Rebuilding VET

So  a number of people over the past few weeks have asked me about my opinions about how we can rebuild and revitalise VET in Australia.  While I have in the past spoken about what I thought might be specific changes to particular parts of the system, I have to at least some extent shied away from proclaiming my view for a future of VET.  One of the reasons for this is that, to me, a lot of what happens in this sector, a lot of what the sector does and the vast majority of the outcomes which are produced are excellent.  I am not sure that the sector needs a reimagining or wholesale reenginerring of how it operates.

If you listen to the left you will hear the constant chant of TAFE TAFE TAFE, get rid of private providers and the system will be right.  If you listen to the right, it is all about market forces, competitiveness, and the free market and here of course is the rub, they are both right and they are both wrong.  The answer lies somewhere in between.

We need a strong public provider and a strong network of private providers to make the system work effectively, more importantly though we need both groups to be treated the same and regulated the same, and not just in name only, in actual practice.

We need to recognise that trainers and assessors in this industry need to have three skill sets.  They need to have a deep understanding and relevant, up to date knowledge of their industry; they need vocational currency.  They need to have and understanding of the VET sector; how assessment processes work and what it means for someone to be competent, and they need to be good at presenting the material they are covering in an engaging and meaningful way, so that students actually learn what they need to.

We need the owners and senior managers of of all providers, be they public or private to really actually put students and their outcomes first.  Yes sustainability is vitally important, but we are in the business of education, so the actual education should be our focus, not how much money we can make, or whether or not we have the best office or the best view, or what awards we get.  The outcomes for students should be at the heart of what we do and if it isn’t we should probably get out and find another sector.

We need the regulator to actually regulate.  More than that however, we need to regulator to act fairly, consistently and in timely manner.  It is essential that providers regardless of whether they are public or private, new entrants or longtime RTOs, catering to 100 students of 10,000 students that they will be treated and assessed fairly and consistently and that breeches dealt with appropriately.

We need to government to invest in the VET system and to invest in it properly.  There is a need for sensible long term commitments to funding plans, be they direct entitlement style funding, organisational funding or contingent loan facilities.  The commitment however has to be long term and it has to address the skills and knowledge needs of this country moving forward.

Sounds really simple doesn’t it.

 

What is the purpose of a VET qualification?

Over the last few weeks, the concept of mission statements for, and the purpose of, Vocational Education (VET) has been rolling around in my head, so this week I thought I might throw an idea or two about the purpose of VET in particular out to the world and see what happens.  Firstly then here is what I think is a relatively simple statement about what VET is designed to do;

Vocational Education and Training (VET) is designed to deliver workplace specific skills and knowledge, across a wide range of careers and industries which prepare participants for work, advancement or further study.

but let’s just leave that there sitting in your brains while I go on a little bit of wander through some of my thoughts on this idea of purpose in VET.

The first question which comes into my mind when I think about any kind of education, but particularly education over and above compulsory, Primary and Secondary education is why? Why would someone make the decision that they wished to undertake some program of study in some chosen field?  While we talk about lifelong learning, and learning for the sake of enjoyment and personal interest and I am sure that for a significant number of people the continuing learning process is something which motivates them and to at least some extent underpins some of their decisions in relation to learning, I don’t think it is for most people the central thing which drives them to undertake formal courses, particularly formal courses in the VET sector.

Most people, according to the NCVER just over 80%, undertake VET for employment related reasons.  This would seem to suggest that for the most part people who undertake a VET course are looking to convert the outcomes of that course (skills and a certificate) into either employment or advancement in their role or field.  This idea of converting a VET qualification into employment is an important one because I think it is one that in general all stakeholders can agree upon in terms of a purpose.

For employers and industry the idea of being able to convert a person to a worker or a more highly skilled worker through a qualification is central to why employers would utilise the VET system. Employers need workers with the right skills and qualifications to undertake the roles they have within their organisations.  From a Government perspective, if we focus on workforce participation, converting people into workers through a qualification reduces unemployment numbers, (even when they are undertaking training) and creates a pool of skilled workers for employers and industry to call upon when needed.  For providers having a good qualification to employment conversion rate helps to make the business more profitable and sustainable through growth in their reputation as a quality provider.

So it seems to me that this idea of conversion, converting a qualification into employment or advancement is an important one across the board and one which we could perhaps use to underpin our various models and thinking.  If the central goal of the delivery of a VET qualification is employment or increased chances of employment and advancement, this creates an environment where the outcomes for the student are central and quite clear.  This should then provide us with a critical lens through which to assess compliance and quality in terms of providers, connection with industry, funding levels and appropriate courses and range of other parts of the puzzle.  It also would provide students with a lens through which to evaluate both the courses they are interested in undertaking and the providers through which they wish to undertake them.

 

Anyway that’s just what I think.

Oh What a Year its been!

When I think back over the last year, it really has been quite a big one for the sector.  So as the holiday season approaches and as I probably will not be updating my blog as regularly again until January, I thought I might consider the year past and the year ahead.

As just about everyone knows, in fact I think it would be difficult to find anyone in this country who didn’t have an opinion on VET at the moment it has been in the news so much, the sector has been in turmoil for a pretty lenghty period of time.  I remember Rod Camm talking at the Queensland ACPET Christmas party last year and saying he both thought and hoped that the worst was behind us.  However with ACN going into administration, Aspire college and the rest of the Global Intellectual holdings disappearing overnight, Careers Australia and the ACCC decisions and agreements, and Ashley Services looking very shaky at the moment it has not been a great year, particularly at the top end of town.  Not that small to medium sized providers were immune either with quite a few either leaving the sector voluntarily or because they could simply not sustain their businesses anymore.  Add to this massive uncertainty about the future of the sector during a very very long general election race, what would happen to VET FEE Help and the debacle of the new Certificate IV in Training and Assessment qualification and this year has been a cracker.

Enough bad news for the time being though.  What have been the positives for the year? Well, whether we like it or not there is now a replacement to the troubled VFH system, VET Student Loans, so at least there now exists a level of certainty around the that portion of the market. A large proportion of those providers who were doing the wrong thing have now either left, been forced out, or either been fined or in the process of being chased by the ACCC and others.  Simply removing these providers from the pool can only help to improve the quality and perception of the sector.  In terms of large scale good news that is about it, however I have seen so many providers this year, working so hard to create outstanding outcomes for their students and clients and when we look at the research and figures from NCVER we can see that overwhelmingly, this sector does a fantastic job and contributes so much towards the Australian economy and workforce.

So what about next year? Let’s just say that I think the roll out of VSL will be an interesting (the Chinese curse kind of interesting) space to watch.  With stricter entry requirements, loan limits for students, variable caps for providers depending on completion rates and a raft of other things, a lot of providers who were VFH providers or who might have been considering moving in that direction are viewing it as simply falling in the too hard basket and won’t be seeking approval to deliver.  The National Partnership agreement on skills reform, up for renegotiation as the current on expires in June 2017 seems currently if not dead in the water, leaking severely, with the states calling for a one year extension to the current agreement and the Federal government pretty much saying no.  No NPA would basically leave most of the state budgets for training with holes of around $100 Million  plus.

In terms of providers and the market itself, I also dont think we are out of the woods yet in terms of closures, restructures and downsizings.  It seems to me, as an outsider, that Ashley Services may have a very hard time trading out of the position it is currently in, at least in its current form.  There are also a number of other providers who had grown substantially on VFH incomes who will see those incomes slashed by in some cases 50-75% even if they are given approval to deliver under the new VSL system.  This will mean in most cases that there will be little chance of them continuing in their current forms and closures or restructures in terms of both staff and delivery will need to occur.  Is this a bad thing?  Yes and No.  Clearly there are probably some providers who expanded rapidly, did not deliver and did not properly invest in their continuing existence and the market may well be better off without them.  The down side of course is much wider than that, fewer available places and less choice for students, quality VET staff finding themselves unemployed or moved to contract and part time, casual work. There may also in some areas be knock on effects in terms of skilled workers in certain areas over the coming years.  So while there is a need to make sure that providers are meeting their requirements and delivery quality outcomes to their students and stakeholders, there is also a need to ensure that happens while we keep an eye on the wider picture and the impacts the VET has more generally.

Next year will be a year for consolidation and restructuring throughout the sector at all levels, a year of readjustment and reevaluation.  A year where we will see the number of providers, particularly at the bigger end of town shrink considerably both in number and size, but also hopefully a year in which the sector can reestablish itself and begin to move forward.

Anyway that’s just my opinion.

Thank you all for reading and interacting with this little slice of me for the year and thank you to all the friends both near and far I have made or held onto over the past year.  May you all enjoy whatever it is that you do over this time of year and all return happy and safe in the new year.

Paul

Student cohorts, learning outcomes and employment possibilities

So as you may have noticed I haven’t posted anything for a couple of weeks, this was mainly due to two things, firstly I was on holidays and secondly I have actually been out on the boards so to speak again, delivering some training.  A certificate II in community services to be exact which has kept me in the field and somewhat away from the keyboard.  It has done something else as well, it has driven home to me the need that we have in this sector to make sure that when we enroll people in programs that they are in the right program for them.  The level of the program needs to be right, both in terms of content and assessment, it has to link to what they want to do with their lives and there needs I think to be the possibility of an appropriate outcome for them.  Unfortunately I think that perhaps we in the sector and those around the sector who recruit, for want of a better word (I will explain what I mean later), student cohorts for us to deliver training to sometimes don’t look hard enough at those who are going to be doing the course before we start them on their journey.

Now as most of you know I am a strong believer in the value of education for everyone, particularly in terms of the possibility of improving a persons lot in life shall we say, for example assisting them to move into gainful employment.  At the same time I am troubled that a lot of the programs and funding which is spread around by various governments with the idea of helping highly disadvantaged people to improve their prospects  may in fact by quite ineffectual simply because the student cohorts who are being recruited into these programs, for a range of reasons, such as, the  eligibility requirements, the pressure on organisations to reach certain numbers of attendees and recruitment being often done by third party organisations (community sector and NFP’s) who don’t understand the VET system.

I have had this exact thing driven home to me over the past weeks, while as I said delivering a Certificate II in community services through a program where community sector organisations are funding to recruit and provide a range of wrap around services like CV’s for example and the provider ‘simply’ delivers the accredited part of the program under standard funding arrangements. That I encountered such issues with a lower level qualification may puzzle some of you, but bear with me as I explain.  Firstly there are a range of criteria set by the government for who can undertake these programs, students must be either unemployed and not receiving commonwealth benefits or have been unemployed for a period of more than six months.  Now as anyone who has been unemployed for more than six months, either by choice or not, their are in general significantly more issues around getting back into the workforce then for people who are currently employed or only short term unemployed.  Secondly the organisations are given funding for a certain number of students, so if they don’t get the numbers they need they may well have to refund money to the government when the program is over and thirdly the vast majority of organisation involved in these programs have little no experience in the provision of accredited training, they are service providers not training organisations.

So what happens when all of this comes together?  Well you get a group of people (twelve to be exact) out of whom, I would suggest only two will gain employment as a result of the program and maybe another two more will go on to do further study.  So about two thirds of the group will not achieve one of the listed outcomes for the program. Why? Well there are a variety of reasons some of which are,

  • lack of social and work skills, to such an extent that it will take far more work and training than what they are having to overcome
  • Attitudinal issues bought about from previous experiences, both in work and elsewhere
  • a lack of ability to determine what is appropriate behaviour and act accordingly, and
  • their world view

The first thing that is interesting about this list is that for the most part none of these issues relate to their ability to successfully complete the assessments for the program.  There are one or two who have really struggled with the content and assessments, but all but one will actually successfully complete.  What is interesting is that when the class first started I thought the number of people who would get an appropriate outcome would be much higher, but as time has progressed and we have had more and more conversations, the students have felt safer and more comfortable, they have said and done things which show clearly why a number of them have had the experience of never keeping a job for more than about 3 months.

None of this of course should not be taken to suggest that the students have not grown, learnt things and perhaps become a little better equipped for life.  What it is to suggest is that we need where we can, across the board, to try and do a bit better job when it comes to recruiting students, across all levels of qualifications.  Now can we always get it right at the start, no and to think we could would be foolish.  We recently had to withdraw a student who had an undisclosed mental illness, which made it impossible for him to complete the requirements of the course.  He didn’t disclose it, because he thought it was going to have an impact, but as the course rolled on it did and despite the supports we were able to offer it was impossible for him to continue and as I have said with my recent experience, issues didn’t become clear until we touched on a particular subject or the student felt sufficiently safe.

The other thing that needs to be done is for the funding bodies to look at the criteria they are placing on these courses and programs and ask themselves some hard questions about whether the criteria themselves are making it more difficult for everyone, students included to get the desired outcomes.

Anyway that’s just my opinion.

State of the Industry Survey

As a lot of you know back in the early part of the year I created a state of the industry survey for the VET sector, and, and I am really grateful for this lots and lots of you took the time to fill it in.  I then shared the views and information that the survey had captured and also use it in a number of submissions and discussions with various people and bodies.  I was thinking today that with all of the changes which have occurred over the last six months (and it was always my intention to do these every 6-12 months) it might be a good time to do this again and to see what everyone thinks.

Now most of the questions are the same because it, well makes it easier to compare the data then, but there are also a couple of new ones and a couple that I have left off this time around.  So if you want to be involved and you want to shared your views on the sector no matter what part of it you are from I would really appreciate it if you would click on the link below and fill out the survey.  I will leave it open for about 2 weeks of so depending on how the level of responses goes and then I will sort through all of the data and let you know the results.

So here is the link    VET State of the industry survey November 2016

The business of vocational education – revenue streams and models

So today I really wanted to talk about some more specific items rather than theoretical positions.  What is often called where the rubber hits the road, and the obvious place to start is around the idea of revenue streams and business models.

Before I go any further I want to reiterate something I have said many times before.  There is always a lot of discussion around the topic of the cost of education, which is often framed by the statement ‘ education should be free.’  Now while I would hold it as a fairly self evident truth that education is a social good and that the ability of people to access quality educational outcomes should not by necessity be contingent on their own personal ability to pay for those outcomes, what is sometimes lost or can perhaps mislead people when this statement is used is the undeniable fact that there is always a cost associated with the delivery of these outcomes.  Someone, either the government, an organisation, an employer or an individual has to pay for the costs associated with the delivery of educational outcomes.  So with that said let’s move on.

Revenue streams

Realistically when we look at revenue streams within the delivery of vocational education (and I would argue education in general) there are only two types.  I will look at both of these types and the issues and advantages they have and then move onto the kinds of models which we have seen grow from these streams.

Government supported.

Those with a keen eye will notice I have used the term government supported rather than government funded in the title of this section.  The reason for this is simple.  In terms of what I am talking about here I want to include not just direct funding, say through entitlement programs or apprenticeships, but also also things like VET FEE Help, which is often considered fee for service, and targeted or one off government funded programs which have training as a component.  The reason for this is simple there is a common denominator across all government supported training, this denominator is the simple fact that how this funding is allocated, its level and even it very existence is utterly at the whim of government.   We need look no further than this year to see the issues which reliance on government supported revenue streams can have.  Changes to models in most of the states have irrevocably altered the landscape, with particularly in Victoria a significant number of providers either struggling or leaving the market because their funding contracts were not renewed.  We are in fact seeing the ramifications of removal of funding (albeit for different reasons) from a provider currently playing out with Dawkins/Vocation debacle.  The freezing of VFH payments at 2015 levels also had a similar effect where even quality providers have struggled to maintain their businesses as a result of the changes.  So given these issues what are the advantages to delivering government support training?  Often the big sell shall we say, is enrollments. people, and by people I mean potential students seem more likely or willing to enroll in these sorts of programs.  There is a consumer attraction operating for providers who are able to offer government subsidised positions in training courses.

Fee for service.

For the sake of this discussion I am going to take fee for service training to be any training for which there is not some component of government support.  This would therefore be where an individual, organisation or employer directly contracts or pays a provider for the delivery of an educational outcome.  It is an interesting side note I think that in the world of organisational learning and development fee for service training is the norm rather than government supported training.  There is a view, quite strongly held by some that fee for service training is the more secure and safe basis on which to build a training business. Now while I do not by necessity disagree with this as it is clear that there are definite advantages to fee for service training there are also still significant risks.  While the advantages are things such as generally higher levels of revenue, less time spent on reporting and other administrative activities and in general more flexibility in terms of the range of qualifications which can be delivered, it needs to be remembered that as with supported training, while it is less susceptible to the vagaries of government it is susceptible to the vagaries of business, particularly where providers deal with only thin segments of the market or where the market is highly competitive.  I know of a number of companies who were exposed heavily to particular market segments, one to the mining sector and one to government who had 60-90% of their business disappear overnight as a result of the GFC.  In one case the business has survived but is now a much smaller entity than it once was and in the other they have folded altogether.

Business Models

So with these revenue streams in mind we can then look at the various business models that have arisen as a result of them which will then eventually allow us to consider which of these models or others might be the most ethical and sustainable.

Rapid growth model (The VET FEE Help Model)

This type of business model exploded over the last few years since the introduction of VET FEE Help driven by government support, the ability to charge significantly higher prices due to that support, commencement payments and significant enrollment numbers driven by brokerage.  This perfect storm created an environment where an expansionist business model could thrive in a way that it had not been previously able to.  Organisations enrolled large numbers of students, which generated significant commencement payments from the government supported program (VFH) took that money, a significant portion of which technically should have been used to support the students learning experience and ensure that educational outcomes were met, and ploughed it into the expansion of the business, primarily in order to increase the size of the business to be able to then enroll more students, to access more payments and further expand.

Now while there is nothing intrinsically wrong with this model or approach, it is contingent on the actual delivery of the education outcomes which are part and parcel of the government support. I think most people still feel the anger and the ramifications which followed on from when it was discovered that in some cases these rapid growth model businesses were producing completions rates in the low single digits

Funded delivery model

This is a model which has been adopted in a number of areas, one area where it has and is used a lot is in the community services sector and in particular by not for profit organisations.  This is a model which seeks to develop a scope of delivery which maximises the access the provider has to programs which attract direct government funding. (rather than support) The costs associated with a student entering the course are kept as low as possible, which then allows, hopefully, volume of enrollments across the range of courses to offset the costs associated with delivery.  Given that this model is popular within the NFP sector the drive for profitability is generally less and there is also usually lower overheads produced by thinner staffing models and often training being part of a larger business.  Under for profit models however, as with the Rapid growth model, there is a need to continue to generate enrollments across the suite of programs offered in order to maintain both sustainability and profitability.  It is in general difficult for providers delivering under these models to expand without external or organisation investment, or through debt raising.

Fee for service niche model

A significant number of providers in the fee for service market apply a niche market model to their delivery in order to limit costs and to enable a targeted spend in terms of marketing and positioning.  This model often sits at both the top and bottom end of the market in terms of qualification level with providers tending to either deliver high level qualifications or their own accredited courses where while numbers are small, associated fees can be quite large due to low competition.  Or at the other end they tend to deliver low level (often short course programs like white card, RSA or First Aid) where while competition may be significant, volume is very large and recurring, so that even a small margin on low cost programs multiplies out to significant revenue.

Everything to everyone model (The public provision model)

This is a model where the provider has a massively large scope, spanning foundational and certificate I programs through to very high level programs, across multiple training packages, with the vision shall we say of being able to cater for the needs of any student regardless of their choices in terms of study.  While the other models I have spoken about above generally apply to the non-public side of the education market this model is or has been the model in which the public provider has operated also since the beginning.  It is important however, as I said early on in these pieces that regardless of models we should expect our public providers to operate as businesses, at least with regards to providing the best possible ROI on investment and value for money in terms of costs of delivery, given that by in large most public providers would cease to be able to operate without the support they receive from their respect government owners.  Problematically given that they are owned by various governments essentially they are seen as having to provide services across markets and areas where there is little or no chance of breaking even let alone creating even a small profit margin.  There is significant tension between the ability of these providers to naintain cost effective delivery and ROI and the demands placed upon them by their governments.  Of course the argument is that the purpose of a public provider is to ensure that services are available in markets where without significant government support such provision of services could not occur.  Additionally it is also argued that often there are other social assistance requirements which public providers have, which increase the tension between their delivery of programs and the costs associated with the delivery of those programs, particularly, though not limited to administration costs, which if we look at various reports and budget submissions may be as high as 60 cents in every dollar of funding in some cases.

It is important to note that I have here only covered, in broad strokes some of the models which exist in the sector, primarily to see how streams of revenue impact upon the kinds of models of delivery which exist and how those models in turn utilise the revenue streams on which they are most focused.

 

The Business of Vocational Education – Purpose

What is the purpose of Vocational Education?  For me this is a really important question because I think  our answer to this question will have some wide-reaching implications for how we might view the sector, and how we might be able to conceive of a business model which would be ethically and financially sustainable and meet the needs of the many and varied stakeholders within the sector.  If we look at a simple definition from the Australian government, Vocational Education and Training (VET) is designed to deliver workplace-specific skills and knowledge, and covers a wide range of careers and industries, including trade and office work, retail, hospitality and technology. While this is a solid definition, I tend to think that it does not go far enough, simply because it fails to mention the link between VET and employment or workforce participation.  Other definitions talk about it as preparing participants for work or for advancement, by providing with the skills and knowledge mentioned in the original definition and this is I think an important link in the VET chain.

It is an important link because if we consider VET as related to workforce participation (whatever that might mean in the long run) then that changes the dynamic and the purpose, at least to my mind.  If the outcome or the aim for someone undertaking a VET course is a greater level of workforce participation, rather than just to undertake study for the purpose of study, then what an ethical business model is going to look like is certainly going to change as well.  I say this because ones ability to participate in the workforce is not solely dependent on having a piece of paper which indicates that you should possess certain skills or knowledge.  I have over the years fired heaps of people who had pieces of paper that said they knew and could do certain things, but after a short period of time it became abundantly clear that they could not.  It is actually having the skills and knowledge which the paper you have says you have and being able to put them into practice which at least to some extent determines how long you will be able to participate in the workforce.  If we put the idea of producing competent graduates who can participate in the workforce at the center of our business model, then a lot of other structure around what that model might look like seems at least to me to be self-evident.

It is easy to see the first things to go in approaches such as this.  Models that preface provider growth on the strength of continuing streams of enrolments, or where the central concern is the issuance of certificates to generate payments are going to have a difficult time justifying themselves;  whereas models which consider the student experience and competence outcome as their central focus are going to be those that make the grade.  This should however be taken to suggest that a provider cannot be both student focused and profitable, the two are not mutually exclusive at all, nor should it preclude us from suggesting that the delivery of vocational education should not managed in as cost-effective way as possible.  It is simply a recognition that what we should always be seeking as an outcome is competent graduates, graduates who have the potential to participate in the workforce, even if for whatever reason they do not.

These concepts of competent graduates, workforce participation and cost effectiveness become even more important when publicly funded rather than personally funded vocational education is considered. It could be suggested that where someone is funding their own education, providing we meet the outcome of competency, the need for a workforce participation outcome seems not to be as strong.  It does need to be suggested here though that where the ‘personal’ funding’ is something like an income contingent loan scheme (such as VET FEE Help) I tend towards the suggestion that workforce participation and cost effectiveness or ROI come back into play, and all three need to be present.

So it seems to me that the purpose of being in this industry should be to provide high quality learning which leads to competent graduates with improved workforce participation potential in an efficient and cost-effective manner.  Now if we believe this it seems to give us very solid base from which we can develop an ethically and financially sustainable business model.

Anyway that’s just my opinion.

 

 

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