Does Public VET mean Quality VET?

Before I start I need to make something clear, I think that a well supported public VET provider is, for the most part, a vital part of the VET landscape in this country.  There is work and projects which are done by the public provider which are either not done by non-public providers or only done by a small number of non-public providers, usually from the not for profit sector.  This piece should also not be taken to be criticism or bagging of the public provider sector, but rather a look at what seems to be a view being pushed by a range of particularly media commentators that the Public provision of VET through TAFE automatically means quality.

Firstly then a couple of facts.  The vast majority of private, again I prefer the term non-public providers, deliver high quality outcomes for their students and employers.  We can see this from NCVER data, and a range of reports from the various state and federal governments.  We can also see this from the small number of non-public providers who have closed or been closed as a result of the fall out from the VET FEE Help issues.  As I have always maintained there were about ten or so providers who were not playing the game as it should have been played so to speak.  10 out of around 4000 or about 0.25% of all providers.  Enough defending the value of non-public providers however’ what is a far more interesting phenomenon I think is the calls from various commentators, that governments should be cordoning off more funding for public providers, because, and this seems to be a common theme, public providers provider quality training.

It is important to note here that I do believe that for the most part public providers (TAFE) do provide quality training outcomes to their students and employers, however as with non-public providers I simply do not think that we can automatically assume that public means quality in all cases and in all courses.  We certainly cannot assume that public means better than non-public in all cases and in all courses.  There are numerous examples across widely varying industries of non-public providers delivering training of at least the same, if not better quality than that which is delivered by TAFE.  Just as there are examples in the opposite direction as well.  TAFE does some things very well. Non-public providers do somethings very well, and across the board there are things are probably not done as well as they could be.

Of course the point of this view is to push the agenda that because TAFE equals  quality that TAFE should get the lions share of government funding.  The interesting thing is that it already does.  The vast majority of government funding and training monies go directly to TAFE, in fact in most states the split between public and non-public when it comes to funding is about 80/20.  So somewhere in the vicinity of 20-25% of government funding goes to non-public providers, while 75-80% goes to TAFE.

So if TAFE already gets the vast majority of government funds allocated to training already,  and if across the board it really doesn’t seem to matter where a person goes to get your training done, as they are probably going to get a quality experience, which meets their needs and provides them with the outcome that they desire regardless of the choice them make, where, oh where is this view coming from.  Part of it is certainly ideological and interestingly I have no real problem with groups, particularly political parties, taking their ideological stances, I just want them to be honest about it.  I don’t care whether you are a politician, part of the education unions, an academic or a researcher, or anyone else for that matter, if you are making a stance on ideological grounds then at least be willing to tell us that.

What this sector needs going forward is not infighting between the various parties, interest groups, providers, media and others, who are whether consciously or not, promoting a particular ideology or agenda.  We need facts and informed discussions.  We need everyone to sit down, put their baggage, their ideologies, to one side, and listen to what other people are saying.  Listen, then openly talk and enter into meaningful discussions about what is best for this sector and the vital part that it plays in the future of this country.

Advancing Skills for the Future – QLD’s Draft VET strategy

As some of you may be aware the Queensland state government recently released their consultation draft of their strategy for VET entitled Advancing Skills for the Future, so I thought that I might have a bit of a look at what it says and the effect this might have on VET in Queensland.  I will however caveat all this by saying that as we are due for an election in Queensland in the next 12 months, the strategy whether it is good or bad, may never move forward, but hey that is the nature of the sector we work in.

Firstly there is the obligatory simple statistics in the introduction, 1430 providers (both public and private), $810 million and change in funding spread across 600 or so PQS providers, again both public and non-public) and in addition 14,000 government-funded students in 2015-16 over 2014-15.  Make no mistakes VET is big business and touches the lives of a massive number of Queenslanders every year, with more than 270,000 funded students alone in 2015-16.  These types of high level statistics tell us very little about how the sector is operating or which bits might need to change.

Next we come to the now absolutely obligatory statement about the future of work, STEM and advanced technology and automation in the workforce.  This is the world we live in now and let’s be honest any government or organisation that isn’t embracing this view of the world right now is going to be left behind.  We then have a piece about how the whole VET system works and who is responsible for what and then some more statistics about how well the Queensland VET sector is doing.  So far all pretty standard stuff and what you would expect.

Now however we get to the meat of the strategy with the governments vision for VET: In a changing world, all Queenslanders are able to access – at any stage in their lifetime and career – high
quality training that improves their life prospects and supports industry development and economic growth. There are also three key areas that the government see as being crucial to their ability to deliver this vision, which are;

  1. Industry and innovation
  2. A quality system, and
  3. Access and participation

The rest of the paper then looks at what the government intends to do in relation to these areas and what goals it wants to achieve.

Industry and innovation

Job Queensland get a fairly big mention here, particularly in relation to its administration of specialist funding and what seems to be its key role of listening to what is it that industry wants particularly in regional and remote areas.  There is a recognition here that the fastest growing job market over the next few years will be health and social assistance with a projected rise in numbers of employees of around 11% or one in five of every new job created.   While this recognition of the fact the sector will grow over the next few years my only concern is that I have seen so many numbers released around how many new employees will be needed by so many different agencies and departments that have to think that perhaps someone has it wrong, but then again it is probably far better to prepare for a high need in term of new employees and over compensate than it is to come up short.  There is also an additional commitment to STEM and related activities which is again something which should be expected.

 

A quality system

I have often suggested the Queensland has had its finger on the pulse and has better managed its state based funding arranges that a lot of the other states and it seems that this tighter control over who can deliver funded training in Queensland and the management of risks around it will continue, with the tightening of entry criteria and reporting and renewal of contracts based on the quality of the providers and their outcomes.  In addition and this is something that I really do welcome, is a commitment to providing better information to the public about both the sector and the variety of choices which exist for students who wish to engage with it.  That this includes a commitment to improve how VET in schools works and the advice given to young people at school and school leavers, an area which has been sadly lacking over the past few years.

 

Access and participation

In what is by far the largest section of the paper the government goes on to talk about how it intends to achieve its goal of All Queenslander’s having access to skilling pathways
that enhance employability and social wellbeing.  After a discussion of what is currently happening in Queensland, which for the most part, at least in my opinion, is working well the paper goes on to discuss the future direction.  We will be seeing more Skilling Queenslander’s for work which given it has been the flagship employability program of Labor in Queensland for a number of years now should not be surprising to anyone and neither should the goals of better engaging with vulnerable youth, particularly those who have already intersected with the justice system.

There is also, again not unsurprisingly, a commitment to TAFE.  A commitment to ensure that grants allow TAFE to have up to date resources and training facilities and to properly provide the services which they are supposed to deliver.  There is also a commitment to look at the TAFE Queensland Act 2013 to ‘ ensure it enables the public provider to fulfill its role in meeting government priorities and providing commercial and non-commercial services in a competitive environment.’

Overall I have to say that when I finished reading this paper, I was, well a little blase about the whole thing.  Yes it contains a lot a high level goals as one would expect in a strategic document, but very little in the way of meat.  There in of course lies the rub.  It is difficult to know, guess at or comment on a lot of the commitments in this paper simply because we don’t actually know what they mean or more importantly what the government means by them.  What does the statements about the TAFE QLD act or looking at the appropriateness of grants to TAFE mean?  What does a high quality provider look like under PQS?  How does the government see it providing for the training of 20-50,000 new health and community services workers over the next 5 years?  These are all questions for which no answers are given and while we may be able to hazard a guess of the broad direction some of these commitments might take, given the platform and proclivities of the current government, we certainly cannot read anything certain from this document.

So as a high level strategy document, it does its job, however there are still a significant number of questions that need answering about how this strategy is going to be achieved.

Anyway that’s just my opinion.

 

 

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.

Voluntary Administration, closures and VSL – A New Year in VET

As many of you may be aware a number of RTOs have over the last few weeks have shut their doors either voluntarily or not so voluntarily.  A significant proportion of these providers were ones which had large exposures to the VET fee Help market and have been financially impacted quite severely by the move to the new VET student loans scheme.  Have we seen the last of these closures?  I certainly don’t think we have. Over the rest of this financial year we will see the closure or downsizing of a significant number of VFH providers who, for what ever reason have been unable to adapt to the new market place.

Why is this happening?  There are a number of quite obvious reasons why this is occurring, although it is important to note that I have know direct knowledge of the the reasons behind any or all of the recent spate of closures.  The first reason I would point to however,  is a simple one, either the provider has not been granted access to the new VSL system for whatever reason, or the courses which they relied on have been removed from the list.  In both these cases the revenue which was being generated through VFH will have effectively stopped.  Take for example a provider with $11 million turnover, $10 million of which came from VFH.  Not being given access to VSL or having their courses removed from the list effectively reduces them to a $1 million turnover business and destroys the cash flow created through the VFH system.  Finding a way to plug this revenue hole will be almost impossible given the changes under VSL, because even if the provider were to be granted VSL access in the next round or commence delivery of courses which are now on the approved list there are other issues which I will outline below.

The second reason why a number of VFH providers are struggling is the loan cap.  As we know the government has capped loan amounts depending on the course you are undertaking, at $5,000, $10,000 and $15,000.  Let’s take our $11 million provider again.  Say they were delivering the Diploma of Leadership and Management under VFH for $15,000 and this accounted for all of their $10 million VFH income (I know this is unlikely but it is just an example).  The price of the the Diploma is now capped by the government at $5000, so even if the provider is granted early access to VSL and can still generate the same number of enrollments, without the use of third party brokers (which now can’t be used under the legislation) their income from ‘Loans’ under VSL will be at most 1/3 of what it was under VFH, reducing their income to $3 million making it exceedingly difficult to continue operating the same manner they had been.  The other thing to consider here is that even if the provider can generate the same number of enrollments, payments under VSL are now made on a completion rather than commencement basis.  This means that providers now have to have enough additional cash flow generated from other sources to sustain delivery and assessment to these students for perhaps as long as six months before they complete and payments flow through.  Even if therefore a provider was granted access to VSL and could generate the same level of enrollments, they will not, in most circumstances be able to maintain their cash flow at the same level which will of course mean they will either need to severely downsize or close.

The changes from VFH to VSL give us substantial evidence as to why providers should ensure that their revenue streams are as diversified as possible if they want to be able to sustain changes in government policy, funding and the market in general.  Heavy reliance on one source of funding, as myself and others have said for a long time now, is a recipe for disaster.  So will we see more of these closures?  I certainly expect that we will, in particular I think we will as the end of this financial approaches and the legacy arrangements around VFH (and the payments associated with those arrangements) cease and revenue streams become tighter.  I suspect that June/July will be the prime time this year for the closure of a number of RTOs

Anyway that’s just my opinion.

Happy New Year.

 

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

The State of the VET industry survey results.

As many of you are aware last month I conducted the second State of the VET industry survey through this blog.  Thank you to the many 100’s of people who responded to this survey.  Without your input it would be difficult to be able to look at the data in a meaningful way.  What I want to do in my post today is to look at some of the results and think about what they might mean and how they look when compared to the results we got from the survey which was undertaken six months ago, because as we know a lot has changed in the sector since then.

As with the last time the vast majority of respondents were either from Non-public RTO’s or were independent trainers and assessors, with a very small amount of respondents from TAFE, who were consultants, or who worked for non-RTO training companies.  Also in tune with the last survey the majority of respondents were either in senior management roles in their organisation or where in training and assessing roles.  Interesting, though not significantly was a reduction in the number of compliance or middle manager respondents from the last survey.  Again similarly respondents worked for organisations which primarily worked either nationally, in Queensland or in Victoria.  This similarity in demographic data around respondents is important because it provides us with a level of confidence when we look at the other data collected and see changes from previous surveys, that the data sets are at least on the surface comparable.  So lets look at the other data and see what we can see.

When asked ‘how satisfied are you with the vet sector currently‘, the answers were fairly similar to previous surveys, which given the results of those surveys is not terribly encouraging.  On the bright side the percentage of people who were very dissatisfied dropped from 29% to 23%, however on the not so bright side the percentage of people who were dissatisfied, rose from 51% to 55%. Interestingly about 5% of respondents were satisfied with the sector currently a small rise on last survey’s 0%, yes zero.

Clearly casualisation of the training workforce and the use of contractors is something that is on the minds of everyone, as while  the number of full time, part time, casual employees and contractor remained basically the same as with the last survey, when asked how they thought their workforce would look in 12 months, the consensus was that full time numbers would drop by around 25% and while part time numbers would remain about the same, the 25% loss of full time staff would would be taken up by casual and contracted staff.  This thinking is clearly driven by uncertainty in the market around sustainability, cost vs income, and an uncertainty around funding arrangements.

This uncertainty plays out across the questions regarding income streams, profitability and continued financial viability.  While it seems that most RTO’s are attempting to utilise as many different sources of income as they can, there is a significant, almost 15%, increase in the number of RTO’s operating in the fee for service space, with that 15% showing up as a drop in the number of providers utilising VFH arrangements.  Providers have either dropped out of the VFH market or have changed their business models to prioritise VFH less within their income streams to attempt I think to somewhat limit the damage to income as a result of the changes to VFH and the release of VET Student Loans.

Interstingly more than double amount of respondents this time felt that their profitability would increase over the next 12 months, 38% as opposed to 14% in the last survey, problematically however,  there was also a significant increase in the number of respondents who felt their profitability would decease substantially, 24% in this survey as opposed to 11% in the previous survey. My initial thoughts around this would be the increase in the number of who felt their profitability would decrease substantially stems from the changes to be rolled out under VSL, such as price and student enrollment capping, while those that feel their business will increase, are I think those who feel that increased fee for service delivery and changes to business models will drive profitability up.

This trend is around uncertainty is also seen when we look at financial sustainability over the next 12 months.  While the percentage of respondents who answered neutral, sound or very sound in terms of their financial viability over the next 12 months remained exactly the same at 37%, the number of responded who felt their financial viability was very unsound increased from 9% to 23%. The upshot of this would seem to be that we will continue to see a range of providers throughout the market close up shop over the next 12 months unless they can find ways to solidify their financial base.

The final thing I want to talk about today was the results of the questions around the VET Student Loans (VSL) proposal which seem to echo the sentiment that I have been hearing a lot from people that I talk to.  A significant number of respondents (41%) are neither happy nor unhappy with the proposal, answering neutral to the question how happy are you with the VSL proposals.  While it is true that about 30% percent of respondents were dissatisfied or very dissatisfied with the proposals about the same percentage were satisfied or very satisfied with it.  Clearly however the vast number of respondents, some 73% have no intention at least in the short term of applying to be able to access the VSL system as it currently stands.

So there you have my first cut of the data that has come through and as I said a lot of what the data says seems to echo the general anecdotal sentiment that I have been hearing over the last few months.  While people in the sector are worried about its future and the impacts of the massive amounts of change we have seen, and will continue to see, there is still significant numbers of people who feel at least somewhat buoyant about the future

I will leave a link to the survey here  so if anyone who hasn’t contributed would like to they can.

Now I don’t know about all of you, but as the silly season is fast approaching, (I will start saying Happy Christmas to people tomorrow as I have a ban on saying it prior to December 1st) things will slow down somewhat around here until early in the New Year.  So firstly I would like to thank all of you out there who read this little piece of me, whether you read every everything or have just read one thing I truly appreciate it.  To all the people who comment, both here on wordpress, on linkedin and in other forums, I really want to thank you for engaging, for challenging, for both agreeing and disagreeing.  If as a sector we are unable to look upon the work that we do objectively, and to listen to both the criticism and the praise then we are doomed to fail.

 

 

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