Redesigning VET market stewardship with eyes wide open


The vocational education and training sector in Australia is in chaos. It is well past the time for clear and strong action that will reset the system and slowly rebuild VET’s tarnished image in this country.

The current VET system is a product of competition policy introduced during the Bob Hawke-Paul Keating era. Premised on the reasonable concept that competitive markets are more efficient and more innovative than monopolies, a new competitive public (TAFE)-private VET system was introduced in the mid-to-late 1990s based on three core structures:

  1. Training packages;
  2. The Australian Qualifications Framework with G6 grades of achievement (levels 1-6); and
  3. Quality regulation through a combination of training entity registration (Registered Training Organisations) and the auditing of RTOs against criteria to ensure students have the necessary skills and underpinning knowledge (competence) to be awarded a specific qualification. Competence and flexible delivery replaced traditional models based on classroom hours.

Training packages were developed in consultation with industry to focus training on real workplace skill needs. The framework’s competencies were defined using verbs such as “assess efficacy”, “monitor”, and “use and maintain” — which can be interpreted reasonably by skilled and ethical trainers, but are also open to misuse by those who are not skilled assessors or those who are not constrained by ethical values. Either way, time/cost/management pressures can become a factor in the assessment decision by RTOs of any ethical persuasion.

Quality regulation in VET occurs through the regulation of benchmark criteria that must be achieved for the training organisation to obtain and maintain registration. In the early days of competitive markets (the late ’90s), the quantum of compliance for RTOs was significant. However, in response to systemic failures of quality in competitive markets, from the beginning but highlighted by landmark situations such as the exploitation of overseas students in 2007 (several years in the making), and the current VET-Fee-Help debacle, the regulatory burden has continuously increased.

The risk of regulation

Regulation is now a very significant component of the cost of training for governments and training providers. But despite this and an attempt to fix the system with the formation of the Australian Skills and Qualifications Authority by Julia Gillard’s administration in 2011 and the cost and effort since, consistency in quality has not been achieved. To add to the confusion, Victoria and Western Australia have not delegated powers to AQSA and remain state regulators.

“It is not an impossible scenario that the employer and student are happy but the taxpayer is being totally ripped off.”

As well as auditing many “inputs” to VET within the RTO such as corporate structure, directors obligations, teacher training and processes, it also audits for evidence students have reached the required level of attainment. Note firstly the evidence being collected for units of competence is often highly skills based which means the underpinning knowledge and generic skills needed to be competent might not be accounted for.  Secondly, note this evidence is more difficult to obtain when qualifications are delivered online. Thirdly, importantly, note the collection of evidence is a significant cost to the training process.

The taxpayer, via the government, underpins much of the accredited training occurring in Australia. The government, rightly, in return, demands quality training that develops the skills, educational levels and productivity of the workforce and represents a return on the public investment. Unfortunately, as we have seen many times in the media, this is not necessarily the case. Instead, the public purse is used as an avenue for rorting and abuse by some for-profit VET providers.

While the desire for quality outcomes from VET training are relatively clear for the government, the motivation of the employers and students — the other two customers of the VET process — are much less clear. Certainly, some employers are primarily motivated by a desire for quality skills in their trainees. However, others are more motivated by such issues as industry access — such as a requirement to have employed apprentices or qualified technicians to even tender for a job — and cheap labour. Likewise, motivations of students can vary from an enthusiastic desire to learn to “just wanting the qualification”. Most employers and students do not have just one motive but a mix of two or more.

These varying motivations make interpretation of VET satisfaction surveys very difficult. It is not an impossible scenario that the employer and student are happy but the taxpayer is being totally ripped off, pouring good taxpayer dollars into shoddy, non-nation building RTO performance.

No doubt the motivation for a market-based system was the cost of training and, in part, presumptions of a “fat and lazy” TAFE system that has long been protected by strong and at times belligerent unions. Despite nearly 20 years of a competitive VET market and the near decimation of TAFE in some states, there is a view among some politicians that this is still the case.

When an employer pretends to be an RTO

Unfortunately, in the early days, most private RTOs entered the market using on-the-job delivery and lower cost as their selling points. I say unfortunately because on-the-job delivery of training by the RTO can be more expensive than the classroom for the same standard of training and underpinning knowledge. Therefore, from day one, there was a tacit understanding that training standards were going to decline and/or some of the training (and cost) was being transferred to the employer or trainee, even though the money for training went to the RTO.

In response, many employers set up their own RTO in order to access government funds for training that they perceived they would have to partly fund anyway. As time passed and the regulatory burden and cost of RTO compliance increased, many employers found that maintaining an RTO was uneconomic.

Cost pressures and the transfer of training from RTOs to employers and students reached a point years ago where many RTOs provided little training and focused their effort on assessment, compliance, travel and profit. Of course, many employers and students performed poorly in this environment due to a lack of both skilled trainers and an encouraging educational environment.

“It comes as no surprise that the private sector can and will act unscrupulously.”

The point of give in this nexus was, and still is, the ability to variably interpret training packages and the quality of assessment. These are subject to enormous variation as recent reports by ASQA in the child care and security industries have proven. It’s resulted in VET graduates with vastly varying ability in skills and knowledge.

The purchasing funds to the RTO are provided at sign-up and completion (outside VET-Fee Help) which creates an economic imperative to sign up as many students as possible and get them through to completion. There is no economic signal to the RTO to ensure that the standard of completion (competence) is sufficient. This makes the funding model highly susceptible to rorting and exploitation by unscrupulous training providers.

It comes as no surprise that the private sector can and will act unscrupulously. The “pink batts” saga was a graphic snapshot of how ethics and morality are found wanting when insufficiently regulated public money is made available to the for-profit business sector. Unfortunately, the public debate at the time could not progress past the shock and horror of perceived lack of ministerial responsibility. This example is clearer: the VET Fee-Help debacle where taxpayers have effectively gifted a significant part of $2 billion to highly unethical RTOs who have robbed the system and its students of money and opportunity.

The once high reputation of VET has now been trashed by the behaviour of unscrupulous VET operators and the arguable naivety of senior government bureaucrats. While the quantum of the abuse of VET Fee-Help was predicted by very few, the fact that abuse was certain was noted by many industry spectators who questioned how such a massive new source of funding for VET diplomas could be provided to an industry with substantial endemic quality problems.

VET Fee-Help the hero?

However, VET Fee-Help may well end up as the hero in the debacle. The situation is now so dire that the government may be prepared to consider otherwise unthinkable radical solutions.

The solution is not so complicated. The problem is the regulation of quality in a market dependant on, and distorted by, taxpayer funds. Purchasing of “starts and completions” by students (as measured by audited evidence of competence after the fact) in this environment is too imprecise. The answer has been staring us in the face all along — think grade 12, think university. That is, external assessments.

The Turnbull government can fix the VET system by instituting external assessments of competence, either as a 100% requirement (like Finland), or an auditing tool or some other variation of the concept. One potential concept is a capstone assessment which is a final, external test before the granting of a qualification. This is already the situation for electrical apprentices.

The important point is that the purchasing precision is substantially increased from auditing evidence of competence to auditing actual competence. Essentially, linking the flow of funds to RTOs to actual (audited/externally assessed) achievement of student competence will sort out our RTO and VET sector very quickly. In this way the dodging of regulatory intervention by smart lawyers that has so plagued ASQA and state regulators becomes irrelevant. The unethical and poor quality RTOs will simply not receive enough income to survive.

VET Fee-Help has unwittingly provided an opportunity to set VET on the road back to being a world leader. The question is does our government have the will and the courage?

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