11 10 9 8 -21%

Skilled animal and horticultural 6 5 4 4 4 -36%

Other technicians and trades 21 22 13 12 9 -57%

Total 96 99 82 83 73 -24%

Non-trades

Managers 32 7 4 3 4 -87%

Professionals 3 1 1 1 1 -83%

Community and personal service 49 38 38 29 30 -39%

Clerical and administrative 57 38 23 18 19 -68%

Sales workers 47 27 19 16 18 -63%

Machinery operators and drivers 22 17 12 12 12 -43%

Labourers 25 19 12 11 12 -54%

Total 235 147 108 89 94 -60%

NCVER (2018b)


Table 8 Publicly funded VET students by age, Australia 2003 to 2016 ('000) 2003 2004 2006 2008 2010 2012 2014 2016 2010/2003 2016/2010

15 to 19 years 308 308 364 385 403 433 359 316 131% 79%

20 to 24 years 220 210 221 216 241 273 261 233 109% 97%

25 to 29 years 127 112 115 117 134 158 151 144 106% 107%

30 to 39 years 224 198 198 198 219 255 240 227 98% 104%

40 to 49 years 192 171 172 170 190 224 199 181 99% 95%

Total 1266 1163 1248 1254 1360 1543 1393 1266 107% 93%

Source NCVER (2018c), DET (2017c)

Total includes other age groups and not known.

Table 9 Proportion of employers satisfied with all forms of VET, Australia 2009 to 2017 2009 77.8 ± 2.4

2011 77.8 ± 1.9

2013 73.1 ± 2.1

2015 72.9 ± 2.4

2017 71.4 ± 1.9

Source: Productivity Commission (2018)


Table 10 Vocational and university graduates, Australia 2008 to 2017, percentage employed

Vocational graduates from publicly supported VET University graduates

same occupation

group as course

different occupation but training relevant

to job %l employed %l employed

Difference university and vocational

2008 In a trade occupation course 79 11 94

In a non-trade occupation 38 38 88

All graduates 30 34 82 95 13

















In a non-trade occupation 38 28 78 All graduates 30 31 78 87 9

Source: NCVER (2017e,) QILT (2018)


Table 11 Some data and research issues • Comparability of finance data for higher education with that of vocational education and from the ABS (2017b)

(see also Burke et al, 2001; Burke, 2016)

• Comparability of vocational, higher education and school student data where: o Higher education has standard notions of a year of course but vocational courses are measured by hours of

training, with variations by levels and fields. o Vocational education and training in schools where the courses studied are the same as in the vocational

sector and students are often enrolled in both schools and vocational education (NCVER, 2017g). o Collections based on enrolment throughout the calendar year rather than at census date as for schools

(NCVER, 2017i).

• HECS-HELP and VET Student Loans: differences and their effects.

• Fee concessions and additional funding for the less advantaged.

• Subsidy rates and fees across fields and levels in vocational education.

• Comparability of finance data for higher education with that of vocational education and from the ABS (2017b) (see also Burke et al, 2001; Burke, 2016).

• Data on total fees paid to private vocational providers (as for higher education and schools.

• Data on staff in vocational education.

• Effectiveness of the provision of places by student choice in higher education but driven by government identified labour force priorities in publicly funded vocational education.

• Estimation and analysis of the various forms of funding related to apprentices and comparison with funding of

non-apprenticeship vocational education.

• Evaluation of all major government programs for vocational education including student assistance, for which Bradley (2008) proposed three-yearly evaluations.

• The implications for vocational education of the small proportion of vocational graduates employed in the occupation for which they trained and declining employment outcomes.

LH Martin Institute | How can VET teacher education and development be improved? Page 1 of 16

— LH Martin Institute

How can VET teacher education and development be improved? Hugh Guthrie, Hon Senior Fellow, CVEP, University of Melbourne & Anne Jones, Emeritus Professor, Victoria University, Melbourne


Table of Contents

Acknowledgements .......................................................................................................... 3

Introduction ..................................................................................................................... 4

The VET teaching workforce and how it has changed ........................................................ 4

VET teaching qualifications before the mandated Certificate IV ........................................ 6

The move to Certificate IVs............................................................................................... 6 Concerns about the Certificate IV flagged in quality audits and research ................................ 7

Further insights from key reviews of VET teacher education and training ............................... 8

The Certificate IV market ........................................................................................................... 9

ASQA implements a targeted regulatory strategy to address issues with the Certificate IV .. 11

Other actions to improve VET teacher quality and capabilities ........................................ 11 The nature and role of higher education qualifications .......................................................... 11

Where to from here? ...................................................................................................... 12

Afterword ...................................................................................................................... 14

References ..................................................................................................................... 14


Acknowledgements We are grateful to Berwyn Clayton, Emeritus Professor Victoria University, for her insightful feedback on the various drafts of this paper.

We would also like to acknowledge and thank Hans Tilstra of RMIT University for encouraging us to write this paper in the first place


Introduction The Standards for Registered Training Organisations (RTOs) 2015 updated the qualifications required for delivering and assessing training in the vocational education and training sector ending sixteen years of controversial dependence on Certificate IV level qualifications to prepare most vocational education teachers for their teaching practice1. From the beginning of 2016, the mandated qualifications were broadened to include the Certificate IV or diploma or higher-level qualifications in adult education. Importantly, these latter include higher level qualifications in language, literacy and numeracy. From 31 March 2019 the new standards will offer qualification choices including the latest version of the Certificate IV TAE (TAE16), the former TAE10 with additional units of competency in LLN and assessment as well as diploma qualifications and above including postgraduate qualifications in adult education (ASQA 2017a). These changes address a number of the problems that have beset the Certificate IV. They offer all of us stakeholders in vocational education the opportunity to reconsider what we have learned during the years in which a specific Certificate IV qualification was mandated for all VET teachers except those working in limited roles such as enterprise trainers. Since our insights have been shaped by Certificate IV failures as much as successes, we will look at history to understand what research, enquiries and audits during the Certificate IV era and before can tell us about the formal qualification needs of vocational education teachers. We will then go on to discuss the future: what formal qualifications could better support the initial and continuing education of VET teachers; who should deliver them and how.

The range of qualifications undertaken by vocational education teachers and the impact of these on the quality of teaching and learning in the sector have been contested amongst vocational educators, teacher unions, teacher educators, government, industry and other stakeholders for over fifty years; long before the Certificate IV appeared. Largely, this reflects the continuing unsettled status of vocational education and its teaching and assessment practices in the educational spectrum. More recently, tensions around costs and returns on investment associated with training VET teachers in a large-scale, marketised sector have affected employer, government and individual investment in VET teacher education, intensifying the debate. Towards the end of the paper we look briefly at higher level qualifications, their architectures and roles before drawing some conclusions and posing some ways forward to address the challenges facing the effective initial and ongoing education and training of VET’s teachers. Finally, although this paper concentrates on formal qualifications, we acknowledge that other and less formal forms of professional development make very important contributions to the improvement of VET practice.

The VET teaching workforce and how it has changed Until the mid 1990s the VET sector was dominated by public providers, principally TAFEs. While there were private providers, these offered education and training in a limited range of fields. The VET workforce was characterised by teaching staff pursuing a second or subsequent career and tending to be permanent or long-term employed. There was significant growth in the teaching workforce through the 1980s, mainly through the expansion of the public system. The development needs of this workforce were supported through the then more ample institutional funding and a series of federal and state/territory programs established to improve the quality of VET teaching.

The early 1990s saw an increasing focus on workplace training, and hence growth in the number of workplace trainers. Increasingly private providers and schools also required teachers. Thus, the VET workforce grew significantly and diversified from the 1980s onwards. Since that time VET provision has expanded to encompass a wider range of disciplines and vocational qualifications from AQF 1-8. In addition, many VET providers, including TAFE institutes, now offer secondary, vocational and higher education (up to masters level).

From the late 1990s VET providers came under increasing financial pressures which changed the nature of the workforce, increasing the levels of part-time and casual employees2. These pressures also affected the work roles and qualifications held within the VET workforce. In 2004 Dickie et al. characterised TAFE’s teaching workforce as older, mainly part-time and employed on a non-permanent basis. The characteristics of teaching staff in other types of VET providers were less known. Most VET teachers held a post-school qualification, however these were not “…

1 https://www.legislation.gov.au/Details/F2017C00663 2 This was sometimes characterised as ‘growth through efficiency’. Cost-efficiency demands have been a significant driver in the reconstitution of the VET workforce along core/periphery lines (Dickie et al. 2004)


qualifications in education or training - a situation which is being remedied, for permanent staff at least, in some jurisdictions” (Dickie et al., 2004 p. 52).

Consequently, the teaching workforce moved to a core/periphery model characterised by a significant and growing group of part-time staff employed on a casual or sessional basis and supervised by a smaller core group of full-time highly skilled staff (Dickie et al., 2004). These peripheral staff may work at multiple providers across the sector, and/or in industry. The proportion of core to peripheral staff varies across jurisdictions for TAFEs and is, at least in part, a function of the relevant industrial awards. Again, sound information on other provider types is lacking.

Dickie et al. (2004) found that VET trainers employed within enterprises spent relatively little time in the direct provision of teaching or training. The nature and complexity of the VET teachers’ work has therefore become increasingly diverse. Some teachers move into and out of the sector and while some see it as a long-term career, others do not.

Finally, Dickie and her colleagues reported that it was problematic to obtain data on the number and characteristics of VET staff, proposing that better data would assist workforce planning. They emphasised that estimates of the size of its professional workforce (of which the majority were teachers) were disparate, ranging from 17,400 to 71,300 for TAFE alone. Later studies (Mlotkowski & Guthrie 2008, Productivity Commission 2011) have supported Dickie and colleagues’ findings. The Productivity Commission (2011) estimated that there were about 73 400 TAFE employees, of which about 2/3rds are teachers. It estimated that about another 150 000 workers were involved in VET delivery by non-TAFE providers, but pointed out that higher numbers had been suggested by others:

“The lack of precision of workforce estimates for the non-TAFE sector partly reflects the fact that, currently, there is no agreed standard or national system of data collection for the VET workforce” (Productivity Commission 2011, p. 38)

A set of descriptors enabling the collection of uniform VET workforce data was developed by NCVER some time ago but not used until recently3. As so often happens data collection floundered on the rocks of ‘who pays’.

The nature of VET teachers’ work is variable and, at least for teachers and trainers in institutional VET settings, has changed considerably over time (NCVER 2004). These changes continue to impact on the ways in which they understand their professional identities and their relationships with other parts of the VET sector. VET teachers are required to work in an increasing range of contexts—institutes, private RTOs, schools, online and in a wide variety of workplaces and with different student cohorts, including school children, the disadvantaged, international students both in-country and onshore and older people. They are also called on to develop relationships and work collaboratively with a range of specialist service providers, to develop skills in career advice and work placement, and to take greater responsibility for administrative functions. They are now learning managers, brokers and facilitators, requiring effective communication skills, relevant and up-to- date content knowledge in their vocational area and the knowledge and skills to deliver and assess in a wide range of contexts. They can be ‘consultants’ as well as ‘teachers’. This requires greater flexibility on their part, and a strong focus on an increasingly diverse set of clients and client needs.

VET practitioners need a wide-ranging set of capabilities. They need to understand the theory and practice of learning, and curriculum design and evaluation; know how to teach creatively and imaginatively to engage learners; assess effectively; understand how the VET system works and critically reflect on their own and their colleagues’ practice. They must maintain digital currency in technologies used in teaching as well as in their industrial practice. They need to maintain their occupational expertise and hone their personal attributes, including professionalism, and strong skills in the relational and dispositional aspects of their work that makes them great teachers (Smith & Yasukawa 2017).

A 2017 study into the relationship between VET teacher qualifications and quality problems in the sector, found that:

“Good teachers were described as open to new knowledge and professional development, with the ability to help and inspire others to learn. In terms of teaching and learning, it was said that good teachers had the skills to communicate with a diverse range of students. Extensive industry experience and the skills to transfer knowledge, theory and practice to learners were also mentioned.” (Tuck & Smith 2017 p.2).

3 NCVER is currently undertaking a project to survey VET providers and obtain workforce data. It is due to be completed in mid 2019


The Certificate IV does not, and cannot, develop all these capabilities. At best it initiates a professional journey. Addressing the needs of VET teachers and trainers is a complex business, and no one teaching qualification is fit for purpose. What is needed is a diverse range of qualifications, experiential opportunities and on-going professional development. And, indisputably ongoing CPD, formal and less formal, must follow completion of the Certificate IV.

So, having looked at the VET teaching workforce, how it has changed and briefly at the nature and diversity of its work and the capabilities required, let us turn our attention to the changing nature of VET teachers’ qualifications over time and issues related to their quality, and focus especially on the various versions of the Certificate IV.

VET teaching qualifications before the mandated Certificate IV To better understand the controversy and the reasons for mandating a Certificate IV level qualification we found it useful to go back to the 1970s to follow the research and policy paths that led to a mandated Certificate IV qualification. Fortunately, VET historians have made this easy (e.g. Batrouney 1985; Chappell, Gonczi & Hager 1994; Guthrie 2010; Clayton & Guthrie 2013; Harris, 2017). Prior to the late 1970s, post-secondary technical teacher preparation was poorly funded and inconsistently structured with no formal teaching courses in Queensland and Tasmania and short non-award courses available in NSW, Victoria, Western Australia and South Australia (Chappell et al., 1994). Concerned with the poor quality of technical teacher preparation, the 1974 Kangan report prioritised the development of a well-prepared teaching workforce, recommending an inquiry into TAFE teaching4. The resulting Fleming report (1978) proposed a formal initial preparation program recognising the distinctive nature of TAFE teaching. This program was intended for completion within the first three years of employment and would lead to an advanced education award5. In response at least one college of advanced education in each state offered diploma level courses tailored to local jurisdictional needs. Coinciding with the demise of colleges of advanced education, a range of universities offered degree level courses for TAFE teachers. Throughout this period time release and mentoring were generously funded (Chappell et al., 1994; Guthrie 2010; Harris 2017). For example, in 1981 one of us was given two days’ paid time release for a year to undertake a Graduate Diploma in Education. The other one was in a teacher support unit in a Victorian dual sector institution, where one of its roles was to provide support for those undertaking such training. This included a short but intensive introduction to VET teaching to help support them in this role while they gained their formal teaching qualification6.

Despite the enviable funding, TAFE stakeholders - teachers, their unions and colleges - remained justifiably dissatisfied with the content and structure of higher education qualifications provided to their sector (George 1979, Batrouney 1985; Hall et al., 1991; VEETAC Working Party 1992 & 1993). Concerns included lack of knowledge of TAFE on the part of many teacher educators, inclusion of subjects designed for school teachers and general education subjects designed to broaden TAFE teachers who had not previously studied at tertiary level (Batrouney 1985). Other early concerns aligned closely with current debates, including differing views on the distinctive nature of vocational education teaching, its complexity and the level of qualification required for initial preparation of VET teachers. Consequently from at least the early 1990s there was growing support for a nationally consistent teacher preparation program offered by the VET sector itself (Hall et al., 1991; VEETAC Working Party 1992 & 1993; Guthrie 2010).

The move to Certificate IVs Continuing concerns led to a decade of reviews of TAFE teacher training culminating in the 1992 workplace trainer standards developed to ensure that unqualified workplace trainers had sufficient training skills for that purpose (Workplace trainer competency standards 1992). These were not intended to replace conventional VET teacher training but became popular with institutions which used them as the basis of professional development for teachers unused to workplace delivery.

With the introduction of Training Packages in 1996 the workplace trainer standards were reviewed and broadened in scope and, in 1998, endorsed as the Certificate IV in Assessment and Workplace Training (BSZ40198). This

4 TAFE represented the formal technical and further education sector and its work until the expansion of private provider participation from the mid 1990s 5 Colleges of Advanced Education were part of the Australian tertiary education system from 1967 to the early 1990s 6 Such programs were offered in a range of TAFE institutions and jurisdictions at that time


development coincided with considerable growth in VET provider numbers, mainly private providers and schools and increasing casualisation of the TAFE/VET workforce though funding and other pressures (Korbel & Misko 2016). The confluence of these forces led to widening recognition and eventual prescription of this Certificate IV qualification as the required qualification for vocational education teachers as well as trainers (Clayton et al., 2010).

Subsequently, in 2001 the inaugural Australian Quality Training Framework (AQTF) standards also endorsed the Certificate IV requiring that the person delivering training “has all the competencies in the Certificate IV from the Training Package for Assessment and Workplace Training (or has demonstrated the equivalent competencies) or who is under the direct supervision of a person with these competencies; and … is able to demonstrate vocational competencies at least to the level of those being delivered.” (ANTA 2001, p.17). This form of words continued until recently, being incorporated into the Standards for Registered Training Organisations when these became part of the National Vocational Education and Training Regulator Act 2011.

Since 2001 some, especially more highly qualified TAFE and school-based VET teachers, have resented the requirement to hold a Certificate IV qualification perceiving the change as devaluing their existing qualification and teaching capabilities. The Australian Education Union, like its predecessor organisations, has been steadfast in its support for higher level teaching qualifications for TAFE teachers (Corbel et al., 2014). Many TAFE leaders have concurred and TAFE industrial agreements have often required qualifications higher than the Certificate IV to cross salary bars or access more senior roles. For example, the Victorian TAFE award specifies in addition to the current Certificate IV that “progression beyond the fourth incremental point of the Teacher classification is subject to the Employee completing a course of teacher training accredited at diploma (Australian Qualifications Framework Level 5) which includes supervised teaching practice and studies in teaching methodology, or equivalent.” The current Training Package in Education and Assessment consists of six qualifications: one Certificate IV, two Diplomas and three Graduate Certificates. Provider numbers for qualifications other than the Certificate IV are relatively small (see figure 2 below). The most significant of these are the Diploma of Vocational Education and Training and Diploma of Training Design and Development.

Individual TAFE institutes and some private RTOs have continued to support staff to achieve higher level qualifications including Master of Education degrees delivered by universities but this activity has declined (Guthrie et al., 2011; Guthrie & Every 2013). For the majority of VET teachers, working for private VET providers and covered by the Federal award, the Certificate IV is their only teaching qualification (Guthrie & Every 2013).

Concerns about the Certificate IV flagged in quality audits and research From the beginning, audits and research have exposed significant problems with the quality of the BSZ and its successors (TAA04 and TAE10). Indeed, the Productivity Commission (2011), ASQA and others have come to see the Certificate IV as a high-risk course. Reports have repeatedly identified poor quality outcomes from Certificate IV delivery, poor teaching by Certificate IV teachers and have expressed concern at the use of the qualification as the sole, rather than the initial development of VET teachers (Bateman & Dyson 2003; New South Wales Vocational Education and Training Accreditation Board 2008; Clayton et al., 2010; Allen 2011; NQC 2011; ASQA 2017b). For example, Bateman & Dyson found that “the providers reviewed … seldom modelled good practice in terms of training delivery and assessment,” struggling to meet the AQTF standards for RTOs through a lack of knowledge and adequate documentation (Bateman & Dyson 2003, p.7). Clayton and colleagues found clear evidence from several sources that, like its predecessor the Certificate IV BSZ, the Certificate IV TAA qualification did not seem to provide the essential 'toolkit' required by new practitioners (Clayton et al., 2010; IBSA 2009; Precision Consulting 2008; Robertson 2008). However, one of Clayton’s key messages was that:

“When taught well, the certificate provides some if not all of the essential skills required of new practitioners, particularly if they already have some experience of training if they are supported by mentors and if they undertake further developmental activities after they graduate’ (Clayton et al., 2010 p.33)

These researchers emphasised the importance of support during initial education and training as well as access to significant ongoing professional development. They also emphasised the need for a more flexible TAA program structure to accommodate the diverse job roles, responsibilities and levels of VET experience of beginning VET practitioners. The study recommended this be addressed through the introduction of differentiated qualifications, skill sets and an orientation program for those unfamiliar with VET when they commence the Certificate IV. Finally, they stressed the need for those delivering the Certificate IV TAA to be appropriately experienced and qualified and capable of modelling good practice (Clayton et al., 2010): a view supported by Wheelahan & Moodie (2011).


Recent strategic audits of the Certificate IV TAA found that while there was evidence of good practice (VETAB 2008; TAC 2010; Allen 2011; NQC 2011):

• RTOs offering educationally sound programs found it hard to compete with RTOs offering short, cheap courses

• assessment tools were often non-compliant with 50% of providers demonstrating issues with learning and assessment strategies, evidence gathering tools and record keeping. There was evident lack of systematic collection, analysis and implementation of information to improve training and assessment (VETAB 2008; TAC 2010), and

• there was substantial variation in the duration of the TAA (TAC 2010).

The 2010 WA audit made a series of recommendations including that: RTOs wishing to deliver the qualification should provide a business case, those approved to deliver should ‘use it or lose it’ and finally that the [WA] Department of Training and Workplace Development should develop and implement strategies aimed at continuous professional development of teachers and trainers (TAC 2010).

The NQC audit reinforced the issue of assessment quality, cost sensitivity and qualification design especially for those providers, in their words: “seeking to develop their product faster, quicker, cheaper and at a profit” (Allen 2011, p.25). The National Quality Council proposed a staged plan of corrective actions, including regulation through detection, deterrence or the threat of deregistration and persuasion and professional development including NQC (2011a):

• supporting RTOs to improve the validity of their assessments

• improving the risk assessment for RTOs delivering the qualification

• professional development in assessment offered by those seen to have the requisite expertise

• benchmarking assessment practices

• using auditors with strong assessment expertise

• refining the training package itself and diversifying available qualifications and skills sets

• designing and implementing an effective moderation system, and finally

• ensuring that the relevant audit reports were made available to prospective clients.

Significantly, the detail above demonstrates that despite ten years’ experience with reviewing and redesigning this entry level qualification and including assessment units as a core requirement those teaching assessment continue to lack assessment skills.

Further insights from key reviews of VET teacher education and training Two more recent major reviews of VET teaching and the teaching workforce merit attention: Productivity Commission (2011), and Wheelahan & Moodie (2011). Both these, like their predecessors, made significant recommendations regarding VE teaching qualifications including:

• requiring RTOs offering the Certificate IV to meet higher regulatory standards and be taught by staff with a higher-level teaching qualification and demonstrated experience (Wheelahan & Moodie 2011) and incentivising providers to focus on quality training and its assessment (Productivity Commission 2011)

• requiring better national coordination, targeting and support (including funding) of professional development (Productivity Commission 2011). Wheelahan & Moodie (2011) proposed the development of a national CPD strategy to support teachers and their specialisations, with access available to all teachers and provider types

• establishing a national VET professional body with responsibility for VET professional standards, accrediting VET teaching/training qualifications and registering VET teachers (Wheelahan & Moodie 2011).

In response to this consistent identification and documentation of enduring problems through audits and reviews, governments and other responsible agencies have achieved little effective rectification:

“the same issues [of VET teacher training and development] emerged time and time again with no apparent progress. In short the issues, whilst recognised, never seem to be really resolved. One of the reasons for this is


that no one body or group has the power to make things happen, or to enact comprehensive solutions. Rather, any attempted solutions have been piecemeal, or have turned into battles between jurisdictions or a variety of interest groups over whom, precisely, has responsibility for carriage of the issue” (Clayton & Guthrie 2013, p. 8)

Most recently ASQA has examined a range of qualifications with unduly short durations. In relation to the Certificate IV TAE they found:

“47 per cent of RTOs with the qualification on their scope of registration advertise it with course duration of seventeen weeks or less and 31 per cent of RTOs advertised course duration of less than eight weeks” (ASQA 2017b, p. 96)

They found similar, although less severe, problems with the Diploma of Vocational Education and Training. As a result, ASQA implemented a targeted regulatory strategy which is described later in this paper.

The Certificate IV market Analysis of NCVER data reveal further problems with the Certificate IV delivery linked to unexpected market consequences and poor control over delivery quality.

The Certificate IV BSZ, TAA and TAE have always had high student numbers (Figure 1).

Figure 1 shows changes in government-funded enrolments in the BSZ, TAA and TAE from 2008 to 2016. The ebbs and flows reflect the progressive replacements of each qualification by its successor. At their peak, each had significant government-funded enrolments. Unfortunately, fee-for-service numbers were not captured until total VET effort data became available in 2014. Therefore, total enrolments across the years are probably significantly understated.

Figure 1: Government-funded enrolment numbers in Certificate IV BSZ98, TAA04 and TAE10 (NCVER data)

NCVER data on total VET activity available from 2014 to 2016 for the Certificate IV TAE10 and data on provider numbers (Figure 2) show that:

1. total student enrolments were very high but declined from 69,500 in 2014 to just over 45,200 in 2016;7 with a 21% fall in enrolments between 2015 and 2016

7 Note, though, that the proportions of government-funded enrolments were low in both 2014 and 2016.


2. in 2016 private providers delivered most provision; significantly, specialist providers for TAE qualifications delivered a higher percentage of delivery hours as fee-for-service compared with non-specialised providers (95% of hours compared with 83%) (Korbel 2018).

3. provider numbers were comparatively low for BSZ98, peaking at nearly 290 in 2002; provider numbers for TAA04 grew rapidly after its introduction and peaked at between 650 to 700 in 2010 and 2011 respectively; provider numbers were high for the TAE10, peaking at around 850 in 2013, and coinciding with unprecedented growth in the sector nationally.

These provider and student enrolment data demonstrate how much the Certificate IV became a ‘cash cow’; its attractiveness increased by a 2010 National Quality Council determination (NQC 2010) which gave added impetus to a market for ‘quick and dirty’ provision.

The determination concerning transition from TAA04 to its successor TAE10 required individuals to either hold the new qualification or demonstrate equivalent competencies. Many individuals found it easier to obtain the new qualification through fast-tracked provision than to demonstrate equivalence. This occurred despite the relevant Industry Skills Council, Innovation and Business Skills Australia’s (IBSA 2010) assurance that “… the newly revised Certificate IV in Training and Assessment qualification (TAE40110) is equivalent in content and outcome to the existing qualification TAA40104.”

Figure 2: Provider numbers offering qualifications at Certificate and diploma levels from the BSZ, TAA and TAE training packages

Guthrie & Every (2013) argued that an NQC determination that the Certificate IV TAA10 was equivalent to the TAA04 would have destroyed at a stroke a large proportion of the ‘quickie’ qualification/requalification market which resulted. There was strong anecdotal evidence that the NQC determination contributed to the continuation of a distorted market for the Certificate IV whilst achieving little significant improvement in the quality of Certificate IV.

We can only conclude that the high level of attention paid to the various versions of the Certificate IV in terms of reviews, audits and research has had a perverse impact on teaching and teacher quality. On the one hand we know a great deal about it. On the other, this distorted focus on form, content and delivery has distracted the attention of policy makers away from how best to provide, fund and manage significant levels of on-going professional and workforce development; including provision of formal qualifications at Diploma level and above.


ASQA implements a targeted regulatory strategy to address issues with the Certificate IV In a disruptive response to the continuing damning audits and reviews, on 1 April 2016 ASQA issued a media release (ASQA 2016) which stated that:

‘’All registered training organisations, whether currently delivering the old Cert IV TAE qualification (TAE40110) or not, will need to apply to ASQA should they wish to offer the updated [2016] qualification”.

This resulted in an almost overnight drop in Certificate IV TAE provider numbers from just over 500 in 2016 to zero. According to training.gov.au, in mid-July 2018 only 86 providers were approved to deliver this new qualification, twenty of these being TAFE or university providers. Sudden action, following years of relative inaction on the prevalent poor provision, has resulted in confusion and revenue loss for many providers. As with VET FEE-HELP and the Victorian Training Guarantee, good providers, as well as poor ones, suffer from, and resent blunt approaches used to solve significant issues (Saccaro & Wright 2018; Guthrie et al., 2014). In this case, however, significant action was necessary and taken – albeit after well-known problems with the successive Certificate IV qualifications had not been substantively addressed for over ten years.

Other actions to improve VET teacher quality and capabilities There is no doubt that governmental and bureaucratic over reliance on regulation and specification to solve VET teaching and assessment quality problems has not been effective. As this paper was being written the Australian Government announced its latest attempt to remedy VET’s ongoing quality issues. In its response to the January 2018 Braithwaite report on the National Vocational Education and Training Regulator Act 2011 (Australian Government, June 2018) the Government has accepted two out of three of Braithwaite’s recommendations relating to VET teaching practice:

• Recommendation 7: The legislative framework be revised to require an RTO to assess the quality of its teaching workforce and develop teacher quality improvement actions, which must be submitted to ASQA annually as a part of the Quality Indicator Annual Summary report (Braithwaite 2018 p. 67)

• Recommendation 8: The Training and Education Training Package be reviewed with the purpose of creating a career path for teaching excellence in vocational education and training (Braithwaite 2018 p. 70).

The Government’s response asks the Department of Education and Training to determine the feasibility of implementing these recommendations (Australian Government 2018). The effectiveness of recommendation 7, in particular, will depend on the quality of the dialogue between ASQA and individual RTOs, and on their reaching a mutual understanding of the value of the ‘quality improvement actions’ proposed. ASQA will need to be attentive to individual provider needs and priorities and therefore flexible in its views of what constitutes quality improvement. Likewise, this will force RTOs to be more mindful about development needs and opportunities and how they can best support these. One limiting issue may be the availability and cost of high quality, relevant and timely professional development opportunities, whether formal or less so.

The nature and role of higher education qualifications In 2011 Guthrie and his colleagues investigated initial VET teacher training (Guthrie et al., 2011). They found that there were around 22 higher education institutions offering relevant VET teacher or adult educator qualifications although, strictly, they were no longer ‘initial’ given the mandated Certificate IV. Guthrie & Every repeated this work in 2013 finding then that only 14 higher education institutions were offering such qualifications. Those available in 2013 included associate degrees, bachelor degrees, graduate certificates, graduate diplomas and masters degrees. Since then the number of institutions offering VET and adult education qualifications and their enrolment levels have fallen further, leading to significant loss of experienced VET teacher educators and researchers from the higher education sector.

University-delivered qualifications have survived despite at least two decades of concern with their quality, duration and relevance. This is due to continuing commitment by jurisdictions, providers and individuals to the value of higher education qualifications for enhancing the skills of VET teaching staff. Researchers have also argued for the value of


these qualifications. Smith and her colleagues (2015) gathered the opinions of participating teachers studying higher education VET teaching qualification and found that:

“university-level VET teacher education studies help practitioners develop the high level of knowledge and skills required for the complex work of VET teaching, as well as suggesting some further benefits resulting from the dialogue between practitioners and academics.” (Smith et al., 2015 p. 1)

More recent work, which asked the question “Would more highly-qualified teachers and trainers help to address quality problems in the Australian vocational education and training system?” concluded that:

“While any type of higher level qualification was helpful, VET pedagogy qualifications had specific utility in pedagogical and assessment matters. The Diploma of VET qualification made a difference here; but the significant difference was at degree level” (Federation University 2018, p.2)

Associated research has identified lack of time and cost as the most significant barriers to CPD for VET teachers (Tuck & Smith 2017). Additional factors include the nature of the present VET workforce and its career pathways and the attitudes and priorities of members of the VET teaching workforce to their own qualifications and professional development. However, Smith and her colleagues (2015) also identified that the current structure of university teaching qualifications for the VET teaching workforce was considered problematic by some. So, what might change?

We believe there are a number of potential solutions. First, institutions educating VET teachers should understand that they are educating adult career changers and offer credentials at an appropriate level. This means focusing on learning at AQF levels 6 and 8-9, with academic skills development for those who need it. Second, providers must break away from a focus on qualifications and develop programs and other offerings that are both ‘tactical’ and ‘strategic’. By this we mean their offerings are focused on areas of key and immediate interest to VET teachers and their institutions. In this way what they offer addresses relevant topic areas in a specific and timely manner; utilising integrated programs of micro credentials and qualifications as needed. On the other hand, they are strategic in that these tactical offerings could be accumulated towards the attainment of a substantive qualification. In addition, learning experiences could better support multi-directional learning pathways rather than simple hierarchical ones and explore ways to give credit for ‘non-standard’ learning experiences, including appropriate professional development, in line with possible outcomes of the current review of the Australian Qualifications Framework and the paper developed by Phillips KPA (2018).

For effective delivery, there is now potential for universities, TAFEs and other large higher education providers to work independently or through inter-institutional collaborations to develop and offer programs. There is potential for new collaborative approaches to research into vocational education and its pedagogies to ensure a bright future for applied learning and other vocational pedagogies. It will be important for VET institutions and the sector to continue to work with universities to access research training including at doctoral level. More thought and resourcing are needed to ensure that high quality vocational education research is conducted in universities and in large RTOs.

Where to from here? In this final section of the paper we look forward from where VET teacher education and development has been for at least the last five decades. There are lessons to be learnt from this history, but we also propose a number of ways forward that need to be considered by our readers. Most especially they need to be considered by those with the power and influence to effect much needed change.

In summary, we have identified issues with initial and continuing VET teacher education and suggested that these relate to sector-wide issues including:

• the real and long-term decline in funding levels, affecting the resources available to support teacher development at jurisdictional and provider levels

• problems arising from market-based VET and its impact on the nature and quality of provision, including adverse effects on the ways in which programs have to be taught and assessed

• a recognition that improved regulation is part of the solution, but not THE solution

• lack of clarity over the sector’s missions and focus, which affect the nature and range of teaching staff needed to give effect to VET’s variety of missions


• evidence of poor-quality delivery of the mandated Certificate IV, which have hopefully been rectified by ASQA’s recent interventions

• evidence of inadequate VET teaching skills in competency assessment, including amongst those teaching the Certificate IV, and

• lack of agreement both about the capabilities and attributes needed by VET teachers and trainers and the initial qualification and subsequent development and support needed to attain these.

We have shown there are also specific and enduring issues in relation to VET’s teaching workforce, the qualifications its members hold and their professional development including:

• the lack of comprehensive and consistent workforce planning data. These data, now fortunately being gathered by NCVER, are needed to enable reasoned decisions to be made to assist workforce planning at national, jurisdictional and individual RTO levels, and

• the failure of providers or government to implement long-term strategic VET teaching workforce plans.

Some ways forward are proposed below.

VET needs to be better recognised as a field of education with distinct pedagogical approaches. This view must underpin future planning for VET teacher development.

VET and its teaching workforce need to be acknowledged as a legitimate industry and workforce in their own right. VET and its teachers should not just continue to be seen just as a support to the other sectors of the Australian workforce.

There is no simple fix or ‘silver bullet’. The piecemeal approaches adopted in the past have not, and will not, effect substantive change and improvement Rather, the effective solutions needed require sustained, comprehensive and well supported actions. So, the one question we pose is:

Do we need to authoritative taskforce with considerable powers and influence to look at the issues directly related to, and surrounding, VET teacher education and development to propose a comprehensive set of actions which will actually be implemented?

VET teachers and teacher educators need to be part of the solution. Current expert VET practitioners should be consulted in planning the ways forward. In addition, teachers see themselves as time-poor, burdened by ‘administrivia’ and adversely affected by unrelenting change. Ways need to be found for teachers to feel they have the time and space to reflect on and improve their teaching practices and maintain their vocational currency and other expertise. All teachers, no matter their employment arrangements, need to be involved.

Further, the range of recognised qualifications for the VET teaching workforce must expand. As we stated at the outset, the expanded rules for mandated qualifications is a step forward, allowing a range of higher AQF level adult education qualifications to be recognised. Importantly, the new rules recognise the diverse roles that many VET teachers undertake, including teaching language, literacy and numeracy to adults, and could be further expanded to recognise fulfilling other important roles - including providing counselling support. It is now up to providers to offer programs that match the need.

VET teacher education and development must be adequately funded. The responsibility for improving VET practitioner development needs to be shared between providers and governments. However, variation in provider size and type means that some providers are better able to manage and support workforce development than others. VET teachers, as professionals, also need to play their part by committing time and even contributing financially to the development and maintenance of their skills. This investment needs to be ‘incentivised’ in various ways, however. In addition, the Commonwealth should work with jurisdictions and others to ensure that developmental opportunities are available for a range of teaching issues of national significance.

A good starting point would be supporting significant development in teachers’ capabilities to assess effectively. In summary, more resources and funding are needed and responsibilities to develop and maintain skills need to be shared fairly.


Provider workplace cultures must enable them quality staff development. Individual RTOs need to play their part. This means paying attention to the quality of leaders and managers and to active support of teaching staff to develop, grow and qualify. At heart of this is a culture and human resource management issue.

The nature and delivery of teaching qualifications beyond the Certificate IV needs attention. Higher education providers, including universities and TAFEs, will play important roles in VET teacher education; however, we believe they must move beyond arguing for their intrinsic worth and instead understand how to make their offerings more relevant and available to a wider pool of potential participants. Some ways forward were proposed in the penultimate section of this paper above.

A range of comprehensive and high-quality professional development experiences and opportunities must be accessible to providers and individual teachers. At present, regretfully, professional development continues to be largely focused on immediate imperatives rather than on pathways to improved practices and lasting change. Available professional development opportunities must include proper induction, support while undertaking initial and subsequent teaching qualifications, support for maintaining vocational and research currency, mentoring support as well as planned and serendipitous access to high quality non- and informal professional development opportunities.

Afterword As Walker has emphasised VET teachers are the sector’s “most valuable asset and arguably least cared for resource … the quality of the service provided to learners is entirely dependent on the quality and performance of the trainer” (Walker 2012 p. 1). Sadly, initial and ongoing VET teacher development continues to be relatively ad hoc and focused on those who are more institutionally attached. To remedy this the sector needs institutional and political cultures that value and commit to real professional development rather than merely ensuring compliance through regulation. Key stakeholders must understand that continuing neglect of initial and continuing professional development of VET’s teaching workforce will do further reputational damage to the sector and the quality of the education it offers, and at worst may contribute to its eventual demise. Now, more than ever, VET teachers must be highly capable industry practitioners and educators, able to deftly navigate changing the needs of learners amidst societal and industrial disruption. This is particularly the case where technological change demands higher level VET qualifications such as the degree level apprenticeships emerging in Australia.

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LH Martin Institute | Boundaries and connections between VET and higher education at AQF 5/6 Page 1 of 28

LH Martin Institute Melbourne Graduate School of Education

Boundaries and connections between VET and higher education at AQF 5/6

Dr Craig Fowler 7 August 2018


Table of Contents

Executive summary .......................................................................................................... 4 Findings ...................................................................................................................................... 4

Observations .............................................................................................................................. 5

Introduction and purpose ................................................................................................. 6

Sources of data and general method ................................................................................ 7

Comparing enrolments by number ................................................................................... 8 Data ............................................................................................................................................ 8

Observations ............................................................................................................................ 10

Comparing enrolments by field of education .................................................................. 11 Data .......................................................................................................................................... 11

Observations ............................................................................................................................ 12

Comparing enrolments by course ................................................................................... 13 Data .......................................................................................................................................... 13

Observations ............................................................................................................................ 15

Comparing marketing and student choice ....................................................................... 15 Differing educational/training intent and student pathways .................................................. 16

Evidence from VET AQF 5/6 students ...................................................................................... 16

Evidence from HE AQF 5/6 students ........................................................................................ 16

Observations ............................................................................................................................ 16

Comparing training and educational institutions ............................................................. 17 Data ...........................................................................................................................................

Observations ............................................................................................................................ 17

Providers and relationships across the VET/HE boundary ...................................................... 17

Comparing public funding and financing ......................................................................... 18 Funding for VET level AQF 5/6 diplomas and advanced diplomas .......................................... 18

Funding for HE level AQF 5/6 sub-bachelor courses ............................................................... 19

Observations ............................................................................................................................ 20

Public funding/financing and administration .......................................................................... 20

Implications and conclusions .......................................................................................... 21 Differing policy viewpoints across sectors ............................................................................... 21

Related international perspective ........................................................................................... 22

For the present ......................................................................................................................... 23


For the future ........................................................................................................................... 24

References ..................................................................................................................... 25

[Click to insert contact details] ....................................................................................... 28

Table of figures

Figure 1 AQF 5, 6 and 7 program enrolments by domestic students, 2001―2017 ........... 11

Figure 2 Domestic HE and VET course enrolments by field of education as a proportion of enrolments in each category (AQF 5, 6 and 7), 2016 (%) ............................................... 13

Figure 3 Program enrolments in VET FEE-HELP (2016) and VET Student Loans (July-December 2017) as a proportion of enrolments in each category (AQF 5, 6) (%) ......... 14


Executive summary This paper examines education and training undertaken at Australian Qualification Framework (AQF) levels 5

and 6, which are the overlap between the vocational education and training (VET) and higher education (HE)

sectors. It follows an earlier paper, The boundaries and connections between the VET and higher education

sectors: ‘confused, contested and collaborative’ (Fowler, 2017).

Given the quantum of public resourcing by Commonwealth and state and territory governments that support

both sides of the HE/VET AQF 5/6 divide, this paper explores the similarities, differences and interconnections

between the sectors that affect educational and skills outcomes, sectoral pathway opportunities and future

employment for students. These matters are relevant to HE and VET policy and increasingly to employers, who

expect graduates to have both discipline knowledge and technical skills.

Findings Though total enrolments in publicly funded/financed AQF 5/6 VET diplomas and above are greater in

number, recent trends show their sharp decline compared with a modest increase in AQF 5/6 HE sub-

bachelor enrolments.

There is an overlap of students to whom HE and VET AQF 5/6 course providers promote educational benefits

of their courses and ‘skills for jobs’, and significant overlaps in student enrolments by field of education.

While such overlaps exist, evidence from graduate surveys shows firmer distinctions in students’ reasons for

study. VET diploma graduates rate the work-related benefits of their training higher than HE diploma

graduates, who tend to see their qualification as less relevant to employment.

Universities have greater marketing powers in offering sub-bachelor courses compared with training

providers offering VET diplomas in similar fields of education. This is for reasons of perceived prestige and

pathways, in some cases leading into the second year of bachelor degree study, their ability to ‘self-

accredit’ courses and preferred funding/finance arrangements.

Some thirty-six institutions were identified as straddling the VET/HE boundary: that is, registered as both HE

provider and approved VET Student Loan provider. These institutions comprised twelve universities

(including dual sector) and eleven TAFEs. At local levels, collaboration between institutions provides

examples of practical student-centred pathway solutions that make boundaries between AQF 5/6

qualifications and bachelor degree study relatively porous.

Public funding and financing of VET AQF 5/6 courses is complex, being the sum of (unknown) state/territory

government subsidies of VET diplomas and higher-level VET qualifications as well as Australian government-

financed VET Student Loans (some with state/territory subsidy), available at 211 approved providers (at May

2018). The amount paid to course providers in respect of VET Student Loans approved for students studying

eligible courses in 2017 was $200,335,628 (full-year 2017). Of the 211 approved course providers that

operated during 2017, 155 had students who accessed a VET student loan.

Portfolio budget papers 2018/19 state the VET Student Loan program had administered expenses

appropriation of estimated actual $191,144 million (2017/18) and budget of $251,333 million (2018/19).

Long-term costs to governments of loans not repaid remain uncertain.

By comparison, the Australian government provided thirty-six universities with a total of about $205 million

in grants for HE AQF 5/6 sub-bachelor courses, in addition to which enrolled students will pay a capped

contribution that can be financed by HELP loans, with again-long term uncertain cost to government of any

loans not repaid. So there are two parallel Australian government funding/finance programs supporting AQF

5/6 qualifications, in HE and in VET.


Funding and financing policy – such as loan fees - is critical, as any inequity in opportunity or support risks

students enrolling in courses not because of educational/training benefits that best suit them, but because

they perceive them as financially more favourable.

Proposed national policy to extend the HE ‘demand driven’ system to HE sub-bachelor programs was not

pursued, it being strongly supported by the HE sector but equally strongly opposed by the VET sector.

This contested ground is similar to that described in the United Kingdom, where one commentator holds the

strong view that UK universities have ‘colonised’ the upper levels of their vocational training system.

The present policy is that from 2019 the Australian government intends to support sub-bachelor courses that

focus on industry needs and fully articulate into a bachelor degree. An unresolved issue for universities is

how ‘industry needs’ and ‘full articulation’ will apply to associate degrees and diplomas. Some HE diplomas

may provide more academic and as meritorious pathways leading into higher AQF levels.

Future solutions may focus on qualification pathways spanning VET/HE that have a clear line of sight from

training/education to occupational needs. This presents an opportunity for intermediary stand-alone

qualifications, supplemented by skill sets and/or ’micro-credentials’, aligned to evolving and emerging jobs,

as well as tiered-levels of professional qualifications supporting job progression. This approach would work

best with vocationally specific qualifications linked to professional registrations and credentials. Fresh

approaches may be needed in best joint practice in pedagogy, combining knowledge/skill teaching and

assessment supported by a stable continuum of public funding/financing designed to support students to

navigate an integrated tertiary education system.

Observations

Overall, the evidence shows a highly complex policy edifice built at the AQF 5/6 boundary. It shows

intertwined yet differing operational, regulatory and funding/financing arrangements as well as

administrative burdens at what at its simplest is a qualification framework that both sets a boundary and

allows an overlap between two sectors within one tertiary education system.

The approach of the Australian government differs on either side of the VET/HE boundary, with training

loans for students enrolled with approved providers in legislatively specified VET AQF 5/6 courses, and grant

funded places (plus capped student fees that can be covered by loans) for students enrolled in quota-limited

HE AQF 5/6 courses available at universities. The payments to 151 training providers in 2017 for training

loans that students must repay was just in excess of $200 million (with some 42,220 loan-assisted students in

2017); by coincidence a comparable total of $205 million in grant payments was made to thirty-six

universities in 2018 (for some 18,847 designated places).

The total cost of subsidies for VET AQF 5/6 courses funded by states and territories, plus any long-term costs

of loans not repaid for which they may be part liable are unknown, leaving this analysis incomplete.

Where there are student pathways straddling VET and HE AQF 5/6, these typically have been cooperatively

negotiated ‘ground up’ between institutions, not facilitated by national policy ‘top down’. If universities

(dual sector or their colleges) are approved as VET Student Loan providers and also have contracts for HE

‘designated places’, they have the potential benefit of two student entry pathways both at AQF 5/6 and are

able to decide student entry into AQF 7 level, supported by their course ‘self-accreditation’.

This edifice has been built up incrementally, more by accident than design, as a result of long-term

avoidance in developing integrated national tertiary education system policy. It illustrates the urgency of

establishing more coherent funding and financing arrangements for the tertiary education system, with the

present set-up significantly disadvantaging VET and now requiring a range of policy changes to fix this.

The announced review of HE provider category standards and separate full review of the AQF are both

expected to be especially pertinent, potentially laying the groundwork for future reforms.


Introduction and purpose This paper follows on from The boundaries and connections between the VET and higher education sectors:

‘confused, contested and collaborative’ (Fowler, 2017), which examined the boundaries and connections

between the VET and HE sectors set by national and state/territory policies, regulations, programs and funding.

That paper highlighted examples of contest as well as of cooperation across the tertiary education system and

its providers. It argued that multiple issues have affected the relative performance of both sectors and this has

eroded their differentiation. This erosion has been caused by a combination of differing sector-specific national

policies and agreements; differing sectoral financing/funding; differing sectoral legislation, regulation and

standards; as well as overlapping qualification frameworks and different standards for courses and

qualifications.

The decline in VET participation relative to that of HE was noted as a consequence of policy and funding

reforms that have travelled along ‘different tracks’ over the past six to eight years. The establishment of

student loans spanning VET diplomas to degrees had, whether by design or not, reset control of VET and HE

sector policy, program and funding boundaries. From the perspective of students, the ability to pick and mix

the best from university education and vocational training, be it skilling, academic study or work experience,

was argued to improve future job prospects for students and to better meet the needs of employers. The paper

suggested reforms including policy and incentives to ensure the more equitable funding of mid-level

professionals: for example, associate degrees and higher apprenticeships to improve cross-sectoral education

and training opportunities for students.

This paper considers these issues further. The research question explored here is, given the major public (and

private) investment in education and training on both sides of the HE/VET AQF 5/6 divide, what are the present

and future educational, skills, pathways and employment benefits for students and/or employers?

Sub-bachelor courses have a longer history than the VET Student Loans program (which has only been

operational since January 2017, when it replaced the VET FEE-HELP program). This paper considers whether

there is (or will be) an increasing convergence of popular courses and greater competition for students across

the HE/VET AQF 5/6 levels. Alternatively, will the design and funding/financing of these courses lead to more

clearly differentiated educational and training purposes, pathways and job-specific outcomes, helping the

sectors to complement one another and enhancing cross sector mobility, if students so wish?

Either scenario is highly dependent on policy, funding and administrative efficiency and flexibility for both

students and education providers. Outcomes are increasingly relevant to employers, who give equal weight to

and very much expect both discipline knowledge and technical skills in any graduates they employ.


Sources of data and general method Data have been drawn from recently published sources of information as shown in Table 1.

Subject to the availability of data, numbers of enrolments in VET and HE courses in Australian Qualification

Framework (AQF) levels 5 and 6 are compared, this being the AQF boundary between the sectors (AQFC, 2013).

Some data are presented by discrete program (e.g. VET FEE-HELP and VET Student Loans).

Popular courses are listed by discipline areas and as promoted by HE institutions.

Graduates’ views after studying at VET and HE AQF 5/6 levels are analysed to a limited extent, including their

educational, training and job-related benefits.

Education/training providers that span VET and HE sectors at AQF 5/6 levels are enumerated.

Information available regarding public funding is analysed, in particular for grants, subsidies and financing for

both VET and HE AQF 5/6 qualifications.

Comparisons are made across consistent time frames where possible, and where not this is explained. In

general, the information presented is for domestic Australian students, unless otherwise indicated.

Observations and conclusions are presented within the sometime significant limitations of available data

including timing of release of public data and typical complexities of cross-sectoral data comparisons.

Table 1 Data sources used in the analysis

HE data and sources

Data Sources

Bachelor Department of Education and Training (DET) (2017). 'uCube - higher education statistics'. Canberra: DET. Retrieved 19 January 2018 from <http://highereducationstatistics.education.gov.au/>.

Sub-bachelor DET (2017). 'uCube - higher education statistics'. Canberra: DET. Retrieved 19 January 2018 from <http://highereducationstatistics.education.gov.au/>.

Sub-bachelor Commonwealth Support Grants 2018 (CSG)

DET (2018). ‘Higher education providers’ 2018-2020 Commonwealth Grant Scheme funding agreements’. Canberra: DET. Retrieved from <https://docs.education.gov.au/node/49011>. DET (2018). ‘2018 allocation of units of study to funding clusters’. Canberra: DET. Retrieved from <https://docs.education.gov.au/documents/2018-allocation-units-study-funding-clusters>.

VET data and sources

Data Sources

Government-funded VET diploma and above

National Centre for Vocational Education Research (NCVER) (2018). National VET Provider Collection. Adelaide: NCVER.

Total VET diploma and above NCVER (2018). National VET Provider Collection. Adelaide: NCVER; NCVER (2018). National VET in Schools Collection. Adelaide: NCVER.

VET Student Loans (first half of 2017)

DET (2017). 'VSL six-monthly report Jan-Jun 2017'. Canberra: DET. Retrieved from <https://www.education.gov.au/vet-student-loans-statistics>.

VET Student Loans (second half of 2017)

DET (2018). 'VSL six-monthly report Jul-Dec 2017'. Canberra: DET. Retrieved from <https://www.education.gov.au/vet-student-loans-statistics>.

VET FEE-HELP DET (2017). '2016 VET FEE-HELP statistical report: study tables'. Canberra: DET. Retrieved from <https://www.education.gov.au/vet-fee-help-statistics>.

http://highereducationstatistics.education.gov.au/

http://highereducationstatistics.education.gov.au/

https://docs.education.gov.au/node/49011

https://docs.education.gov.au/documents/2018-allocation-units-study-funding-clusters

https://docs.education.gov.au/documents/2018-allocation-units-study-funding-clusters

https://www.education.gov.au/vet-student-loans-statistics

https://www.education.gov.au/vet-student-loans-statistics



Comparing enrolments by number Comparative information on enrolments at AQF levels 5 to 7 is presented in Figure 1. The wide time-span of

2001 to 2017 has been chosen to illustrate longer-term trends. Data for VET Student Loans is limited to 2017,

the first year of this program, and is shown in Figure 1 as block points only. The figure shows enrolments by

domestic students, as government funding and loans are commonly restricted to this group (it excludes

international students and ignores finer domestic eligibility differences across programs). Unless otherwise

stated, data are for enrolments (not student numbers, nor equivalent full-time student load (EFTSL)).

Data

Bachelor (AQF level 7):

Higher education enrolments in AQF 7 level courses show a steady rise, starting in 2009 and accelerating since

2012, coinciding with the phasing in and start of the Bradley reforms and the uncapped higher education

‘demand driven’ system (Figure 1). Bachelor enrolments totalled 758,972 in 2016.

HE sub-bachelor (AQF levels 5/6):

The higher education enrolments in AQF 5/6 level courses shown in Figure 1 include associate degree, advanced

diploma and diploma, but not enabling courses (DET, 2018b). These sub-bachelor enrolments totalled 29,917 in

2016, far fewer than those at bachelor level (AQF 7). Sub-bachelor enrolments include those that are

designated places1 funded under Commonwealth Grant Scheme (CGS) support as negotiated between the

Commonwealth and universities. These places are allocated to universities and distributed between disciplines

according to specified funding clusters.

These qualifications were the subject of proposed but stalled reforms to extend the demand-driven policy to

sub-bachelor programs. It is an HE entry point promoted by many pathway colleges that have relations with

universities and which specialise in associate degree and diploma courses, the latter being the main pathway

course that may facilitate subsequent entry of students to the second year of a bachelor course at university

(see below).

Public universities cannot offer full-fee places to domestic undergraduate students, which is a constraint on

their expansion in the diploma or associate degree markets. Sub-bachelor enrolments including domestic and

international students may occur within other higher education providers. Domestic students may access FEE-

HELP loans at eligible providers (with a 25 per cent loan fee).

VET diploma and advanced diploma (AQF level 5/6):

Three time-series representations of AQF 5/6 VET data2 are shown in Figure 1. The first series is that captured

in Total VET students and courses (NCVER, 2018b) or Total VET Activity (TVA) reports, with data first collected

in 2014 and published in 2015. This series contains an estimate of all VET diplomas and higher, regardless of

funding/finance source. The latest data (for 2017 training activity, published in 2018) show some 398,516

‘domestic’ enrolments in programs at diploma and higher levels, an overall decline of some 25 per cent from

531,306 like enrolments in 2016. The upward trend in enrolments and more recent dip in 2017 mimic the

underlying peak and fast decline in VET FEE-HELP enrolments (explained below).

The second series is the VET FEE-HELP time-series spanning 2009 to 2016. This program closed in December

2016 and was replaced in January 2017 by the VET Student Loans program, with students enrolled in the former

being eligible to continue their studies only until the end of 2017 (unless there were exceptional

circumstances). The data shows a rapid growth in enrolments to a peak of 320,703 in 2015 and then a sharp

1 Sub-bachelor places are outside the demand-driven system and allocated by government under funding agreements. 2 There are some data overlaps in the time-series: for example government funded may include enrolments supported by both government subsidy and loan financing. It has not been possible to dissect such examples fully.


decline in 2016 after deliberate policy intervention to curtail enrolments. These VET FEE-HELP enrolments3 are

a proportion of the total seen within the TVA reports (above).

VET FEE-HELP was for predominantly fully fee-for-service tuition, but a significant minority of VET FEE-HELP

enrolments also had some state or territory government subsidy.

The third series is Government-funded students and courses (NCVER, 2018a): that is, VET diplomas and higher

that have been subsidised by government funding (including some enrolments with government subsidy

supporting student loans). The series shown here from 2003 onwards presents a steady but fluctuating pattern

(Figure 1). The graph indicates three broad trends:

decline from 2003 to 2008. Government-funded VET program enrolments at diploma level or higher

decreased from 175,100 in 2003 to 149,100 in 2008 (a 14.8 per cent decline).

increase from 2009 to 2011. Government-funded VET program enrolments increased annually from 2008 and

peaked in 2011 at 220,900 enrolments at diploma level or higher. This coincides with the introduction of

VET-FEE-HELP in 2009. In addition, the Productivity Places Program, first reported in 2010, was responsible

for some growth in 2010 and 2011.

decline from 2012 to 2015. Government-funded VET program enrolments at diploma level or higher have

declined each year since 2011 to 142,800 program enrolments in 2015. Results of 2017 data just released

show a small increase to 143,300 enrolments.

Finally, Figure 1 shows the first year of data for VET Student Loans (thus no time-series), drawing data from two

separate six-monthly reports. As explicitly reported, some 24,492 students had a VET Student Loan approved for

the first time in the reporting period (January to June 2017) (DET, 2017h, p. 5), and further, some 35,197

students undertook a part of a course with a census day during the reporting period (July to December 2017)

(DET, 2017i, p. 5), where part of the course being studied was VET Student Loan―assisted.

Full-year data4 for 2017 for VET Student Loans showed that a total of 42,220 students undertook a part of a

course with a census day during 2017, where the part of the course being studied was VET Student

Loan―assisted (DET, 2018e, p.6).

3 There is some doubt whether all of these are genuine student enrolments. 4 Released 8 August 2018 when this paper was near completion.


Figure 1 AQF 5, 6 and 7 program enrolments by domestic students, 2001―2017

Observations

The AQF level 7 bachelor enrolments demonstrate growth arising from the demand driven policy in place from

2012 onwards. Enrolment numbers are far higher than those of all other AQF levels and are included in Figure 1

to show this relativity.

The early numbers of enrolments in 2017 under the new VET Student Loans program are far fewer than under

the VET FEE-HELP program in 2016, though the latter was fast decreasing in enrolments in its final years. Policy

intervention eliminated most of the flaws in VET FEE HELP, and the program is now closed. VET diplomas and

above enrolments funded/subsidised by State/territory governments exceed VET Student Loan enrolments.

In the first year of operation of VET Student Loans in 2017, 24,812 enrolments in the first six months (January to

June) were reported (DET, 2017h, p. 26) and 36,124 enrolments in the last six months (July to December) (DET,

2017i, p.24). Data for VET Student Loans 2017 full year showed that ‘a total of 42,220 students undertook a part

of a course with a census day during 2017, where the part of the course being studied was VET Student Loan

assisted’ (DET, 2018e, p. 6). Given the experience of VET FEE-HELP, this far lower number represents

significantly tighter policy and program administrative control.

VET Student Loan enrolments (in 2017) were marginally higher in number compared with enrolments in AQF

level 5/6 sub-bachelor courses in higher education, these being 29,917 in 2016, and an increase by about 4,500

enrolments from 2015 (data for 2017 were not yet available). Most recent data indicate commencing students in

government-funded VET courses at diploma and above have decreased 12 per cent while commencing students

in sub-bachelor courses have increased 26 per cent (for the period January to June 2016 compared with the

same period in 2017) (Table 2). There were more commencing sub-bachelor students in the first half of 2017

than there were VET Student Loans–assisted students (26,100 compared to 24,500).


Table 2 Domestic and international students (commencing and total) by AQF level and funding category

Commencing students All students

Jan-Jun 2016 Jan-Jun 2017 Change Jan-Jun 2016 Jan-Jun 2017 Change

Bachelor (AQF 7) 261,285 262,197 0% 854,745 871,310 2%

Sub-bachelor (AQF 5/6) 20,769 26,067 26% 40,723 47,957 18%

Government-funded VET (AQF 5/6)

53,911 47,194 -12% 114,405 105,560 -8%

VET Student Loans - 24,492 N/A N/A N/A N/A

Notes: 1. Higher education data for January-June 2017 are the latest available and are only currently available for students not enrolments. 2. Higher education data for January-June 2017 are not currently available by domestic/international status and AQF level, so this table presents a combined domestic and international student count. 3. Around 10 to 15 per cent of program enrolments marked as commencing in a given year are also marked as commencing in the previous year, or the following year, or both. For more information, see NCVER (2016).

As a separate point of interest, the total number of enrolments reported in Total VET students and courses

(NCVER, 2018b) at VET diploma level and higher in 2017 was 512,637, including international students.

The split of domestic and international students shows 398,516 domestic enrolments in VET diploma level and

higher programs in 2017, a fall of some 25 per cent from 531,306 enrolments in 2016 (coinciding with decreasing

VET FEE-HELP). By comparison, there was a marked increase in international student enrolments in VET diploma

and higher programs with 114,100 enrolments in 2017, up from 94,500 in 2016.

In TVA 2017, some 46.7 per cent of international VET student enrolments were enrolled in courses at diploma

level and above (NCVER, 2018b). By comparison only 12.7 per cent of domestic VET students were enrolled in

courses at diploma level and above, the dominant qualification being certificate III at 30.2 per cent of all

domestic course enrolments. Data indicate that these high numbers of international student enrolments at AQF

level 5/6 VET diploma level and higher are from China, and some half of all these students intend to go on to

further study, especially in HE.

Comparing enrolments by field of education Data

Enrolments in HE and VET courses at AQF levels 5, 6 and 7 for 2016 are shown in Figure 2. They are shown as a

proportion of all enrolments in each category. The year 2016 coincides with some of the highest levels of

enrolments under the now closed VET FEE-HELP program.

Figure 2 does not include any data on VET Student Loans, which commenced in 2017.


Figure 2 Domestic HE and VET course enrolments by field of education as a proportion of enrolments in each category (AQF 5, 6 and 7), 2016 (%)

Observations

Noting that this figure shows the proportion of all enrolments in each category, there appears to be a broad

overlap with some variability in enrolment preferences by field of education between VET diploma and higher

(AQF 5/6) and HE sub-bachelor (AQF 5/6) qualifications.

The fields of education management and commerce and society and culture dominated in both HE (bachelor and

sub-bachelor) and VET course enrolments (diploma and above) in 2016. Enrolments in health, education and

creative arts had the next highest numbers of enrolments. Natural sciences had far greater numbers in HE,

whereas food hospitality and personal services enrolments were predominantly in VET.

Comparison with VET FEE-HELP courses is not warranted (the program being closed): suffice to say that the

latter were dominated by enrolments in management and commerce and society and culture.

However, using data available (DET, 2017a, 2017i), Figure 3 shows the differences in proportional enrolments

between those under VET Student Loans and those under VET FEE-HELP.

Health and creative arts enrolments were more common in VET Student Loan than in VET FEE-HELP courses, as

were engineering and related technologies and architecture and building. Conversely, management and

commerce and society and culture were less common in VET Student Loan courses than in VET FEE-HELP

courses. This presumably reflected the type of legislatively specified courses in the VET Student Loans program

compared with those that could be undertaken with VET FEE-HELP.


Figure 3 Program enrolments in VET FEE-HELP (2016) and VET Student Loans (July-December 2017) as a proportion of enrolments in each category (AQF 5/6) (%)

Comparing enrolments by course Data

Table 3 lists the twenty VET Student Loan courses in which most students enrolled (DET, 2017g) compared with

those recorded in the government-funded VET time-series, also for 2017 (NCVER, 2018a). This table compares

VET diploma level and higher (AQF 5/6) courses either loan financed or government funded (subsidised), both

categories of program being publicly resourced. There is some obvious overlap in courses and clearly far higher

enrolment numbers in government-funded VET, as this is an ongoing and long-running commitment funded by

States and Territories, compared with the commencing year for VET Student Loans. The table indicates that for

many popular VET diploma courses, and within program rules, states and territories could direct students into

Commonwealth financed ‘loans’ for their training and far more limitedly ‘fund/subsidise’ diploma courses.

Table 3 VSL courses ordered by VSL-assisted enrolments, government-funded diploma and higher

VSL Jan to 30 Jun 2017 VSL 1 July to 31 Dec 2017 Gov-funded VET 1 Jan to 31 Dec 2017

Course name Enrolments Course name Enrolments Course name Enrolments

Diploma of Nursing 3,584 Diploma of Nursing 5,925 Diploma of Early Childhood Education and Care

67,534

Diploma of Early Childhood Education and Care

1,647 Diploma of Community Services

2,451 Diploma of Leadership and Management

41,204

Diploma of Community Services

1,560 Diploma of Early Childhood Education and Care

2,333 Diploma of Business 27,432

Diploma of Screen and Media

1,475 Diploma of Screen and Media

2,090 Diploma of Community Services

18,524

0 5 10 15 20 25 30 35

Mixed Field Programmes

Food Hospitality and Personal Services

Creative Arts

Society and Culture

Management and Commerce

Education

Health

Agriculture Environmental and Related Studies

Architecture and Building

Engineering and Related Technologies

Information Technology

Natural and Physical Sciences

Percentage of enrolments

VET FEE-HELP (2016) VET Student Loans (Jul-Dec 2017)


VSL Jan to 30 Jun 2017 VSL 1 July to 31 Dec 2017 Gov-funded VET 1 Jan to 31 Dec 2017

Diploma of Beauty Therapy

1,299 Diploma of Beauty Therapy

2,019 Diploma of Nursing (Enrolled-Division 2 nursing)

14,307

Diploma of Business 805 Diploma of Remedial Massage

993 Diploma of Project Management

13,578

Diploma of Counselling 743 Diploma of Business 985 Diploma of Nursing 13,292

Diploma of Remedial Massage

676 Diploma of Accounting 760 Diploma of Accounting 12,196

Diploma of Music Industry

662 Diploma of Counselling 746 Diploma of Building and Construction (Building)

11,961

Diploma of Visual Arts 498 Diploma of Music Industry

657 Advanced Diploma of Leadership and Management

10,880

Diploma of Accounting 491 Diploma of Business Administration

607 Diploma of Hospitality Management

10,326

Diploma of Sport Development

431 Diploma of Visual Arts 577 Diploma of Beauty Therapy

8,403

Diploma of Business Administration

400 Diploma of Information Technology Networking

536 Diploma of Business Administration

8,253

Diploma of Building and Construction (Building)

390 Diploma of Sport Development

533 Diploma of Remedial Massage

7,137

Diploma of Graphic Design

389 Diploma of Youth Work 522 Diploma of Human Resources Management

7,118

Diploma of Information Technology Networking

345 Diploma of Building and Construction (Building)

521 Diploma of Financial Planning

6,804

Diploma of Event Management

344 Diploma of Graphic Design

502 Advanced Diploma of Translating

6,737

Advanced Diploma of Building Design (Architectural)

339 Diploma of Leadership and Management

499 Diploma of Counselling 6,391

Diploma of Youth Work 333 Diploma of Event Management

470 Advanced Diploma of Translating

6,061

Diploma of Leadership and Management

306 Advanced Diploma of Building Design (Architectural)

460 Diploma of Youth Work 5,415

A second comparison of interest is between VET and HE for VET AQF 5/6 enrolments under the VET Student

Loans program and those in HE AQF 5/6 sub-bachelor courses. This is less simple, not only because VET Student

Loans data are as yet so limited, but also because unlike practice in VET, names of higher education courses are

institution-specific. The following is then a proxy comparison.

Public websites were inspected of some ten higher education institutions regulated by TEQSA (including nine

universities with associated colleges specialising in sub-bachelor associate degrees and diplomas), representing

examples from eight jurisdictions. Advertised courses with varied and differing institution-specific titles were

noted. A summary is shown in Table 4: this content was built from on-line course advertising content that

displays a broad discipline area, and not by using a national VET qualification name as in Table 3.

Courses offered include associate degrees and diplomas (AQF 5/6). Separately (and not regarded as sub-

bachelor) foundation entry programs are also advertised (e.g., languages; preparing for study at university).


Table 4 Scan of associate degrees and diplomas offered by higher education providers

General discipline area Examples of sub-specialisation associate degrees and diplomas

Arts Design and Innovation, Journalism, Media Arts, Design Fashion, Illustration, Music, Song Writing, Music Production, Writing and Publishing

Business Finance, Commerce, Accounting, Leadership and Management, Marketing and Communication, Hospitality Management

Education Early Years, Social Science, Social Work

Heath science and science Nursing, Pharmacy, Psychological Sciences, Health Information Management; Biomedical sciences, Veterinary Nursing

Engineering Architectural Studies, Design, Engineering and Building Design Management, Civil Engineering, Aviation

Information and communications technology

Website Development, Information Technology Networking, Business Informatics, Health Network and Software Engineering

Law Para Legal, Legal Practice, Policing and Criminal Justice

Observations

This evidence clearly indicates significant overlap of high/popular course enrolments across the VET/HE AQF

5/6 boundary.

A longer track record of the VET student loan program over time will allow more comprehensive and meaningful

comparisons of the uptake of VET diploma vs HE sub-bachelor courses.

While the preceding data and observations point to significant overlaps, as well as some areas of

differentiation, such a conclusion risks being too superficial in not examining at deeper level what is known of

institutional marketing, student choice, study intent and post-study outcomes: that is, the promises, purposes

and benefits of courses. This is now explored.

Comparing marketing and student choice There are common themes in the marketing to students of educational benefits and skills for jobs in both VET

diploma-level courses and above, and HE sub-bachelor courses. The overall pitch and rhetoric in presenting

benefits of sub-bachelor programs are much the same as those long espoused by vocational education providers.

Universities have significantly greater marketing power in offering sub-bachelor courses in like or similar fields

of education to VET courses at diploma level and above. Students are persuaded to choose higher education for

reasons of prestige and opportunity to jump into second year from university colleges. This may suit some

student aspirations.

Advertising is directed at students who either did not get into a university course as their first preference or

who do not have an Australian Tertiary Admission Rank (ATAR). It can include targeting students seeking a

pathway into undergraduate degrees or just new skills or a career change. Entry qualifications may include year

12 or a certificate III or IV. Program duration is between twelve and twenty-four months full time for diplomas

and associate degrees respectively.

Many such courses are designed to allow direct entry to and articulation with like university courses, linked with

potential entry into second year. In some instances, guaranteed entry between a TAFE and university (or its

college) is featured, and there are a few examples of dual awards of VET diploma and sub-bachelor awards.

Funding may include access to HELP financial support, subject to relevant funding rules.

Universities also have a further advantage in their ‘self-accreditation’ status and curriculum agility, and are

able, if they choose, to work ever more closely with industry. Registered Training Organisations (RTOs)

https://www.rmit.edu.au/study-with-us/levels-of-study/undergraduate-study/associate-degrees#collapseOne



http://www.canberra.edu.au/future-students/courses/pathways/domestic-students/diplomas/diploma-of-health

http://www.canberra.edu.au/future-students/courses/pathways/domestic-students/diplomas/diploma-of-health

http://www.canberra.edu.au/future-students/courses/pathways/domestic-students/diplomas/diploma-of-network-and-software-engineering


including TAFEs by contrast are greater reliant on (or at worst anchored by) timeliness in the development of

training package qualifications, or accredited courses as approved by under regulation requirements..

Differing educational/training intent and student pathways

Besides prestige and opportunity, there are multiple other considerations as to why students may pick a

program at either a VET or HE provider at AQF levels 5/6. One major factor is cost where students may enrol in

courses, not because of educational/training benefits that are best suited to them, but for reasons they

perceive as financially the most favourable. Students, and indeed providers, will move to where they believe

they will be best funded. Any inequitable funding policy (such as loan fees - see below) and/or administratively

burdensome process risks distorting student choices.

The other major factors that steer student choice are personal aspirations. Students may either choose learning

for academic interest and intellectual pursuit, or for job-relevant applied knowledge and skills acquisition. A

combination of both is common, and this typically depends on students’ age, prior qualifications, work-

experience and employment status.

Evidence from VET AQF 5/6 students

Total VET students and courses data (NCVER, 2018b) show that of the 512,637 VET diploma program enrolments

(both full and part time) some 52.3 per cent were students who stated they were a full or part-time employee,

or self-employed, or an employer. Some 17.2 per cent were unemployed and seeking full or part time work.

These students were motivated (based on the reasons they selected for their subject enrolments) by factors

such as ‘get a better job or promotion, to try a different career, requirement of my job, wanted extra skills for

my job, to start my own business’.

Evidence from the 2017 Student Outcomes Survey (NCVER, 2017) for VET graduates who completed a diploma

and above indicated that after training some 79.5 per cent were employed, 31.8 per cent were enrolled in

further study and 14.1 per cent were studying at a university.

Portfolio budget papers state that the “proportion of VET Student Loans students studying for job or business-

related reasons is expected to be 60% (against a target of 80%) … [and] this is the result of a shift from students

studying for job-related reasons to students studying to get into another course of study (approximately 20 per

cent), consistent with the high volume of VET Student Loan students in courses with a direct pathway to a

degree level course” (DET, 2018c, p. 50). This indicates that a higher proportion than expected of VET Student

Loan students appear to have higher education, rather than employment, as their longer-term study purpose.

Evidence from HE AQF 5/6 students

The evidence from Graduate Outcomes Surveys (2016 and 2017) (Norton, 2017) indicates that about 56 per cent

of sub-bachelor graduates (comprising all associate degrees, advanced diplomas and diplomas) were engaged in

ongoing further study (as high as 60 per cent for diploma graduates), and that more than 80 per cent of those

that enrolled in further study were in bachelor (AQF 7) and higher qualifications.

Close to double the percentage of HE AQF 5/6 graduates, then, compared with VET AQF 5/6 graduates, are in

further study. When asked if their training is important or very important to their work, about 80 per cent of

VET AQF 5 diploma graduates rate the value of their training at this level of importance, compared with only

about 22 per cent of HE AQF 5 diploma graduates. The HE diploma students are by comparison less likely to

consider their qualification as relevant to employment, a response that probably reflects the differing purpose

and perceived benefits of VET and HE diplomas.

Observations

In summary, some qualification pathways spanning VET and HE have a clearer line of sight between

training/education and occupational purpose. This trajectory presents an opportunity for both intermediary


stand-alone qualifications in evolving and emerging jobs as well as supporting tiered-levels of professional

qualifications and job progression. This might apply in fields such as engineering, design/architecture, IT

technologies, management/finance, nursing, etc. Qualification outcomes in such instances may be linked to

professional registration and credentials. More effective transitions between VET and HE sectors may require

fresh approaches to best joint practice in pedagogy, combining knowledge/skill teaching and assessment

underpinned by a stable continuum of public funding/financing designed to span the tertiary education system.

By contrast, other AQF 5/6 qualifications, such as HE diplomas (AQF 5), may provide more academic pathways

(equally meritorious) to higher learning, or be used as valued adjuncts to other professional pursuits, an

example being foreign language diplomas. Such sub-bachelor courses may then provide articulation into higher

AQF levels but by their purpose have little relation to industry need. By contrast, VET diplomas (AQF 5) are built

more for vocational purposes, with employment as the generally intended outcome.

Comparing training and educational institutions Data

The VET Student Loans program is limited to a list of courses each tied to one of three levels of funding and

delivered only by approved providers. By comparison, publicly funded sub-bachelor courses are limited by

designated numbers of Commonwealth Grant Scheme (CGS) places as agreed between universities and the

Commonwealth (unless students choose to enrol as fee paying, having access to FEE-HELP support with

approved providers).

A total of 144 providers approved for VET Student Loans operated during the period 1 July to 31 December 2017

and included 23 TAFEs, 12 other public organisations (including Table A university providers) and 109 private

providers (DET, 2017i, p. 4). Providers reported as having sub-bachelor students in 2016 included 10 TAFEs, 38

universities (Table A and Table B providers under the Higher Education Support Act, including dual sector

providers), and 47 non-university higher education providers (NUHEPs).

In the full year 2017 a total of 211 registered training organisations operated as approved providers for VET

Student Loans, but only 155 had students who accessed a loan. The 211 included 23 TAFEs, 14 other public

organisations (including Table A providers), and 174 privates (DET, 2018e, p. 5).

Observations

Some education and training providers straddle both VET and HE sectors, having enrolments at AQF 5/6 levels as

they are approved and funded to offer both VET Student Loans courses and sub-bachelor courses. A cross-tally

of these institutions is shown in Table 5. For historic comparison, a cross-tally for VET FEE-HELP is shown as

well.

Table 5 Providers that were registered as both higher education providers and approved as VET Student Loans providers (and historically VET FEE-HELP providers)

Public universities Private universities NUHEPs

VET Student Loans* and higher education

10 (including dual sector providers)

2 24 (including 11 TAFEs)

VET FEE-HELP (2016) and higher education

10 (including dual sector providers)

1 32 (including 11 TAFEs)

* Out of the 167 approved VET Student Loan providers (as of 14 May 2018).

Source: author’s analysis based on data from Department of Education and Training (2017a, 2018a, 2018d)


Providers and relationships across the VET/HE boundary

Table 5 shows some thirty-six institutions straddling the VET/HE boundary, able to offer VET courses financed

by VET Student Loans and potentially offer sub-bachelor courses, with public universities having access to CGS

places. Most of these providers reported students studying HE sub-bachelor courses in 2016, with the exception

of four TAFEs, five other NUHEPs and two universities. These institutions would be registered and accountable

to two regulators.

Content on public websites shows some examples of productive inter and intra-institutional collaborations at

local levels between education providers, supporting students to benefit from both sectors with designed

pathways and articulation, a few with guaranteed entry or offering dual qualifications.

These appear to be cooperatively negotiated ‘ground up’ between institutions, not facilitated by policy ‘top

down’. Two recent such examples were highlighted in the Halsey Report (2018, pp. 52-53) concerning courses at

La Trobe University and Central Queensland University. Students (if they are aware of all this) pick what suits

them best for reasons of personal motivation and cost.

At least eleven universities are approved as VET student loan providers and also have contracts for HE

‘designated places’. This provides potential for two student pathway entry arrangements - both at AQF 5/6.

Comparing public funding and financing Funding for VET level AQF 5/6 diplomas and advanced diplomas

Dissecting and quantifying all funding sources, public and private, for such training is problematic through lack

of available information. This makes it difficult to estimate the overall costs to all governments, especially

where there are costs (and cost sharing by governments) of future doubtful debts from unpaid student loans.

The differing funding sources for training are as follows.

Courses may be state/territory subsidised as per jurisdiction-specific subsidised training lists. The offered

courses and levels of subsidy (and indicative total price) are the subject of differing public disclosure

practices.5 The total subsidy costs for all governments of their VET AQF 5/6 enrolments are unknown. The total

out-of-pocket costs to students are also uncertain.

Courses may also be supported by the Australian government financing through student loans, with the national

VET Student Loans program commencing in January 2017. This program is designed to be of the highest quality

and is limited to selected approved providers, a legislatively defined course list and capped public financing at

three levels of $5,000, $10,000 and $15,000 for the three course categories (other than exceptions).

Students may enrol on a full-fee-for-service basis and trigger a 20 per cent loan fee if they borrow for such a

purpose. Students whose enrolment is also partly subsidised by a state or territory government do not incur such

a loan fee (DET, 2017f, p. 4), seemingly regardless of the (minimal) quantum of subsidy. Where an employer

might similarly subsidise a student employee’s enrolment, perplexingly, the student still incurs a loan fee.

Finally, courses may be undertaken on a full-fee-for-service basis and be privately funded. There is no direct

cost to government (other than if such students attend a publicly owned TAFE, with such costs then presumably

recovered by fees).

The financing and expected achievements for the VET Student Loans program are shown in Table 6. This table

shows portfolio program expenses (assumed but not stated as interest and doubtful debt) and indicates a

modest expansion in program expenses over the forward estimates.

5 As one example NSW lists in its ‘Smart and Skilled Prices and Fees V8.1’ a ‘student fee plus subsidy to equal a qualification price’, that includes some 200 diploma courses, whose student enrolment and costs are not known: https://www.training.nsw.gov.au/forms_documents/smartandskilled/prices_fees/prices_fees_v8.1.pdf (accessed 26 June 2018).

https://www.training.nsw.gov.au/forms_documents/smartandskilled/prices_fees/prices_fees_v8.1.pdf


Table 6 Program expenses VET Student Loan program (DET, 2018c, p. 40)

2017/18 Est. actual

$’000

2018/19 Budget $’000

2019/20 For-est. $’000

2020/21 For-est. $’000

2021/22 For-est. $’000

VET Student Loans Act 2016 VET Student Loans

191,144

251,333

268,012

275,243

276,892

Early reports of the VET Student Loans program indicate the amount paid to approved course providers in

respect of VET Student Loans approved for students studying eligible courses was $78,131,044 (January – June

2017) (DET 2017h, p.5), and $114,147,477 for the reporting period (July to December 2017) (DET 2017i, p.5).

Public funding and financing of VET AQF 5/6 courses is complex, being the sum of (unknown) state/territory

government subsidies of VET diplomas and higher-level VET qualifications as well as Australian government-

financed VET Student Loans (some with state/territory subsidy), available at 211 approved providers (at 4 May

2018). The amount paid to course providers in respect of VET Student Loans approved for students studying

eligible courses in 2017, was $200,335,628 for full-year 2017 (DET 2018-e, p.6). Of the 211 approved course

providers that operated during 2017, 155 had students who accessed a VET Student Loan.

Portfolio budget papers 2018/19 state the VET Student Loan program had administered expenses appropriation

as shown in Table 6. It is difficult to reconcile levels of provider payments in 2017 with the stated estimates of

program expenses in Table 6 (assumed to include interest and unpaid loans).

Legislation is presently before the Senate to split VET student loan debts from other forms of HELP debt by

moving the legislative basis for VET Student Loans from the Higher Education Support Act 2003 into the VSL

Student Loans Act 2016. This might have the impact of changing the basis of risk rating of loans for VET courses

(when excised from HE HELP debt) and hence potentially adjust cost-sharing arrangements across governments.

Funding for HE level AQF 5/6 sub-bachelor courses

At the sub-bachelor level ‘limited funding (CGS places) [are] provided for students enrolled in … sub-degree …

programs based on Funding Agreements with public universities’ (DET 2017c, p. 47). The Commonwealth enters

into agreements with higher education providers for designated places for sub-bachelor qualifications that are

categorised into funding clusters. There are eight such discipline-based funding clusters (summarised in Table

7). Units of study are allocated to funding clusters and student contribution bands by field of education.

The Commonwealth contribution (see Table 7) as well as a maximum student contribution (not shown here) are

explicit. Institutions then decide the level of student contribution (up to the maximum allowed), with the costs

to students then potentially covered by HELP financing.

Table 7 Sub-bachelor funding cluster and Commonwealth contribution

Funding cluster Commonwealth contribution

Funding cluster 1 Law, accounting, administration, economics, commerce

$2,120

Funding cluster 2 Humanities

$5,896

Funding cluster 3 Mathematics, statistics, behavioural science, social studies, computing, built environment, other health

$10,432

Funding cluster 4 $10,855


Education

Funding cluster 5 Clinical psychology, allied health, foreign languages, visual and performing arts

$12,830

Funding cluster 6 Nursing

$14,324

Funding cluster 7 Engineering, science, surveying

$18,240

Funding cluster 8 Dentistry, medicine, veterinary science, agriculture

$23,151

Inspection of 2018 bilateral Commonwealth and institutional agreements has allowed an aggregate estimate of

sub-bachelor designated places and grant outlays. This shows an estimate of 18,847 designated places6 at an

outlay of $205.4 million in grant funds contracted to 36 selected universities (Table A providers) in April 2018,

excluding one institution.7

Nursing is substantially funded through designated places (1,219 places, $17.5 million in 2018), which is of note

given that the VET Diploma in Nursing showed the highest VET Student Loan enrolments in 2017. A further

recent example is the University of Tasmania being funded $41 million for 500 additional sub-bachelor

Commonwealth-supported places in 2018 and 1,000 additional ongoing places from 2019 to deliver more

learning and employment opportunities for students (Abetz, 2018). Total domestic enrolments in such sub-

bachelor places in 2016, two years before, were reported as 29,917, as shown in Figure 1 above.

Finally, other students (both domestic and international) enrol in sub-bachelor programs on an entirely fee-

paying basis (for example at private providers). Domestic students may access HELP financing if the provider is

approved for FEE-HELP and in such cases there is a 25 per cent loan fee.

Observations

Public funding/financing and administration

Different public policies and financing/funding programs support education and training in either of VET

diplomas/advanced diplomas or HE sub-bachelor courses, both at AQF 5/6.

At the Commonwealth level, on present (early) evidence, the VET AQF 5/6 side of the boundary is supported by

a loan finance program linked to a legislated list of courses with an estimated actual cost in program expenses

of $191 million in 2017/18 and a budget of $251 million in 2018/19 (per portfolio budget papers). The amount

reported as paid to course providers in respect of VET Student Loans approved for students studying eligible

courses in 2017, was $200,335,628 for full-year 2017.

The early reports of the VET Student Loans program (2017 data) show a more tightly targeted program which, to

date, has far fewer enrolments than there were under VET FEE-HELP. In the main this is attributable to

deliberate quality and containment policies. Early indication is that subject pass rates are sound (Andrews,

2017). The program is designed to be “job-targeted, high quality, cost controlled”, this born from the past dire

experiences of VET FEE-HELP.

An unknown is the quantum of government funding in training subsidies paid by state and territory governments

for enrolments in VET AQF 5/6 courses under their jurisdictional training lists. Such subsidies may also support

enrolments in a VET Student Loan listed course, with the long-term consequence that costs of any future unpaid

loans will be shared between governments.

6 Designated undergraduate places include places in associate degrees, advanced diplomas, diplomas and enabling courses but not medical places 7 The University of Notre Dame was allocated 416 places for which funding was not calculable as undergraduate sub-bachelor and undergraduate bachelor places could not be distinguished for non-Table A providers.


Conversely, on the HE AQF 5/6 side of the ‘boundary’ a Commonwealth grant program supports contracted

universities. Designated places are limited by a quota in field of education codes within assigned funding

clusters, for which the maximum student contribution is also specified. In 2018 the outlay in grants to

universities is estimated as at least $205 million. Students may take on HELP finance to cover additional tuition

costs and again any unpaid deferred loans are a future cost to government.

Based on the above, the approach of the Australian government differs on either side of the VET/HE boundary:

there are training loans for students enrolled in legislatively specified VET AQF 5/6 courses and grant places

plus loans for students enrolled in quota-limited AQF 5/6 courses available at universities.

There are also significant costs to the Australian government in administering parallel programs: for example, a

recent proposed outlay of “$36.2 million over four years from 2018–19 (including $7.6 million in capital funding

in 2018–19) to fund implementation of a new IT system to support the compliance and regulatory arrangements

for the VET Student Loans program … This approach will deliver both efficiencies and better services for VET

providers and students” (Australian government, 2018, pp. 89–90). This expenditure is for a program that in the

full year 2017 had some 211 approved providers.

Implications and conclusions Differing policy viewpoints across sectors

The boundary areas between VET diplomas and above (AQF 5/6) and HE sub-bachelor courses (AQF 5/6) have

been the subject of recent policy debate. On sub-bachelor courses the national policy is clear, at least in the

mid-term. It now states:

The previously proposed expansion of the demand driven funding to Commonwealth

Supported Places (CSPs) in approved Sub-bachelor level diploma, advanced diploma

and associate degree courses will not proceed. Each university will receive an

allocation of Sub-bachelor CSPs in 2018, which will be documented in their funding agreement. From 2019, the Government will reallocate CSPs for Sub-bachelor courses

that focus on industry needs and fully articulate into a bachelor degree.

(DET, 2017b)

The initial policy proposal was contentious. The argument for the policy was exemplified by the submission of

Universities Australia:

Removing caps on Sub-bachelor places will help to fill skills gaps in the economy,

provide more choice for students, and provide an alternative route into a Bachelor

degree. Sub-bachelor qualifications are valued by employers because they equip

graduates with practical skills that can be applied immediately in the workplace. These

courses build student confidence and increase students’ potential to succeed. They are an excellent pathway to further degree level study.

(Universities Australia. 2017)

TAFE Directors Australia expressed opposition:


TAFE institutes across Australia are concerned about the potential distortionary effect

of the extension of Commonwealth Supported Places (CSP) demand-driven funding to

Sub-bachelor level qualifications. The proposal to extend CSPs to university Sub-

bachelor courses is duplicative and difficult to justify, from either a financial or efficiency perspective. Past experiences suggest that such a move would see a rapid

expansion of higher education delivery at the diploma and advanced diploma level,

which would displace existing public investment within the VET sector, and ultimately call into question the viability of TAFE. The proposed ‘test’ of industry relevance for the

courses and the approval by the Department and the Minister would duplicate the

industry engagement arrangements already in place in the VET sector.

(TDA, 2017)

These views summarise the contested boundary space. In the decision not to proceed with the extended

demand driven policy, an underlying issue may have been risking further increase in national HELP debt

(Ferguson, 2018).

An unresolved issue for universities in particular is the detail of how the policy of ‘focus on industry needs and

fully articulate into a bachelor degree’ will be made operational and whether associate degrees and diplomas

must meet both tests of industry need and articulation.

Related international perspective

Higher education/VET distortion and credential creep are claimed to be evident in the United Kingdom, where

universities have power through finances, prestige and marketing. Wolf, in critique of the UK experience states:

[U]niversities are thus well placed to expand their recruitment and the range of their

offerings, colonising areas of vocational education and training which were

traditionally the preserve of apprenticeship or of vocational schools and colleges. One policy option is simply to accept this: everyone should go to university, and all training

should simply take place there. It is a bad option – financially and substantively.

There are two key characteristics of universities which undermine their ability to provide good education and training in some areas. First, they are self-contained and

separate from the workplace. They cannot, for either financial or practical reasons, possibly keep up with all the changes which take place in a fast-developing industry –

the new machinery and techniques, the new markets, the emerging competitors. In

addition, because they are separate, their instruction takes place in environments which are not like the workplace. Universities use classrooms (even if the classroom

may be fitted out as a lab). They assess and mark people individually, which is the only

fair thing to do – and what students, very reasonably, demand – since people then go out into the world as individuals, with their individual degree results. When people in

work are asked about the type of training they have found most valuable, ‘on the job’

training with others, invariably comes out top and it is what universities cannot, by


their nature, provide. That is why vocational institutions which are genuinely close to

employers and the workplace are needed.

Second, university teachers however ‘vocational’ their speciality, make their careers as academics and researchers, not as practitioners of whatever profession, trade or

calling they teach. The tension, in university life, between teaching and research is a permanent one. Teaching is, ultimately, what universities exist to do, but research is

what they also do. It is what academics like to do and it helps to maintain the

universities’ (and their teachers’) ability genuinely to promote understanding and, critically, it is something on which one can reach fairly objective judgements about

people’s quality and abilities. So research and research publications inevitably get the

most attention from the ambitious and able.

(Wolf, 2015, p. 74)

Whilst such views are expressed in somewhat extreme terms, Wolf advocates the need to tilt Britain’s

education system back towards skills training (2017a, 2017b).

In responding to the Business Council of Australia’s thought-leadership ‘Future-Proof: Protecting Australians

through Education and Skills’ (BCA, 2017), Universities Australia (2018) write that:

… investing in education and research is the best way to support productivity and innovation, and to equip Australia for an era of rapid change. The Universities Australia submission proposes industry could partner with universities to (inter alia):

Jointly develop higher-end vocational programs in higher education;

Co-invest with universities in quality work placements, including internships, work-integrated learning (WIL) places and apprenticeships; and

Increase the number of apprenticeships offered business and industry.

This has traditionally been VET terrain, and the Universities Australia statement enters directly on to the

contested ground and ‘colonisation’ criticised by Wolf. This all might be seen as takeover by some, but as

innovation and opportunity by others. The Australian Technology Network of Universities assert their vocational

credentials to align their relevant HE qualifications to future jobs, advocating inter alia “competency based

teaching and assessment”, “pathways integrating employment and education”, “micro-credentials developed

with industry”, “closer industry/university collaboration via work integrated learning”. (Australian Technology

Network of Universities/PWC, 2018)

For the present

The VET/HE AQF 5/6 qualifications and their ‘boundary’ space presently operate under separate legislative,

funding/financing and regulatory regimes, including different accreditation paths for courses and qualifications,

and with separate public administrative costs. With regards to Commonwealth support, one program appears

dominantly loan based (with uncertain state and territory subsidies), the other dominantly grant based with

loan top-up. This picture is incomplete in detail as it does not include either costs of state and territory VET

subsidies or longer-term costs to governments of unpaid loans for VET or HE courses.

Present policy and funding arrangements appear to tilt student choice to the HE track. The most recent

evidence is that VET AQF 5/6 diplomas and above declined from 2016 to 2017, with lower total VET enrolments


at diploma and above (fall of 132,790 or 25 per cent) explained in large part by the switch from VET FEE-HELP

to VET Student Loans as well as a fall in government-funded VET diploma and above programs. By comparison,

there is some growth in HE sub-bachelor enrolments (increase of about 4,500 or 18% between 2015 and 2016).

To the extent that choice of course and costs drive student behaviour (assuming they are aware), the question

to be answered is: what is the quantum of direct public funding/subsidy from all governments plus longer-term

costs to government of any unpaid loans both sides of the VET/HE AQF 5/6 divide, and for this outlay, what are

the educational, skills and employment benefits to students and employers?

There are examples where the boundary is porous, with locally cooperating institutions providing student-

centric solutions and pathways that allow student progression. Overall, however, when considered from the

viewpoint of students seeking better combined educational and training opportunities to enter or advance in

the labour market, and employers wanting mid-tier professional graduates with better knowledge and critical

thinking capability, as well as higher-level technological skills - then the present national arrangements need

deeper examination. Present policy settings resemble the UK experience with a need to ‘tilt’ back to VET.

For the future

Transcending Wolfe’s strident view of HE colonisation of VET, there are even greater forces in global evolution

in institutional structures and education/training delivery systems, with technology leading and policy lagging.

Education futurists point to the forthcoming disruptive impact of internet-empowered education interlopers,

offering global reach in digital learning and corporate packaging of industry-endorsed ‘just when needed’

learning, including micro-credentials, which are forecast to impact on existing HE and VET providers (Halloran &

Friday, 2018). Such revolutionary change may not of itself be damaging to the national aspiration of high

quality, timely skills formation in the current and future workforce (Productivity Commission, 2017), provided

educational offerings such as micro-credentials are supplementary and not alternatives displacing full

qualifications.

Setting this world view aside, two important ongoing reviews are relevant to Australia’s education and training

future in this regard. The first is a review of higher education provider category standards (Birmingham, 2018)

which may amend institutional forms (perhaps by rethinking the definition of ‘university’), and the second a

national review of the AQF (DET, 2017e, p.29) for which an expert panel has now been appointed (Birmingham

& Andrews, 2018).

Contextual research in preparation for this review of the AQF (PhillipsKPA, 2018, p. 79) suggests the need to

review the positioning and descriptors of AQF levels 5/6 in VET and HE. As a preliminary observation and

summarising views of providers, it notes “ambiguities in having different qualifications on the same level, but

also about differentiation of student support payments for the same qualification dependent upon its

classification as ‘VET’ or ‘HE’” [and] “while funding and support payments may sit outside the sphere of

influence of the AQF they nevertheless potentially promote powerful distortions in the marketplace for

qualifications which is a core concern for the AQF”.

While any change and solutions are for the future, the evidence presented here shows an extraordinary edifice

of complex, differing and intertwined national and state policies, regulation and funding/financing covering a

national qualification policy framework that sets a boundary and overlap between two sectors within one

tertiary system. It illustrates the urgency of establishing more coherent and better integrated policies for the

tertiary education system, with the present set-up significantly disadvantaging VET.


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Acknowledgements:

The author acknowledges the review of initial drafts of this paper by Peter Noonan, Professor of Tertiary Education Policy, Mitchell Institute and Andrew Norton, Higher Education Program Director, Grattan Institute; data assembly by Dr Patrick Korbel, NCVER; and editorial assistance of Dr Kai Jensen, PolicyTrain.

https://www.universitiesaustralia.edu.au/Media-and-Events/media-releases/Universities-invite-business-to-work-with-higher-education-sector-on-policy#.Wv4voyDhUdU

https://www.universitiesaustralia.edu.au/Media-and-Events/media-releases/Universities-invite-business-to-work-with-higher-education-sector-on-policy#.Wv4voyDhUdU


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