October 17, 2014

Cutting "red tape" in the VET market - the triumph of ideology over common sense

By Pat Forward

In response to a suite of changes to the VET sector announced by Minister Macfarlane in early September, the Australian Skills Quality Authority (ASQA), the national VET regulator, is set to invite more than 800 registered VET colleges - the majority of them private for-profit - to apply for the right to change their courses and introduce new ones, without permission from the regulator. More than 1000 colleges may be offered this opportunity, in a sector which has, according to The Australian “displayed no lack of imagination in exploiting money trails.”

In recent years, Victoria's open training market has produced, again in the words of The Australian, "heroic rorts" - four-day diplomas with cash rewards for enrolling students and trips to Bali. The introduction of HECS-style loans -VET FEE HELP - has resulted in "entrepreneurial" private providers offering courses at four times the going rate, "zero upfront fees" and free iPads. And "earn or learn" welfare benefit rules have spawned a new class of agents lurking outside Centrelink offices, trying to sign up jobseekers.

The proposal to give hundreds of colleges the capacity to decide what courses they offer comes at a time when the opening up of government funding in VET to the private sector is almost complete. With NSW set to introduce its version of market reform, Smart and Skilled in January 2015, every state and territory will have embraced so-called competitive allocation of funds through the national entitlement mandated in the previous Labor government’s National Agreements. This has resulted in a massive expansion in the proportion of government VET funding allocated contestably, and therefore available to the private for-profit sector, especially in the two most advanced “reform” states. By the end of 2012, 71 per cent of Victorian VET funding, and close to 75 per cent of South Australian VET funding was contestably allocated, and therefore open to the private sector.

In a recent article in The Australian, ASQA was reported as saying that the move wouldn’t trigger a new round of rorts. ASQA believes that the requirement that RTOs be registered for at least five years, be re-registered without mishap and be the subject of no on-going regulatory concerns were sufficient to protect the sector.

But what is abundantly clear is that the move to make it easier, particularly for private RTOs to change their course offerings is based not on evidence but on ideology. The shift to so-called "light touch" regulation and the reduction of red tape is driven by a desire to make it easier for private for-profit colleges to operate profitably in the sector, not by any interest in students, or any desire to protect them from unscrupulous operators.

Gavin Moodie highlights this triumph of ideology over evidence in VET policy making, arguing that it increases not reduces the need for regulation of providers. He says:

ASQA's own reviews find that there are pervasive failures of compliance amongst private registered training organisations. These aren't problems with isolated 'rotten apples' but extensive, perhaps systemic problems with quality and standards.

The minister's own advisers state that there is widespread lack of confidence in assessment standards and qualifications amongst employers, and this lack of confidence is shared by teachers and students.

The evidence-based response would have been to introduce measures to correct the noncompliance and inconsistent assessment, and review providers' performance after 3 or so years to find whether their quality and standards had improved.

Instead, says Moodie, the Government has deregulated providers "in the face of evidence of substantial regulatory noncompliance, numerous quality failures and widespread inconsistencies in assessment."

Moodie suggest that ASQA's conditions for delegating regulatory responsibility to RTOs are too lax because "ASQA doesn't have enough inspectors in the field investigating complaints and possibilities of regulatory and quality failure, and because there is no systematic mechanism for assuring the consistency of assessment standards."

In the end, says Moodie, State Governments will have to extend their own regulations and monitoring of providers' eligibility for State Government subsidies:

So rather than reducing regulation, the federal Government's relaxation of national regulation will extend the duplication of regulation: once at the national level for registration as a training organisation and a second time at the State level for eligibility for State subsidies.

Leesa Wheelahan argues that the moves to create a friendlier more flexible regulatory regime come despite manifest market failure, scandals and corruption. She says that ASQA has good reason to be concerned with Standard 15.

She highlights the fact that 72% of RTOs were non-compliant with RPL – "which is perhaps the highest risk because it is based on assessment without any accompanying process of teaching and learning and is wide open for corruption. About half were found to be non-compliant with the qualifications of their teaching staff, with the facilities and teaching and learning materials, and with the actual training package itself."

"This isn't one or two rotten apples – this requires root and branch rebuilding."

But Wheelahan also points to what many are increasingly realising is the "rotten core" of Australia's VET market:

We have patently inadequate qualifications which don’t require big investments by RTOs to develop and implement and a regulatory system that has been shown to not work already.

The structure of the system favours rent-seekers," argues Wheelahan. "There are millions to be made. The problem is there is no way into the government's logic. The Federal and State governments believe that the market is the only way to distribute access to social goods. If there are problems, it must be in the settings of the market, so let's tweak the settings until we get it right. There is no way into this logic – no way of saying that the problem is the market, it is always attributed to the settings. So we have zigzagging policy, funding levels and instability, and this leaves the door right open to unscrupulous providers.

So where do these changes leave Australia's vocational education system? On a daily basis, trust is being eroded and the reputation of the sector is being trashed. The public TAFE system, struggling under the weight of budget cuts and incoherent reform, will be damaged by the activities of the for-profit private sector.

But by far the biggest risk is to students. As public funding of programmes is continuously reduced and made conditional on a range of factors outside young peoples' control, this generation cannot afford to waste their once-only opportunity at a funded qualification at a dodgy college. As the regulatory system is weakened, and trust is eroded, how does a young person, or indeed any intending student know which college is good, or which unethical? In Queensland, where TAFE facilities are now opened for private providers, many students will not even know that they have enrolled at a private college, rather than a trusted TAFE college. And if their experience is bad, or they are ripped off, they will blame the whole system, including TAFE.

More serious still, students are being required to pay much more of the costs of their qualifications, and in many cases, they are being charged full "market" rates. The era of $30,000 diplomas is upon us, and students are being enticed into these qualifications, with inducements, but also with the prospect of paying no upfront costs, but becoming indebted far into the future - and again for a qualification which could prove worthless. Currently, VET FEE HELP loans are disciplined at the extreme end by a lifetime borrowing limit for students. The package of reforms to the higher education sector currently being promoted by Minister Pyne proposes to remove the limit on all HELP loans, and so even that discipline would be removed, allowing VET providers to charge unlimited fees to put on the never-never of students’ debt.

This government is driven by the ideology of the market, and it is devising policy in the VET sector with the guiding principle that the market rules, and the capacity of the private sector to make profit should be uppermost in the minds of governments. This is no way to organise an education sector, and it is no basis for sound public policy. Young people will be damaged by their experience in the VET sector in Australia at the moment. Many will be cheated, a large number will be left with long term debt, trust in the qualifications they acquire is already being undermined, and they will be discouraged from engaging in education again. Their employment prospects will be jeopardised - and while that other great god of market philosophy, the economy, will suffer – it is our society which will be much the poorer for this ill-conceived approach to vocational education.