Elections, policies, promises and Vocational education

Just in case any of you failed to notice, we are at the beginning of the longest election campaign since the 1960’s and I was hoping that at this point we might have heard some real announcements or policy positions from the opposition parties at the very least around the sector given its high media profile recently.  However about from some rhetoric and banner waving about Saving TAFE (whatever that actually means) we really haven’t seen too much.  The Greens, it seems, still want to decimate the sector by creating an almost complete TAFE monopoly, where only things that can’t be delivered by TAFE could be delivered by Non-TAFE providers, so their policy position hasn’t changed much since the last election.  Labor want a review of the sector, which I am not against, providing as I have said elsewhere it is a fair and reasonable review and not one driven by ideology, which I am not sure we will see when the call for a review is accompanied by rhetoric about the unique position of TAFE.  The Liberals clearly have a contestable market driven policy but ultimately what that will actually look like going forward with the National Partnership Agreement up for renewal next year and the clean up that is happening in VET FEE HELP is at this point a bit of anyone’s guess.  So given I can’t actually discuss any details of any policy announcements I thought that I might look at what I thought a good VET policy might look like or at the very least what it might include.

So in no particular order I think that any policy on Vocational education should address;

  • The purpose and role of the sector and its importance to the overall economy and future of Australia
  • The roles that the various parts of the sector (public, private, not for profit and enterprise) play within the system and their strengths and weaknesses
  • The need for flexible, modern, and high quality learning solutions
  • The need for a sensible funding model, preferably one which is similar no matter what State you happen to be in
  • Student choice
  • The need for a strong, enforced national regulatory system
  • Strong links between training packages and industry practices
  • A recognition that vocational educators are not teachers, but industry professionals as well as educators, they are not just delivering curriculum, they are assessing competence.
  • The issues faced by regional and remote students and how those can be addressed
  • A system that is as inclusive as possible, and allows people with disadvantage and disability to access the system
  • The link between vocation education and employment outcomes
  • The link between vocations education, secondary education and university education
  • An improvement in data collection to provide deeper insights into the industry and its impact

There is probably a great deal more things that a good vocational education policy should do and lets not kid ourselves here the devil is always in the detail, but I tend to think that we could at least get these things sorted out we might well on our way to have a policy that might actually work and not be like trying to sand on a bottle cap, resting on quicksand with mines floating through it.

Anyway, that’s just my opinion.

 

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ACCC decisions, ASQA, VET FEE HELP and the end of the mega college

A few weeks ago I wrote a piece entitled Death knell of the high growth mega college looking at the significant issues that were facing a number of the most high profile mega colleges in the VET sector and suggesting that what we were seeing was in fact the last throes of the large, aggressively marketed and growth oriented private RTOs.  Yesterday we saw what is another nail in that coffin with the ACCC announcing it had accepted a court enforceable undertaking from Careers Australia regarding false or misleading representations and engagement in unconscionable conduct, in breach of the Australian Consumer Law around the marketing of its VET FEE HELP courses.  So before we look at what this means for Careers Australia and what it might mean for the sector lets have a quick look at the decision and undertaking itself.

Between 1 August 2013 and 31 March 2015, Careers Australia received and processed applications from around 40,000 students for enrolments into its VET FEE-HELP courses. Of these students, 20,242 were enrolled and incurred a debt to the Commonwealth. Careers Australia received approximately $190 million worth of payments from the Commonwealth in relation to these students. The ACCC was concerned (and Careers Australia has admitted by virtue of its undertaking) that some of its agents engaging in door-to-door marketing and telemarketing across Australia, made false or misleading representations and engaged in unconscionable conduct.

“This conduct affected some of the most vulnerable and disadvantaged groups of consumers in Australia. For example, it is unacceptable that Careers Australia allowed 80 consumers from a remote Aboriginal community in Yarrabah, Queensland to be enrolled into courses and incur debts when they were offered inducements to sign up but not alerted to the debts they would incur,” ACCC Chairman Rod Sims said.

So what does this mean for Careers Australia, well first and foremost it means that Careers Australia has undertaken to automatically cancel the enrolments of students who have not completed a unit of study, and repay the Commonwealth any amounts received as a result of those enrolments As a result of this undertaking Careers Australia has cancelled at least 12,130 of these student enrolments and either repaid or partially repaid to the Commonwealth amounts totaling at least $44.3 million.  This is a phenomenal sum both in terms of money and in terms of sheer enrollment numbers.  Sixty percent of its enrolments over 18 months up to March 2015, have been cancelled.  In addition while $44 million has been repaid the other thorn is that Careers Australia will now not be eligible for in excess of $300 million which it may have been able to claim in relation to these students.  Now let us let that sink in for a moment, it looks as if Careers Australia’s potential (and actual) cash flow has been gutted to the tune of somewhere between $50 million and $350 million depending on how they modeled future payments.  In addition to this though there may be many more cancellations and potential refunding of cash as, as part of the decision, Careers Australia will also invite other students who may have been misled to approach them should they want to have their enrolment and debt cancelled.  If even 10-15% of their other enrolled students feel they were mislead, given the dollar amounts charged for various qualifications we could see the repayment figure rapidly approach $100 million.  One could be forgiven for suggesting that White Cloud Capital who own a significant portion of the company might be feeling a little worried at the moment as might the other shareholders.  Of course being a private rather than a publicly listed company means that we won’t see a sharemarket implosion as we saw with Vocation and Australian Careers Network.

The next question is then a simple one and that is can Careers Australia survive this, and in addition to that simple question a more complex one, being, should it?  It seems certain I think that as a result of this Careers Australia will and probably must at the very least downsize and attempt to control costs and must also rethink its business model, from the ground up if it does hope to survive this.  There is a bigger question here though and that is should it survive this?  Should a company which has acknowledge that its agents engaged in unconscionable conduct be allowed to continue as a Registered Training Organisation and hold a VET FEE HELP contract or for that matter any other contract.  I mean I have worked in Yarrabah (in another life), I know first hand the conditions and levels of education and general skills and knowledge (and I mean no disrespect to the people of Yarrabah here at all) that exists there and I can tell you that without a shadow of a doubt no one with common sense, let alone a conscience could ever enter that community and think that 80 of the residents there understood what they were being signed up for.

I am struggling as I am sure many others in the sector are, with whether a company who knowingly allowed these kinds of activities to occur should be able to continue to operate in this sector. Surely this undertaking must however make ASQA as the regulator, the Federal Department of Education and even the various state training departments with whom Careers Australia has contracts, seriously consider their next actions.  It begs the question, can the Federal government do anything else other than remove Careers Australia’s VET FEE HELP contract and if that happens will we see another of the mega providers slide into administration.  If that happens I like so many others will feel deeply for both the staff and the students who are caught up the in the middle of it all.

What does this mean for the wider sector though?  It means that anyone who was using a broker or agents and who wasn’t careful around the students they enrolled in their VFH programs should be feeling a little uncomfortable at this point, particularly considering that the ACCC currently has actions around four other providers and is looking into another five.  On the other hand it is a good thing.  This rampant growth fueled by education brokerages and agents who had a sign up everybody attitude had to stop.  The damage it has done to the sector in beyond belief.  I would however also like to see the ACCC go after the brokers and agents themselves, though I acknowledge that this may be significantly more difficult.  This is however what the industry and the sector required, it required those who allowed these things to occur to be called to account so that these practices which in no way contribute to the outcomes of students, the sector, industry or employers can be stamped out and we can get back to doing what the vast majority of providers both public and non-public do and that is provide high quality training that makes a real difference in the lives of people.

Anyway that’s just my opinion.

 

On the Redesigning VET FEE-HELP Discussion Paper

So as most of you are aware the Redesigning VET FEE HELP discussion paper was released on 27 April with submissions closing on 30 June.  So what I thought I might do today is have a look through the paper and discuss some of the propositions and statements in it and then see where we land after that.

As I have said many times previously, I think income contingent loans for a vital part of the educational landscape, they allow people to study things that they want to study, some of which may not have direct correlation to employment outcomes.  They also provide an opportunity for people, who without these processes may have not been able to upskill themselves in relation to job roles then may be interested in now, or in the future.

The first part of the paper goes through the purpose and reasoning behind VFH and how and why the system was extended into the VET sector from the higher education sector.  Also interestingly I think, it points out some of the differences between the two sectors which have, at least in part have been responsible for some of the problems the income contingent loan process has had in the VET sector which didn’t occur in the higher ed sector.  These differences are things like lower barriers to entry, lower graduate pay rates, competency based rather than a graded system, lack of formal semesters, with the preference being for rolling enrollment dates and a not insignificant number of VET enrolments where the student does not intend to finish the course rather their intention is to only complete a small subset of units, which has an effect on overall completion rates.

It also makes the point that the regulatory landscape surrounding VFH is quite limiting in terms of responses.  Non-compliance with ASQA and the regulations do not have a necessary impact on the right of a provider to payment of fees, the department had only limited powers of audit and information gathering and limited capacity to take compliance action for RTOs who had appealed ASQA decisions.  As it sates in the paper ‘until January 1 2016 the only relevant consideration for determining a providers’ payments was whether or not the providers’ student had an entitlement for VFH’.  In addition it looks at the fact that there was massive growth in VFH between 2012 and 2015 with the highest grow areas being those where the students could be considered to be most at risk or vulnerable.  There was a 649% increase in indigenous enrolments, 503% increase in very remote enrolments, 181% increase for people with disabilities and 172% increase for lowest socioeconomic status quintile.  In fact the lowest increase was in the highest socioeconomic quintile.  Now while this itself is not necessarily a problematic thing as it may point to more people, who would not have usually undertaken training, entering the system, it clearly should have been a red flag given the outcomes we know have occurred.  There was also a significant increase in tuition fees from an average of $5917 for a diploma in 2012 to $14018 in 2015 with VFH loan values doubling from 2009 to 2015.  This caused a massive disparity between the cost of diplomas under VFH and price various state governments were willing to pay in terms of funding for the same diploma.  A Diploma of Salon management for example with a smart and skilled pricing of $6,330 had an average VFH price of $32,941. The other issue that sat along side this, was the issue that a great many of the qualifications with the highest levels of enrollment had little or no actual links to employment outcomes.  A prime example of this is the Diploma of Community services where there is little or no job outcome as the vast majority of employers in the sector want people with a certificate III or IV in aged care or disability or similar as these are the qualifications which are required for the vast majority of roles.  The paper then goes on to discuss a range of other issues, including the dominance of the system by a very small number of providers, before moving on to look at the current and future reforms to the system.  It does appear however, that the 2015 reforms are having an effect on VFH providers with all areas of complaints (with the exception of debt dispute, which is a lagging indicator of previous poor performance) have dropped, in most cases significantly.  It is also acknowledged in the paper the capping of enrolments at 2015 levels may have had an effect on some ethical providers, but that it was necessary to reign in the soaring costs associated with the program.

So now let’s move on and have a look at the discussion questions posed.  The first question posed is whether there are additional eligibility requirements which might be necessary for the VFH system, with an additional question around administrative complexity in relation to LLN skills for potential students.  Now I am going to be a little controversial here because I think to a large extent both of these questions can in fact be answer quite easily.  Yes there should be an additional requirement for VFH students (which should if done well solve the LLN issue) and that is at a student not be eligible for VFH unless they have already successfully completed a course of study at Certificate IV or lower.  It is important I think to remember that is would not be a course prerequisite but rather a policy setting around eligibility for the VFH loan scheme.  If you have not completed a lower level qualification then you are not eligible for a VFH loan.

In terms of the lifetime loan limit for students I see no problem with it being part of and the same as the general Higher Ed FEE HELP system, providing of course there are some other refinements to the system put into place, particularly around the rising cost to students of obtaining a Diploma.  I have on a number of occasions suggested that the government rather than limiting the loan amount or price setting (setting a price that all providers need to charge) it rather needs to simply develop and publish, and force (through its VFH contacts) all providers in all of their materials to publish, a ‘recommended’ price.  I do however think that attempting to calculate this price, factoring in mode of delivery over complicates the process without adding significant value.   With this recommended price openly published providers can then still choose to charge whatever they wish.  Those who wish to charge lower than this may justify it by them being a TAFE or a not for profit or any other number of reasons, and equally those who charged a higher fee would then need to justify why their course costs where higher.  The justification process could also be one that was part of the VFH application process as well, where providers were asked to justify why their course costs were at the level they had set them if they were significantly over or below the recommended price.  I also think the concept of linking VFH funding levels to industry need, employment or pathways to further study has value.  A priority system (similar to that used in some of the states) could then be used to determine the level of VFH funding applicable to the course.  A level one priority program would have a VFH loan rate of 100%, Level two 75%, Level three 50% for example.

It is my opinion and one which I have held for some time now, that external, third-party brokers, should simply be banned from the VET sector.  They add zero value to system and only serve to drive prices up.  All marketing should be done by the RTO themselves and directly controlled by them.

Rather than simply a VFH ombudsman a far more elegant solution would be to  appoint a VET sector ombudsman, however it is acknowledged that given the way in which various powers are spread across the states this may be significantly more difficult to achieve therefore it seems that an ombudsman to deal with VFH.  It would be my suggestion that this simply be a short-term appointment to deal with the current issues with its continued necessity being considered after changes to the system had been implemented.

I am also in favor of provider cap of some description.  A provider should on application to utilise VFH estimate the number of VFH students they will have within the next financial year.  This initial estimate should be capped at a level not exceeding 75% of their current student enrolments.  This estimate process could then simply occur each year which any increase on the previous years cap of more than 10% requiring justification as to why the number of enrollment will increase that significantly.

In terms of quality measures the links between results of ASQA audits and non-compliances and continuing VFH approval should be significantly strengthened, with higher quality standards being applied to all VFH providers through the provisions of the contractual arrangements.  This should include student completion and progression rates and additional outcome measures around employment and further study outcomes resulting from the various courses of study.

It should also be the case that with any new standards/contracts that all current providers be required to reapply for VFH status under any new system.  There should be no providers who are simply moved to the new system.  The current system should be finalised at the end of 2016 and all students either given two years from their initial enrollment date to finalise their course of study or moved onto the new system where appropriate.  In addition there should be a legislative time limit placed on all approvals (no more than 3 years) which should also be at the discretion of the minister to alter or removed as deemed  necessary on a provider by provider basis.  All providers approved to deliver under VFH should be, as with most funding contracts with the various state governments, required to report their avetmiss data on a monthly basis.

I think the current tuition assurance system is solid though there needs to be stronger links between the government and the providers of the schemes in order to ensure that students are provided with the range of protections which they require.

It is and continues to be my position that upfront payment of fees is in general a mistake and the system should be moved to a model which is more reflective of completions rather than commencements.  A fuller discussion of this can be found here.

Anyway that’s my opinion.

 

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