From: TAFE Reform Panel: A strong and sustainable Victorian TAFE sector, January 2013, http://bit.ly/1DZpe1L
The TAFE Reform Panel (the Panel) has been given a significant task by government – to gain an understanding of the transition risks and opportunities facing TAFE institutes in the move to competitively neutral funding arrangements, and to help government make the decisions needed to secure a strong and sustainable TAFE sector in Victoria. In formulating our recommendations, we have been informed by not only the significant information provided by TAFE institutes but also an understanding of the policy intent of recent reforms and the characteristics of a vocational training system required by Victoria’s changing economy.
Victoria is transforming into a service-oriented economy, yet maintains a core of technologically advanced sectors engaged in agricultural and manufacturing production. Over the past 20 years the rise in employment in skilled occupations has outstripped growth in low-skilled jobs. This trend is expected to continue. The skill requirements of many jobs are predicted to change dramatically in response to new systems and technologies.
In some industries a Certificate III is emerging as the minimum qualification needed for entry level jobs. The competitiveness and effectiveness of Victorian industries – and the resultant prosperity of the state – is largely based on the skills and capabilities of its people. Employers are seeking to work with government to foster pools of better-educated workers, who can work with more complex technologies and continually expand their skills. As the pace of business change and labour mobility increases, both pre-employment and life-long learning is more important than ever before.
There is considerable evidence that higher qualifications increase the likelihood of getting a job. For example, the May 2011 Australian Bureau of Statistics (ABS) Survey of Education and Work showed that those with a Certificate III or higher qualification had a lower unemployment rate than workers who do not hold post-school qualifications. Higher qualifications generally also mean higher pay. The demand for higher skills, and for employees that are capable of becoming productive more quickly, has enormous implications for vocational training providers. To maximise workforce participation amidst an ageing population, training providers must support a more diverse student population. This includes learners with low levels of previous educational attainment, learners seeking a pathway into higher education, and learners who are balancing learning with work.
A diverse student population brings different preferences and expectations. For example, learners are seeking greater flexibility in timetabling to accommodate work and caring commitments. Many learners are looking for more engaged learning experiences using their own technologies and social media tools.
At the same time, employers are seeking more say in training content and assessment and more emphasis on practical work-experience and work-based learning, especially in pre-employment training. While the overall level of educational attainment continues to rise, there continue to be communities with lower levels of participation – particularly in outer metropolitan and regional areas of Victoria. Raising youth participation and attainment remains an important priority. In response to emerging skills gaps, and the need to attract and support a broader range of students to gain skills and qualifications, Victoria’s subsidised vocational training system has undergone substantial changes over the past twenty years.
The system has evolved from a publicly funded, TAFE-centred, contract funded model; first to a government planned, purchaser-provider model; and finally to a more student-centred, demand-driven system. These changes have seen the emergence of a relatively deep vocational training market where both government-owned TAFE providers and private providers openly compete. Through its Refocusing Vocational Training reforms, the Victorian Government has set out its strategy for raising workforce participation and productivity through a dynamic, high-quality vocational training system that responds to industry needs and focuses on providing training in areas where skills needs are greatest.
The thrust of the vocational training policy reforms is the use and reliance on market levers – principally price, information and supply contestability, as opposed to the institutional lever of TAFE institutes – to drive the demand and supply of training. Building on earlier phases of reform, the Refocusing Vocational Training in Victoria policies remove legacy constraints on the operation of an open, competitive training market. The Government’s strategy is based on:
• empowering students to access a government-subsidised training place in the course and at their training provider of their preference
• a level playing field for high-quality public and private training providers to access government subsidies and family commitments
• providers being able to set tuition fees at whatever level they deem appropriate
• more direct engagement between industry bodies, prospective learners and training providers to improve signalling of industry skill needs and satisfaction with training provision
• targeting of funding to deliver the greatest public returns on investment
• a stronger role for government in monitoring overall system performance, quality assurance and consumer information.
The stimulation of competitive market outcomes through sector-neutral funding arrangements has implications for the role of, and the relationship between, TAFE institutes and government. With the move to a competitively neutral market, there is not an exclusive role for public providers within the vocational training market.
However, the Panel sees value in the Government continuing to recognise, support and maintain the strengths of Victoria’s TAFE institutes alongside private training providers, particularly as the critical operational elements of an effective market continue to mature. TAFE institutes will need to identify and maximise their competitive advantages – educationally and commercially – to attract students and sustain revenues.
They will need to take account of the full costs of business (including capital costs) in formulating business strategies and budgets to meet their commercial obligations. Like all providers, TAFE institutes will make strategic decisions on setting prices, investing in services for students, capital stock and renewal, providing community or commercial access to facilities and educational offerings and delivery models.
These investment decisions will need to be made on the basis of market analysis and strategic planning. TAFE institutes should no longer assume that they are required to deliver community service obligations that are not explicitly required and funded by government. To deliver on the Refocusing Vocational Training in Victoria strategy, and to equip TAFE institutes to be competitive and sustainable, there needs to be a shift away from protectionist policies and direct government involvement in TAFE operations.
From an ownership perspective, the Government should set clear performance expectations around supporting regional and community development, financial sustainability and teaching quality. This implies a commensurate decrease in detailed reporting to government on service activity measures and more focus on institutional business performance measures.
In place of operating controls and collection of large volumes of activity-based data, the Government’s ‘ownership’ role should be focused on:
• setting clear expectations to maintain the Government’s investment and improve student/employer outcomes
• setting clear, transparent ‘rules of the game’ for exercising commercial powers (including clarity of the risk-appetite of government)
• empowering and equipping institutes to compete and reinvest profits in the business
• strategic oversight of performance informed by benchmark data shared with the TAFE institutes, with a clear and transparent range of interventions in response to underperformance or non-conformance with the ‘rules of the game’.
As a funder, the Government will continue to require acquittal of training outputs (as is the case for any contracted provider). TAFE institutes will need to be geared to rapidly respond to market changes and transform strategies and operations to become commercially self-sufficient, to continually improve their competitiveness and productivity, and to continue to adapt to learner and industry needs. This will require a higher level of organisational agility and focus on strategic direction than ever before.
The Government’s approach to supporting TAFE institutes in transforming their businesses should be underpinned by a continued commitment to:
• levelling the playing field between providers operating in the subsidised vocational training market
• clearly articulating expectations and obligations on TAFE institutes
• removing constraints on them successfully competing and meeting those expectations
• providing transitional financial support to avoid institutional failures, assist the implementation of viable business strategies, and incentivise competitive and commercial outcomes.
This report spells out six areas of action by government to enable and support the TAFE institutes to transform their businesses and assure the efficient and effective operation of the vocational training market.
While the provision of high quality public vocational education and training (VET) through TAFE has been under threat across the nation for decades, it has intensified dramatically in recent years.
Driven by privatisation and marketization, government policies have used workforce casualization, breakdown of the statewide system into stand-alone institutes, administrative and industrial separation of TAFE from the schools sector, introduction of ever increasing fees and so-called competitive tendering to undermine TAFE as the pre-eminent provider of VET.These policies neglect the needs of students, communities and the nation as a whole, by turning VET provision over to private companies whose primary purpose is to profit financially.
This approach epitomises state and federal governments’ abrogation of their core responsibility to provide high quality public education that enables individual students to realise their potential in education, work and life, and that builds the knowledge, expertise and skills base that underpins our socially cohesive, democratic and economically prosperous nation.
Essentially, TAFE has been in a state of transition since the mid-1980s, when VET was moved toward a national system and aligned more directly to industry. Increasingly, there has been contestation between state and federal governments over curriculum, regulation and funding. Since the late 1990s, TAFE has been under growing pressure through a decline in real funding and a steady increase in enrolments.