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VET markets:The good, the bad and the

questionable

Damon AndersonCENTRE FOR WORK AND LEARNING STUDIES

MONASH UNIVERSITY

20 October 2006

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Policy background

• ‘Open training market’ (Deveson 1990)

• ‘Efficient, effective, responsive and integrated training market’ (MOVEET 1992)

• ANTA/National Competition Policy (Hilmer 1993)

• ‘Competitive training market’ (ANTA 1993)– Competitive Tendering (1995-)– User Choice (1998-)

• National Training Framework (1997-)

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NCVER National Training Markets Conference 1997

‘In concluding, I would like to reflect on the debate on the training market. Why is the subject of introducing market reform often discussed with such consternation? Are we as a sector so arrogant as to think that … we are … immune from change? That education is special, different and exempt?

There is change all around us - that is a fact … yet debate still tends to focus on the intellectual niceties of “who is the client”, “what are the benefits of competition?” and so forth.

It is disappointing to me that much debate gets caught up on these minor issues, given the challenges in front of us. I am particularly concerned that these messages consistently came from the research community during our … consultations. While I am not against intellectual rigour, there comes a time when you need to look at the bigger picture and move on.’

(T. Moran, CEO ANTA)

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NREC Key Priority Project

• Project aimed to examine:

– structure and dynamics of the training market

– impact of competitive tendering & User Choice

– effects and outcomes

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Intended outcomes (primary)

• Efficiency• Responsiveness• Diversity (choice)• Quality• Flexibility• Innovation• Access and equity

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Market & non-market TAFE revenue, Aust 2001

Non-market revenue Non-contestable recurrent 65.4 Student fees and charges 5.0 Total non-market 70.4Market revenue Contestable government funding 13.3 Fee-for-service 9.3 Ancillary trading and other 7.0Total market revenue 29.7Recurrent govt funding (2001$m) 3934.6

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Contestable funding allocations, 2001

TAFEs % of contestable govt funding 55.6 % of recurrent govt funding 90.1 Recurrent govt funding (2001$m) 2986.0

Non-TAFEs % of contestable govt funding 44.4 % of recurrent govt funding 9.9 Recurrent govt funding (2001$m) 3024.2

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National survey of RTOs (2001)

• Questionnaire sent to 2,581 RTOs

• Response rate of 32.6% – 71% of all TAFEs

– 31% of non-TAFE RTOs

– 64 % metro and 36% rural/regional

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Contestable funding processes have increased: CT CT UC UC

TAFE RTOs TAFE RTOs

Innovation in product developmt/delivery + 22 + 22 + 27 + 27Flexibility of delivery + 35 + 15 + 69 + 33Responsiveness to ind/employer demand + 44 + 15 + 65 + 37Responsiveness to stud/apprentice needs

- 7 + 7 + 27 + 21

Range of options (diversity) + 22 + 5 + 27 + 25Quality of products and services - 4 + 2 - 4 + 20Access for medium/large enterprises + 29 + 30 + 25 + 33Access for small enterprises - 32 - 2 - 2 + 28Access for women - 48 - 8 - 46 - 3Access for unemployed people - 32 - 3 -- --Access for disadvantaged groups - 31 - 14 - 47 - 7Access for local/surrounding communities - 25 + 7 - 19 + 16

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Contestable funding processes have produced:

CT CT UC UCTAFE RTOs TAFE RTOs

Closer/more direct client relations + 46 + 11 + 65 + 36More client control over outcomes - 11 - 15 + 15 + 18Lower costs of delivery -55 - 65 - 62 - 64More efficient use of public funds -33 -12 - 43 + 4Lower administrative costs - 97 -88 - 94 - 85Less administrative complexity - 94 -80 - 94 - 74Improved financial viability - 53 - 22 - 58 - 14Greater accountability for public funds - 6 + 30 + 10 + 35Increased employer investment - 83 - 31 - 53 - 13Improved skill supply to industry - 26 + 12 - 25 + 17Improved skill outcomes for stud/tees - 45 + 9 - 38 + 28

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Have TMRs enhanced capacity to satisfy client needs?

TAFEs Total RTOs

Government-funded clients Full fee-paying clients Small enterprises Medium/large enterprises Women Unemployed people Disadvantaged groups Local/surrounding communities

Global impact of contestability (%)

Very

positive Positive Neutral NegativeVery

negativeSecondary school 0 11 76 13 0TAFE 0 32 23 40 5ACE centre 5 19 37 31 8Business College 7 16 57 0 20Commercial TP 13 24 35 18 10Enterprise 10 20 54 17 0GTC 13 26 39 22 0Industry Skills Centre 19 24 38 14 5Prof/industry assoc’n 4 18 58 13 7Other 2 21 50 21 5Total 8 22 42 20 8

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Impact on TAFEs

My RTO’s program profile is becoming less coherent and consistent from one year to the next due to short-term government contracts Agree: 54% Undecided: 4% Disagree: 40%

My RTO is less inclined to share information and resources with other RTOs for commercial-in-confidence reasons Agree: 88% Undecided: 4% Disagree: 9%

My RTO is giving higher priority to reducing costs than to improving quality due to government funding formulae/purchase prices Agree: 62% Undecided: 4% Disagree: 35%

My RTO is redirecting resources from training delivery to administration (eg. planning, financial management) Agree: 52% Undecided: 9% Disagree: 37%

My RTO is redirecting resources from training delivery to marketing information and communication Agree: 48% Undecided: 4% Disagree: 36%

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Impact on TAFEs

Reductions in the costs of training delivery by my RTO outweigh increases in administrative and marketing costs Agree: 10% Undecided: 19% Disagree: 71%

My RTO’s training provision is driven more than before by short-term (rather than medium or long-term) demand for skills Agree: 54% Undecided: 14% Disagree: 30%

My RTO’s provision is driven more than before by financial/commercial imperatives than by educational/skills formation objectives Agree: 66% Undecided: 12% Disagree: 21%

My RTO’s training provision is driven more than before by efficiency objectives than by equity goals Agree: 58% Undecided: 12% Disagree: 30%

My RTO’s training provision is driven more than before by market demand than by government policy and planning priorities Agree: 44% Undecided: 19% Disagree: 36%

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Commercialisation and competition in TAFE: National survey of TAFE teachers (2003)

809 survey respondents

Metropolitan = 63%Rural/regional = 34%Remote = 3%

NSW = 24%

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Respondents by job classification

Tutor/Lecturer Asst/Skills Instructor/VocSkills Trainer 5

Teacher/Lecturer 53

Advanced Skills Teacher/Principal Teacher/Lecturer 11

Head Teacher and Program Coordinator 18

Head of Department 5

Senior/Chief Education Officer 2

Other (research, planning, curriculum, counselling, disabilities)

6

Total 100

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Respondents by job tenure

Permanent/ongoing 73

Contract/temporary 19

Casual/sessional 7

Total 100

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Impact of a more commercial approach on teachers’ work

Program planning, dev & del

Administ’n Marketing/ promotion/ client relns

Total workload

Greatly increased

24 52 21 41

Increased 42 37 46 44

Nil 17 8 28 11

Decreased 10 0 1 1

Greatly decreased

4 0 0 0

Not sure 1 1 2 1

Total 100 100 100 100

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Impact of a more commercial approach on teachers’ morale and commitment

Your job security

Your job satisfaction/

morale

Commitment to a teaching

career in TAFEGreatly increased

11 3 6

Increased 28 13 11

Nil 30 24 38

Decreased 20 33 24

Greatly decreased

8 25 16

Not sure 2 2 3

Total 100 100 100

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A more commercial approach has increased:

Agree Neutral Disagree

Range/diversity of programs/services 39 31 18

Responsiveness to individual needs 36 28 31

Responsiveness to industry needs 56 25 12

Responsiveness to community needs 30 34 26

Innovation in program devel/delivery 57 22 16

Flexibility of program/service delivery 63 21 12

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A more commercial approach has decreased:

Agree Neutral Disagree

Quality of program planning/curric dev 43 26 25

Quality of program/service delivery 41 28 26

Standard of facilities/equipment 41 37 18

Availability of learner support (lit/num)

33 43 17

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Effects of a more commercial approach:

Market pressures hinder systematic program planning/dev 71%

More emphasis on narrow-enterp than broad-industry skills 63%

Students are viewed more as customers than learners 83%

Learners with special needs receive less individual attention 44%

Profitable programs receive more staff and resources 65%

Entrepreneurial skills are more valued than teaching ability 68%

Price competition/cost-cutting compromising program quality 76%

Assessm’t standards being relaxed for contracts/completions 51%

Program quality being eroded by time/resource pressures 79%

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Effects of a more commercial approach:

Higher priority is placed on fee-payers than community needs64%

Higher priority is placed on industry than individual needs67%

Higher priority given to reducing costs than improving quality84%

Provision is driven more by large purchasers than individuals67%

Provision driven more by commercial than education object’s81%

Provision is driven more by efficiency than equity goals81%

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On balance, what impact has a more commercial approach had on the programs and services you

deliver/coordinate?

Very positive

Positive Nil Negative Very negative

Not sure

Total

1 17 18 44 13 4 100

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What impact has a more commercial approach had on skill/learning outcomes for your students/trainees?

Very positive

Positive Nil Negative Very negative

Not sure

Total

2 11 27 41 10 8 100

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What impact has a more commercial approach had on the educational culture and values of your TAFE institute?

Very positive

Positive Nil Negative Very negative

Not sure

Total

1 12 10 47 24 5 100

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Scorecard of market outcomesRTO CEOs

TAFE CEOs

TAFE teachers

Increased diversity Increased efficiency --Increased flexibility Increased innovation Increased responsiveness to individ needs Increased responsiveness to industry needs Improved program/service quality Improved skill outcomes for student/apps Improved skills supply to industry --Increased industry investment in VET --

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Concluding Q&As

Who’s driving? Employers + government

Who’s paying? Individual students/communityTeachers

Who’s winning? Large enterprises + private RTOs

Who’s losing? Disadvantaged/unemployed peopleTAFEs + smaller RTOsCommunity (esp. rural/remote)Industry + economy + public interest

Where next? Policy vision informed by research…