VET reform: bureaucracy naïve to moral compass of the private sector

By Paul Roberts-Thomson

May 16, 2016

Minister Scott Ryan’s Redesigning VET-Fee Help discussion paper extends the unquestioned consensus in government that the market mechanism in vocational education and training is paramount. Competency-based training and self-checks by providers, as opposed to independent assessment of the learning outcomes, are still not up for discussion.

Of the 34 discussion points canvassed in the paper, the word “quality” is used only once, and even in that case the word is used to refer to the quality of registered training organisations (RTOs) rather than the quality of the education they are providing to the student, usually at taxpayer’s expense.

“This is the sort of model expected to work in the public sector. For the private sector, purchasing must be far more precise … ”

If redesigning VET-Fee Help is seriously to be pursued, it is paramount that there is a thorough examination of why the scheme largely appeared to work, while higher education articulation was required as an outcome, and also why the university incarnation of the scheme has not so spectacularly failed. The short answer: required quality of output underpinned by university reputation.

While the rationale for a market mechanism as an assumed efficient provider of VET is not disputed, the Australian VET market is now approaching 20 years of age and defendable quality control has never been achieved. Regulators haven’t pruned enough bottom off the wide range of VET RTO performance. From the development through the full period of the Howard years to the present, increasing regulation of RTOs has always been a step behind the market. That is why Australian Skills Quality Agency was formed but this has still only at best stemmed the tide of poor quality and rorting.

The regulatory burden is now so substantial, despite poor outcomes, that a very significant part of the millions of Australian taxpayer’s money that goes into VET actually goes into a failing regulation regime. Further, at lower levels of VET, despite all the funds going to the RTO, in many cases the RTO does little or no training, leaving the knowledge and skill building to the unpaid students and employers while disbursing their often taxpayer funded revenue on assessment, travel, compliance and profit. Yet, the system fundamentals seem to be beyond question.

A significant problem in fixing VET appears to lie in bureaucratic wilful naivety of both the processes and the moral compass of the private sector. While the private sector may well be far more innovative, agile and efficient than the TAFE structure, the troublesome component of the private VET industry will only respond to very precise purchasing and this sector demonstrates very little moral compass.

Herewith a quote from private RTO CEO Ivan Brown, Phoenix Institute, on Radio National’s recent story, referring to the Vet-Fee Help rules under which he operated:

“It states very clearly that students if they’re enrolled before a census date and still enrolled after, so in other words they’re enrolled in the course, even if they don’t participate they are still eligible or liable for the full course cost. Now, there was nothing in relation to participation, there was nothing in relation to completion of any study … that’s what they’re rewarding, you’re only going to get the behaviour that you’re rewarding and they’re rewarding that behaviour. When it comes down to it it’s a lot cheaper to train students who don’t turn up than it is to train students who do … “

While Ivan Brown may have candidly enunciated how a private provider may interpret government policy, the evidence over nearly 20 years to any dispassionate VET observer is that he has correctly described the issue. Therefore, a very clear and very serious question has to be asked of the politicians and officials who have been charged with VET responsibility over that period concerning why they have apparently been unaware of this or why they have not acted in response.

Given that the most ambitious of the private sector will only respond to precise purchasing, the VET thinkers must address the issue of how VET is purchased, or to put it another way, how RTOs are paid, since this is the only criterion upon which they appear to be reliably responsive.

The largely failed strategy of auditing RTOs’ capacity to train and RTO-held evidence that the student may have achieved competence is clearly inadequate for a private sector market for taxpayer funds in the 21st century. This is the sort of model that may be expected to work in the public sector. For the private sector, purchasing must be far more precise and the only apparent way to improve purchasing precision is to audit the competence of the student directly and link funds to the outcome of the audit.

Given that the discussion paper does not appear to even canvass issues that may question the broad basis of our heavily distorted market it is difficult to see that any outcome has a likelihood of delivering a VET industry about which our nation can be proud.

The various discussion points put forward in the discussion paper are neither wrong nor pointless. However, they are directed, at best, to papering over the issues and limiting the government expenditure exposure rather than trying to set a framework to deliver a high quality and sustainable VET industry. We can, and must, do a lot better.

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