November 2, 2014

Level playing field or devil's playing field?

By Virginia Simmons

In 1990 the Commonwealth and all States and Territories signed up to national competitive neutrality principles, through the Competition Principles Agreement or CPA, which has since been updated and re-affirmed.

The CPA states that the objective of competitive neutrality policy is:

‘the elimination of resource allocation distortions arising out of public ownership of entities engaged in significant business activities’. (Competition Principles Agreement – 11 April 1995 (as amended to 13 April 2007), p 3)

Here, ‘business’ is the operative word.

But it also goes on to state that that the competitive neutrality principles:

… only apply to business activities of publicly-owned entities, not to the non-business, non-profit activities of these entities.

Governments have chosen to regard TAFE as a business enterprise within the Competition Principles Agreement. Since the 1990’s they have been progressively applying competitive neutrality principles to TAFE - increasingly treating TAFE solely as a business rather than, for example, also a service (imparting education/training/skills). The CPA marked the advent of the ‘Training Market’ and the application of market principles to both public and private sector VET..

Even though it does not appear anywhere on the lists of public trading enterprises under the Competition Principles Agreement, it is being treated in the same way as government intended to treat entities like Qantas, the Commonwealth Bank or Telstra at the time that the Agreement was signed.

TAFE is the only education sector to have been singled out in this way although the Competition Principles Agreement does not require that it be so treated.

There are now over 4,600 RTOs in VET compared with less than 200 private Higher Education Providers and the cost and effort of trying to regulate all these RTOs for quality– so often unsuccessfully – is not seriously regarded as an issue. The sad fact is that an open market was introduced before the regulation of quality was introduced. There was even a misguided view that introduction of a market system would itself deliver quality. Recent statements by the Federal Minister that there is a need to ‘cut red tape’ in the VET sector, do not auger well for improvement in this regard.

Only two or three years ago rorting by unscrupulous providers ruined the VET system’s reputation in the international market. It is only just now beginning to recover. More recently the rorting has been at the domestic level. We see the provision of training being manipulated by the market for purely income generation motives. There was much publicity in the media about the massive oversupply of people qualified as personal trainers and security guards in Victoria in 2012. This was stamped out but only to be replaced by other fields of study where opportunistic providers could see a market.

Here are some of the more stark examples from the Victorian Training Market Report for 2013.

  • There were 18,800 enrolments in Aged or Disabled Carers in 2013. This is equivalent to around half the total number of workers in the entire industry and nine times the average annual requirement for new employees in the field.
  • There were 15,000 enrolments for Storepersons in 2013 – equivalent to about 40% of the total number of workers in this field and ten times the average annual requirement for new employees.
  • There were 13,600 enrolments for Engineering Production Systems Workers. This is a staggering two and a half times the total number of workers in the field and 34 times the average annual requirement for new workers.

These figures represent a scandalous waste of government money, at the same time as the Government is making radical cuts to the TAFE system in the name of ‘the market’.

TAFE is being increasingly pushed into the high-cost, resource-intensive areas such as Professional, Scientific and Technical Services, where it has 93% of the market, Electricity, Gas & Water (85%), Information, Media & Telecommunications (81%), Mining (73%) and Construction (69%).

By contrast the private RTOs dominate in the low-cost areas such as Financial & Insurance Services, where it has 88% of the market, Wholesale Trade (87%), Transport, Postal & Warehousing (78%), Retail Trade (74%) and Administrative & Support Services (72%). These are all areas vulnerable to ‘tick and flick’ approaches to assessment.

The Victorian Government has been leading the competitive neutrality agenda. It has reduced funding to TAFE in a range of areas. It requires TAFE institutes to deliver a return on investment and it has ceased to fund capital improvements. It has also removed funding for community service obligations and so has stripped the TAFE institutes of their capacity to provide a rich learning experience.

The Victorian Government has also issued strategic planning guidelines that TAFEs must adhere to. In this 19-page document[1], the following words do not appear at all:

  • student
  • learner/learning
  • pathways
  • industry
  • employer/employment
  • access/participation/attainment
  • regions/communities
  • disadvantaged.

It is instructive to consider the words that appear in these guidelines with the most frequency. They are headed by financial (50 times), performance (22 times), corporate intent (14 times), asset, (14 times) and monitoring (11 times).

These are the matters that count for government in VET.

It is not suggested that these latter terms are not important, just that the balance between VET as a service and VET as a business has been completely skewed. Nor is it suggested that there are not many reputable and high quality RTOs, because there clearly are. Their reputation is equally damaged by those that rort the system and by the fact that they continue to find ways to do so.

What is particularly troubling is that students enrol under an entitlement system and only have access to government funding at a given qualification once. If they enrol with a provider offering training and a qualification of low quality, they will generally not get a second chance at the same level.

The most recent Victorian Government training market reports for the first half of 2014 show that the market share of the public providers is down to 27%, a steady decline from 40% in 2012 and 66% in 2008.

The pattern in Victoria is being repeated nationally.

Against this background, there is a deep fear among many TAFE professionals nationally that TAFE is headed for full privatisation; that the die is cast and it is too late to undo the damage that has been done.

There is also a fear that many young and older people who have benefited in the past from the broad-based, industry and community-focussed and supportive environment that TAFE offers will no longer have access to it – initially financially but ultimately as a system as well.

In case the above comments are seen as cynical or alarmist, consider the report of the recent Senate Inquiry into TAFE[2]:

Recommendation 3 is an implicit recognition that the regulatory body, now in existence for three years and about to be reviewed, is not adequately resourced to undertake its role and that quality is slipping through the cracks:

The committee recommends that the resources and funding for the Australian Skills Quality Authority be proportionally increased relative to the number of private providers entering the training market.

Recommendation 4.2.2 acknowledges that the current standards are not sufficiently rigorous to ensure quality:

The Committee recommends the development of improved government standards for registration of training organisations, as the current regulatory environment provides no guarantee of quality for students.

Recommendation 4.5.1 acknowledges that the funding cuts to TAFE have damaged its capacity to provide a quality service.

The Committee recommends full and immediate reinstatement of TAFE funding cuts by State governments.

Although the Committee’s report contains a dissenting view from Coalition Senators they did not dissent from these recommendations.

In a recent speech to the national conference of TAFE Directors Australia Jennifer Westacott, Chief Executive of the Business Council of Australia challenged the marketization of VET in Australia. ‘Fad-driven market reforms have left vocational education and training more disjointed than ever’, she said. ‘We can’t just say let the market work, because it doesn’t always work for everybody and I say that as the queen of capitalism.’

Jenny Lambert, Education and Training Director of the Australian Chamber of Commerce and Industry, agreed, describing the open market policies in VET as ‘an abomination’.

So if VET is an industry-driven system, it has been marketised and industry doesn’t think it has been a good idea, how long will it be before something is done?

Recently the Assistant Minister for Education Hon. Sussan Ley MP bemoaned the fact that some providers were offering the Certificate III in Early Childhood Education - a qualification of 15 core and 3 elective units - in 8 weeks and that this would not serve young children well. But there was no recognition that this is the result of a bi-partisan policy of the Australian Government. The ideology of the market appears unshakeable. Its application to VET is never questioned.

If the Abbott Government’s reforms to Higher Education go through, TAFE institutes will have access to Commonwealth supported places and funding will be extended to Associate Degrees and HE Diplomas. Minister Pyne has emphasised that implementation of these policies will be tightly controlled to ensure quality is maintained. State-based cuts to TAFE run counter to this intention.

A valuable asset to the Australian community is at risk. Much damage has already been done to TAFE and the best parts of VET are also at risk. . The devil is not only in the detail. The devil has control of the agenda.

It is time to restore the balance between TAFE as a quality service and TAFE as a business in a flawed training market.


[2] The Senate Education and Employment References Committee, Technical and Further Education, May 2014