16 May, 2016

Guarantee 70% funding to TAFE!

By Pat Forward

There are some important questions facing Australia about the future of TAFE and vocational education: Will TAFE survive another three years of damaging cuts? Can the economy afford the waste of so much government funding being allocated to a discredited private for-profit sector? Which political party will have the courage to face up to the private for-profit VET sector and shut down the disastrous student loan scheme, VET FEE-HELP?

The Turnbull and Abbott governments have cut funding to the TAFE sector, refused to act decisively to control the activities of dodgy for-profit colleges, and failed to control the unprecedented growth of VET FEE-HELP.

Vocational education once struggled for any recognition. It was the forgotten education sector. Not anymore. Every day, the news is full of stories about rorts; about action being taken by the ACCC; of the federal police raiding private colleges; of the government “toughening” regulations to stop the rorts. Every day, there is another story about another rip off.

At best, the Federal Government’s response has been piecemeal. It continues to blame the previous Labor Government for all the problems in the sector while all the time, trust in the sector is being destroyed, and its reputation is being trashed.

The Federal Government has said repeatedly that “toughening” the rules around VET FEE-HELP will fix things up. It hasn’t. The Government cannot keep up with the rorting that the private sector has engaged in. They cannot keep ahead of the tricks and scams. They cannot keep ahead because the flaw lies in the fundamental architecture of a system designed to mimic markets, designed to make profits, not to deliver a social good like education.

And just how serious is the Federal Government about “toughening” when it has just cut $8m from the national regulator, ASQA, in the budget?

As the crisis in the private VET sector has unfolded, each attempt to clamp down on rogue providers has been met with contempt from them, as they adjust their operations, or side step the regulations. It is almost impossible to keep up with the for-profit sector because at the core of the VET market is the promise, made by governments that a profit is to be made from selling vocational education.

And as discredited Phoenix CEO, Ivan Brown said: “When it comes down to it, it’s a lot cheaper to train students who don’t turn up, than it is to train students who do …”

There is only one way to stop the rorting, and that is by cutting off the supply of money. This could be done almost overnight by shutting down VET FEE-HELP, and guaranteeing 70% government funding go to TAFE. Neither of the major political parties wants to do this, and so they have all condemned themselves to playing catch-up with a private sector with nothing to lose, and everything to gain from gaming the system.

It is not just unions and TAFEs that are saying the VET sector is in trouble. Business and industry groups have also been critical. In 2014, Business Council of Australia CEO Jennifer Westacott noted, in relation to vocational education, that:

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.

Echoing these concerns Ai Group Chief Executive Innes Willox in February wrote, that “we have never seen the Australian training system in such a parlous state” and referred to the crisis in the VET FEE-HELP scheme as a “debacle”.

Since the introduction of VET FEE-HELP, student fees have skyrocket. The average VET FEE-HELP loan is between twice and five times the qualification price set by NSW TAFE. The amount of funding for loans has risen dramatically between 2012 and 2015 by 380% at TAFEs, but by 1,000% at private providers.

This is very clear evidence of government policy in the sector massively increasing the costs to students.

The design of VET FEE-HELP allows private for-profit VET colleges to further disadvantage some of the most disadvantaged people in the community. Under VET FEE-HELP, Indigenous students, and those from disadvantaged backgrounds are charged much higher fees and therefore accrue much more debt on average than non-Indigenous students and those from advantaged backgrounds. Indigenous students were charged on average $5,649 more per qualification in 2015, and for students from disadvantaged backgrounds, fees were $3,358 higher.

But the problems with VET FEE-HELP are problems which arise out of the marketisation of the vocational education sector as a whole. Even if it were possible to fix the problems with the VET FEE-HELP scheme, this would not fix the problems with vocational education, because it is the design of the sector – the architecture that was foisted on the sector in the 2012 National Agreement, but trialled with disastrous consequences in Victoria several years earlier - which is at the heart of the problem.

While the first casualty of this disastrous experiment with marketisation is TAFE, the longer term consequences are much more serious for Australian society and the economy. And at the moment, the most serious casualties are those people who have incurred huge debts for worthless qualifications.

An estimated $4 billion was expended on VET FEE-HELP in 2015, up from $25 million in 2009, with 80% going to the for-profit sector. At the same time, funding for TAFE has declined by 24% since 2008. Last year, a study by Sydney University showed that private for-profit VET providers were making profits of between 30% and 50%. And this study predated the rapid expansion of the VET FEE-HELP scheme and is based on profits made from recurrent government expenditure, not VET FEE-HELP.

The vocational education system is broken, and the future of TAFE is in the balance. Billions of dollars are currently being wasted- churned into profits by a voracious, and canny for-profit sector.

There is no evidence that the experiment with markets, market reform and competition has delivered anything positive to the Australian VET sector. Assertions by the for-profit sector that they have added value do not constitute evidence.

We cannot fix vocational education by redesigning the market.

We need to cut funding off at the source and shut down the VET FEE-HELP scheme. We need to guarantee 70% of recurrent government VET funding go directly to the TAFE system.

Australia as a society needs to consider whether any public funding should be allocated to for-profit colleges; but in the meantime, and as a first and modest step forward, we need to cap the amount of funding open to competition from the for-profit sector.

The Australian economy is in transition. We are currently facing skills shortages in some areas, while in other areas, industries are in decline, and people need to retrain, and have access to high quality vocational education.

Young people need a comprehensive vocational education that sets them on a path to learn and adapt throughout their lives, not “just-in-time”, narrow skills for today.

Australia needs to guarantee a minimum 70% funding to TAFE, and allow it to rebuild confidence and trust in vocational education.

There is a lot at stake if TAFE is allowed to die.