Quality Assessments in Vet – Student Assessments and Regulatory Reform

Last week I looked at the Quality Assessments in VET discussion paper that was released by the government and discussed some of the questions posed in the first half of the paper.  I also promised that I would come back and look at the second and third sections of the paper which talk about reforms to student assessments and regulatory reform.  So after spending that last week recovering from a severe chest infection here goes.

Chapter Two of the discussion paper looks at how we can assure the quality of qualifications issued to students and ensure that students who are issued with a qualification are competent.  It is of course vital that qualifications issued through the system are and can be trusted, otherwise what is the point of a nationally accredited system, we may as well just let anyone train people give them a piece of paper to say they are qualified.  As the paper rightly suggests independent validation of assessments to ensure validity and consistency of outcomes is one such way of attempting to achieve this.  There is without a doubt a need to have the outcomes of assessments validated, we should be able to say with confidence that everyone (or at least the vast majority) in Australia who has a certain qualification will be able to successfully undertake particular activities that relate to that qualification, whether it was delivered and assessed by the biggest private provider, a TAFE, or a small local provider.  The competency outcomes should always be the same.

One of the problems I think that often comes out of this discussion is one around how to make the process fair and equitable for all parties involved.  One could suggest that what is required is independent external validation of key competencies for all students prior to the issuance of a certificate.  Now while I can see the value of this in high risk areas and areas where there exist registration bodies that control who is licensed to work, there are a lot of vocational areas where the risks involved are quite low, particularly at the lower levels of qualifications and it would seem unnecessarily burdensome to have a carte blanc approach such as this.  I would however think that external validation of randomly selected participants might be useful across the board, with the percentage of participant outcomes being validated increasing as the number of graduates increased.

I also think a principles and risk based approach to validation of assessments and tools through a collaboration with industry is great start.  I know some have suggested that there is a burden here and that employers or industry groups may become reluctant to collaborate with a large number of providers.  It has also been pointed out that for providers with large scopes of delivery the process becomes almost never-ending and requires a significant staff commitment which they may not possess.  I personally think that the current requirements in The Standards for validation, if properly enforced are a sufficient base to work from.  Where there are particular concerns either around a qualification or a provider, or there is an acknowledged high risk area than additional requirements could be enforced.  The key here is of course enforcement.  There is as I have said before no point in having The Standards if they are not properly enforced.  The idea however of industry-endorsed, externally administered tests is not one that I could endorse primarily because it is something which is really outside of the philosophy of VET and the ideas of competency based training and assessment.

An argument is also often made that industry does not necessarily possess the skills to determine whether or not an assessment or tool has or will produce the right outcome.  The argument is that this is a specialist skill which is not necessarily part of the skills of an industry.  I am  not sure about this, but what Industry can do for us is tell us whether or not they feel that someone who has completed all of assessment tasks within a tool would be competent.  They can tell us in the case of particular students whether or not a judgement of competency was correct, both based on the evidence and through more practical methods.  It is industry after all who will end up employing VET graduates.

There is also  suggestion that one reason for industry satisfaction with graduates has more to do with the expectations of employers than it does with the actual competence of students.  It suggests that employers have a much higher level of expectation for say someone with a Certificate II or III than the qualification provides a graduate.  There is some validity to this argument, which suggests that employers both need to be better involved in the process of the development of qualifications, and that they need to be educated as to what should be expected of graduates at various levels.

Quickly now I want to move onto and discuss chapter 3, regulatory reforms.  I have long suggested that the regulator should be more concerned with the actual training that is being delivered and the outcomes of that training rather than just the tools, policies and materials.   Now I know that ASQA currently looks as a sample of completed assessments to ensure that a competency decision can be made from those assessments, but currently they consider or look at how those assessments were generated.  They don’t randomly visit face to face training or workplace delivery, or undertake random sampling of online delivered materials.  They don’t know if the training consists of the trainer standing at the front of the room as essentially reading the answers to everyone while they copy them into a workbook.  I firmly believe that this one single step, that is actually looking at how the training was being delivered who have a more significant effect on the quality of assessment outcomes than almost anything else suggested in these chapters.  It would also give ASQA a chance to consider the skills and quality of the trainer delivering the program and the quality of their qualification.

I think the idea of Training only RTOs is foolish and should be put out of its misery right now.


Anyway that’s my opinion.

Quality of assessments in VET Discussion paper – A discussion.

So the Federal government has just released its discussion paper on Quality Assessments in VET.  This is part of some ongoing movements around the Certificate IV in TAE and other matters that has seen the new qualification being held back while the powers that be see what they can do about the perception at least, that there is a significant problem with how assessments are being carried out in the sector.

My initial comments on this are simple.  There is nothing wrong with the Certificate IV in Training and assessment, particularly as an entry-level qualification into the sector.  The problems with assessments in my opinion have very little to do with the Qualification and a whole lot to do with;

  • Inappropriate delivery and assessment of the qualification itself by unscrupulous providers simply out for a quick buck, and
  • pressure being put on trainers and assessors to ensure that people are deemed competent, again by unscrupulous providers out for a quick buck.

The problem here is not the qualification.  The problem lies squarely at the feet of providers themselves.  If the TAE is delivered and assessed properly, and the assessment processes within providers were up to scratch then there would be no issues.  The Department, ASQA and the sector itself needs to man up and end the shonky delivery of this qualification.  We all know whose TAE qualifications aren’t worth the paper they are printed on, but no one seems to want to do anything about it,  and when someone suggests that we do, the old catch cry of not more regulation leaps out of the woodwork.


Now that I have got that out of the way let’s have a look at the questions/proposals in the first half of the discussion paper.

  1. RTO Limitations
    • Is it appropriate for large number of RTOs to deliver the TAE qualification – NO.  The TAE should be a qualification for which obtaining approval to deliver is a rigorous process, including having not just the assessment tools, and staff audited, but also to have the delivery of the program audited.  TAE should be a special scope item outside of other areas as it is the key component within the system.  The number of RTOs delivering the qualification should be reduced by ensuring that there is a heavy and continuing compliance and regulatory burden on any RTO that decides to place a TAE qualification on scope.
    • Should RTOs be restricted from issuing to their own trainers and staff – NO.  If the audit and compliance system is rigorous enough there should be no problems with issuing to internal staff.
    • Should TAE be available through RPL – YES.  There are significant number of people within this sector who are highly skilled and whom undertaking a full assessment process whenever there was a package change would be overly burdensome.  Again if the regulatory controls are right RPL is appropriate.
    • Should TAE only be delivered by practitioners with a specific period of training and assessment within the Sector – YES.  At least 2 years FTE.
    • VET trainers should have higher qualifications – YES.  Anyone training the Certificate IV TAE, should hold that qualification plus and additional higher level qualification relation to VET.
    • Should there be a practical component – YES.  There should be either a work placement (for those not currently employed) or evidence of work (for those currently employed).  It does have to be long 50-80 hours would be more than sufficient.   This would ensure that graduates had actually spent time with real students and undertaken real assessments.
    • Should participants in TAE be employed in the sector prior to entering the course – NO.  This would overly constrict entry into the sector of people who might otherwise be able to undertake a TAE course and become quality additions to the sector.
  2.  Skills and Qualifications of Trainers
    • Should a design and development unit be made a core part of the Certificate IV and would this improve outcomes – NO and NO.  Including a unit on design and development would do very little to improve student outcomes at a certificate IV level.  Design and development of assessment tools is skill which is above the AQF level of a certificate IV.  Assessment tools should not be being designed by someone who only holds the entry-level qualification unless that person has substantial experience within the sector and in relation to design and development
    • While there should be some weight given to majority considerations, these majority considerations should be tempered strongly with the views of key stakeholders (as long as those key stakeholders are chosen wisely) and the strength of the arguments made.  The idea of who are the key stakeholders for the TAE is an interesting one to ponder.  I believe there needs to some representation from the sector itself, but which must include representation from both the coal face of delivery through to RTO/provider management.  There must also be strong representation from government (The department of education) as they are the major stakeholder in this (you can disagree with me if you like).  In the long run it is the government who is the ultimate customer for the vast majority of VET work that occurs, be that through funding or loans, or special purpose project or what ever.  The system belongs to the government so it is the major stakeholder.    Now I know that there are going to be calls here for the unions (AEU etc) to be involved and the academic VET research set, but in the long run the decisions about the TAE have to be made by the sector itself and the government, others can have input and ideas and the decision should and must sit with these two groups.
  3. VET Professional association
    • Is there a need to have a national VET professional association – YES.  This to me is a no brainer, of course there should be.  Should membership be mandatory in order to work in the sector, yes, but there needs to be levels.  So the first would be an associate member shall we say which would be open to anyone who had a TAE with very little additional in the way of requirements.  From there, various level could exist depending on the experience of the person, continuing professional development, independent evaluation of their work and skills etc.  This would make it easy to delineate between those at the top of the profession and those just beginning and would also encourage the continuing improvement of skills.  There should also be categories for  Trainers/Assessors, Management, compliance etc and a person should be able to be in multiple categories.
    • The big barrier to this is of course money.  It would either need to be funded by the government or it would need to be a membership fees based process.  The problem with being funded is obvious, in that money would be need to be found somewhere.  With membership fees two things would need to happen, one, it would need to be ensured that membership was not just a you pay your money you get your piece of paper deal or there would be no point.  On the other hand the process would need to not  be overly convoluted or expensive as this may be a disincentive to gaining higher levels of membership.
  4. Activities of a VET Association
    • It needs to be a register of VET practitioners
    • Develop and implement a CPD system for the sector
    • Approve professional development activities for CPD points
    • Promote VET sector work as an attractive career path.
    • While these activities need to be coordinated at a National level, but in particular the CPD program could be achieved through existing groups and or other external structures which were approved as CPD
    • There are a number of bodies with significant sectoral membership which could be utilised.  One example would be ACPET, although this might be met with resistance from the public sector, another might be something along the lines of AITD, which is already a membership organisation for the learning and development sector and which has a significant number of VET sector members.  In addition a private sector organisation like VELG which already has a solid VET membership base may also be an option in this area.
  5. Models for a VET association
    •  I have a preference for the type B model, it is the simplest, funding can be easily accounted for, and maintenance and management of registration and CPD needs to be held centrally anyway in my opinion.
    • While model A has advantages in that it takes into account things which already exist, I think it would be too hard to manage overall and membership would not be centralised.
    • Model C is simply a registration model as far as i am concerned and would add nothing to the sector.

Well so there you have it, my thoughts on at least the first half of the paper.  I will make some comments on chapter two of the paper later in the week.

On completion vs Commencement Payments – Some Thoughts

I wrote a piece last week about the state of VET FEE – Help (VFH) and listed a number of points that I thought needed to be addressed by any government considering changing the way in which the system works.  One of those points, that a completion based payment system rather than a commencement based system should be considered created significant discussion, so I thought as the issue is quite complicated that rather than try to answer questions or outline my position in a range of forums I would simply write about it here.

As we know VFH is a system in which payments to the provider from the funding body (Federal Government) are paid on the commencement of a student in a program of study.  This is diametrically opposed to the way in which funding works in a number of the states, notably QLD, where payments to the provider are made on a unit completion basis. One, VFH is essentially an inputs system while the other is an outcome system.  I suggested in my post that a new VFH system should consider moving towards a completion based system as a built-in safeguard to ensure that providers do not enroll students who they are not confident will complete at least a significant proportion of the course in question.  One of the reasons why VFH came to be viewed as a cash cow by a range of providers was the fact that payments were made on the basis of commencement, that is passing a certain census date.  Large number of students could be enrolled, significant cash funneled into the business and there was very little regulation around completion rates, this meant that unscrupulous providers could milk the system for significant amounts of money without having to actually provide anything to anyone.  It could be suggested that one of the reasons why the Mega-providers we have now came into existence was almost entirely due to the payments on commencement system which allow the creation of large war chests of capital available to fuel growth over a very short period of time.  This exponential growth would have been significantly more difficult under a completions based model.

Let us them oppose this system with the one which is in place for government funding training in Queensland.  Direct funding in QLD through the government pre-qualified supplier arrangements are structured so that RTOs are paid only when a student completes a unit of study with an appropriate completion type, in general Competent or RPL granted.  There are no upfront fees paid by the government at all, although they do insist that providers charge a mandatory student contribution fee, though they do no mandate to providers what that fee might so.  Payments are made to providers on a monthly basis on the acceptance by the department of an extended AVETMISS data report, capturing those students who have completed and for whom a payment is allowed.  In addition where a student withdraws from a course and the provider has delivered training to the student a percentage claim can be made (withdrawn – non assessed) to compensate the provider for resources that may have been consumed in the delivery of training to the withdrawn student.  In general payments relating to student completions take no more than 6 weeks be paid to the provider from the time the student completed the unit.  If a student completed on the 1st of the month it would be approximately 6 weeks until the payment for that unit came through between 10-14 of the next month.  What I am suggesting is a system such as this be implemented in relation to VFH.

Now I think it is very important to note here, but in my opinion the business models adopted by providers in relation to how their businesses run should have no bearing on  the decisions of government in relation to how they fund courses.  Simply because a change to a funding model makes it more difficult for a provider should not in general be the concern of government, providers should be flexible enough to adapt their business models to these changes.  Now while this may seem harsh on the surface, anyone who has had a passing involvement in this sector knows that funding arrangements are always subject to change and providers either are able to cope with that change or they are not.

There were a couple of key discussion points that were raised in opposition to my suggestion of moving to a completion based model;

  1. Providers have costs such as staff, trainers, rent and other overheads which have to be paid regardless of whether a student completes.
  2. Non-completion is often out of control of the provider, and
  3. Manipulation of outcomes to ensure that students pass/complete units leading to a devaluing of sector qualification.

I will look at each of these in order and offer a response to them.

Issue 1: Providers have costs such as staff, trainers, rent and other overheads which have to be paid regardless of whether a student completes.

Yes, that is simply to my mind about being in business, there are always expenses and how you structure and run your business particularly in relation to how payments are made is your business. Also again to take QLD for example there are numerous PQS providers who seem to cope quite well with all of these expenses in a completion payment environment and in addition if a completion payment model was to adopted where providers were compensated for withdrawals with a percentage payment to cover training expenditure would not this reduce the problem here.

Issue 2: Non-completion is often out of control of the provider.

Again, yes this is true in fact I would say that more often than not non-completion is out of control of the provider.  However completion payment systems where withdrawal is compensated for ensures that an RTO is very proactive in relation to the progression of their students in their chosen of study.  Students are worked with constantly to ensure that they are moving forward, assistance given where they may be struggling with particular elements or units, and processes around withdrawal or transferring to other programs, clearly articulated.  Now I am not suggesting that VFH providers don’t do this, I am simply suggesting that under a completion payment system, this whole process is managed more tightly simply because it needs to be.  What a completion based system does do, l is make the RTO more considerate of a students chances of finishing a program of study than under a commencement system.  Now while 100% completion rates are impossible with good student enrollment policies and good systems in place 75%+ is not difficult to achieve without the problem alluded to in Issue 3 raising its head.  In fact I know of a enterprise provider in a highly regulated industry who had a 98%+ completion rate for its apprentices.  Why? Because they were selective about who they bought on and they worked extremely hard with each and every student.  Now of course there is wide difference between that sort of model and a more commercial model, however if profitability it not your central goal, then being selective about the students that you chose to offer programs to and how you manage those students can have substantial effects on your completion rates.

Issue 3; Devaluing of the sector due to people simply being passed to make completion payments

Again Yes, this may be a problem, however I think the damage done to the sector in the last 12-18 months by the VFH debacle has harmed the reputation of the sector than anything that has happened before.  How do we combat this then; contractual compliance audits outside of the normal ASQA audit cycle are one way.  Again to reference QLD the education department can audit a provider at anytime and look at their outcomes, time frames, evidence (essentially all of things ASQA would look at) and more to determine whether or not the RTO is meeting the contractual requirements.  The QLD department has over the last 12 months and previous to that imposed a range of sanctions on providers up to and including removal of their PQS status for non-compliance with contractual arrangements.

One of the things I think is crucial with any new system of funding be it commencement or completion based, but particularly in relation to commencement funding is for the government to be able to quickly and easily recover funds that have been paid up front.  Where we have seen completion rates as low as 2-4% for online courses the government should have simply been able to say, you haven’t met the standard benchmarks you need to give us the money we paid you upfront back or to at least suspend payments until the amount owing has been recovered.

Perhaps however there might also be some compromise position which will reduce some of the concerns people have while at the same time providing for better control over the funding and the outcomes that are supposed to relate to this funding.  Perhaps a model could be developed which paid a small percentage of the overall potential claim at enrollment with subsequent payments  being provided on a completion basis and adjusted accordingly.  So bear with me while I describe what is in my head;

  • RTO enrolls 10 students in a course at $10,000 per student  (Total potential claim TPC $100,000)
  • At census date RTO is paid a nominal percentage of the TPC say 20%, which would be $20,000.  This would be a figure that would relate to what the funding body saw as lowest acceptable completion rate.
  • Completion payments are then adjusted as students complete and the RTO is liable to pay back any amounts where the overall completion rate is less that the initial payment.
  • Where 20% of students completed RTO would get no additional funds over the initial payment
  • Where 10% of students completed RTO would be required to repay 50% of initial payment or $10,000
  • Where 50% of students completed RTO would receive an additional 30% of total potential payment or $30,000 making a total of $50,000 in payments.  Additional payments would be made on a month by month basis on the completion of various units by students.
  • RTO could claim a rebate of say 25-50% of total potential claim per student where student withdraws by RTO has delivered training to the student.

Anyway that’s just my opinion.



Reinventing VET FEE – Help

So I think no matter what happens in September or October at the next federal election the VET FEE-Help (VFH) will change in 2017 and I think for a lot of us in the sector, particularly those who have been around for a while, changes to the system cannot come quickly enough.  We have seen the VFH system spiral out of control over the last couple of years.  I have on a more than a few occasions previously suggested that while there have certainly been unscrupulous, profiteering activities by a small number of providers the main issue with VFH was that the system and the contracts around it were simply not appropriate.

Even if we simply consider the process of applying for status as a VFH provider, the focus was almost completely on the financial aspect, sure there were a few nods to policies and procedures, but in the long run financials were what the decisions were based on.  Part of me understands mindset here, providers are regulated by ASQA and therefore if they where a registered provider then the compliance around quality of training and outcomes should have technically at least been taken care of.  But without a doubt this mindset is wrong, not because ASQA is not doing its job but because registration as a provider is simply a compliance process and not a quality process.  In addition it seems to me to be obvious that simple compliance is insufficient when we are talking about contractual arrangements of the nature of VFH.

So given the government has said that they have open table policy in terms of changes to the VFH system what changes do I think need to be made in order to make the system work more effectively, given that I think we need to have an income contingent loans system for vocational education.

  1. Ban completely or restrict heavily the use of education brokers.  I disagree somewhat with ACPET’s stance here and also the argument that it is difficult to find students without the use of a brokerage.  Student recruitment and marketing should be controlled in house with no loopholes for the RTO to blame third parties for any issues.
  2. Extra scrutiny paid to providers who delivery a significant portion of their programs online, because well lets be honest it just hasn’t worked and figures show that strongly.
  3. ASQA registration, financial information and a nod to quality through polices is simply not enough.  That being said, being anything less that medium risk with the regulator should have their VFH status refused or paused until such time as they can show that they are back at medium risk or below.
  4. RTOs must have been trading/delivering training for a substantial period of time, I think at least five years.  No provider should be able to start-up and get VFH status.  I think the must have been delivering Diploma level courses for 5 years concept is a bit wrong-headed as there are quite a number of legitimate reasons why a high quality provider may have chosen not to become involved in Diploma level qualifications and a range of reasons not relating to directly to VFH for them to decide to take them on.
  5. Buying, transferring ownership, rolling up into a holding company or any activities like that should void the VFH status of the RTOs and a reapplication process with their new status commenced.
  6. Payment should be on completion of units or subjects not commencement.  If you can’t cash flow your business to cope with this then your business model is probably wrong.
  7. Significant movements in a providers VFH enrolments, particularly increases and particularly in programs with low employment outcomes should trigger audits from both the department and ASQA.
  8. Active monitoring of marketing advertising and student enrollment practices needs to be instituted.
  9. Complaints process that triggers cessation of payments for the particular student or for all payments where there are significant numbers or types of complaints.
  10. Automatic 5 year ban from operating or being a high managerial agent of a VFH provider where there have been negative findings relating to another RTO they have been involved with.
  11. Automatic cessation of payments where any action is taken by ASQA, ACCC, The Department or any other similar body against a provider.
  12. Where potential students may be eligible for alternative funding options to VFH to access a course they must be notified of those other options.
  13. Limit fees.  I have often said I struggle with Diploma prices over $10,000 given that 3-5 years ago they were as low as $5,000.  This should particularly be the case where the course has low employment outcomes or workforce needs (Diploma of Counselling for example).  Set a standard limit on fees and if providers wish to charge more than this they must make their case as to why as part of their application for VFH status.
  14. Give the Department the power to simply cease payments immediately where any matter of concern arises until that matter has been decided.
  15. Cancel all existing VFH provider status and make every provider reapply.
  16. Transition any continuing students to the new system and even new providers where necessary.
  17. Strong government information campaign around VFH, what is legal and what isn’t.

So there are my thoughts on at least some things that would make a much better VFH system.  I know that some of you are going to disagree strongly with my on some of the points I have made and I would be really interested in hearing why you disagree and what you think an alternative would be.


Anyway that’s just my opinion.


New Year – New VET or does nothing really ever change

First off I hope that everyone had a wonder Christmas and New Year and that at least some of you got away from the daily grind for a little bit of  break.  For me it has been interesting to have an actual significant break over the Christmas and New Year period.  Usually I take holidays at other times during the year and simply escape the office for public holidays and maybe a couple of extra days.  So between Christmas itself, seeing Weird Al Yankovic at falls and renovating my kitchen I for once in a long time have not paid significant attention to the various machinations within the sector.

The big thing that has happened of course are the changes to the VFH system.  There has been substantial commentary from a number of sources around this so I won’t say a lot.  My one concern out of the whole bag of tricks is the requirement that providers must have been delivering Diploma Qualifications for 5 years or more, regardless of how long you have been an RTO for.  We would be ineligible under these new provisions despite the fact that we have been a successful, low risk, NFP RTO since 1998, but because our business for many years was focused on new workers and workers with disabilities we until relatively recently never bother to put diploma level qualifications on our scope.  I can understand why it is the government has decided this, but I also sincerely hope that in the fullness of time they rethink this and make allowances for those reputable RTOs who have well established track records, but who for many legitimate reasons had previously chosen not to deliver diploma level qualifications.

So enough of that and two the year ahead.  First things first, for those of you who are interested I will be presenting at the AITD conference in Sydney on 5-6 May this year on the topic of reconnecting L&D and VET, so if you are going to attend the conference, come and say hi.

What then are we gong to see in the sector over the next 12 months.  Firstly I think we will see more prosecutions by the ACCC and more actions from ASQA.  I suspect we will see somewhere in the vicinity of 8-10 providers (including some large ones) investigated by the ACCC as well as a number of the brokerages.  We will also see more cancellations of registrations over the coming months as well, both voluntary and involuntary and further constrictions on how the VFH systems operate with a view to a revamped system being run up the flag pole prior to the end of 2016 for commencement in 2017.  What that system might look like and where it might be focused I think will depend to a very large extent on the outcomes of the next federal election which PM Turnbull has already suggested will be in September or October.

I think we will also see further TAFE campuses close as the costs associated with maintaining large facilities for smaller numbers of students becomes financially difficult to swallow.  In fact if rumors are to be believed the Dapto campus will be closing this week and moving to leased facilities to reduce their $650,000 operating expenses for 10 students.  We will also I think see a shift in the educational brokerage market.  We will see less RTOs utilising these third part providers and more bringing the student recruitment processes back inside their own walls, where to be honest I thing they belong and where the RTOs themselves have far greater control over what is happening.

We will of course also see some significant changes in how the various states deal with their direct funding initiative.  We are in fact already seeing the Victorian government change the structure of its funding programs and we will see other changes, in some cases significant and in others tweaking of systems which are already working fairly well.  I suspect in Queensland we will see a more rigorous process around becoming a contracted provider when the current contracts come up for renewal in June.

Will it be a tough year, I think for those providers who haven’t built sustainable and ethical income streams, particularly those who have relied on ever-increasing student enrollment to fuel growth it will be particularly hard and we will see job cuts and business changes in those organisations if they manage to continue at all, but for the rest of us I think it will be pretty much as it has been for long time, business as usual.


Anyway that’s just my opinion.

Christmas in VET land.

Well it is coming to the end of another year and holidays are rapidly approaching for me at least.  So I thought that now was a appropriate time to look back over the year that was (and what a year it was) and to consider what has changed and what hasn’t for those of us who live in VET land.

Personally it has been an busy and fruitful year for myself and the organisation that I work for, not just in our training business but in our overall community services business as well.  Sure we are not a massive operation dragging in ever increasing amounts of money, but we are and continue to grow and be successful which I think for most of us is all we actually want.  We are a niche provider and the decision to focus more on particular parts of that niche (community services) has given us a number of highly successful income streams which will continue over the next year or so and which are not heavily reliant on either direct government funding or programs like VET FEE Help.

Now onto wider issues and perhaps the most pervasive and divisive issue of the year, VET FEE Help.  For a lot of us who have been questioning the prices, actions and activities of a range of providers in this sector, both public and private and who have expressed concerns over how the program has been run and managed, this year has (or at least I hope it has) been a bit of a watershed.  We are seeing prosecutions and regulatory actions taken in relation to a number of providers, again both public and private with at least a few more to come in the New Year.  We have seen changes made (whether or not they are the right changes I will not comment on here) to the system itself and a commitment to substantially change the landscape around VFH for 2017.  These are in my opinion all positive things.  I know that many of you, like me have despaired at the negative media publicity and what now seems to be almost daily stories about the horrors of the VET sector, but two things rise up in me when I think about it, firstly that the vast majority of these issues relate to the VFH side of the sector and those of us who either don’t access or only access sparingly the VFH system still stand with our reputations strong.  This is, or at least should be a business that is built on the strength of the reputation and outcomes of the provider, not the churn of endless new students recruited through unscrupulous brokerage firms.  This should not be take to condemn those who use VFH extensively or all brokers, it is to point out that even the best of us can be unfortunately be severely effected by the actions of a few bad apples.  The second thing that rises to my mind from this whole situation is the idea ‘this to shall pass.’   Change is part of this sector and always has been, not just around funding models, but compliance, training products, everything, change is part of what we do, and it something that most of us do and cope with well and we should be proud of that.

Of course it hasn’t been just the VFH side of the sector that has seen problems and changes.  We have seen changes to direct funding arrangements in SA and the beginnings of changes in Victoria ( a system and situation which even today I still struggle to make sense of both in terms of policy and operations).  We have seen the public sector shout loudly (some more loudly than other, I am looking at you AEU) about the horrors of having to be accountable and competitive and provide outcomes and services that people and business both want and need and to not just expect to governments to pick up the tab no matter how large it might be.  Queensland has acted to remove funding contracts quickly from providers who were doing the wrong thing and to sanction others in other ways.  In general we are I think finally starting to see the shift and progress towards to goals of the VET Reform project.

Now enough of what some of think might be a focus on the negative.  Again this year I have made some amazing friends and acquaintances and colleagues who along with those of you I have know for many years really are for the most part the best of the best.  You all care so deeply about this industry and about providing the kinds of outcomes that change the lives of people.  I am honored to humbled to know you all.  That is not to say that all of the people who I have met during this year have been peaches and cream, but hey you can please everyone all of the time and to be honest the good out ways the bad so much as to make it unimportant.

Some of my highlights of the year for me were the VELG conference in Adelaide and I think  tremendous amount of thanks need to go out to the VELGY bunch for their work not only on the conference but within the sector as well.  Being part of the VET Reform process; it was I know not only for myself but for a lot of other in the sector nice to feel that our thoughts and ideas were not just being aired but also listened to.  Which of course brings to the need to thank our previous Minister, now Minister for Educations, Senator Simon Birmingham.  It has been fantastic to have a Minister in this portfolio who actually seemed to genuinely care and want to make the VET sector as good as it can be.  Along with the team at VET reform and the department in general it actually felt like the sector was being listened to, something which had not seemed to happen for a long time.  I also feel sure that Minister Hartsuyker will continue the good work done by Minister Birmingham.  While on politics, we saw a senate inquiry where for some they could not separate their ideology from what is good for the sector (Yes Greens and Senator Rihannon I am looking at you) which is disappointing to say the least.

It would I think also be remiss of me not to that Rod Camm and the wonderful people at ACPET.  Rod I think has done a fabulous job during very difficult circumstances and the ACPET team (at the very least the Queensland team) has been supportive and have worked to attempt to ensure that the great things that are done in this sector by non-public providers are not lost.

So all in all it has been a very very big year for the VET sector and I have to admit I am looking forward to having a couple of weeks off from the hustle and bustle of it all.  So thank you all for journeying along with me this year, through my rants (and there were a couple) my opinions and my other various scribblings.  May you all have a very happy and safe festive season, enjoy some time away from this world of VET and come back next year refreshed, happy and ready for the challenges ahead.  I know that is my plan.

On the cost of a Diploma

I have written on a number of occasions, about the rise in costs to students around diploma and advanced diploma qualifications since the introduction of VET FEE Help.  The other day I suggested that I saw very little justification for pricing a diploma or even an advanced diploma at over $10,000 per student.  I was challenged about this statement by a number of people, so I thought it might be worth exploring again and pointing to my justifications for my statements.  Firstly I do agree that there may be some qualifications where due to the need for the RTO to have expensive equipment available for trainees that there could be a higher cost, however I think that these are not the norm and in the discussion that follows I will be considering average, highly accessed qualifications.  I think where a provider thinks that their costs are outside of what I suggest that perhaps the onus needs to be on them to show us why they think that and not the other way around.

Firstly let’s go back just a couple of years to around 2011/12, where most diploma level qualifications were around the $5,000 mark and advanced diplomas around $8,000.  At these levels providers seemed to be profitable and their business models seemed to be working.  Now if we scroll ahead to today and apply a CPI increase over that time of about 10% (it was actually a little less but lets just use round numbers shall we) that would make a diploma $5500 and an advanced diploma $8800.  However we are seeing prices in the market place above $10,000 for a diploma and in some cases above $15,000.  Which leads me to suggest that well one of three things must have happened.

  1. Costs of delivery have risen by something in the vicinity of 200-300%
  2. Previous business models were deeply flawed, unable to cope with all of the changes over the last 3 years and needed to be altered, or
  3. There is perhaps a lot more profit being made then there was 3 years ago.

Certainly one of the things I think has happened is that now providers are charging much higher prices and running courses with substantially lower numbers.  As we will see when I throw around some figures if the static cost of running a course is $30,000 then if you are charging $15,000 a student you only need two students to cover the costs, where as back in the old days (2011) you would have needed 6.  But it also means that after those two students, except for any small per student on costs everything else is profit.

So lets take a look at how much a diploma might cost.  Now remember I am just looking at what an average cost might be.

Firstly we have the costs associated with a trainer.  Now lets say we allow $45.00/ hour as a base rate and to calculate our day rates lets say that the ‘day rate’ is made up of 8 hours of teaching and 4 hours of assessment, support and other activities.  So that makes the per day cost of a trainer about $630.  Lets then allow 2.6 days per unit (face to face) with an average of 15 units making the total number of days 40.  This makes the total trainer costs for the course including marking and other activities around $25,200.

We have other costs apart from the trainer though don’t we.  For administration lets add in an additional 30 hours at the same rate, which given the efficiency of technology is I think pretty reasonable, that brings us up to $26,550.  But wait there is more lets add an additional 75% of that figure to cover general outgoings, management costs and all of those other little things including hopefully some profit.  Now we end up with a total cost to run the course of $46,462.  Now this is how much it costs to run the course whether there is one student or 15 students, save for perhaps a small resource cost per student.  So that total costs to run a face to face diploma course is around $40-50,000.  So I need 4-5 students at $10,000/ student to break even and make a little bit of profit (remember I built that in).  Any more students than that and the profitability of the course goes up.  At $15,000 a student we only need 3 students.

Trainer Costs
Daily Rate Including Training, prepartion and assessment $630.00
Days per course 40.00
Total Trainer Costs per program $25,200.00
Adminstration Costs
Hourly Rate $45.00
Administration hours/course 30.00
Administration Staff Costs/course $1,350.00
Subtotal of Costs $26,550.00
Management Fees
Costs related to management of programs $19,912.50
Total Direct costs per course $46,462.50

This brings a very serious question to my mind, are there really providers out there who are operating on minimum students levels of 2-3 in their classes for face to face? More than that though if we start to think about all of the courses and programs which are being offered online, with the same price tag, yet in some cases 100’s of students, a cost of $15,000 seems completely unjustifiable to me.

Here is my honest opinion, I would probably not run a face to face program for a cohort of only 4-5 students, mainly because I struggle to see how with that small number you are going to get any real social, group learning going on.  It is really just going to be a chalk and talk, here are the answers to the questions style program isn’t it?  Please someone correct me if I am wrong.  Also if I was only attracting that number of students into a course I would be asking myself whether or not there was a market, or if I was doing something radically wrong with my marketing.

Of course I have purposely left something out of this equation.  The one single thing that in my opinion has not only caused the massive jump in prices for diploma and above qualifications, but also the thing that has had an incredibly detrimental effect on the sector as a whole and that is education brokers.  With brokers taking  between 25% and 50% of the cost of a qualification (I recently hear of one who was marketing 79 students who would enrol in any qualification you like, but his cut was 75% of the course fee) it is really easy to see why prices have gone up.  At 50% a $15,000 qualification cost become $7,500 for the RTO.  It is this cost, the costs providers have been willing to pay brokers, just to get students through the door that has more than anything driven prices up and in my opinion has provided nothing to industry except for numbers.


Anyway, that’s just my opinion.

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