Edition 629, 9 November 2015
The Art of Balance
Monday, November 9 2015
In the midst of a now common debate, it is clear we need balance in the discussion about VET reform and to analyse just what we can learn from this journey.
Based on some real problems with VET Fee-Help, and in some states due to poor design, a minority are calling for abandoning reform and reverting back to centralised planning of TAFE. The aims and achievements of reform from both sides of government have had little recognition.
The central premise of VET reform has been to provide choice to individuals and businesses. This has produced responsive, flexible and more accessible Tertiary education.
ACPET last week released an ACIL Allen research report, Australia’s Skills Reform Journey: The case for VET reform and progress, which focuses on Victoria and VET Fee-Help to try to understand what we have learnt.
The report exposes that problems were stunningly evident.
Both in Victoria and in VET Fee-Help, there was very large enrolment growth in a relatively small number of providers. In VET Fee-Help, the growth was accompanied by completions significantly less than elsewhere in the sector and in Victoria a decline in student satisfaction accompanied the high growth.
The report highlights the important role of government in market design, including establishing the rules of the market, the thresholds to entry, student eligibility, and subsidy levels. However, the role for government in market management is equally important. As the purchaser, government is able to exercise a high degree of control. The role in ensuring market information and price signals can also not be overstated.
We must not accept any excuses for the very poor behaviour of selective providers and brokers, but we also must not pretend that this is evidence of a fundamental failure of the sector.
As we move forward, we need to acknowledge the merits of well structured, contestability and student choice. It is informed student choice that will drive quality and surely they have that right? Alternatively, we can revert to a system that fails to keep up with economic change, if supply is driven and delivered to suit the system, not the student.
The report can be found at http://www.acpet.edu.au/uploads/files/ACIL%20Allen%20Consulting%20final%20report.pdf
Of course we must also reflect on just what impact the private sector is making. The face of education at all levels is changing, why not VET and why not Australia?
A minority (yes the same ones I mentioned above) argue for a return to the halcyon days when education was dominated by the public sector.
Were they really the great days? A supply driven system, students and employers with no choice, a lack of places in highly desired courses and no capacity to shift resources to areas of economic demand. Why run an unneeded course – you have to have teachers employed. Of course technology and innovation were foreign back then.
The consequence was, government needed to fund everything and there was limited capacity to ramp up or down to meet demand.
I read an interesting article on this dilemma recently by Ashwin Assomull, EY.
His argument was that as the economy has developed across the world there has been large scale increases in education enrolments. Yes, Governments have played an essential role in increasing access, but increasing demand saw overcrowding as public systems struggled to keep pace.
In this context, we have now seen private capital becoming evident to finance education. Some (yes the same as above) call 'the end is near'!
Yet, private education operators are growing across all sectors. Assomull writes that mergers and acquisitions in the sector have increased by over 600% since 2000.
For government, citizens and students this should be celebrated and again the Author cites three reasons for this.
It has enabled the sector to expand without the limitation of government expenditure. Yes, Private providers aim to maximise profit, but this is through improving their impact. From my perspective this shows why academic decisions should be separate from commercial ones. The commercial side of private providers needs to trust the academic team, as quality and student centric strategy is what establishes long term success.
Of course a growing private sector has produced remarkable innovation. Well managed competition drives innovation and helps put reform pressure on government providers.
Finally, private capital is driving far better metrics, as investors want to see measurable impact.
So what is government's role. Government plays a key role in designing markets and mitigating risks through appropriate regulations, best developed in partnership with industry. Sound familiar?
As South Australia will fast find out, no government can rely on or afford a system that relies only on TAFE. It is too expensive, inflexible and reform is just too difficult, without the pressures of competition. This is not criticism of TAFE, they have a critical role and make a huge contribution.
Remember the reform journey is at a time when Government expenditure on higher education has grown by over 40% over 11 years, school funding by 25% whereas the VET sector experienced a 15% increase to 2012-13 before a sharp decline in 2013 -14.
This has left the sector in 2013-14 only 5% higher than 2003-04. This stagnating investment is at a time where the Australian workforce has grown 22% over the 10 years to 2013-14. Yes this is four times the growth in VET funding, which is meant to be key in developing a skilled workforce. It is a real challenge to implement market based reforms when some Governments do not regard the sector as a priority.
Speaking at Higher Education Summit, Jennifer Westacott, BCA, says VET should not be the poor cousin to universities. This has been said in the 50 years since the Martin Report. I fear it is not the students or industry who have the view but the funders.
Of course the large scale inconsistency between different State and Territory Systems also underlies the challenge. A final word from Jennifer Westacott ‘(the) consequences of state-based systems diverging further from one another are real, and have significant national economic and personal consequences.’
Despite our current challenges, and a growing number of scars, I remain tremendously enthusiastic about being in tertiary education at this time. I meet enough outstanding people in the private and public space to help me look ahead.
We can make a huge difference and can lead the way out of this.