Private RTOs are not a threat to Institutes of TAFE – An unlevel playing field is


copyright-symbols-and-rules-you-need-to-know-04 2015

Intellectual Property of Dr. Bruce D. Watson, DEd Melbourne and attributed authors as noted.

For Private individual use. All rights reserved.


Private RTOs are not a threat to Institutes of TAFE (it is telling that they think they are!) – the Government funding model and the unlevel playing field are.

The VET “playing field” is not a level one.

It is not about denigrating training provision by private registered training organisations (RTOs) – though it must be recognised there are “rogue operators using the market”.

Nor is it seeking to insulate TAFE Institutes from competition from Private RTOs; which can add useful diversity, innovation and choice to the overall system.

We need to lift the horizons beyond the Public – Private RTO dialogue!

As the Financial Review published recently, [28 April 2014,]

” …….. we need to recognise the complexities associated with creating a level playing field between old and new providers.”

“In Victoria, public and private providers now collect identical amounts of government funding for the teaching of vocational qualifications. Yet this has seen many private training providers thrive and TAFEs rapidly lose market share.”

“The reason for this is that many established providers have struggled to manage the higher costs associated with the way in which they’ve always done business.”

“These include higher expenses associated with legacy assets – campuses that may have been established by former governments to meet political needs but which are now uneconomic to run.

Historically, wages and conditions have also been more generous in the public sector than those offered by private training providers.”

“At the federal level, any reform which pits universities against non-university providers must also recognise that, for as long as anyone can remember, universities have cross-subsidised research activities from teaching funds.”

“No precise figure has been put on the scale of this cross-subsidisation, though estimates have ranged from 10 per cent to 30 per cent. Establishing the amount of this research premium is another essential pre-condition to reform. The government will wish to pay no more than the efficient price to those providers whose mission is to teach rather than research.”

“Paying anything more than this will simply encourage rent-seeking and guarantee a cost explosion that taxpayers will ultimately bear.]”

TAFE Institutes as public entities have other requirements expected of them

It must be recognised that moves to contestability of public VET funding present fundamental challenges for the Public RTO TAFE sector which need to recognised and addressed in appropriate ways – Institutes of TAFE as public entities have other requirements expected of them –

1. Manage public assets,

2. develop contemporary industry skills,

3. provide Pathways to other educational institutions,

4. provide further education (not just training),

5. provide services to learners with a disability and other under-represented groups,

6. develop citizenship,

7. build the capacity of this and future generations to participate powerfully in society.

Not all Private RTOs choose to take on those additional responsibilities.

However, it is notable that ” TAFE (and VET) Reform Panel” recommends that;

“The Government should:

• identify and cost community service obligations

• fully reimburse training providers for foregone revenue from concessional students

• commission a study into the costs of providing services to learners with a disability and, if appropriate, fund both public and private providers for disability support services

• provide additional support to enable at risk young people to successfully complete vocational training

• support the development of workforce development strategies to ensure that the vocational training workforce is well placed to respond to changes in industry skills needs and student learning preferences.

These recommendations impact all vocational training providers in the market – both public and private.


Towards understanding what TAFE Institutes (Public RTOs)face

For those prepared to understand what is expected of Institutes of TAFE compared to Private RTOs, this is worth reading, ” TAFE Reform Panel: A Strong and Sustainable Victorian TAFE sector”

“With a heightened demand for knowledge and skills, and demand-driven funding across vocational and higher education, partnerships between TAFE institutes and with schools, private training providers and universities are becoming more mission-critical. Partnerships and network arrangements are already emerging to aggregate training demand to enable courses to be offered; collaborate on teaching and training product development; offer back-office shared services; and share facilities.”

“TAFE institutes should be free to make their own decisions about these partnerships. In doing so, institutes should take a long-term strategic view on the risks and benefits to their institute and to the markets they service. In regional areas, in particular, TAFE institutes may establish stronger relationships with universities that have a commitment to that region or regional delivery per se.”

“To facilitate the further development of pathways, the Government should:

• examine funding and curriculum models for vocational pathways through schools, with a view to improving transitions to further study

• continue to advocate to the Commonwealth to enable non-university higher education providers accredited by the Tertiary Education Quality Standards Agency (TEQSA) to access Commonwealth Supported Places for applied degree programs, particularly in areas of skills shortage

• continue to advocate to the Commonwealth for streamlined visa processing for international students seeking to study with non-university higher education and vocational training providers, including TAFE institutes.”

Some examples:

“The Government should articulate the following clear expectations of TAFE institutes:

a) display teaching excellence and quality in training delivery

b) foster industry and community development

c) operate as sustainable businesses in the community.”

“Consistent with the Victorian Government’s competitive neutrality principles and the expectation that the TAFE institutes operate as sustainable businesses, the commercial objective for the TAFE institutes should require them to maintain the Government’s investment by fully recovering costs, including depreciation charges, and earning a return on fixed assets that is equal to the TAFE institute’s weighted average cost of capital.”

“The Government should:

a) take a strategic State-wide approach to providing capital grants to vocational training providers (public and private) to ensure that it does not replicate existing facilities

b) ensure that, if through government intervention a TAFE institute is not able to dispose of an asset to meet its commercial objective, it should not be financially disadvantaged

c) provide TAFE institutes with borrowing powers, limited to a commercially accepted debt/equity ratio

d) transfer to the stand-alone TAFE institutes the title to all assets they operate, that are not in their name.”

“The Government should consider specific funding for a transitional period in the areas of curriculum development, curriculum maintenance, program delivery, innovative pedagogy, and new technology, which can be shared across the sector to reduce duplication of effort and create areas of excellence.”

“The following principles should guide the design of future models of school-based vocational training:

a) The emphasis should be on progression to further education and training

b) The quality of provision is paramount and should be of the same standard as that offered to non-school based learners

c) Provision to young students should be tailored to a young person’s learning and support needs.”

The TAFE institutes should be encouraged to establish long-term relationships with universities, schools and other training providers to effectively support regions.

a) TAFE institutes may develop multiple relationships with universities where there is a benefit to do so.

b) In regional areas, TAFE institutes should establish stronger relationships with universities that have a commitment to that region or regional delivery per se.”

“The Government should clearly define the community service obligations that it wishes to fund in the Victorian vocational training market and the process for identifying and costing them.”


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