Would a Federal VET funding system be good for TAFE?

So I wrote a couple of days ago about the discussions that are happening around the idea of the Federal government taking over responsibility for Vocational Education and training from the various states and what that would mean.  One of the points I talked about was the idea that essentially under a system where funding and regulation are the responsibility of the Federal government, TAFEs become simply another provider within the system, albeit one that is owned by the state rather than by some kind of non-public entity.  A small amount of criticism to the idea or use of words, that TAFE would be ‘simply another provider’ was raised.  Central to the criticism is the idea that TAFE being just another provider devalued the social value and functions that TAFE provided and its special responsibilities as a publicly owned provider.  It would be my contention however that a federalised VET funding system would, if there are in fact special responsibilities in terms of social functions and value for TAFE, make the provision of these functions easier and in addition far more transparent than what they currently are.

The idea that TAFE has some special responsibilities, social functions and value in excess of the responsibilities of non public providers is often raised as a reason why TAFE needs to be protected, needs to have some percentage of funding allocated to it and outside of any contestable model which might be being utilised.  Now while I am sure that there are areas in which some TAFE institutes do have these social functions and responsibilities I have never been completely convinced by this argument, particularly when used to justify funding allocations, primarily because while it is quite often talked about in terms of support for people with disabilities and other special needs, providing community hubs and various things like that, a lot of what is discussed is provided by a range of other organisations.  Non-public VET providers, particularly those not-for-profit providers, do substantial work with disabled and disadvantaged people in assisting them to achieve their educational and other goals.  There are also numerous community sector providers (non-VET) who provide substantial amounts of social value and function in communities and in a lot of cases the services and outcomes provided by both these types of organisations are often better then those provided by TAFE.

No withstanding that however, let us assume that TAFE or at least some TAFEs have special responsibilities or functions in terms of social and community value.  A federalised system would it seems, create a situation where these functions could be properly resourced and funded , by the state governments, without that resourcing and funding being rolled up or conflated with funding for the provision of vocational education outcomes.  Essentially a federal system would be responsible for the regulation of all registered training organisations and for providing a pool of funding which would be allocated under some type of contestable model to meet the skills and training needs of both the nation and where necessary particular states.  Given that the states were no longer involved in the allocations of funding for training and were simple the owner of a number of providers of vocational education there would be no need for funding at a federal level to be portioned off into that which was solely for TAFE and that which was available for all other providers.

This is the case because like any other training provider, the operational costs for the delivery of VET services should be covered by the income they generated through the provision of those services, be that through the delivery of funded training, fee for service or income contingent loans.  Capital expenditure, maintenance of infrastructure and any additional functions should be provided either from additional revenue raised through the provision of educational services or in the case of TAFE from the state government.  This would then allow the state governments to allocated state funding to TAFE institutes for the provision of these special responsibilities and social functions, over an above the income which the TAFE generated through a contestable federal funding model.

This would have some additional side effects as well.  It would make what funding was being allocated to public education providers, and for what purposes extremely transparent, which would in turn indicate what the special responsibilities and functions that public providers had were and what they cost.  This would then allow the government to determine whether or not using an educational provider to provide these special social functions or values was the best way of achieving their social goals or whether it might be the case that in most cases TAFE should simply be a training provider and the other functions were better off being provided in some other way.  This transparency would also show the true costs associated with delivery within the public providers, as being responsible for their operation expenses through the generation of training income would show whether or not they needed to be supported even in this area and whether,  depending on the particular institute that was the best use of resources or if in cases where they were seen to be unable to cover their operational expenses through the delivery of training services and where there were no other substantive reasons, or the situation was not likely to improve, hard decisions about their continued existence and form might need to be asked.   The costs in terms of capital expenditure, maintenance etc. would also be clear.  In essence a federal funding system for VET, where state owned TAFEs were simply another provider, would actually improve the system of public provision, by allowing TAFEs to concentrate on what they should be doing, that is the business of delivering educational outcomes and the State governments to simply act as the capital support mechanism in a way that was far more transparent than it currently is.

Yes it would be a substantial change to the mindset of both those in the government and those managing TAFEs and some of them might not survive at least in their current form, but a federalised system would also have a effect upon non-public providers as well and those who were not able to cope with the change would not survive.  All in all a system of federal regulation and funding where all providers are essentially playing on a level field is one it seems  likely to produce solid outcomes for everyone involved.

Anyway that’s just my opinion.

A Federal system for Vocational Education?

I for one have been for a long time now a proponent of the Federal government being in charge of Vocation Education in Australia, so as you might expect I have reacted quite well to the news recently that there seems to be once again support for this notion both Federally and by the States.  As I said I have for a long time thought that a set up where the federal government is in charge of the regulation and funding of a national system of vocational education makes sense.  It should make it easier to navigate the morass of funding that currently exists and changes whenever you attempt to work across state boarders whether from an RTO perspective or from an organisational perspective.  Having a single set of rules and criteria would certainly make a difference.

One of the significant things I think having a Federal system would do is to change the States from being on both the provider and funder sides of the equation.  Currently all of the states fund VET in their state, however they also provide vocational education through their network of TAFE institutes.  Moving all of the funding for the delivery of training to the Federal government would have the effect of TAFE becoming another provider in the market, simply a provider which is owned by the State government and the state government could then determine from its overall budget what amounts it wanted to allocate to the resourcing and infrastructure of their TAFEs.  It would see a transparency around what money being given to TAFE from the State government was actually being used for.  Now that is not to suggest that a federal system might not earmark a certain amount of money for delivery by public providers, but what it would do is clear up the sometimes muddy waters around what is support for delivery and what is support for infrastructure.

The other significant thing it would or should do is as I said at the start even out the currently differences in what is funded and to what level.  As I said a couple of weeks ago I was amazed when I found out that in Victoria every AQF qualification is funded, the amount of money simply varies, which is unlike Queensland and other states where funding is allocated to what is seen to be the needs of that State in terms of skilled workers now and into the future.  Having one set of funding rules across the country would work for everyone, it would make it easier for organisations (particularly those who work across the entire country or a number of states) to access funding for their staff training, which is as anyone who has ever worked in a L&D role in such an organisation will tell you is currently a brain melting nightmare.  It would work well for providers both niche and large.  For example we are one a small number of providers who deliver a particular qualification, currently someone from Queensland can obtain the qualification for around $100 (it is funded in QLD), where as someone from NSW (where it is not funded) would have to pay $3,500 for the same qualification.   The management of funding contracts at a provider level would also be much easier, no longer perhaps having to produce multiple reports for different states with different rules and requirements.  A federal system should have the effect of smoothing out a range of the issues which currently make funded programs across states difficult to manage for everyone.

So what are the downfalls, well there could be some issues where their might be a mismatch between the needs at a national level in terms of skills and the needs at a state level.  On a nation level there could be a shortage of appropriately qualified aged care workers say but WA might have a massive over-supply.  Conversely there could be no national shortage of plumbers but serious shortages in QLD.  Not that these kinds of issues could not be relatively easily addressed, it is just that given that we are such a large country it may be the case that such differences arise.  Although on a side note seeing these differences at a national level rather than at a state level might encourage the federal government to provide incentives for say aged care workers in WA to move to other states or plumbers to move to QLD.

I also don’t think a federal system would affect programs like for example Skilling Queenslanders for work, where the additional money in the program is not going to providers but to community organisations to support the learning activities of their cohorts.  There kinds of programs could still be funded on a state by state basis dependent on need, the funding source for the provider would simply change for the state to the federal government.

It would or should remove this ridiculous situation we currently have where while most of the providers in the country are regulated by ASQA, two states still regulate a portion of RTOs in their state.  All providers both public and non-public would be just that providers for a national system, providers with one set of regulations and one set of rules around funding.  I for one really hope it gets legs and gets over the line.


Anyway thats just my opinion.

Is there something wrong with how TAFE Institutes are being managed?

Last week I wrote a piece asking why TAFE is so stressful for Trainers which generated a huge amount of discussion.  One of the single biggest things that was raised by people was  the issue of management and the skills and attitudes of those in management roles at TAFE institutes and the effect that this had on the morale and stress levels of teachers.  Now as I said in the last post, I am not attempting here to cast this as a them and us discussion or to in some way discount or belittle the work that TAFE does, or suggest that some of the changes that have taken place in the VET landscape over the last few years haven’t had an effect on TAFEs, however as some once said, if it looks like a duck and quacks like a duck you can be pretty sure its a duck.  So when a lot of people who are either currently working or have worked in TAFEs talk about the fact that what is causing them stress is how the institute is being managed and the attitudes of managers.

Now to be completely fair I do know a number of people in senior people in leadership positions in TAFE QLD, and have always found them to be incredibly competent and committed to the sector.  I don’t however know very many institute people or people from TAFE in other states, so much of what I am going to say next comes from things that other people, (who work or have worked in TAFE) are saying.  Now please don’t get me wrong here either managers at all levels of TAFE are between a rock and hard place, they are expected to manage their little part of the world, but by the same token constrained massively by things like outdated awards, pressure from both internal and external stakeholders, increasing competition and very little control over their budgets and staff in a lot of cases.

That being said, given the responses of people currently inside of TAFE there does seem to something wrong with the way at least some TAFE institutes are being managed.  There seems to be feelings from staff that their managers are disconnected from the issues they are facing on the ground, more concerned with their own positions and the prestige and perks that comes with it, particularly the higher up the ranks the manager is or just simply not good managers who are at least perceived to have got the position they have simply because they had been there forever.

So given that there is a perception (both internally and externally) that there is something wrong with the way a least a number of TAFE institutes are being managed, what is the problem, why does it exist and what can be done about it?

Anyway that’s just my opinion.

So why is TAFE so stressful for trainers?

So I have read a couple of articles recently about how being a teacher at TAFE is so stressful, particularly at the moment and over the weekend I was having a discussion with a friend of mine (who doesn’t work in the sector) who only half-joking suggested that VET people had the life because they got all this extra time off that people in other job didn’t on top of their actual working hours being really flexible and things like that.  I corrected him and said that conditions like that really only existed in the public system and that most people working in VET in the non-public arena didn’t have those kinds of arrangements and really just worked the same kind of hours and had the same conditions as pretty much everyone else.  I found his response to this quite interesting he said,

Why? It’s no wonder that TAFE is stuffed then.

It actually got me thinking a little bit about this whole situation and in particular the rhetoric from the education unions about how working conditions for TAFE people have been so badly eroded, are under attack and how TAFE teachers are so stressed because of it.  Now this is not a swipe at TAFE teachers in general as I know that the vast majority of people who work in the TAFE system, like those in the non-public system are hard-working, committed people, who just want to achieve the best outcomes they can for their students.  However I am legitimately wondering what is so stressful;

  • Being asked to be at work every day of the working week?
  • Not getting 10 weeks leave a year?
  • The possibility that you might be made redundant?
  • Having to teach more than 3 days a week?
  • Being asked to do some more work?

Outside of the TAFE system this is simply called having a job.  Now I know that I am being a little naughty here and little tongue in cheek, but I really do want to know what is so stressful.

One of the other stressors that has been raised is the concept of increased casualisation of the TAFE workforce.  Sensible business practice suggests that you only employ enough staff permanent staff to cover the standard ongoing workloads, if there is more work, or specific skills or knowledge that is required that is not currently in the organisations, you hire it in, usually on casual, or contract basis, this is what happens everywhere.  It is a waste of organisational resources to have people sitting around with nothing to do, while you are still paying them, just on the off-chance that you might need them 3 months down the track.  As a lot of you know I ave been around the L&D, VET and organisation learning scene for quite a while now in a variety of roles and often these roles were contract roles (3-24 months) to do specific jobs, using my specific skill set.  This is also the case for a substantial amount of the people I know who work in the sector, with the exception of a few who have had long-term enterprise level positions, I think for most of us our careers have been a mix of permanent, part-time, casual and contract work, it is the way the industry works except it seems in the TAFE sector.   It seems to me that the only part of the VET sector where there appears to be this concept that a role would be a job for life, is the TAFE sector.

So here is my question;

Why are TAFE teachers so stressed?

Is it just that they are used to a certain level of conditions and expectations, or is it that really they aren’t and it is just a beat up by the unions or are there some actual stressors outside what would be expected if you worked outside the TAFE system?  I don’t know, but I would love to know what everyone else thinks.


Anyway that’s just my opinion

Victorian VET funding Review – The things I didn’t know about VET funding in Victoria

So as some of you may notice it is a Saturday and I am posting which is unusual I know, but a connection of mine on linkedin posted on Friday the issues paper from the Review of VET funding in Victoria and as I said in a response to her post I was gobsmacked when I read it because, while I freely admit that I don’t have intimate knowledge of how things work in VET in Victoria, I found a range of things that I simply couldn’t believe were and had been happening, and it seems allowed to continue to happen by the Victoria government and its departments and which were a universe away from what I has been the case in QLD for years.

Victoria funds every course accredited under the Australian Qualifications Framework.  Why?  As I said in my initial response, who thought that this was a great idea, in my mind it is one of the stupidest ideas around.  Yes I get that different courses are funding at different levels,  but surely (as it says in a number of places in the review there needs to be industry outcomes from funded training) how are you ever going to target industry outcomes well when you fund everything.  This idea of not (like QLD and other states) having a list of those qualification which are funded and which contracted providers can deliver.  A list which has been developed considering the needs of the State and industries within it, is for me so far removed from common sense I find it unfathomable.  The other issue with this it that when everything is funded it leads to a range of other issues which seem to occur in Victoria which we in QLD in particular don’t seem to see.

The issue of substitution.  First off, if it is an issue and you have name for and people know it has been happening why didn’t the Victorian government do something about, surely they had to know that this was occurring and who was doing it.  All you have to do is look at the data people it will all be there in black and white.  So for those of you who don’t know what substitution actually is (I certainly didn’t because as I will explain later QLD has very simple safeguards against that sort of thing).  “Substitution utilises the broad training packages and flexibility built into the funding system to select units from alternative training packages to receive higher funding rates. In one example mentioned, providers switched units relating to the responsible service of alcohol, commonly delivered under a hospitality qualification (which attracts a low funding rate) to higher-funded units delivered under health support services”.

Now here is a couple of really quick things about this practice.  It is way less likely to happen if not everything is funded.  Also and please someone correct me if I am wrong, it appears that you can, in Victoria simply replace one unit with another as long as it meets the packaging rules, so for example import a unit for a different qualification or training package into another qualification in which it does not naturally reside, without any kind of check or balance by the people handing out the money,  they pay you.  Wow, no wonder there has been so many problems.

In QLD when you apply for pre-qualified supplier status (with additional approval criteria over and above just being and RTO, including industry support to deliver the qualifications, from the approved list, that you have on your scope and want to deliver) the scope of units that are funded are the units explicitly stated in the qualification documentation.  If you import a unit which is not explicitly stated in the qualification, then it creates an error and you don’t get paid.  This doesn’t mean you can’t import units and be paid for them, what it means is that you have to tell the department what you are doing and they make a decision about whether or not that substitution is appropriate, meets packaging rules etc.  No approval from the Department no payment for the unit, it is as simple as that.

Zero or low fees.  Again, of course, when everything is funded and everyone is trying to scramble to deliver there is going to be a race to the bottom in terms of student contribution fees.  However it also needs to be remembered that probably about 25% of our funded students are there because they can afford our fees, which quite low simply for that reason and a lot of non-profit and community sector providers try to keep their fees as low as possible for just that reason.

Contracted providers.  Now again I don’t know what percentage of providers in Victoria are contracted to deliver training, but I do know again in QLD that the number of PQS RTOs is far lower that the number of actual providers.  Why, well firstly there are additional compliance burdens but secondly, and let me say this again


So that is my little weekend rant.  There is a range of other things in the issues paper which worried me as well, but I am going to save that for a more lengthy review of the document which I will post next week.

Anyway that is just my opinion.

Innovation, technology, automation and RTOs

Some of you may have notice that I have been talking a lot recently about financial viability and the RTO/VET sector and that the delivery of programs of learning are a business and the more we adopt business ideas and models around what we do the more sustainable we can make our organisations whether they be small or large.  So I wanted to continue in that same vein today but from a slightly different tack by looking at the idea of how innovation both in how the business of learning is run and innovation in how we deliver learning to students can have a marked and in some cases quite quick effect on overall viability.

Firstly lets look at the business side of the business, administration, management, compliance, finances all of the things that make it possible for an organisation to deliver its product or service in this case learning.  There are of course the simple things like how easy is your website for people to navigate and find the information that they need to make a decision.  Is it just as easy for a corporate L&D person or a manager who want to access training for their staff to find out what you do as it is for an individual?  Does your publicly available information even say that you work with organisations or is it all aimed at individuals? Does your website have the ability to capture information on visitors or the ability for them to sign up for a newsletter or the like so that they can be marketed to later? Can a student apply to enroll from your website?  These are simple things but they are also very important things that often are missed out by a business.

More and more these days we hear about automation of routine tasks and activities, but think about how many of the processes in your RTO are automated.  One of my friends who recently completed a course with a relatively well-known, but smaller provider, received their Learner Questionnaire in the mail, was somewhat confused that they couldn’t just do it online and wondered whether or not this was standard practice.  The moment a student completes their last unit of study a letter containing a link to the survey site we use (we don’t use surveymonkey we use a wonderful site called TrainingCheck) which holds an electronic copy of the questionable is automatically emailed out to them.  The same goes with welcome letters and requests for USI numbers automatic emails are generated by the RTO management system we use (Jobready) based on differing sets of criteria.  Now the vast majority of good quality RTO management systems have these functionalities in them but still there are organisations that don’t use or in some cases don’t even know they can do things like this.  But why is this sort of automation important?  Well because it frees up everyone involved in the process to do the tasks that actually generate the income which the organisation needs to remain viable.  The great thing about automation is that once you start to look at what you can do and how it might work you start to see a whole range of other things that can be partially or completely automated.   We have over time automated a large range of processes within the RTO both for students and for staff and trainers and in long run it makes everything much easier for everyone involved.

What about the money side of the business then, how is invoicing of students and the general finances of the RTO handled and who can and should have access to various bits of this information and when.  Not so long ago a worked for a large organisation whose entire financial management system (except for corporate credit cards to some extent) outside of the financial department itself was ‘paper based’.  There were forms for everything for generating an invoice to getting something paid for all of which had to be printed out (only a small number of the forms were actually editable) filled out, scanned and then emailed or posted to Finance and then they would use their system to deal with it.  Getting financial information just as difficult (in reality it was actually far more difficult) as only Finance had access to the Finance and if you wanted information you had to fill out a request and they would get it to you in a few days, as long is it wasn’t the last or first week of the month.  To be fair they did produce a report for all of the executive managers and directors for all of their various business units, but managers (those that didn’t report directly to a Director) had no visibility over how they were going on a day-to-day basis unless their managers and directors passed the information on.  Now I understand that the larger an organisation gets the more complex things like finance become, and the more difficult it sometimes becomes to interpret the information in financial reports and when this is coupled with issues of confidentiality, and delegations of authority that it can become a real problem waiting to happen.  However, the people who are actually responsible for whether or not your business is viable, should be able to have access, relatively easy access to the financial information they need to be able to make informed decisions about their business area.

So let’s then move away from the business side of things and have a look at the other side, the actual process and delivery of training and assessment.  It is important I think at this stage to point out that when I am talking about innovation and automation etc in this regard I am not talking about making a course shorter and calling it intensive or innovative, just to provide the organisation with the opportunity to get paid quicker.  What I am talking about here is actual real innovation which improves both the outcomes for all stakeholders.  I am still amazed by the number of providers who run term based or course based programs which have set enrollment and start dates and if you miss the start date you have to wait until the next course starts.  Why not instead structure the course around subject areas or units of competency and run a rolling set of workshops which people can just enroll into and commence whenever they want.  Yes it is a little more difficult to manage (particularly if you aren’t automating things) but you don’t lose students because they have to wait until they can start.  All of your material should be available in a range of formats as different people will prefer different formats for their learning and your systems should be able to cope with assessments in different formats as well.  Do you record your face to face sessions so that they can be viewed later or allow people to join in remotely using video conferencing software and programs?  Do you chat rooms and forums where students can get together without having to be in the same room and talk about the course and ask questions both of other students and the trainers?

Everyone talks about things like clustering and holistic assessment, but often what ends up happening is that students end up answering the same sorts of questions over and over again through a course and the assessor keeps marking them, because no one took the time to identify all of the similar questions and map properly across the whole qualification rather than just the unit.  Also as I have said before integrating assessment and training into what organisations are already delivering  and working closely with students work supervisors and making the forms they need to fill out as easy and straightforward as possible increases the amount of information you will receive and their willingness to assist you and the student.

Now I know some of you are going to look at this piece and say ‘yeah I know all of that’, but that isn’t the challenge here, we all know what we should be doing to make things work better and more smoothly, but let’s have a good look at what we are actually doing in practice, see what else we do and build on the good things we already have.


Anyway that’s just my opinion.


Managing your RTO like a business

While I have spoken about this a little bit before and also about career progression in VET the really positive reactions to yesterdays post on financial viability for RTOs and a couple of discussions that have arisen out of that have prompted me to revisit this idea managing learning and RTOs like a business.

We are often quite critical of some (particularly the bigger) providers in the sector on the grounds of their organisations being run like businesses and while there may in some cases be other good reasons for criticizing some of these providers, I actually don’t think that being critical of them for running the delivery of learning like a business is one of them.  One of the issues I see in the sector, and one that has been there for quite a long time is that we have fantastically skilled trainers and educators and compliance and admin people, but it seems that we have very few truly great educational business people.  People who understand both what quality education looks like and what quality business looks like and can bring them together into a cohesive whole.  Yes we are seeing more people and organisations with high levels of business experience moving into the sector, but often what is lacking there is that understanding of the quality education piece, which brings about a disconnect between the delivery of learning and the delivery of business imperatives.

Before I go any further thought let me just cover off on one thing.  I know that at least some people will shout, learning is not a business.  Well the act of learning may not be,  but the delivery of learning is and in my opinion has to b.  Whether it is delivered by a public or non-public provider there are critical business skills and concepts that need to be part of the arsenal of any learning provider, otherwise, quite simply they will not survive or the return on investment (be that social, financial or whatever) for governments, industry, individuals and nation in general will not be what it should be.

We have seen the problems that not thinking about the delivery of learning as a business has had across the sector for some time now, both in the public and non-public space.  We have seen TAFEs struggling to survive when their seemingly constant stream of government funding has been cut or curtailed.  We have seen non-public providers in the same situation when governments make changes to funding models or when there is a drop in enrolments from a particular source (such as international students).  Why, well one of the reasons is that they have failed to pay enough attention to the business side of the equation and fallen into the trap of thinking that things were always going to remain the same as they were last year.

The biggest issue I see with people from outside the sector moving into management style roles in the sector is that they tend to fail to understand that the delivery of educational services is costly, both in financial and in terms of time and resources and the cash flows, particularly from funded training may vary wildly from month to month.

The biggest issue I see with the trainer and educator side of the picture is that they tend to fail to understand that at some point the money runs out.  There is only so much time you can spend with a class or individuals, or so much new technology you can have, or support that can be given before the value of the each dollar you are spending starts to become radically diminished or there is simply no more money in the coffers.

Unfortunately simply focusing  on the bottom line and financial viability will not produce great learning outcomes, but also focusing just on student outcomes and forgetting about the money will create massive problems for both public and non-public providers.

All providers need a mix of both sets of skills, not just in their teams, but also in the people charting the course of the ship.  There needs to be within every provider, whether big or small, public or non-public at least one person in a significant position, with sufficient significant decision-making power who understands deeply both sides of the picture and how to get the best out of each side in order to benefit the other.

Every provider should know some very simple things about their business such as:

  • Projected cash flow  every single month for at least a year in advance
  • Projected student commencement numbers and completion numbers the same as for above
  • Which are the busy months and which are the slow months (does anyone in training actually do any business over Christmas)
  • How much of their income comes from what streams and what are the risk factors around each of those streams
  • Exactly how much it costs to deliver a day, or a unit of training to one person and how that changes with changes in scale
  • Exactly what it is that the amount someone pays for training actually pays for  (resubmits, individual support hours, %of admin and management costs)
  • What are your direct costs and indirect costs
  • How much time do staff spend doing income generating work (like training and assessment) and how much is spent doing non-income generating work

The problem is that even some very good providers of high quality educational outcomes both public and non-public, struggle with what would be considered some very basic metrics in terms of business viability.

People talk a lot about the need to have high quality trainers and assessors and high quality compliance people, but often there is not enough talk about the value that a high quality education management person, with a good understanding of the actual business of learning can bring to an organisation particularly in terms of its continued viability.  Over the years I have seen too many high quality providers go to the wall not because they weren’t delivering fantastic student outcomes, but because they weren’t watching the financial football closely enough.

Remember the industry is changing and only those providers both public and private who understand that the delivery of learning is a business and what is needed to successfully deliver that business will survive.


Anyway thats just my opinion

Staying afloat in the volatile world of VET

RTOs, Funding and Financial Viability

We have seen a whole lot of changes in the VET sector recently, particularly around government funding and who is being expected to be paying for VET in Australia.  A couple of weeks ago I looked at the major ways in which VET in this country is paid for, that is income contingent loans, entitlement style funding, trainee and apprenticeships and special purpose funding programs.  In that piece I left out (on purpose) the concept of Fee for Service training, where a person or an organisation simply pays a provider to deliver a qualification, but in the context of what I am talking about today, fee for service training is an important element in how VET is paid for.  So given all of the changes that have happened to funding in the sector recently, what does an RTO need to do in order to ensure that they are financially viable both now and into the future.

The first two things are obvious (well at least I think they are), but sometimes as we have seen spectacularly in some cases they are often overlooked or their important placed second to maintaining a constant flow of new students  and financial considerations.

  • Provide High Quality training, and
  • Be compliant – Not just on paper, but be really compliant.

Anyone who doubts the importance of these two things in terms of continued financial viability, should perhaps think seriously about whether or not they have a place in this industry.  It doesn’t matter whether you are a very large provider or a very small one, if you are not providing high quality training and maintaining your compliance you will pay for it in the long run.  Take for example a large provider who is heavily reliant on VET FEE-HELP whose quality of training is called into question, or their compliance is off.  Their risk rating for their Tuition assurance scheme might risk substantially or worse still it could be revoked, leaving them without the ability to utilse the funding source that drives their business.  What about a small provider who is heavily reliant on government entitlement funding like Queensland’s Certificate III guarantee program, who is delivering courses that don’t meet time requirements (Volume of learning and nominal hours for example), who find as a result of this that the government decides to radically reduce the level of funding for the course, to match the amount of time it is being delivered in.  Both of these circumstances would be extremely detrimental to the financial viability of an organisation, but also point to the next thing the providers really need to think about when they are thinking about their business.

  • Don’t rely on just one source of income!

Unfortunately a lot of providers, both big and small and even both public and private rely far too much on single sources of funding or types of funding and fail to spread their exposure to variations in the market place.  Contestable funding made things more difficult for the public providers because most of their delivery and services were based on a model where government funding remained constant.  The proposed changes to the funding of training in South Australia, could have huge effects on those non-public providers that have relied on it for years.  A change to how VET FEE-Help is paid (for example if it moved to a completion model rather than a census date model) would have an enormous effect on the cash flow for those providers for whom it is a substantial proportion of their income stream.

So what can providers do to ensure that they can be financially viable over time.

  • Spread your funding risk
  • Build income streams not related to funding sources.

If providers are going to rely heavily on funding, be it income contingent loans or other sources of funding, then they need to make sure that their risk is spread as much as possible, add special programs to your entitlement funding programs, become an apprenticeship and traineeship provider as well as a VET FEE-Help provider, make sure that if funding changes in one area that your business can absorb those changes through the income from the other funding streams.  The most important thing you can do however, is to try to build income streams that don’t rely on government monies.  All providers who want to continue to be viable should be ensuring that they look at things like

  • Fee for service for individuals and organisations
  • skill sets as opposed to full qualifications
  • non-accredited training and
  • partnerships with organisations and other providers.

Building your fee for service base is one of the best ways that providers can continue to remain financially viable as it untethers them from the vagaries of government policy and funding decisions. The problem is that most providers don’t do this very well at all.  The biggest problem for most RTOs is that, that is all they see themselves as, providers of VET qualifications and in some cases skill sets.  The best way for providers to build their fee for service business is to start to look at themselves as training organisations rather than just RTOs and look at developing their skills and programs in the non-accredited space.  Look at what you are good at and capitalise on that.

Anyway that’s what I think.


So why do we still have more than one regulator in VET

I mean, lets get serious for a second here, ASQA has been the ‘national regulator’ for over 3 years now, and as from 1 April 2015, all RTOs are covered by the same set of standards so why, why are the separate regulators for Victoria and Western Australia.  Can someone please explain it to me because surely it can’t simply be these two states simply trying to flex their states rights muscles, and given that they only regulate those RTOs that only do business in their respective states it can’t be about the generation of income.  I for one am dumbfounded that we still have this ridiculous situation where some RTOs are not regulated by the National Regulator, for what to me at least has nothing to do with quality or costs or anything like that and far more to do with political points scoring and control.

It is not like ASQA is new or that there are different sets of standards (That dumbfounded me as well but that is a different story).  I know when ASQA first started that Queensland took a cautious approach and waited 12 months before referring powers, but it has been over 3 years now people, get with the program.  It can’t be  about quality, because first off everyone is governed by the same standards and secondly surely consistency of auditing and quality is better served by having a single regulator, whose job it is to make sure that all of their auditors apply the standards in a consistent way.

Now I know some people have a negative view of ASQA, but I and a lot of other people in the sector really have found them to fantastic, particularly in the last 12 months and when I see reports like the recent one from Victoria about the state government cracking down on dodgy providers accessing government funding, I can’ t help but ask myself, how many of these dodgy providers are regulated by ASQA and how many are regulated by Victoria.

So unless someone can show me an actual, real, logical, viable reason why we should have two states that are not regulated by ASQA, then Victoria and Western Australian, need to bite the bullet, suck it up, stop playing political games or whatever the hell they are doing and join the rest of us.

The sooner we have one single national regulator for everyone the better.

Anyway that’s just my opinion

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