Principles and obligations for government contracted training providers in Victoria

The Victorian government has published a “statement of expectations” of private RTOS contracted to deliver government-subsidised training under the Victorian Training Guarantee.

The government says the statement explains what is expected of contracted providers in service provision and business practice in terms of responsibilities and ethical behaviours. It also provides a framework to promote ethical day-to-day conduct and decision making says that providers are expected to:

• demonstrate a commitment to serving the public interest;
• be responsive to the needs of Government and the community;
• demonstrate accountability and transparency; and,
• demonstrate integrity and fairness.

The statement was shaped through consultation with training providers in partnership with the Australian Council for Private Education and Training.

With funding reforms announced last year, the Victorian government has asserted that there is now no substantial distinction between public providers (TAFE institutes) and private RTOs.  Certainly, that’s the case concerning funding, with TAFEs having had $300 million a year in funding for “comprehensive service provision” withdrawn.

This statement would seem to give force to that assertion, at least to the extent that it is a condition of funding that is actually monitored and enforced.

In its response to the Report of the Panel on TAFE Reform, which recommended the government “clearly define the community service obligations that it wishes to fund in the Victorian vocational training market and the process for identifying and costing them” (recommendation 18), the government agreed but said there are currently no such obligations.

This statement, taken with some provisions of the recently promulgated TAFE constitutions, sends a slightly confused message  – but that’s the nature of Victorian skills reform.

As recommended in the Roche report on Queensland TAFE, the Newman government has introduced legislation to create to establish a new TAFE Queensland as an independent statutory body.

Minister for education, training and employment John-Paul Langbroek said the new parent entity will come into being on 1 July 2013 to manage Queensland’s  13 TAFE institutes.   The government expects that under the new arrangements, Queensland’s TAFE institutes will be stronger and more responsive to the skills and training needs of students and industry.  

Langbroek says that, up until now, the government has been both a purchaser of training and a provider of training.

Through the Queensland Skills and Training Taskforce we undertook extensive consultation with industry and they told us that we should keep TAFE at arm’s length from the government to enable it to thrive in an increasingly competitive training market.

One of Langbroek’s first tasks in establishing the body will be to recruit up to nine board members with high level commercial experience and in-depth knowledge of VET for the TAFE Queensland board.

This board will determine the new organisational structure of TAFE Queensland so it is important that we have the right mix of commercial skills and experience, balanced with an understanding of Queensland’s rapidly changing training market.

In stark contrast to Victoria, while  Langbroek will appoint the interim CEO, all future CEO appointments will be made by the board to “reflect the independent nature of the new TAFE Queensland”.

There will be a 12 month transitional phase after TAFE Queensland is formally established on  1 July 2013, during which Langbroek says “it will be business as usual for all TAFE staff and students”.

See

Queensland’s blueprint for skills reform: the government’s response

The Victorian government gave $13 million in subsidies to private ­colleges that have since been closed down by regulators for “critical non-compliance” or have voluntarily relinquished their licences.

Victoria, under the Brumby Labor government, was the front-running jurisdiction for the demand-led training policies championed by Prime ­Minister Julia Gillard when she was education minister in the Rudd ­government. The system guaranteed a place to those seeking vocational ­training and produced a massive surge in enrolments, leading to budget ­blowouts.

The Baillieu government restructured the scheme and last year made politically unpopular cuts it said were justified, partly because of various forms of non-compliance.

Now documents obtained by The Australian Financial Review under freedom of information laws show that in ­Victoria alone, 19 private colleges, which pocketed a combined $13.6 million in government subsidies in the 2011-12 financial year, have since been deregistered by federal and state authorities.

At least nine were struck off for ­“critical non-compliance”. The biggest beneficiaries, C.A.R.E. Employment and Training Services and Vocational Training Group, each attracted more than $3.5 million in subsidies.

At least three others collected more than $1 million each in subsidies: Stefan Training Group ($2.08m), the Ashmark Group ($1.7m) and Trade Institute of Victoria ($1.2m). Trade Institute Victoria challenged the regulatory suspension and last week had its registration reinstated. Director Jing Jasmine Lin said the college has “taken legal action” and that “things had changed”.

Official documents show that $639 million in subsidies went to private colleges in 2011-12.

The approved providers list in Victoria, which featured more than 600 training organisations in 2011, now stands at 462.   Enrolments in “soft” courses dropped to 13 per cent after July 2012, from 31 per cent, after subsidies were cut.

The number of private training providers exploded in Victoria. Training through private institutions has grown by 47% between 2003-2012, and rose 40% in 2011-12 alone. In the same period, TAFE enrolments grew 13%  (up 8% in 2011-12).

South Australia, eight months into its own scheme, is battling similar problems to Victoria.  Out of 341 applications to join South Australia’s approved providers’ list, 151 were from interstate training organisations.  Enrolments have risen 26% since the scheme began.  Private colleges and non-TAFE SA training providers attracted the majority of these additional l 13,964 students, but not by much: 50.4%  compared with 49.6% .

The Australian Workforce and Productivity Agency (AWPA) has made a veiled attack on national training reforms, saying that dwindling funding rates are jeopardising quality and the ‘entitlement’ model prevents people from adapting to workplace change.

In its Future focus: 2013 National Workforce Development Strategy, the agency  says that while recurrent funding since 1999 has increased 31% for public primary schools and 20%  for secondary schools, it’s fallen 25% for vocational education and training.

AWPA says all jurisdictions except South Australia and the Northern Territory decreased their VET budgets last year. The trend “raises questions about ongoing quality”, its ‘Future focus’ report says.

The report says that while there’s been the Base Funding Review for higher education and the Gonski review for schooling, there’s been no equivalent process for vocational training.  There should be a federally commissioned review “to determine an appropriate price for the delivery of high-quality VET”, it says.

It reserves special criticism for jurisdictions which have cut their TAFE budgets.

TAFE institutes remain the bedrock of the national VET system, offering vital programs in industry areas and geographical locations that many other providers find challenging,”

TAFE Directors Australia CEO Martin Riordan said the call for a base funding review in VET was “not before time”.

It should have gone ahead of any promises for an entitlement scheme. I don’t think we need to wait for the government to look at it seriously as a recommendation that could be acted on quickly.

Open markets for training funds have crippled some commercial colleges, according to the private sector peak body ACPET, which says governments need to consider the impacts of their policies on private as well as public providers.

Skills reform implementation in both Victoria and South Australia has resulted in good private provider businesses going to the wall because governments do not fully understand the fee-for-service markets they are injecting government funding into, ACPET argues in its pre-budget submission to federal Treasury.

This is a serious issue which the commonwealth cannot absolve itself of. [It] needs to require state and territory governments to consider and account for the impact of skills reforms on both public and private providers.

ACPET CEO Claire Field says  ACPET strongly supports market reform of training, but the implementation needs to be handled carefully.

The last thing governments want to do is interfere with something that’s healthy and strong and people are prepared to pay for.

The ACPET submission says the latest intergovernmental funding agreement obliges states “to deliver more training with less funds”.

Nevertheless, Field argues that some courses were funded too generously under the SA model.   She said that if subsidies were reduced in areas of moderate skill need, such as business, fewer colleges would be tempted to offer training in those areas – maintaining the viability of high-quality full-fee courses.

Conversely, areas of great need to the economy – such as hard trades – needed to be funded more generously to discourage providers from cutting corners and inciting a “race to the bottom”.

Field praised the SA government for its efforts to calculate the true costs of training delivery in each discipline.  But she said a weighting for economic importance would complete the job

An extra $375 million will be spent on vocational education and training in Western Australia, the ACT, South Australia and Tasmania under the National Partnership Agreement on Skills Reform.  Approximately $28 million will go to the ACT, $127 million to SA, more than $39 million to Tasmania and $182 million to WA. An implementation plan was approved for the Northern Territory last year, providing an extra $18 million to the Territory.

The key elements of the $1.75 billion reform package include:

• a national training entitlement giving working age Australians access to a government subsidised training place for the first time;
• the expansion of interest-free loans to higher level VET qualifications;
• increased transparency through the My Skills website;
• the introduction of a student identifier for the nation’s VET system; and
• measures to raise the quality of skills training and increase completion rates.

Students in these jurisdictions will have access to training vouchers for certificate-level courses and income-contingent loans for higher-level diploma qualifications after governments agreed to reforms aimed at lifting quality and completion rates.  As part of the changes, students will in many cases be able to “spend” their training entitlement with either a public or private provider.

To gain access to funding states have been required to submit implementation plans in exchange for reward funding.

Agreements are yet to be reached with the New South Wales, Victorian and Queensland governments on training reform in these states.

Former Commonwealth minister Chris Evans said recent decisions by governments in these states have seen course and campus closures across the TAFE sector, generating widespread community concern and threatening to undermine the national reform agenda.

The final report of the Queensland Skills and Training Taskforce, established in June to advise the government on reform of the VET sector, differs little from its interim report in September.   It recommends a radical overhaul of industrial arrangements, and the closure of 38 of the state’s 82 TAFE campuses (without specifying which ones).  The final report does, however, propose a timetable for transition to full contestability for public funding, beginning 1 July 2013 on a limited basis, with full implementation from 1 July 2014.  The Taskforce recommends that the actual amount of contestable funding be subject to “finalising the cost of the TAFE owner’s base cost”, which the Taskforce describes as “the ‘non-market’ services of the public provider”, presumably something like the $190 million in comprehensive service funding the Victorian government has cut from its TAFE system.

The Taskforce also recommends the establishment of a Queensland Skills Commission, subsuming Skills Queensland and taking over many of the current responsibilities of the Queensland education and training department,  The Commission would:

• conduct/commission labour market research and analysis to identify skills demand that in turn drives productivity growth in the broader economy
• design solutions that meet the economy’s skills needs in the short, medium and long term and support small, medium and large enterprises
• invest public funds into skills formation leading to skilled employment outcomes for the State within an increasingly contestable VET funding environment.

The Taskforce “agrees that there is a role for a public provider of VET in Queensland and that role is one of training for economic and employment priorities” (it would have been astonishing if it had concluded otherwise) but it clearly sees this as a somewhat diminished role.

It recommends the establishment of a “TAFE Queensland “parent entity” outside the current department structure as a statutory body, in a way that provides a potential future opportunity to transition to a more commercially focused organisational form (including potentially a Government Owned Corporation)”.  This would incorporate the 11 TAFE institutes that currently come under the department although it’s not clear how the two institutes that are already statutory authorities (Southbank and Gold Coast) would be treated under this model.

The Taskforce reports that its consultations “identified an almost universal view that the current industrial relations arrangements restrict flexibility in terms of hours of work and staff utilisation, create uncompetitive costs and are inconsistent and out of date with current training arrangements and strategies.  It recommends sweeping changes to the industrial relations framework to deliver improvements in flexibility and productivity.

Together with the “rationalisation” of the TAFE campus network (that is, closure of up to 38 existing campuses/sites), the report  recommends  institutional mergers to create from the the existing 13 institutes five geographically focused institutes (including a single Brisbane Metropolitan institute) plus SkillsTech Australia as the new parent entity’s lead subsidiary on trade skills training.  Should the CQU/CQIT merger not proceed, CQIT could form another region.  The Taskforce does acknowledge that, “appropriately, these are decisions for Government and the new TAFE Queensland parent entity.”

Reactions

Queensland Training Minister John-Paul Langbroek said the government will consider “the potential ramifications” of the recommendations.  He didn’t want anyone “jumping to conclusions that recommendations from an independent taskforce are ones that the government will just accept.”

The Commonwealth minister Chris Evans expressed concern about the extent of  proposed campus closures and a possible decrease in students and increase in the cost

To cut the capacity of Queensland TAFE in half would seriously undermine the national training effort and see many students denied the opportunity to gain the skills and training needed in our modern economy.

TAFE Directors Australia cautiously welcomed the report, particularly relating to the overall governance reforms (although not commenting on possible institutional mergers).

• While a “tight” two-year transition to full contestability is proposed, TDA stresses the caveat of a base funding review of the public provider (TAFE) network would be required before changes proceed.
•  TDA will seek further detail on the Queensland Taskforce proposals for a record 38 campus closures – mainly across regional Queensland – and investment to sustain an increase in skills delivery to industry.
•  TDA noted that the Taskforce Report was “openly critical of Queensland’s dwindling financial commitment to skills, the need to improve school to skills pathways, and the need for greater and more effective investment”.

The Taskforce was attracted to the recommended [by the Queensland department of education and training] rationalised structure of TAFE institutes under a TAFE Queensland parent entity in Figure 18 (page 68). Under this structure there would be an initial five geographically focused institutes (including a single Brisbane Metropolitan institute) plus SkillsTech Australia as the new parent entity’s lead subsidiary on trade skills training.

Recommendation 3.12: A rationalised structure of TAFE institutes under a TAFE Queensland parent entity that could have the following characteristics (as presented to the Taskforce by the Department of Education, Training and Employment):
- Far North Queensland Region (from 26 to 15 campuses)
- Fraser and Sunshine Coast Region (from 13 to 8 campuses)
- Western Corridor Region (from 16 to 11 campuses)
- Brisbane Metropolitan Region (from 15 to 5 campuses)
- Skills Tech Australia (from 6 to 2 campuses)
- Gold Coast Region (from 6 to 3 campuses).

The proposed functions of the Skills Commission would be to:

Provide skills and workforce  policy advice and recommendations to the Minister and Government, including strategic skills policy leadership and engagement at state and national levels.

1. Re-evaluate and improve the information brokerage arrangements of the Industry Skills Bodies Network and ensure their activities align with an industry driven training market.
2. Gather, elicit and synthesise industry intelligence through multiple sources such as expert research, local communities and  industry skills bodies.  Map the current and emerging vocational education and training priorities of industry and employers, and their ranking, within and across all sectors of the Queensland economy.
3. Monitor labour market and training system trends, determine appropriate subsidy levels and develop consistent system performance data.
4. Manage and coordinate labour market research.
5. Develop rolling three-year strategic training and employment investment plans to address those skilling priorities, informed by industry, and as directed by the Skills Commission Board in accordance with the policies of Government and a demand driven training system.
6. Determine relative training investment allocations for those priorities, and purchase from, and monitor performance of, VET providers accordingly.
7. Monitor, analyse and report on training and skilling outcomes achieved, and proactively develop interventions to mitigate emerging risks and failures.
8. Direct and/or manage and invest all training and employment funds of government for effective skilling outcomes for industry and individuals, with a focus on employment and economic priorities in a cost-effective and accountable context.
9. Establish effective industry-engagement relationships and arrangements with all segments of industry including small and medium enterprises consistent with these functions.
10. Progressively leverage wider industry co-investment  in  and/or ownership  of  the training system.
11. Broker industry take-up of more hands-on involvement in the training system (e.g., at RTO Board level) in hosting trainers for industry currency and professional development, participation in training delivery either by industry personnel or use of industry facilities, etc.
12. Conduct bi-annual skills forums open to all industry and employer groups to develop a unified view on the Queensland economy’s skills needs.
13. Provide annual reports to the Minister and Government on outcomes achieved, emergent barriers and policy considerations, and future priorities and opportunities to inform wider policy considerations of Government.
14. Implement any other approved recommendations of the Skills and Training Taskforce as directed by the Minister.

The TAFE Queensland parent entity would provide the following for the network of subsidiaries it
leads:

• streamlined interface with the Minister (owner) for the purposes of managing the network of public providers from a state-wide perspective
• eliminate the need for a departmental function that has responsibility for collating a statewide view of the public provider in terms of performance and outcomes
• a lean administrative centre which incrementally transitions-in historically centralised departmental functions and support mechanisms relevant to TAFE Queensland
• an ability for state-wide and meaningful industry engagement in the management and direction of TAFE Queensland as a whole, along with the ability for industry representatives to have specific input into subsidiary operations via local Board appointments
• an  elevated status of the public provider in terms of negotiating with the purchaser and funder of Government training investment
• a platform for active contribution from the public provider into policy development and consistent engagement
• guiding the establishment of relationships with other training providers and education sectors
• ensuring a focus on priority industries
• encouraging a franchise approach to training resource development to reduce duplication of effort across the network
• leading collaborative  approaches to ensuring fit for purpose operational enablers and achieving economies of scale in areas such as core training IT systems (for example student management systems), and shared service arrangements for transactional processing
• the coordination and promotion of digital/on-line delivery training by its subsidiaries
• strategies for possible new delivery locations, aligned to industry demand.

The Australian Chamber of Commerce and Industry is losing faith that national skills reform will deliver a simpler, higher quality system for employers and students after NSW became the latest state to announce its plans.

The NSW government  outlined a cautious approach to deregulating the vocational education and training sector, insisting the state had learned from the Victorian experience and consulted heavily with industry.

NSW Education Minister Adrian Piccoli said government-subsidised training would only be available in skills shortage areas and through approved private providers, allowingNSW to avoid a budget blowout similar to that which occurred in Victoria, where students flocked to personal fitness and other low-level courses that were not aligned to labour market needs.

We are determined that we will not make the same mistakes they have made there.

But ACCI employment, education and training director Jenny Lambert says the jigsaw-like changes occurring across the states are confusing for employers and students, and there is no sign as yet of a nationally consistent training system, which was the intention of the $1.75 billion National Partnership Agreement on Skills Reform, signed in April and to be delivered by 2014.

Lambert also warned against going further down the route of student demand-driven, uncapped systems for post-school education.

We certainly believe an uncapped, student demand-driven system has got to be significantly restricted.  It needs to be capped and directed to where the skills needs are.

David Collins, the general manager of state training services in the NSW Department of Education and Communities, said the government would work with industry to make sure that subsidised courses on offer were in line with skills shortages.

We will be working with industry to establish a skills list which will really define the scope of the qualifications that will be funded under the entitlement.

In this illuminating slide show, sourced through the TAFE in Victoria news site, the Australian Education Union suggests that the skills crisis/deficit in the Victorian workforce was massively overstated to justify skills reform – a classic case of “policy-based evidence”.  It’s a pretty unarguable proposition actually – and was pointed out to officials at the time (as was the fact that the school leaving age had been increased from 16 years to 17 years old).  In making the case for skills reform, in April 2008, the then Victorian government asserted:

Currently, there are more than 1.4 million adult Victorians who do not hold any post school qualification and – if training continues at its current rate – we will face a shortfall of 123,000 people at the advanced diploma and diploma levels by 2015.

But of those 1.4 million “adult Victorians” about half didn’t hold a qualification because they were still at school, in TAFE or at university and another nearly quarter of a million were 55-64 years old and so at or approaching the conventional retiring age and quite probably not all that interested in undertaking training.

See

The manufactured crisis and the need for skills reform

The Scan has published a great many posts on the negative aspects of VET reform in Victoria – but there’s been a lot to publish because commentary and analysis has been overwhelmingly negative.  In this edited opinion piece from Campus Review, Claire Field, CEO of the Australian Council of Private Education and Training (ACPET), makes the case both for the need for reform and an enhanced role for private providers and points to the positive outcomes:  increased participation in training,  not least among equity groups, and strong employment outcomes.

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This post has been removed at the request of Campus Review

To inform future policy decisions about VET,  education and training consultant John Mitchell has collated 22 of the articles he has written for Campus Review over the last year, on the concerns raised by ‘VET reform’ and the cutbacks to TAFE.   Many of the articles examine, either directly or indirectly, three pillars of the model of VET reform, particularly:

1. ‘market design’, that is the proposition that an effective market for vocational education and training (VET) can be designed and implemented government officials, while still meeting industry skill needs
2. ‘student entitlement’, that is providing eligible students with access to a subsidised training place of their own choice, with an approved training organisation
3. ‘contestable funding’, that is opening up to tender more and more of the public funds for training, so that TAFE and private registered training providers compete for those public funds.

The articles show that, over the twelve months from October 2011, VET reform based on these pillars remained elusive, as VET reform requires some foundational elements not yet in place, including well-informed consumers,well-resourced regulators and effective barriers to profiteering providers.

From unease to alarm: escalating concerns about the model of‘VET reform’ and cutbacks to TAFE

Governments have almost tripled their funding of private training since 2007 from about $410 million in 2007 to $1.4 billion last year. catapulting TAFEs towards minority provider status, a new NCVER report reveals.

Victoria led the pack, with payments to private colleges almost quadrupling to about $500m under the state’s open training market, according to the report from the National Centre for Vocational Education Research.

However, private payments also increased sharply in three other states, rising 196% in Queensland, 181% in Western Australia and 165% in South Australia.

Nationally, non-TAFE funding has risen almost 120% during the past two years alone.

University of Melbourne researcher Leesa Wheelahan said the vocational training landscape had shifted with TAFE’s share of publicly funded students declining from more than 72% in 2009 to under 60%  last year.

Dr Wheelahan said TAFE was at risk of becoming “so residual that it loses the capacity to meet the needs of industry, communities and students”.

Queensland’s workforce development advisory body, Skills Queensland, says the Commonwealth government is justified in claiming that it has increased overall funding for training.  But CEO Rod Camm also says Western Australia and Victoria are right to say the Commonwealth was providing less money to support regular state training activities.

“There is no question that the current [agreement], over the length of the partnership, offers less money to the states,” according to Camm. “That’s a problem, because the states are responsible for keeping up training effort. The concept of receiving less money is a really difficult position for a state to bear.”

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The Skills for Australians package announced by the Federal Government this week will provide important education and training opportunities for regional Australians, according to the Regional Universities Network (RUN).

The Chair of RUN, Professor David Battersby, said that in its report the government had recognised that education and training were key to regional development and productivity.    “Improving vocational education and training (VET) will help regional Australians attain stable and well paying jobs,” Professor Battersby said.

“Compared to higher education, vocational education and training  (VET) has almost double the proportion of students from low socio-economic backgrounds. About 42% of VET students are studying in the regions and are disadvantaged.

“The proposal to tie significant funding to agreed improvements in training outcomes, including in skills shortage occupations in the regions, will increase regional productivity and help meet regional industry needs.

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