National Policy Direction on Vocational Education and Training Means that Community Education Loses Out

Australia's lack of a national VET policy means that community education will continue to lose out.  The recent VET FEE-HELP reforms and replacement with VET Student Loans, while welcome, are not enough.  Dr Don Perlgut, CEO of Community Colleges Australia, reports below.

“Contestability” in VET - A disaster for community education

History has not been kind to the Australian community education sector in the last ten years.  The age of “contestability” (I call it “marketisation” or “privatisation”) for VET funding has increasingly disadvantaged community providers, which shrink each year in both size and number of student.  No less than the self-described “Queen of Capitalism”, Business Council of Australia Chief Executive Jennifer Westcott, has said:

We can’t just say let the market work, because it doesn’t always work for everybody…. It doesn’t often work for disadvantaged people, it doesn’t work in certain locations [and] it doesn’t work for emerging skills. Whenever you hear people say, “Let the market just run,” you say: to what end and what purpose?  Market reform has to be about outcomes, not fads.

And it’s not just her.  Jenny Lambert, the Australian Chamber of Commerce and Industry education and training director, has described the National Partnership Agreement on Skills Reform (which obliged the states and territories to pursue open market policies), as an “abomination”.

This shrinkage of the community sector has happened despite community providers maintaining high quality, effectiveness and ethical approaches.  The share of government-funded VET delivered by community providers has almost halved from 2005 to 2015, from 10% to 5%.  This trend in the community sector is NOT the result of any deliberate government policies towards community-owned not-for-profit Registered Training Organisations (RTOs), but the result series of uncoordinated activities by both state and Commonwealth governments (such as “contestability”) that is slowly strangling the community sector.

Does Australia need a community VET sector?

Does this matter?  Does Australia need a community VET sector?

Community Colleges Australia (CCA) believes the community sector does matter.  That the community VET sector is a precious resource that, once it disappears, will be irreplaceable.  If there were not 2,500 adult and community education providers (almost 20% of them RTOs) in Australia, no-one would (re-)create them, with all of their diversity, accessibility, volunteer commitment and close proximity to their communities.

There are no current national policies regarding the community RTO sector.  The adult and community sector (known as “ACE”) last had a “Ministerial Statement” issued in December 2008 by the Ministerial Council for Vocation and Technical Education.  That statement confirmed the “value of ACE in developing social capital, building community capacity, encouraging social participation and enhancing social cohesion.”  The statement also described how the sector can respond industrial, demographic and technological changes in Australia, including important contributions to skills and workforce development – and thus to productivity.

There is very little in the 2008 Ministerial Statement that does not apply today.  But the world of post-school education has changed rapidly in the last eight years, the post-GFC period. Australia needs a national policy statement that articulates the new realities of vocational education and training, given our rapidly changing economy in the post-mining boom period.  This statement must include the complementary nature of community providers to TAFE and the private, for-profit sector, as well as the role in educating young people, and providing services to the NDIS and other programs.

VET FEE-HELP:  A failed program that underpinned the focus on “contestability”

The marketisation/privatisation of VET has created an unbalanced system, one that has relied in large part on VET FEE-HELP as a key driver and effectively pushed VET students AWAY from TAFE and away from the community sector to the private for-profit sector.  As Quentin Dempster wrote in March 2016:

What started as a bipartisan Commonwealth strategy to privatise vocational education and training (VET) by enhancing skills through a dynamic competitive market, has ended with allegations of corruption and malfeasance. Worse than that, it has resulted in the deskilling of Australia and $3 billion in dubious VET loans, part of an estimated $13 billion blowout in all unrecoverable student loans to 2017…. In 2012 the … government gulled the states and territories into defunding their TAFEs with the offer of uncapped Commonwealth money via student loans, in return for making their TAFE systems "contestable".

Here is the exact wording (see page 23, Schedule 3) of the 2012 National Partnership Agreement on Skills Reform):

Jurisdictions recognise that the introduction or further strengthening of an entitlement will also require a suite of supporting reforms - such as the expansion of the Commonwealth’s income contingent loan scheme to improve the accessibility of higher level qualifications and strategies to support public providers to adapt to the particular circumstances of their local training markets, including an environment of greater competition and contestability.

Do we need any more evidence about the abject failure of VET FEE-HELP, and shared “bi-partisan” (both sides of politics) responsibility for that failure?  If so, today’s release of the Australian National Audit Office’s report, Administration of the VET FEE-HELP Scheme, gives us more, concluding that, “The design of the expanded VFH scheme … was weighted heavily towards supporting growth in the VET sector, but an appropriate quality and accountability framework addressing identified risks was not put in place.”

The Age of VET Student Loans:  Will the world become good again?

What will happen when the VET Student Loans program commences on 1 January 2017?  Will this “fix” the VET system?  The long overdue abolition of VET FEE-HELP is only the first step.  By all accounts, the VET sector is about to undergo yet another major shake-up.  Many private for-profit providers will close down:  “For any provider that has built its business model on the back of VET FEE-HELP, this day was coming,” the Hon John Barilaro, NSW Minister for Skills and Deputy Premier, told an ACPET Sydney Forum on 23 November 2016.  Or they will dramatically downsize.  But what happens next?

CCA’s research indicates that only about 48 not-for-profit (NFP) providers were enrolled in VET FEE-HELP in 2015, and of those 48 only about 5 are “traditional” community VET providers, which used less than $500,000 in VET FEE-HELP loans that year.  (Many of the others are NFP industry associations, religious institutions or single-purpose training organisations.)

In other words, the overwhelming majority of 500 or so community education RTOs have not used VET FEE-HELP and are unlikely to use VET Student Loans.  This is for two reasons:  the great majority of community sector VET teaching is at Certificate 1, 2 3 and 4 levels (not Diploma and Advanced Diploma levels), and because much of the community sector never trusted VET FEE-HELP because of the abuses that occurred. 

Thus, as with VET FEE-HELP, any national VET policy built around VET Student Loans as an “answer” will ignore the massive contributions that the community sector does and can make to the skilling of Australia, especially for the vulnerable and disadvantaged Australians that the community sector provides for so well.   Just as the (now almost departed) “age of VET FEE-HELP” did not help the community VET sector, and effectively assisted in its decline, VET Student Loans will do almost nothing to support the community sector.

The Current VET FEE-HELP Reforms are Not Enough

CCA strongly supports the current VET FEE-HELP reforms, but believes that these reforms are not enough:  they only fix one massive “problem”, and leave the rest of the VET sector floating in indecision. Both the Australian schools and higher education sectors are very coherent compared to the VET sector.  Not coincidentally, neither of those two educational sectors experience a 67% for-profit “market penetration” the way that the VET sector has, with 3.5 million of the 4.5 million VET students in private for-profit providers in 2015.

Australia needs a vision about what is required to support an innovative, adaptive and resilient economy and society.  Funding and regulatory models need to be rethought, a real change requiring a fundamental re-examination of the purposes and ideals of vocational education.

The current indecision around 2017 Commonwealth-State VET partnership agreements compounds the already uncertain funding environment, and it is highly likely that VET funding levels will deteriorate.  The community VET sector – the one that we call “The little engine that could” – is likely to continue to be a loser in this mix of uncertainty, with our sector’s capabilities and strengths under-appreciated.

The Pivotal Role that Community Education VET Can Play

CCA strongly believes that the community education VET sector can play a pivotal role in building social and economic capital in Australian communities, particularly within rural and regional areas, and those facing high levels of unemployment. Recently released NCVER figures show that community education providers topped all categories (TAFE, private for-profit, university), with almost half (48.9%) of graduates employed at the end of the training that had not been employed prior to commencing their study.  See The sector can also play an economic development role in every community where community providers operate.

To fulfil that potential, however, two things are necessary:

• State, territory and Australian governments need urgent attention to the future of VET, one that does not see massive changes every two or three years, and one that values quality over perceived “efficiency”, and that values and encourages “investment” over profit.
• The community sector requires the resources that will enable it to elaborate on, catalogue and build new models and visions for how community education can work, as a true investment in sustainable provision of community-based education and training.