This week the ACTU held their National Community Summit: Creating Secure Jobs & a Better Society.  Pat Forward, the AEU Federal TAFE Secretary spoke about TAFE.  This is the edited version of her speech.

The vocational education sector in Australia has undergone significant change over the past twenty years. During that period, government recurrent expenditure per hour of training has declined by 15.4% between 2004 and 2009—part of a longer term trend that has seen funding per hour decline by about 25.7% from 1997.

Government funding for TAFE has declined both because of the decline in recurrent public VET expenditure per hour and because of a shift of government recurrent funding away from the TAFE sector. This is a result of policy settings consistent across both state and federal governments which have focussed on the creation of an open market for training, and the shifting of resourcing in the sector away from governments and directly onto individual students.

Victoria has led the way. Since the introduction of full competition for government funding through a student or voucher in 2006, TAFEs’ share of this artificially created market declined from an already comparatively low 66% in 2008, to only 45% in early 2012. During this same period, the private provider share of the market grew from 14% in 2008 to 46% in 2012. This is an increase of 370%. For the first time in Australia’s history, TAFE has become a minority provider in one state. This has resulted in the proliferation of fly by night private providers, delivering training in a fraction of the time it takes in reputable institutions, and the growth of high volume, low cost training (ie Fitness Instructors) in areas of the economy which are distinguished by their reliance on insecure work, and which are have no connection with skills shortages, or the medium and long term needs of the economy or society. It has seen costs of training for individual students, often the most disadvantaged in society, rise by many thousand percentages points, with a whole generation of young and mature age workers forced to incur debt for qualifications which are of dubious quality, and which have no certain currency in the current or any future economic environment.

The activities of a small Victorian private provider called the Vocational Training Group in November deserve special mention. VTG was running a scheme which involved enticing students to enrol in a government-funded outdoor recreation course by promising kickbacks of up to $1500 per student. Students could complete the free Certificate IV in Outdoor Recreation which typically requires between 6 and 24 months study at TAFE in as little as ten 90-minute sessions. Each student was promised $500 – described by VTG as an “education scholarship” – and an additional $1000 “donation” for his or her club. These payments were to be made by the Supreme Athlete Foundation, a “charitable project” registered at the same address as VTG. At least seven suburban sport clubs and the Royal Yacht Club became involved in VTG’s recruitment drive.

VTG stood to gain government funding of around $2500 to $5000 profit per student under Victoria’s Training Guarantee. The scheme could have netted it somewhere between $20,000 and $70,000 per group of students for about 15 hours of training, delivered at club premises. Cash-strapped suburban clubs also stood to gain thousands of dollars.  No one knows how long the scheme had been running or how much VTG had already made from this scam.

In early 2012, the VTG was deregistered by the Victorian regulator because it was not financially viable. The regulator said that the provider had not been able to demonstrate a viable financial model.

The Victorian regulator did not, and could not deregister VTG for offering thousands of dollars of inducements to students and sporting clubs or for delivering a year long course in 10 x 90 minute sessions. Under the Victorian Training Guarantee, there is apparently nothing wrong with private providers doing this. Just to repeat – VTG was deregistered because it was not financially viable.

The impact of these policy settings are not confined to Victoria.  In Australia in 2008, TAFE share of the market was almost 80%, and private provider share 11%. By 2011, TAFE share nationally had fallen to 66%, and private provider share had risen to 26%. While the effect of the Victorian experiment is reflected in the national figures, there is no way of escaping the impact of policies to increase allocation of public funds to the private sector in each state and territory.

This shift in market share is predicated on a policy consensus amongst all governments that the costs of vocational education should now be shifted to students irrespective of whether it takes place in a high quality TAFE institution, or a dodgy for-profit private provider. At the same time, almost $1b of federal funding annually is paid directly to employers through government subsidies for training, and one of the consequences of the opening up of government funding for training through the creation of a “market” has been an increase in the number of employers accessing freely available government funding for training which they used to pay for themselves.

But the real losers in the current hiatus in the vocational education sector are TAFE and VET students – including, for example, those in NSW. In 2012, students studying a government subsidised TAFE Advanced Diploma in NSW paid either a concession fee of around $50, or a maximum of about $1570. Under the new arrangements agreed to by the Federal and NSW governments, these fees stand to increase initially to $4000 and $5000 when the policy is fully implemented. This is because the both governments have agreed to set an “average price” for these student loans – and this means effectively that training providers, TAFEs or private, will be able to charge students much more for their training – and students will need to take out loans to pay for it.

On top of this, the COAG VET agreement requires state and territory governments to offer an “entitlement” to VET training for qualifications up to certificate 3 – but only for the first qualification. This means that students across Australia, as in Victoria and now SA, may now only get one chance to study at TAFE in these courses, after which they will be required to pay full fees – often thousands of dollars – for any qualifications up to this level. For people who have been retrenched, or who are unemployed, for those returning to the workforce with qualifications which may be decades old – this would be an absolute disaster. It would put TAFE training out of the reach of many people, denying them the second chance of education that TAFE has always provided.

This “one chance” at a qualification has been roundly condemned in Victoria, where many students have been enticed by poorly regulated private providers and the offer of financial inducements and IPads into worthless qualifications.

Louise Watson is one of a number of researchers who are sceptical about the  effects of vouchers or student entitlements:

In education … some clients are cheaper to serve than others, so providers have an incentive to attract concentrations of the easy-to-serve clients.[1]

Watson argues that no voucher scheme has yet been able to solve the problem of thin markets for services.  Denise Bradley was frank in her report about the risk to smaller outer metropolitan and regional university campuses of a voucher or student entitlement system.

Watson makes the link between what she calls ‘simplistic market solution(s)’, and working and employment conditions for teachers:

The introduction of voucher schemes can affect the quality and supply of staff who deliver services. Private for-profit providers … have a strong incentive to keep wages and training costs to a minimum. [2]

The risk is not confined to private providers, who already enjoy the advantage of Modern Award conditions and pay which gives them a huge competitive advantage over TAFE. Salaries at private providers are often half those of staff in TAFE institutes, there are no requirements for permanency, and Modern Award conditions sanction teachings hours which are 50% greater than those required at TAFE institutes. It is no surprise that the Queensland, NSW and Victorian governments have declared war on TAFE teachers’ salaries and conditions, condemning an already highly casualised sector to much greater uncertainty. All this is in the name of competitive neutrality, and a level playing field. It is teachers’ salary and on costs which are the major budget item for TAFE institutes.

Most commentators and key industry figures acknowledge the crucial role of the public TAFE sector both in delivering vocational education to meet the needs of the economy and society, but also as an incubator and repository of high quality teaching skills within the VET sector itself.

Most commentators also acknowledge the key role played by TAFE in regional and rural areas, amongst disadvantaged students, and amongst workers who have been retrenched or who are seeking improved employment and work outcomes. TAFE has built its role and its reputation as an institution which offers students and young workers a much broader vocational education – one which prepares people not just for jobs for today, but for a future vocation where they are able to navigate and negotiate in an environment where jobs are increasingly insecure and where they will need to change jobs many times during their working life.

But the role of TAFE institutes is under significant attack, as the very recently released Victorian Taskforce Review of the training reforms in Victoria shows:

TAFE institutes should no longer assume that they are required to deliver community service obligations that are not explicitly required and funded by government.

Current policy settings in the sector are undermining high quality, innovative and effective vocational education in a highly regarded, and responsive public education provider. The Victorian government has recast its TAFE institutes as just another provider in an undifferentiated market. Other state governments, emboldened by the Victorian experiment, are set to do the same.

Increasing competition for scarce government funds is about creating or extending market organisation of the sector. Making the sector demand-driven through a student entitlement model is code for further competition. We need to be clear that this remains a policy driver in all governments in Australia at the moment. And if the focus of policy is the design of markets, it leads us inevitably to ask the wrong questions, to argue over the wrong things – and to come up with the wrong answers.

There is a great deal to be learnt from the ongoing crisis amongst private providers in the international and domestic education market in Australia.

First, once you create a market, gaining profit becomes the point of the activity, not education.

Second, the actions of a few lead to penalties for all as society’s trust in our vocational education system is eroded.

Third, the market will flood the lower-cost end of provision.

And fourth, more and more regulation is required leading to compliance cultures.

TAFEs are public institutions. They play a number of complex and sophisticated roles in the community. They already have, often directly through the networks of teachers who work with them, fine relationships with their local industry and community groups. TAFEs need to be properly supported in this role. Their role needs to be expanded, and they themselves can help break down the silos of different layers of government and different departments within government. If their role in industry planning was expanded, they could play a much more useful role in assisting local communities to investigate the development of new industries. If they were supported adequately, the strength of the relationships which they currently have could be built upon and developed. Their interest would be with communities, not just with businesses. They are social institutions, and they belong to the communities they serve.

[1] Louise Watson, CR 19/8/08