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VET Reform in VictoriaLee Watts, Executive Director, Skills Victoria14 December 2011

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Presentation outline

The challenge

Fees and funding changes for 2012

The opportunity

Maximising the benefits of skills reforms – current work

Next Steps?

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The challenge

1. Ensuring more Victorians benefit from tertiary education and training2. Building skills for a modern workforce to boost Victoria’s productivity

We need higher level skills to arrest Victoria’s declining productivity…

• 2001 to 2005: Victoria’s multifactor productivity growth rate was half the national average• 2006 to 2010: Victoria’s growth rate declined at five times the average annual rate of NSW

At a time when we know that…

Only half of working age Victorians have the core literacy and numeracy skills they need for work at a time of increasing structural change in our economy...

We need to increase workforce participation to mitigate the costs of an ageing population and key workforce shortages (e.g. community services)…

But 625,000 low skilled Victorians are in low skilled work or disengaged from work…

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In an uncertain economic environment

2010-11 over 50 organisations in Victoria announced cutbacks, closures and retrenchments, affecting more than 5000 employees

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And a more fluid tertiary education landscape

Incrementalist• More partnerships

between VET and higher education

institutions to offer better pathways

• Making it easier for students to simultaneously enrol in VET and higher education institutions

• More practical and workplace learning opportunities within higher education

Diverse• VET providers offering

degrees - including "2 plus 2" diploma/degree programs

• Universities offering double enrolment in a degree and certificate qualification

• More "mixed institutions" specialising in particular fields - e.g. polytechnics

• Teaching-only institutions offering undergraduate degrees

Integrated

• End to structural and institutional divisions between VET and higher education

• A single entitlement funding model

• The rise of the "omni-institution"

Lower degree of change Higher degree of change

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The challenge

Next Steps?

The opportunity

Maximising skills reforms – current work

Fees and funding changes for 2012

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Victoria is the first jurisdiction to have a life-long entitlement to education and training

Compulsory service

•Voluntary fees for government schools

•Choice of public schooling is unrestricted but there is no entitlement to non-government schooling

Mass access

•VET entitlement through Victorian Training Guarantee

•Eligible students can choose what and where they study and receive a partial subsidy

•In higher education choice of subsidised place largely limited to public universities

Early childhood Schools VET and Higher Education

Universal access

•Free access to maternal and child health

•Partial subsidy with co-contribution for kindergarten

•Choice of kindergarten is limited by local supply

Pathways and fault lines between sectors and providers remain a challenge

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The Victorian Training Guarantee was designed to increase access and participation and deepen and broaden Victoria’s skills base

Centralised purchasing Demand-driven market

Set funding purchasing limited places; first-in-first-served basis

Demand-driven funding (with eligibility criteria)

Centrally planned responsiveness to industry

RTOs responsive to demand from individuals and businesses

Limited competition for government funded training

All contracted RTO can access government funding

Flat tuition fees at all qualification levels (13% approx.)

Capped, increasing fees for higher level qualifications – with VET FEE-HELP

Less structured approach to incentivising up skilling

Open entitlement for under 20, up skilling requirements for 20+

Fewer barriers to reskilling, but greater prevalence of “churn”

Exemptions for disadvantage and skills shortage areas

Concessions address disadvantage Concessions address disadvantage

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Early results show Victoria’s demand driven training entitlement provides the foundation to deliver the skills Victoria needs to increase productivity, participation and pathways into work and higher level skills:

Stimulates demand for training

Responds to industry needs

Deepens skills

Engages people with low level or no qualifications

More choice

More training undertaken by Victorians: training increased at all levels and for all age groups -

More training in: important industries; occupations in shortage; and specialised occupations, such as child care and construction

More training in higher level qualifications: 24% growth in diploma-level and above enrolments*

More training by people with low or no qualifications: additional 20% enrolments by people without Certificate III or above*

More training providers who meet quality standards delivering training across the State*

Which is an investment in employment outcomes and in improving capabilities such as parenting (with positive impacts on child development) and reducing costs to the State’s health and social services…

Training providers have responded. There are more Victorians participating in training than ever before (~425,000 in 2011 – up 44% from 2008)– and in areas that are important to Victoria’s economy

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-

50,000

100,000

150,000

200,000

250,000

300,000

2008 2011 2008 2011 2008 2011

Certificates I and II Certificates III and IV Diploma and above

16,000 38,200

1,950 10,300 8,000

7,500 86,700

134,000

25,200 44,100

60,200 60,400

71,200

115,400

26,600

44,800 3,000

4,700

5,500

16,600

3,850

4,400

Gov

ernm

ent s

ubsi

dise

d co

urse

enr

olm

ents

Goverment funded VET - 2011 versus 2008

Little reported vocational benefit

Significant vocational benefit

Specialised and/or in shortage

Foundation

Training is happening in the areas most beneficial to individuals and industries

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Backed by a significant increase in government funding

* Note: 2011-12 figures are estimates only. No definitive level of expenditure for 2011-12 can be given due to the demand driven nature of the system.

Government investment in VET delivery($m-approximate. 2011-12 forecast based on 2011 YTD data)

0

200

400

600

800

1000

1200

1400

2008-9 2009-10 2010-11 2011-12

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The challenge

Next Steps?

The opportunity

Maximising the benefits of skills reforms – current work

Fees and funding changes for 2012

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There are a number of critical pre-conditions for an effective market

Strengthened system performance and

educational outcomes

QualityQuality measures and systems to promote

excellence in training and training products and to

protect consumers

Industry EngagementActive participation and

investment by businesses to help ensure training and

skills are relevant and provide direct feedback

loops on quality

Client InformationAccessible price, product, quality and labour market information

to inform student / family / employer choice

GovernanceEffective and contemporary Governance that recognises

the distinct role of public providers and enables those

providers to compete

Fees and funding mechanisms that enable

providers to compete, supports participation and student transitions and effectively target

government subsidies

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Quality

What does quality mean in VET?

How can quality be assured and

raised?

• Qualifications that are recognised and valued by employers• Teaching and learning that builds student competencies and can be trusted by

learners and employers alike • Skills that are relevant in the workplace• Training that fits around the competing priorities of businesses and individuals

• Strong regulation – which allows for innovation, while responding to malpractice

• Effective contracting – which supplements regulatory protections• Accessible consumer protection – clear avenues for complaint• Informed consumers – exercising their entitlement at quality providers• Engaged industries – informing curriculum, shaping demand, supporting

assessment• Good information - publicly available reporting on quality and outcome

measures• Direct feedback - from individuals and businesses/industries

Priorities for further reform

1. National reforms to agree a common set of outcome indicators for all regulated providers and additional indicators for funded providers

2. Requiring all contracted providers to publish this information3. Strengthening direct feedback loops from learners and businesses

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Quality – NCVER Survey of Employer Use and Views of the VET system 2011

Employer satisfaction with training quality: Apprentices and trainees

80.3% for private RTOs; 80.8% for TAFE Nationally recognised training

92.2% for privates; 90.3% for TAFE (Australia) 92% for privates; 85.3% for TAFE (Victoria)

Graduate satisfaction with training quality: 88.3% for private RTOs 87.6% for TAFE

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Client information

What client information is

important?

What client information is

currently available

• Course offerings• Employment prospects – what training leads to jobs?• Cost• Quality and outcomes

Priorities for further reform

1. Provider register – strengthened by quality work2. Requirements for RTOs to disclose indicative prices3. Requirements for RTOs to publish performance information

All of the above, but it is• Limited in detail• Often hard to access – fragmented • Unclear or incomplete• Often inadequate to inform training decisions

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The challenge

Next Steps?

The opportunity

Maximising the benefits of skills reforms – current work

Fees and funding changes for 2012

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1. Changes to weightings for some high growth courses

Industry sector Current weighting that applies

New weighting to apply

Business and Clerical 0.8 0.7

Finance 0.8 0.7

Hospitality 1 0.9

Property Services 0.8 0.7

Recreation 1.1 0.8

Tourism 1 0.9

Wholesale and Retail 0.8 0.7

What isn’t changing:

• Youth loading and Indigenous loading remains unchanged for all courses

• Weightings for 44 of the 51 industry groups remain unchanged

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2. Removal of minimum and maximum student fee caps/ Retention of maximum hourly student fee rates as previously published for 2012

Qualification level Approx. % of students hitting cap Fee rate per SCH

Foundation 11% Up to $1.08

Skills Creation 5% Up to $1.62

Apprenticeship 4% Up to $2.17

Traineeship 8% Up to $2.17

Skills Building 16% Up to $2.17

Skills Deepening 35% Up to $4.33

What isn’t changing:

There is no change to the maximum hourly rate – so no student will pay more than the maximum hourly rate for the total number of Scheduled Hours for their course

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3. Cessation of special arrangements for apprentices

Fee arrangements for enrolments in apprenticeships will be brought back into line with traineeships – equivalent to the Skill Building rates for 2012.

What isn’t changing:

• There is no change to eligibility criteria for apprenticeships in 2012 – meaning that any apprentice can access a subsidised training place regardless of age or previous qualifications

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The challenge

Next Steps?

The opportunity

Maximising the benefits of skills reforms – current work

Fees and funding changes for 2012