Remove government funding and lets see who survives!

Over the years and again recently I have heard a number of people suggest that one way to deal with some of the issues around the VET sector would be to remove all government funding for a period of time (say 12 months) and see who survives.  The suggestion is that this would cull providers who are not financially sound, don’t have strong fee for services business and who are doing the wrong thing. The thinking is that if there are no incentives then there is no reason for profiteering enterprises to be in the market.

Now aside from the fact that there are a lot of people who are looking for employment, or improved employment opportunities who rely on various funding arrangements to achieve their educational goals (I am not going to talk about this explicitly here), there seems to be an underlying position in these statements.  A positions that is when people say remove funding they are actually saying remove funding from non-public providers.  However if we remove that underlying position and just ask the question, who would survive if all government funding to the VET sector was cut for all providers I think what we get is a much more interesting position.

So who would survive out of all the providers, both public and non-public, if all government funding was stopped for 12 months.  Lets look at the non-public side first.  Would the big boys survive, those top five providers who have who have massive enrollment figures up to 15-20,000 students?  Maybe they would, there certainly have the capital to be able to weather a storm of this nature, but would we seen campuses in every suburb and gigantic corporate offices?  I think not, I think the downsizing would be swift and severe and it would have to be.  These businesses survive and remain profitable only to a large extent on the constant flow of new students into the system.  I  suspect that we would see  carnage at the top end of VET town if something like this were ever to be enacted.

What about at the other end of town, the small providers, the mom and pop shops, the niche market players and in general the not for profit sector?  While I think there would be damage here I think the damage would be less.  A lot of these businesses already operate on successful fee for service models and while there student number might reduce, a lot would weather the storm. Another reason for this with this group I think, is that most of these providers have high levels of commitment to the sector and to student outcomes.  They’re not in the business for the money, they are in it because they want to be and they believe in it.

Where we would see the most carnage is in the middle tier.  In those businesses where there are lots of competing players, margins are small, cash flow is tight and even a bad month makes paying the bills look a little bit shaky.  Now I know no one out there wants to admit it but there are a lot of providers in the middle range who are in just these circumstances, where even a small change in the level of government funding for a qualification has profound effects on their business and staffing.  This is where we would see the biggest losses in terms of sheer numbers of providers, and therefore training and administration staff.

But what about the public sector?  Lets put aside arguments about public good, the need for strong TAFEs etc and just for a moment consider what would happen if government funding was removed across the board for all providers.  Even if we said that the various state government could still support TAFE through capital and infrastructure costs, but they had to generate all of their operating costs through fee for service models and received no direct or indirect funding for students.  They had to pay for things like staff wages, resources and general operating costs just from the money they could generate.  How many of the 57 public providers would be left?  Well I think there would be a lot vacant office and training space up for lease or sale at the end of the 12 months.  The vast majority of public providers would simply not survive.  The public sector providers would be decimated.

Of course let’s be honest here when people call for funding to be removed from the sector, that is not really what they are saying, what they are saying is lets remove funding from the non-public sector and give it all back to TAFE.  It is interesting though to think about what would happen if all funding was actually removed from everyone.

 

Anyway that’s just my opinion.

 

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VET FEE HELP accounts for only 6% of all enrollments

So when I commented on the recent release of the Total Vet Activity data from NCVER  I said that one of the issues with the data was the fact that it didn’t capture or have a way of delineating VET FEE Help Data from other data within the set.  While this still remains true if we look at the statements made by NCVER’s Managing Director about the data and in particular his comments about TVA and the VFH data from the Department of Education we can see some interesting information.

Firstly lets just look at the raw 2014 figures;

  • 3.6 million enrolments in VET programs
  • 492,000 enrolments in Diploma of above programs
  • 217,000 VET FEE Help enrolment in Diploma or above programs

So what does this data tell us?

  1. Only 44% of all programs at a Diploma level or above were VFH assisted.
  2. VET FEE Help programs accounted for only 6% of all VET programs in 2014

There is of course some other interesting data that can be found in the Department of Educations statistics on VFH for 2014.  The Data is not the easiest to interpret as some of the spreadsheets take a little bit of looking into to see exactly what they are saying, but if you are interested you can take look for yourself.  For me the interesting things that come out of that data particularly when taken in conjunction with the TVA data are;

  • 95,000 or 43% of all enrolments were done by the 5 largest VFH providers, Evocca, NSW TAFE, Careers Australia, Study Group and AIPE
  • The 10 largest VFH providers account for 55% of all VFH enrolments
  • The other 260 or so providers account for only 45% of all VFH enrolments
  • The 4 largest providers each have enrolments double or more than the number of enrolments for the fifth largest provider

Now while there is a lot of argument around the accuracy of completion rates and how the data is set collected etc, here are a few interesting items.

  • RMIT (not one of the big players) seems to have the highest number of completions at around 2,300 which appears to be about 50% of its enrolments
  • TAFE NSW, 2200 completions or what appears to be about 10% of its VET FEE Help enrolments
  • Careers Australia, 1192 completions or what appears to be 7% of its VET FEE Help enrolments

Now as I said whether or not we can really actually say anything from these enrollment and completion figures remains to be seen, particularly when we see the next lot of completion figures for 2015 and if we see a marked increase in those rates.

So where does all of this leave us in relation to TVA and VFH?  I am not really sure and the problem with the statistics is that you can use them to say a lot of things, but I think the one thing we can safely say is that the actual number of people accessing VFH in relation to the overall numbers of VET students if quite low and as I have said before, if it wasnt for the amounts of money that seem to be floating around I suspect that this whole thing would not have even rated a mention in most of the newspapers and media outlets let alone almost daily coverage.

 

Anyway that’s just my opinion

Total VET Reporting – Lets talk about the figures.

So as some of you may have noticed I have had a little break from my usual posting schedule, mainly due to spending most of the last 2 weeks working with an organisation to delivery some initial TAE training to a large group of their staff.  Of course while I was having a break we saw the release of the Total VET students and courses data 2014 and a number of other documents which relate to it including Equity groups in TVA 2014, both of which I found to be very enlightening reads.  There have already been a couple of responses to the data, most notably Rod Camm’s which to me was quite reasonable, but I thought that I might look at some of the things which jumped out at me.

The first thing that really did leap out at me as I started to look through the data was, what part of this data related to VET FEE Help and what related to everything else and then I saw in explanatory note 30 – ‘It is not possible to identify VET FEE-HELP assisted activity by funding.’  Now I have to admit that this let me down a little when I read, because one of the things I was really interested in looking at in the data was the relationship between VFH and other kinds of funding, but as we can’t currently identify it there is not much that can be done.

So what are some of the figures which I found really interesting; firstly it was the break down of the actual number of students,  3,908,000 students enrolled in training with 4601 Australian providers, or 849 students per provider on average.  Let’s look closer at this however, as a lot has been made of the break up of figures between public and non-public providers and the effect that non public providers are having on TAFE admissions, with non-public providers servicing 57% of students.  What is not often considered, when we hear people talk about this is the massive disparity in the number of public vs non-public providers.  There are 57 TAFE institutes training 1,065,600 students and 2865 non-public providers training 2,252,900 students or 18,700 students per TAFE vs 786 students per non-public provider.  These numbers bear thinking about, at least to my mind, whenever public providers suggest that they don’t have enough students to make ends meet.  Even at a figure of say $2,000 per student, in terms of revenue that is over $35,000,000 on average for a TAFE as opposed to $1,500,000 on average for a private provider.  Now I know that I am talking in averages here and that there are big, small and medium players in both parts of the sector, but I still think it is interesting to consider.

The majority of students were male over the age of 25, which I personally found interesting because our student demographics are more slewed towards female participants. This has a lot to do with the fact that the vast majority of the training we deliver is in community services, where around 85% of the workforce is female.

What about the programs these students are undertaking, 30% of all enrollments were in Certificate III level programs and 86% of all programs completed were at a Certificate I-IV level.  This I think says something very important about the system that we have and that at its heart it is focusing on the right thing, that is, those programs that really are going to make a difference to people’s employment outcomes and their workforce participation options.  Business and commerce was the area in which most people studied, followed closely by community services.  While it has been suggested that the amount of business and commerce training being undertaken relates tightly to the VFH, its marketing and the perceived ease of deliver of these courses, and while we can’t see what amounts of these courses were funded using VFH or at least not from these figures, general business skills are deeply embedded in most of the things that people do so having a high percentage of people here may simply portray the market.  This could also be said of community sector qualifications, which are the second most popular.  The community sector is one of the largest employment areas and one in which the need for workers continues to grows.  It could be suggested that if areas like these were not high on the list that this may well be far more concerning than the current situation.

Another of the figures which I found quite interesting was in the equity group data.  By far the two largest equity group accessing VET were students from a non-English speaking background and students from rural and remote areas, with their participation rates being much higher than indigenous students or students with a disability.  Again within these groups we see that the overwhelming majority of students as with the general student population are undertaking certificate I-IV level programs, which as I said above is I think a good indicator that the heart of the system is targeted properly.  As we would also expect in a system where the vast majority of training delivered is around entry-level job roles, government funding made up around 60% of the way in which people ‘paid’ for their training with fee for service making up the rest.

So are there any disturbing pieces of data in this report.  In my honest opinion, when we consider that this is the first time this data has been collected and we don’t have a lot of previous data to base assumptions on, I don’t think there is.  I think the big thing is that this data needs to be improved and perhaps integrated with the data collected around VFH and other programs and then sliced and diced to give us a better picture of what is happening as will also happen as we accumulate data sets over a number of years and can begin to make comparisons.

Anyway that’s my opinion.

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