Skills Reform – challenges and opportunities

Claire Field, Chief Executive Officer

History• Late 1980s/early 1990s concerns TAFE curriculum not

meeting industry needs• ANTA– national regulatory standards – training packages– nationally consistent data collection & reporting (incl

employer satisfaction)– funding reforms - User Choice/competition

• Efficiency & effectiveness of government funding become focus of system

Who benefits from VET?• Considerable research showing strong ‘public good’

argument for government investment in lower level qualifications

• Stronger returns to individuals from study at diploma level and above (employment participation and earnings)

• Question then becomes – what should government fund? Should government fund VET study for those who already hold high level qualifications?

2012 Skills Reforms• Focus of government funding - student entitlement

comprising foundation level courses, Cert I, Cert II up to Cert III– approved providers– pricing signals, and in some cases caps on places, based

on importance of courses/qualifications to state economy

• Less government funding for Diploma/Adv Diplomas – students supported with VET FEE-HELP loans

• Concessions still available for disadvantaged learners• Genuine competition – not ‘purchasing’

The private sector• Deloitte estimates for ACPET– approx $7 billion pa earned by private tertiary

providers from non-government funded training– 2 – 3 times size of government funding to private RTOs

• Highly diversified sector – international vs domestic students– on-shore vs off-shore– online, face-to-face, in the workplace– dual-sector vs multi-sector

The private sector• ‘VET only’ providers– Student fee-for-service (eg Open Colleges)– International education (eg Academies Australasia)– Employer fee-for-service (eg Performance Training)– Not-for-profit (eg Encompass Community Services)– Government-funded student delivery (eg MEGT)– Other government funded (eg BCA National)

• Provider funding models are typically a mix of government and fee-for-service revenues

Challenges for the private sector• Established student fee-for-service providers

– Significant risks in entering government funded market– Risks if competitors enter and undercut a provider because

of government subsidy– Experience in Victoria is ‘proceed with extreme caution’

• Established government-funded student delivery (providers already on APL list)– Keep business operating for 18 months during

implementation– No guarantees on prices for different courses/industry

areas

TAFE NSW• Well known brand and reputation• Trusted VET provider• Excellence in some fields – eg Enmore Design School• Important part of community – especially in rural areas

BUT• Most protected of all state-TAFE systems from competition in

domestic market• TAFE NSW = 8% of international VET students (15% for TAFE

nationally)• Growth in private, domestic higher education following lifting of

university CSP caps shows differentiated, quality product

Impediments to competition• Enterprise agreement – union resistance to change

• Ageing infrastructure

• Bureaucratic ‘head office’ limits ability to innovate

• Managers ‘administer’ government funding – different skills needed

in a competitive environment

• Public perception of TAFE

• Too little emphasis on marketing

• Lack of knowledge of competitors

Evidence from Vic reforms• Learners from disadvantaged backgrounds relish choice of

provider – increases in one year:– 20% Indigenous learners– 21% learners with a disability– 21% 15-19 year olds with no Year 12– 32% 45-64 year olds– 36% unemployed learners – 39% learners from CALD backgrounds– 132% enrolments in foundation courses

To prosper…A TAFE Institute will have to:• develop a dynamic competitive strategy as well as

pursuing operational efficiency• target its clients and respond to client needs quickly

with quality learning experiences• get ahead of competitors in its chosen markets when it

comes to innovation and new technology• make sure its staff are highly professional

Terry Moran, TAFE’s Role in the New World, 1998 Education for Employment Conference

The quality stamp