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Emerging Issues

Monday, May 25 2015

This week’s edition was to be about the 2015-16 Commonwealth Budget. I will still touch on it but another issue has emerged.

Surprise would be an understatement in reading the release of the South Australian Government’s subsidised training list (Workready).  The list reveals the cessation of a contestable market for training in South Australia, effectively removing student choice in that State.

I read about it as there was no consultation, no warning and no attempt to work with the sector. The decision overturns 20 years of progress achieved through National Competition Policy in this country and is a breach of South Australia’s obligations under the National Agreement for Skills and Workforce Development (NASWD).

On this basis, ACPET believes Commonwealth Government funding of $65 million allocated to South Australia for 2015/16 and 2016/17 should be withheld.

Having worked in different roles in this sector, I fully understand the fiscal pressures facing South Australia. That said, there are not many businesses that survive in difficult times by removing their supply chain and selecting the most expensive supplier, with no quality differential. The subsidy rate alone for TAFE SA per student is two and half times greater than that paid to private providers – go figure.

As there has been no consultation and no way to prepare any transition, over 100 Registered Training Organisations (RTOs) are at risk of closure.
Yes you might say we have a bias. So it is pleasing that South Australian and National businesses and industry bodies have lamented the short-sighted decision. I am always intrigued that students and industry can prefer private providers (NCVER data) and yet a government can still make such a decision. 

The media release claims that TAFE will be supported to become competitive and then the  number of training places for private providers will be boosted. I think I have read that before. Allocating (why are we allocating in a market) 46,000 of 51,000 new places to TAFE does not prepare for competition, it protects and rewards inefficiency and inertia. 

South Australia signed onto nationally agreed competition policy for vocational education in Australia. Breaching the contract must mean they are no longer eligible for $65 million from the Commonwealth. Industry, students and quality private providers can deliver the State’s skills needs through a direct engagement with the Australian Government.

So anyway the Commonwealth budget has now been well and truly debated – so what is in it for one of Australia’s most important export industries?

Following a very intensive 6 months or so of discussion about the merits of Tertiary education, what does the next phase of reform look like?
Budget 2015-16 does not offer a lot of specific opportunities for the public or private tertiary provider, but the Abbott Government’s commitment to deregulation of higher education remains, as does their commitment to improving quality educational and student outcomes across the VET sector – both of which are welcomed.

So what of Education and Training Minister Christopher Pyne’s steadfast determination and commitment to higher education reform? We have already seen the legislation to deregulate university funding voted down twice in the Senate. It certainly does not seem overly likely that the Senate will offer any more support than previously.  If we stay above the politics, it is very apparent that the jewel in the crown has been missed, caught up in the argy bargy of deregulating universities. The stalled reform creates significant problems for Australia’s burgeoning higher education providers and students and risks the quality and international competiveness of Australia’s higher education system – a sector that is currently one of the success stories of the Australian economy.

So, what is this elusive jewel?

The Budget plans to extend Commonwealth Supported Places (CSPs) to diplomas, advanced diplomas and associate degrees, increasing the capacity, flexibility and opportunity of our tertiary education system to meet the needs of students, including those in regional areas who genuinely need more options.

In a budget built on a platform of fairness, why are students who choose to study with non-university providers treated so poorly? Why are they penalised for their particular circumstances and aspirations?

Students are choosing non-university providers despite this meaning they will pay full fees and an administration fee.

It is pleasing to see the Budget proposes to remove this 25% additional administration fee. The measure is particularly welcome given students from low SES and other disadvantaged backgrounds make up a significant proportion of enrolments.

This reform would address the fundamental inequity faced by some 67,000 domestic students enrolled with non-university higher education providers and open up new opportunities for more students to undertake programs that best meet their circumstances, at a cost that is fair.

Yes, student debt per qualification would be reduced.

However, while in the budget it is futile if the reforms don’t pass the Senate.

It is therefore time, in the interests of students, to uncouple these reforms from the deregulation debate – this is the only approach which is fair.
It is time to take a stepped approach to ensure Australia’s Tertiary Education sector continues to reform and grow.

The first step must be to adopt the Budget measures and both extend the CSPs and reduce or remove the administration fee.
This will also see greater options and choices for students.

To use a well recognised phrase – ‘It is Time’!

The $68 million increase for the Australian Skills Quality Authority (ASQA) to boost its regulatory oversight of the VET sector is good news. It is also pleasing to see that the government has allocated $18.2 million to support the specific measures recently announced by Assistant Minister for Education and Training Simon Birmingham to restore confidence in the program.   

Perhaps the next question is does ASQA have the right tools to make a difference? There are learnings in higher education on that front.
In that regard it is a risk to quality that the same funding boost could not be applied to the Tertiary Education Quality and Standards Authority (TEQSA). TESQA has shown what a well functioning regulatory regime can look like, and any budget savings (read reductions), like the one being experienced by TEQSA may undermine their ability to perform at the level we expect.

What of international education?

Despite concerns about some of Australia’s other export industries, the international education sector is now worth some $17 billion annually – around 5 per cent of our total exports. The sector is an amazing success story and needs support. Our international competitors are investing significantly in marketing their destination. We need this also.

Government policy around student visas is critical to this success. It is worth noting that Budget 2015-16 cuts the funding to the Immigration Department by $168 million over four years, with savings coming from a range of measures including visa processing systems.

Let’s hope the budget ‘solution’ does not result in an attempt to make education providers pick up more of the task of assessing student visa applications. There are already concerns with the workload associated with current SVP arrangements.

The Budget also outlines some $12.7 million cuts to international education support programs as well as increases in student visa charges. At a time when there is real opportunity to get behind the sector, these measures send the wrong messages.   

Last but not least – VET.

A key decision was taken last year to cut programs worth around a billion dollars over five years to help fund the Industry Skills Fund (ISF) – which is now budgeted at $664 million over five years.

However, initiatives like ISF can only do so much in delivering an innovative, contestable, and highly responsive VET sector.

It is hard to ignore the turmoil and uncertainty that is afflicting the VET sector due to the shared responsibility the Commonwealth has with the States and Territories. With several states making significant changes (again) to their VET market reforms and reviews underway or flagged in others, it’s a minefield for industry seeking to operate nationally. It is little wonder that Commonwealth and State/Territory skills ministers recently agreed to a review of the National Partnership Agreement on Skills Reforms. In the interests of simplicity and efficiency, all governments need to step up and put in place a national system and not the eight different systems we currently endure.

Genuine commitment may also reverse the current trend of States and Territories reducing funding in VET, and expecting the Commonwealth to pick up the tab through VET FEE HELP.

My final point relates to the $212 million Youth Employment Strategy.  I know a number of ACPET members will welcome the opportunity to support this important initiative – the country cannot afford to let large numbers of young people fall behind.

Rod Camm



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