NCVER’s Government funded Student data; What does it tell us?

So for those of you who aren’t aware, NCVER released its government funded student data for 2016 recently and I think it has some interesting findings contained in it.  Firstly though what is the overall picture which the data presents us with. The big thing which should jump out of this data for anyone looking at this data is that 7.8% of the Australian population aged 15 to 64 years participated in the government-funded VET system in Australia in 2016.  That is about 1.3 million students, a 3.3% increase from the previous year.  This shows the enormous part that funded training plays in the VET landscape in Australia and the importance that it plays in allowing  people to undertake post secondary education.  Without this funding a significant amount of that 7.8% of the population would not have otherwise been able to access the training they needed to improve their workforce participation options.

Interestingly while there was an increase in students there was also a decrease in subject enrollments, primarily due to the fact that there was a significant (nearly 300%) increase in the number of people undertaking funded skill sets as opposed to full qualifications.  This points out a growing industry trend and one which must be acknowledge and properly dealt with by all of the various funding bodies involved in the sector, that of increasing demand for focused skill sets to meet the needs of an industry or a particular employer.  This is a trend which is on the rise rapidly not just in VET but across organisational learning and development and post secondary education in general.  Organisations and students are looking for short, focused courses containing a small number of units to fill skills and knowledge shortfalls and to be more competitive in rapidly changing markets.

Interestingly 52.2% of funded students, were enrolled in their study at TAFE or other government providers, with only 40.8% enrolled at what would generally be defined as private providers.  The balance of enrollments were through community education and other providers.  This represents an increase for TAFE in terms of students of 14.8%, with both private and community providers both dipping by around 7+%.  I find this interesting (and yes I know these are last years numbers and things can change) because there has been significant media coverage of the downturn in student numbers enrolled in TAFE’s.  What this seems to suggest, at least to me, is that if TAFE is clearly improving its position in the funded training market, then it must be losing substantially in the more competitive fee for service markets, including income contingent loans which as we all know are not Funded Training.  To be fair, the non-TAFE sector has for a long time (even before VFH) traditionally done better in the fee for service space for various reasons.  I will be interesting to see what the total VET activity data says this year, when we can get a picture of all enrollments to compare against the funded enrollment data.

Every demographic with the exclusion of 15-19 year old’s increased in terms of student numbers as did Females, indigenous people and people with disabilities, which is win as often these groups are the ones most in need of financial assistance in terms of their ability to undertake training.  The community services training package was the largest contributor to student numbers at 18.5%, which given the numbers of staff which will be needed in this sector in the coming years is probably a good thing.  The most popular fields of education though were engineering and education however information technology and natural and physical sciences had very significant drop offs at 14.6% and 16.4% respectively.

Overall the real impact of this report is that it shows that enormous value that funded training contributes to this country.

Anyway that’s just my opinion.

P.S.  As some of you know I will be moving on from my current role at the end of this week, to take on a more traditional, less VET centric organisation Learning and development role.  I will be still quite strongly connected to the sector, just in a different way than I currently am.  It is also probably the case that (and I can’t promise this) that I will take a break from posting for a couple of weeks as I get up and running in the new role.



On completion vs Commencement Payments – Some Thoughts

I wrote a piece last week about the state of VET FEE – Help (VFH) and listed a number of points that I thought needed to be addressed by any government considering changing the way in which the system works.  One of those points, that a completion based payment system rather than a commencement based system should be considered created significant discussion, so I thought as the issue is quite complicated that rather than try to answer questions or outline my position in a range of forums I would simply write about it here.

As we know VFH is a system in which payments to the provider from the funding body (Federal Government) are paid on the commencement of a student in a program of study.  This is diametrically opposed to the way in which funding works in a number of the states, notably QLD, where payments to the provider are made on a unit completion basis. One, VFH is essentially an inputs system while the other is an outcome system.  I suggested in my post that a new VFH system should consider moving towards a completion based system as a built-in safeguard to ensure that providers do not enroll students who they are not confident will complete at least a significant proportion of the course in question.  One of the reasons why VFH came to be viewed as a cash cow by a range of providers was the fact that payments were made on the basis of commencement, that is passing a certain census date.  Large number of students could be enrolled, significant cash funneled into the business and there was very little regulation around completion rates, this meant that unscrupulous providers could milk the system for significant amounts of money without having to actually provide anything to anyone.  It could be suggested that one of the reasons why the Mega-providers we have now came into existence was almost entirely due to the payments on commencement system which allow the creation of large war chests of capital available to fuel growth over a very short period of time.  This exponential growth would have been significantly more difficult under a completions based model.

Let us them oppose this system with the one which is in place for government funding training in Queensland.  Direct funding in QLD through the government pre-qualified supplier arrangements are structured so that RTOs are paid only when a student completes a unit of study with an appropriate completion type, in general Competent or RPL granted.  There are no upfront fees paid by the government at all, although they do insist that providers charge a mandatory student contribution fee, though they do no mandate to providers what that fee might so.  Payments are made to providers on a monthly basis on the acceptance by the department of an extended AVETMISS data report, capturing those students who have completed and for whom a payment is allowed.  In addition where a student withdraws from a course and the provider has delivered training to the student a percentage claim can be made (withdrawn – non assessed) to compensate the provider for resources that may have been consumed in the delivery of training to the withdrawn student.  In general payments relating to student completions take no more than 6 weeks be paid to the provider from the time the student completed the unit.  If a student completed on the 1st of the month it would be approximately 6 weeks until the payment for that unit came through between 10-14 of the next month.  What I am suggesting is a system such as this be implemented in relation to VFH.

Now I think it is very important to note here, but in my opinion the business models adopted by providers in relation to how their businesses run should have no bearing on  the decisions of government in relation to how they fund courses.  Simply because a change to a funding model makes it more difficult for a provider should not in general be the concern of government, providers should be flexible enough to adapt their business models to these changes.  Now while this may seem harsh on the surface, anyone who has had a passing involvement in this sector knows that funding arrangements are always subject to change and providers either are able to cope with that change or they are not.

There were a couple of key discussion points that were raised in opposition to my suggestion of moving to a completion based model;

  1. Providers have costs such as staff, trainers, rent and other overheads which have to be paid regardless of whether a student completes.
  2. Non-completion is often out of control of the provider, and
  3. Manipulation of outcomes to ensure that students pass/complete units leading to a devaluing of sector qualification.

I will look at each of these in order and offer a response to them.

Issue 1: Providers have costs such as staff, trainers, rent and other overheads which have to be paid regardless of whether a student completes.

Yes, that is simply to my mind about being in business, there are always expenses and how you structure and run your business particularly in relation to how payments are made is your business. Also again to take QLD for example there are numerous PQS providers who seem to cope quite well with all of these expenses in a completion payment environment and in addition if a completion payment model was to adopted where providers were compensated for withdrawals with a percentage payment to cover training expenditure would not this reduce the problem here.

Issue 2: Non-completion is often out of control of the provider.

Again, yes this is true in fact I would say that more often than not non-completion is out of control of the provider.  However completion payment systems where withdrawal is compensated for ensures that an RTO is very proactive in relation to the progression of their students in their chosen of study.  Students are worked with constantly to ensure that they are moving forward, assistance given where they may be struggling with particular elements or units, and processes around withdrawal or transferring to other programs, clearly articulated.  Now I am not suggesting that VFH providers don’t do this, I am simply suggesting that under a completion payment system, this whole process is managed more tightly simply because it needs to be.  What a completion based system does do, l is make the RTO more considerate of a students chances of finishing a program of study than under a commencement system.  Now while 100% completion rates are impossible with good student enrollment policies and good systems in place 75%+ is not difficult to achieve without the problem alluded to in Issue 3 raising its head.  In fact I know of a enterprise provider in a highly regulated industry who had a 98%+ completion rate for its apprentices.  Why? Because they were selective about who they bought on and they worked extremely hard with each and every student.  Now of course there is wide difference between that sort of model and a more commercial model, however if profitability it not your central goal, then being selective about the students that you chose to offer programs to and how you manage those students can have substantial effects on your completion rates.

Issue 3; Devaluing of the sector due to people simply being passed to make completion payments

Again Yes, this may be a problem, however I think the damage done to the sector in the last 12-18 months by the VFH debacle has harmed the reputation of the sector than anything that has happened before.  How do we combat this then; contractual compliance audits outside of the normal ASQA audit cycle are one way.  Again to reference QLD the education department can audit a provider at anytime and look at their outcomes, time frames, evidence (essentially all of things ASQA would look at) and more to determine whether or not the RTO is meeting the contractual requirements.  The QLD department has over the last 12 months and previous to that imposed a range of sanctions on providers up to and including removal of their PQS status for non-compliance with contractual arrangements.

One of the things I think is crucial with any new system of funding be it commencement or completion based, but particularly in relation to commencement funding is for the government to be able to quickly and easily recover funds that have been paid up front.  Where we have seen completion rates as low as 2-4% for online courses the government should have simply been able to say, you haven’t met the standard benchmarks you need to give us the money we paid you upfront back or to at least suspend payments until the amount owing has been recovered.

Perhaps however there might also be some compromise position which will reduce some of the concerns people have while at the same time providing for better control over the funding and the outcomes that are supposed to relate to this funding.  Perhaps a model could be developed which paid a small percentage of the overall potential claim at enrollment with subsequent payments  being provided on a completion basis and adjusted accordingly.  So bear with me while I describe what is in my head;

  • RTO enrolls 10 students in a course at $10,000 per student  (Total potential claim TPC $100,000)
  • At census date RTO is paid a nominal percentage of the TPC say 20%, which would be $20,000.  This would be a figure that would relate to what the funding body saw as lowest acceptable completion rate.
  • Completion payments are then adjusted as students complete and the RTO is liable to pay back any amounts where the overall completion rate is less that the initial payment.
  • Where 20% of students completed RTO would get no additional funds over the initial payment
  • Where 10% of students completed RTO would be required to repay 50% of initial payment or $10,000
  • Where 50% of students completed RTO would receive an additional 30% of total potential payment or $30,000 making a total of $50,000 in payments.  Additional payments would be made on a month by month basis on the completion of various units by students.
  • RTO could claim a rebate of say 25-50% of total potential claim per student where student withdraws by RTO has delivered training to the student.

Anyway that’s just my opinion.



University vs VET Completions and VET FEE Help!

So I have been looking at a lot of the Government data on completion rates at Australian Universities, on the back of the release of the report on the likelihood of people finishing a government funded VET course.   For me looking at the two sets of data (even though to be fair there is certainly some apple v oranges issues) makes for some interesting reading.  Now it is often suggested that University completion rates are quite high (80-90%) but what is interesting is that that is based on a time frame of 9 years, or in some other cases it is the percentage of students who re-enrolled in the next year which is more of a retention rate than a completion rate, however when we look at the 4 year average it comes down to about 45%.

Now if we compare the completion rates of funded VET courses which sit at between 35 and 45%, with the four-year degree completion rates we see that while overall the VET sector is a little lower, when dealing with the under 25 years of age cohort we see quite similar completion rates.  It is only as the years roll on that we see the degree completion rates outstrip the VET completion rates.  Of course as we don’t have the Total VET activity data yet to look at are just looking at the government-funded portion this picture may change somewhat with different data.

The other issue of course is that VET programs don’t go for 4-9 years. They have a length of between 6-24 months in general (apart from apprenticeships), so it seems like it might be really trying to compare apples and oranges.  However what if we look at first year attrition rates at university and perhaps compare them to something like subject load pass rate, with both of these rates sitting at around 80+% they seem to be fairly similar.

So what is it that I am trying to say here.  Well I guess the first thing is that we need to be careful particularly when we are thinking about the implications of VET FEE-Help in trying to compare University and Vocational studies, which seems then to give us this issue if needing to find out what we think an acceptable completion rate for vocational courses, and in particular those with income contingent loans attached to them is.  The second thing is what is a good completion rate and how do we judge it.  As I said elsewhere I recently looked at our completion figures over the last 7 years and found that over that time we averaged a qualification completion rate of around 75%, this grew to about 93% when unit completer’s (those students who never intended to complete a full qualification, they simply wanted a skill set or single unit) were factored in.  Now I am the first to admit that figure is comparatively quite high and has quite a lot to do with a range of factors including student recruitment, enrollment numbers and cohort makeup, our scope and the structure of both our training and our organisation.  At the other end of the scale I am aware though of some VET FEE-Help only providers (in particular those who deliver a substantial proportions of online only training) who have completion rates which are close to or below 10%.  I also know of a  number of enterprise RTO’s who have completion rates of 98-99% primarily due to the way in which they handle enrollments.

What should we be aiming for then and what should be happy with in terms of completion rates for VFH courses.  Would we be happy if the completion rate sat at around 35% but we aimed to try to raise that to say 45%, which puts our target at around where funded training and 4 year completion rates for the University are?  Are we aiming to low there?  Or is it better to aim at that level rather than to aim at say 70% in the full knowledge that most of the providers in the market place whether public or private are simply never going to meet that mark.

Naming and Shaming, Risk Assessment and Contract management

So as we have seen throughout the media over the past week a number of RTOs have been allegedly caught with their fingers in the honey pot so to speak, with a number shut down, Victorian training contracts removed from others and yet others (publicly listed) with class action claims launched against them.  While I support all of this and think that it is good to see that those providers who are not playing by the rules, or in some cases it seems even playing the same game as the rest of us are being called to account, as I have said previously

It should never have come to this!

Now I know that there will be people out there (yes Senator Lee Rhiannon I am looking at you and others) who will no doubt claim that this is all because funding was taken away from TAFE and non-public providers were allowed into the sector etc.  However that is simply rubbish!  What caused this was not competition, it was not opening up the market place, it was a complete and utter failure of a number of state and federal governments to actually manage the funding contracts they had with providers properly.  

Others will of course try to blame the regulator ASQA or its Victorian or WA equivalent, but again I am going to call rubbish!  Now it is true that the regulators may have some burden to bear in this, perhaps their risk management or auditing regimes could have been better, but lets not forget something here.  It is not ASQA who chooses who gets to deliver government-funded training, it is the various state governments.  They contract providers to deliver, they pay the money and they are the ones that are responsible for managing the entire process and making sure that this sort of thing doesn’t happen.

Now don’t get me wrong I am not suggesting that the providers themselves are not responsible, should not be called to account and are not the reason this has happened.  If all providers did the right thing then there wouldn’t be this situation either.  That being said, particularly it seems if we look at Victoria, there has been a catastrophic failure on the part of the government departments to properly manage these contracts.  There shouldn’t be discussions about improving outcomes, transparency and accountability now, that should have all been done even before the contracts were ever handed out in the first place.  Did the department in Victoria not have any kind of robust monitoring and contract management processes around this, did they not look at the outcomes reports and various bits of data?

Sure it is good that this is getting cleaned up.  It is good that providers who have had their contracts removed are being punished, but maybe, just maybe the government could also think about naming and shaming the people who were in charge of the management of these contracts as well or at the very least actually making sure they are doing the jobs they are being paid to do.


Anyway that is just my opinion.

Victorian VET funding Review – The things I didn’t know about VET funding in Victoria

So as some of you may notice it is a Saturday and I am posting which is unusual I know, but a connection of mine on linkedin posted on Friday the issues paper from the Review of VET funding in Victoria and as I said in a response to her post I was gobsmacked when I read it because, while I freely admit that I don’t have intimate knowledge of how things work in VET in Victoria, I found a range of things that I simply couldn’t believe were and had been happening, and it seems allowed to continue to happen by the Victoria government and its departments and which were a universe away from what I has been the case in QLD for years.

Victoria funds every course accredited under the Australian Qualifications Framework.  Why?  As I said in my initial response, who thought that this was a great idea, in my mind it is one of the stupidest ideas around.  Yes I get that different courses are funding at different levels,  but surely (as it says in a number of places in the review there needs to be industry outcomes from funded training) how are you ever going to target industry outcomes well when you fund everything.  This idea of not (like QLD and other states) having a list of those qualification which are funded and which contracted providers can deliver.  A list which has been developed considering the needs of the State and industries within it, is for me so far removed from common sense I find it unfathomable.  The other issue with this it that when everything is funded it leads to a range of other issues which seem to occur in Victoria which we in QLD in particular don’t seem to see.

The issue of substitution.  First off, if it is an issue and you have name for and people know it has been happening why didn’t the Victorian government do something about, surely they had to know that this was occurring and who was doing it.  All you have to do is look at the data people it will all be there in black and white.  So for those of you who don’t know what substitution actually is (I certainly didn’t because as I will explain later QLD has very simple safeguards against that sort of thing).  “Substitution utilises the broad training packages and flexibility built into the funding system to select units from alternative training packages to receive higher funding rates. In one example mentioned, providers switched units relating to the responsible service of alcohol, commonly delivered under a hospitality qualification (which attracts a low funding rate) to higher-funded units delivered under health support services”.

Now here is a couple of really quick things about this practice.  It is way less likely to happen if not everything is funded.  Also and please someone correct me if I am wrong, it appears that you can, in Victoria simply replace one unit with another as long as it meets the packaging rules, so for example import a unit for a different qualification or training package into another qualification in which it does not naturally reside, without any kind of check or balance by the people handing out the money,  they pay you.  Wow, no wonder there has been so many problems.

In QLD when you apply for pre-qualified supplier status (with additional approval criteria over and above just being and RTO, including industry support to deliver the qualifications, from the approved list, that you have on your scope and want to deliver) the scope of units that are funded are the units explicitly stated in the qualification documentation.  If you import a unit which is not explicitly stated in the qualification, then it creates an error and you don’t get paid.  This doesn’t mean you can’t import units and be paid for them, what it means is that you have to tell the department what you are doing and they make a decision about whether or not that substitution is appropriate, meets packaging rules etc.  No approval from the Department no payment for the unit, it is as simple as that.

Zero or low fees.  Again, of course, when everything is funded and everyone is trying to scramble to deliver there is going to be a race to the bottom in terms of student contribution fees.  However it also needs to be remembered that probably about 25% of our funded students are there because they can afford our fees, which quite low simply for that reason and a lot of non-profit and community sector providers try to keep their fees as low as possible for just that reason.

Contracted providers.  Now again I don’t know what percentage of providers in Victoria are contracted to deliver training, but I do know again in QLD that the number of PQS RTOs is far lower that the number of actual providers.  Why, well firstly there are additional compliance burdens but secondly, and let me say this again


So that is my little weekend rant.  There is a range of other things in the issues paper which worried me as well, but I am going to save that for a more lengthy review of the document which I will post next week.

Anyway that is just my opinion.

Staying afloat in the volatile world of VET

RTOs, Funding and Financial Viability

We have seen a whole lot of changes in the VET sector recently, particularly around government funding and who is being expected to be paying for VET in Australia.  A couple of weeks ago I looked at the major ways in which VET in this country is paid for, that is income contingent loans, entitlement style funding, trainee and apprenticeships and special purpose funding programs.  In that piece I left out (on purpose) the concept of Fee for Service training, where a person or an organisation simply pays a provider to deliver a qualification, but in the context of what I am talking about today, fee for service training is an important element in how VET is paid for.  So given all of the changes that have happened to funding in the sector recently, what does an RTO need to do in order to ensure that they are financially viable both now and into the future.

The first two things are obvious (well at least I think they are), but sometimes as we have seen spectacularly in some cases they are often overlooked or their important placed second to maintaining a constant flow of new students  and financial considerations.

  • Provide High Quality training, and
  • Be compliant – Not just on paper, but be really compliant.

Anyone who doubts the importance of these two things in terms of continued financial viability, should perhaps think seriously about whether or not they have a place in this industry.  It doesn’t matter whether you are a very large provider or a very small one, if you are not providing high quality training and maintaining your compliance you will pay for it in the long run.  Take for example a large provider who is heavily reliant on VET FEE-HELP whose quality of training is called into question, or their compliance is off.  Their risk rating for their Tuition assurance scheme might risk substantially or worse still it could be revoked, leaving them without the ability to utilse the funding source that drives their business.  What about a small provider who is heavily reliant on government entitlement funding like Queensland’s Certificate III guarantee program, who is delivering courses that don’t meet time requirements (Volume of learning and nominal hours for example), who find as a result of this that the government decides to radically reduce the level of funding for the course, to match the amount of time it is being delivered in.  Both of these circumstances would be extremely detrimental to the financial viability of an organisation, but also point to the next thing the providers really need to think about when they are thinking about their business.

  • Don’t rely on just one source of income!

Unfortunately a lot of providers, both big and small and even both public and private rely far too much on single sources of funding or types of funding and fail to spread their exposure to variations in the market place.  Contestable funding made things more difficult for the public providers because most of their delivery and services were based on a model where government funding remained constant.  The proposed changes to the funding of training in South Australia, could have huge effects on those non-public providers that have relied on it for years.  A change to how VET FEE-Help is paid (for example if it moved to a completion model rather than a census date model) would have an enormous effect on the cash flow for those providers for whom it is a substantial proportion of their income stream.

So what can providers do to ensure that they can be financially viable over time.

  • Spread your funding risk
  • Build income streams not related to funding sources.

If providers are going to rely heavily on funding, be it income contingent loans or other sources of funding, then they need to make sure that their risk is spread as much as possible, add special programs to your entitlement funding programs, become an apprenticeship and traineeship provider as well as a VET FEE-Help provider, make sure that if funding changes in one area that your business can absorb those changes through the income from the other funding streams.  The most important thing you can do however, is to try to build income streams that don’t rely on government monies.  All providers who want to continue to be viable should be ensuring that they look at things like

  • Fee for service for individuals and organisations
  • skill sets as opposed to full qualifications
  • non-accredited training and
  • partnerships with organisations and other providers.

Building your fee for service base is one of the best ways that providers can continue to remain financially viable as it untethers them from the vagaries of government policy and funding decisions. The problem is that most providers don’t do this very well at all.  The biggest problem for most RTOs is that, that is all they see themselves as, providers of VET qualifications and in some cases skill sets.  The best way for providers to build their fee for service business is to start to look at themselves as training organisations rather than just RTOs and look at developing their skills and programs in the non-accredited space.  Look at what you are good at and capitalise on that.

Anyway that’s what I think.


Paying for VET – The funding equation

So I have been thinking a fair bit recently about funding in the VET sector and different models and approaches.  A lot of this has been prompted by the release of the new QLD VET investment program and the issues with what has happened with funding in South Australia and the discussions about that, as well as the recent comments by Senator Birmingham and some of the insights which came out of the panel I chaired at EduTech.

As we are all aware there are a range of ways in which VET is paid for in Australia from income contingent loans (yes I know they are not technically funding as such but let’s go with it anyway), to skills shortage lists and priority areas, individual based funding and programs aimed at producing specific outcomes for specific groups.  When we add to this direct funding for public providers in what ever form that takes and apprenticeship and traineeship schemes it is no wonder the average person has difficulty in figuring out who is paying for what.

Firstly lets consider income contingent loans (VET-FEE HELP). I am actually a proponent of this style of ‘funding’ particularly for higher level programs and to be honest if it wasn’t for this kind of system I would never have got the education that I currently have (admittedly my education is from the Higher Education sector rather than VET but the same principle applies).  The advantage to these programs is that it allows people to undertake the study that they wish to, without relying on whether or not that funding is considered to be a priority by the government.  It allows a strong freedom of choice around both what is studied and where and how that study is undertaken.   There are of course problems with this style of system (outside of issues around the cost of a program) the biggest of which is that employment outcomes from these programs may not be as high as they are in other more directed programs.  Why?  Well because people get to choose what it is that they want to study regardless of whether or not there will be an employment outcome at the end of the program.  Is this really a problem though?  I am not so sure that it is, providing people entering into these courses of study understand that there may not be a significant employment outcome for them as a result of undertaking the course, or that they may need to take employment in a different area first, before they are able to utilise their chosen program of study.

What about so-called entitlement style funding, where individuals who meet certain criteria are able to have their training subsidised  by the government.  This funding is almost always tied to those skills shortage and priority occupations lists, which means that while an individual may be able to obtain their training for a very small out-of-pocket expense, they are limited in the areas in which they can study, if they meet the eligibility criteria.  This kind of funding is interesting because it accounts for a fair proportion of the funding provided to the sector by the State governments and different people in different states may therefore have not only different eligibility criteria, but also a different choice of programs which they can undertake, as well as differing choices around providers and co-contribution rates.  The upside of these programs, if well-managed and run would seem to be a much stronger connection to employment outcomes and workforce participation particularly at more entry-level positions, the problems of course are that not everyone will meet the eligibility criteria and even for those people who do, the courses which are available to them, may not the courses which they wish to undertake.

Specific purpose programs (like Queensland’s Skilling Queenslanders for work program) are similar to entitlement style programs, with one key difference, they are designed with usually quite specific outcomes in mind.  If we take the Queensland program as an example, it is heavily focused on youth, particularly those youth are disadvantaged in some way and entry-level qualifications.  It is designed to increase the level of workforce participation in group which currently has a high level of unemployment.  Of course youth (people under 25) are not the only targets of these programs, they are also targeted at anyone who is disadvantaged and who has had difficulty in obtaining work (medium to long-term unemployed).  There are a couple of advantages to these sorts of programs, firstly they are designed and funded with a specific outcome, which usually means more funding for supporting services which may assist students to actually achieve the result that the program is designed around.  Being specifically designed also means that providers and other who are involved also have a very clear idea of what the goals of the program are and what they need to achieve.  The disadvantages are the same of those for entitlement style funding in that there are very specific criteria for participation and in terms of what programs are offered.

Traineeships and Apprenticeships are a slightly different fish from the other styles of funding, primarily because before being able to access these types of funding one must be employed or employed as part of the program.  They also in most cases carry an incentive component for the employer in order for make it more attractive for them to take on a trainee (and the additional costs which may be associated with them) than may have normally been the case.  The advantages to these programs are obvious, people are employed as a result of them and they are specifically aimed at the student completing the qualification in question and continuing to be part of the workforce.  The problem with these programs tends to be the amount of paperwork and regulation involved for all parties concerned.

Then finally we have direct funding to public providers.  I am going to be really open here and say that I think that the vast majority of funding for VET should be contestable.  It should go to the provider who is chosen by individuals and employers, sectioning off parts of funding programs specifically for the public providers simply limit choice and creates state-run monopolies.  That being said however I sincerely believe that there should be funding provided to TAFE, it should however be transparent, not hidden under quotas and things like that.  It should also be for specific purposes, where there is market failure, or where there is a lack of providers, or specific skills or facilities are required.  There should also be funding for the up keep of government-owned assets (where those assets are being utilised or are needed for the future.  However like with non-public providers operational expenses should be met through the utilisation of  contestable funding and fee for service delivery.

So the question which comes from all of this for me is what works best and is there any realistic way in which we could simplify things to make things easier for everyone.  Problematically I don’t think there is, each of the styles of funding have a specific purpose behind them, which also means that it is difficult to determine whether one type of funding is better than another.  I do however think that often entitlement style programs are the most problematic, primarily because of the occupation and course lists which support them.  For these style of funding programs to be effective there needs to be a tight link between the courses on offer and the needs of the workforce, because if there is not they are doomed to not meet the needs of anyone.  The other issue with these style of programs is getting the eligibility criteria right, one of the criticisms of the higher skills part of the QLD VET investment plan is that holding a Certificate IV  in anything disqualifies you from gaining funding for a diploma or above level qualification, regardless of whether or not it is a qualification in the same sector.   Now I am not suggesting that these types of funding aren’t useful and don’t have a place, they do, governments just need to be very careful about the programs they subsidise and the criteria for students.

Anyway that’s just my opinion.

Queensland VET Investment Plan 2015-16

Well Minister Yvette D’Ath and the team at DET in Queensland have released the Queensland VET investment Plan for 2015-16 on Friday.  And I have to say that the Minister has delivered on everything that she promised.  This is particularly delightful given the recent debacle which occurred in South Australia

Firstly the current PQS RTOs have had their contracts renewed until 30 June 2016, which provides some, certainty and stability in the market place that had been missing over the last few months.

So what has the government and what does the plan look like.  As with previous years the majority of funding is in the form of demand driven arrangements, the key points are as follows;

  • a network of quality registered training organisations (RTOs) pre-approved by DET (pre-qualified suppliers) to deliver eligible training and assessment services.
  • choice for individuals and employers to select the qualification, and the pre-qualified supplier, that best meets their needs in terms of delivery strategy, value for money, and potential for securing employment
  • published subsidy levels for all subsidised qualifications or skill sets reflecting the level of government contribution toward the cost of training, influenced by priority and relative cost to deliver
  • co-contribution to the cost of training by individuals, employers and/or industry.

This demand driven funding is backed up by programs such as Skilling Queenslanders for work and direct allocations of funds to the public provider TAFE.  This is all very much in line with what the government and the Minister have been discussing over the last couple of months.

However talking about the model for delivery is very different from funding that model, so to coin a phrase, ‘Show me the money’ and to be completely fair the government has in my opinion stepped up.  There is a total increase in VET investment from $615-754 Million, with and extra $50 million going into the contestable demand driven Certificate III guarantee program.  With $20 Million extra to User Choice and $5 million more to both higher skills and public provider grants alongside the $60 million Skilling Queenslanders package, we are seeing a substantial and well-rounded program of investment from the QLD government, with importantly I think for everyone no surprises.

The only thing I would point to as a slight disappointment is the eligibility problem that I have spoken about before, but given the thrust of the program and the underlying principles are primarily about those who are unemployed or under employed, I can understand it and live with it.

So all in all congratulations against the Minister and the Department for a sensible, well funding, VET investment program.  Well Done.



Education Brokers and the Facebook scenario

Firstly this is not an attack on the Educational Brokerages in Australia, it is more of an explanation and discussion on how the system works and why.

Everyone complains about Facebook, almost all of the time.  They complain about changes to the interface, the way it deals with what turns up in the news feed, how many ads they see, what the company does with all of the data it collects and who actually owns that data (I will give you a hint it’s not you).  The problem is that all of these complaints and issues grow from a mistaken belief about the place of Facebook users in the grand scheme of things.  As a lot of people often suggest if you want to find out why things are being done in the way they are being done, follow the money.  So if we follow the money in relation to Facebook, we quickly realise that Facebook users are not in any real sense of the word Facebook clients, they are in fact simple objects within a data set and consumers to be advertised to.  Facebook’s real clients and the people who they are really trying to keep happy are their advertisers who generate all of the income for the site and their shareholders.  Now while it is true that if you have happy consumers you are probably more likely to generate better income, when you have a billion users a lot of people have to not only complain, but stop using the system before the company would take notice.

So if we apply the same logic to the Educational Brokerage sector in Australia we can quickly see what is happening.  In fact all we have to do to find out who is important to these organisations is to ask a really simple question, which is of course, who pays them?  The answer, of course, is equally simple, they are paid by training providers to provide them with students.  So the income stream for brokers is tied completely to the continuing recruitment of students for their client RTOs.  If there client RTOs are unhappy or there are not enough students, or the costs are to high, or compliance issues start to impact and they leave the relationship, then the broker either has to find other clients or increase the number of students being recruited for the clients it still has to address the income shortfall.

Make no mistake however, as is the case with Facebook users, potential students are not the clients of brokers, they are simply the consumers of the service they provide.  They are in reality very little more than a product with a certain value attached to it, which is generated when they are ‘sold’ to a provider.  The value of a can of beans to Woolworths is that someone will pay money for it.  The value of a potential student to a Broker is that someone (a training provider) will pay money for them.  The more money a provider is willing to pay for a student the more value that student has to broker.

Now to be fair this should not be taken to suggest that potential cash value is the only driving motive for brokers nor it is to suggest that potential students don’t have a cash value for RTOs who don’t use brokerage services because they certainly do.  It simply suggests that as with Facebook the person who does not pay for the ‘service’ in this case the student is always going to be a secondary concern to the needs of the person who pays the bills, in this case the training provider.  When we add to this the concepts of the Brokers themselves being independent contractors, and or working either entirely or partially for commissions, we can easily identify the pain points within the system.

Is someone working on commission going to recommend a Cert III or IV course to a student which might generate $600 worth of income or is there the temptation to recommend the diploma level course which will generate $3,000, particularly when the RTOs (who remember are the ones paying the bills) might make $15,000 from the Diploma course as opposed to $3,000 for the Certificate IV.  Again it is important to note that I am not saying that this is the driving force behind all of these operations, but when we start looking at the money we can see why people might prefer to recommend a Diploma over a Certificate IV or even utilising VET-FEE HELP over accessing direct government funding.  As someone from a brokerage said to me a while ago, ‘our business is recruiting diploma students, it is up to the individual to decide if it is the right option’.  Now while this is true, I would suggest it is also true that even for people who are deeply involved in the VET sector funding arrangements can be complicated to say the least, and for a potential student having a ‘personal learning consultant’ recommend undertaking a Dual Diploma of counselling and community services, which they don’t have to pay anything for up front, becomes an easy thing to agree to because well it sounds good and seems much easier than trying to figure out the morass of funding available.

So here is a question for everyone to ponder.  What would the role of the broker be if the person who was paying them was the student, if their income was generated by creating the right result for a potential student rather than being driven by the training provider?

Sustaining the unsustainable Part 2 – What the hell is happening in South Australia

So as most of you are aware a little while ago I posted about the Victorian Governments $320 million TAFE rescue package and asked why they were going down this path, how it could be justified and what was it that they were actually supporting with this ‘rescue package’.  Now yet again we see a similar, thought to be fair not exactly the same, thing occur in South Australia.  We are seeing the government not only cut subsidies to more than 200 vocational training courses, but handing 90% of the available funded places, some 46,000 out of 51,000 to TAFESA.  It is a decision which seems to have come with very little warning or consultation and has been roundly criticised by employers, business groups and the training sector.  It appears to neither take into account the capacity of TAFESA to deliver these programs nor the vast amount of training, particularly in the trades sector that in SA is done by high quality non-public providers such as PEER VEET.  It also seems to ignore the hidden ramifications like students having to travel over 300km to undertake training at a TAFESA campus, rather than with a high quality local provider or the job loses that this will cause in the non-public training market, primarily in the small and medium provider end of the market.  It situation is so dire that the Federal assistance minister for education and training, who is responsible for vocational education is consider investigating whether the SA government has breached their agreement in terms skills training.

So why would the South Australian government go down this path which has everyone, except for perhaps for TAFE, although if I was involved in the management of a TAFE in SA at the moment I would be really worried about our capacity to actually deliver the outcomes that the government wants, shaking their heads.  It can’t be because they want to save money because a subsidised place at TAFESA costs about 2.5 times more than the same place at a non-public provider.

It seems that the real reason may have far more to do with South Australia trying to balance its overall budget and to find some ways of utilising the white elephant of Tonsely campus or their $38 million mining, engineering and transport  hub, set up to service an industry (mining) which is rapidly contracting and not taking on trainees.  It is an awesome idea to allow unlimited numbers of people to be trained in trades for which there is little or no demand at the moment, while limiting training in disability support (one of the biggest growth areas in the country) to 200 places.

This decision is at its heart one based on political ideology and protectionism, at the cost of student and employer choices and outcomes.  It is a truly backwards thinking decision which is even more disturbing than the Victorian rescue package and even less based in any kind of rational thought processes.

Anyway that’s just my opinion.

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