Sustainability, Federalisation, and a new Minister
February 16, 2016 1 Comment
Well it has been a bit of a big couple of weeks yet again in VET world. We have seen the collapse of a private provider, leaked documents and commentary around federalising TAFE and then suddenly a new Minister. So let’s dive in and have a little swim in the VET pool shall we.
The rumors started late on 9 February, jumped up in intensity on the 10th and then hit the headlines on 11 February. Global Intellectual Holdings which owned a number of different ‘education’ companies including RTOs had gone into administration. For those interested in history, these groups were also closely associated with NTD which disappeared a little while ago with its website pointing to Keystone College. Rumors, excuses and points of view, abounded and still do as to why this had happened. The biggest reason put forward, particularly by those somewhat inside the circle of companies was the changes to the VFH legislation and caps on student numbers. Others suggested it was the amount of money that was paid out to the directors of the companies. For me it is simple. One of the things we have seen over the past few years since the advent of VFH is a rise in massive growth fueled almost entirely by the upfront payments system of VFH coupled with ever-increasing student enrolments. This was never going to produce a situation which was sustainable for anyone. I remember being involved in discussions almost 2 years ago where the concepts of caps on either enrolments or payments were being mulled over as a way of controlling the every expanding costs associated with VFH. Anyone who thought that the situation as it was, was simply going to continue was playing with fire. Yet this is what we saw. We saw smallish colleges suddenly expand to be large concerns with multiple, shiny, storefront, state of the art campuses, with huge lease costs or new players enter the market and suddenly be a $50 or $100 million dollar business. All of this based on this unsustainable premise that VFH was going to continue to expand unchecked and that there was going to be a continuing flow of students enrollments. In some cases we saw 2000% increases in the number of students enrolled in courses. This was never sustainable. Now don’t get me wrong, I feel deeply for the students and staff who have been caught up in this, but let’s be clear about this, if one starts to troll around the ASX and look at job ads and a range of other things one thing is certain, this recent failure is not going to be the last. As I said recently if what is being said by those who know these things is to believed, there will be up to 10 providers (both public and private) who will be in serious regulatory or financial trouble or both, by the time we get towards the end of April. The vast majority of it bought on by unsustainable, short-term growth thinking as opposed to sensible, reasonable long-term growth. You can blame the government if you want but at the end of the day it is the RTOs themselves and their management who are responsible for making sure that they are able to continue should there be changes and issues with funding arrangements.
Back in July last year I wrote a piece entitled “would a federal funding system by good for TAFE” where I put forward the idea that perhaps for the most part we should treat TAFE as just another provider. The recent leaked COAG document looks very much like the suggestions I made. I have a lot of sympathy for this position clearly. One of the biggest issues at the moment, particularly for organisations and L&D people is trying to understand all of the various funding models that exist from state to state. The same goes for providers, differing reporting models and information make it a nightmare to work across borders. Federalisation of funding would, it seems, make this morass much more easily navigated. In a system such as this TAFE can then be treated as simply a state-owned provider, where the state does what any owner of a business would do, things like, maintain facilities, support governance and the like, but everything else that is essentially the day-to-day operational costs would, like with any other provider, have to be covered by the actual income generated through the provision of training. Now for those of you who shout, what about TAFEs special responsibilities, well under a system like this, these responsibilities could be funded by the States in a clear and transparent way, unlike how it dealt with today where what these special responsibilities actually cost is hidden to a large extent within the general funding provided to the TAFEs. TAFE clearly can and does do great things, look at TAFEQld SkillsTech, there recent outcomes data is amazing and shows what can be done when a public provider is managed well and has deeply committed staff. It has been my opinion for a while now that this kind of structure and funding system would provide TAFE with a base from which to not only be sustainable but responsive, effective and vibrant.
Then over the weekend we saw another change in VET Ministers with Luke Hartsuyker MP out and Senator Scott Ryan in. A few people have worried that this was starting to look like shifting deck chairs on the Titanic so to speak. I am however less worried. Importantly from my perspective we still have Senator Simon Birmingham as the Minister for Education and Training. Simon as I have said before did I think a great job as the Minister for Vocational Education and Training, through what was quite a tough time in the sector. Senator Ryan has experience in the department by virtue of being the parliamentary secretary for some time. We are not seeing someone without portfolio experience being thrown in the deep end shall we say. I also think that the appointment of the new minister will not lead to any great shifts in the directions that the reform agendas are taking and that things will travel pretty much in the same direction as we thought they would under the previous Minister.
Anyway, so that’s my thoughts on the week that was.