TAFE At The Crossroads:
What’s the future of SA
under Skills for All?
Pat Forward - Federal TAFE Secretary
Thursday 3 November 2011, Adelaide
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What’s happening around Australia?
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Victoria
• Victorian Training Guarantee is fully implemented
• The Victorian system is in crisis
• Victoria is the lowest funded TAFE system in the
country
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South Australia
• Implementing Skills for All
• The second most marketised state in the country
•Funding has declined, and the government wants
to reduce it further
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Queensland
•Queensland Government has accepted all
recommendations of the Noonan review
•Proceeding down the same path as Victoria
•Consulting around the implementation of its
reform process
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Western Australia
•Announced that it would be making 50% of its
government funding for VET contestable in 2009
•Currently determining reform agenda
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New South Wales
• NSW Government is implementing market reform of
TAFE – has released discussion paper – and is holding a
short round of consultations around its proposed reforms
• Passed legislation to remove TAFE teachers from the
state IR system by making them employees of the NSW
TAFE Commission
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Tasmania
•Tasmania has split its public VET delivery between
a Skills Institute and a Polytechnic
•The aim of the Skills Institute is to move to full
cost recovery
•The government has announced a review of
Tasmania Tomorrow
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NT & ACT
• All public VET delivery in NT through dual sector
university, Charles Darwin
• All public VET delivery in the ACT is currently
through Canberra Institute of Technology
• A review is underway to examine an
amalgamation between CIT and the University of
Canberra
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What has happened in Victoria?
•The Victorian Training Guarantee is a training
entitlement - students are “entitled” to a
government subsidised place with the level of
funding and cost to the student dependent on the
qualification level.
•TAFEs in Victoria are autonomous – they are the
employers of TAFE teachers and have been since
the mid 90s.
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Key Features
• All government VET funding open to competition from public and
for-profit private providers
•Government partially subsidises qualifications at all levels, with
the amount of government subsidy reducing and the amount of
student fee increasing as the qualification gets higher
•TAFE receives some additional funding from government because
it is a “full service provider” – additional funding drops out at
Diploma and Advanced Diploma levels
•Students only receive government subsidy for qualifications above
the highest qualification they hold – with some few exemptions
•Students must pay full costs for training at the same level, or
below
•Student contact hour funding “weighted” depending on industry
area
•Income contingent loans available for Diplomas and Advanced
Diplomas
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VICTORIA
What has happened in South Australia?
•Skills for All to be implemented from mid 2012
•Skills for All will be based on a training
entitlement, where students will be eligible for a
government funded place with the level of funding
and cost to the student dependent on the
qualification level
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Key Features
SOUTH
• All VET funding open to competition from public and private
AUSTRALIA
providers
•TAFE SA as a separate government-owned statutory authority with
each of the existing three institutes as a subsidiary;
•Purchaser/provider split enacted from July 1 2011 through the
formation of the Office of TAFE SA
•Income contingent loan system in place by September 2012, with loan arrangements
published and in place by the end of 2011, subject to agreement with the
Commonwealth
•No student fees at CI and II and below, with the government fully subsidising the cost
•CII and IV will be 80% subsidised, and Diploma and Advanced Diploma 70% subsidised.
•As in Victoria the ICL would be available for these higher level qualifications. The SA
government has taken a different approach than Victoria to the capacity access public
funding for qualifications at the same level or below, but with a range of restrictions.
•Concessions will be available for students at C III and IV
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Skills for All policy is being introduced in the
context of an additional $194 million over the
next six years, and a target of 100,00
additional training places.
The Victorian government committed an
additional $316 million over four years when
it announced its Securing Jobs for Your
Future, with a target of 172,000 additional
training places
When Victoria commenced its reforms, its
funding per student contact hour was
already the lowest in the country: $12.12
(2008) with the national average at $13.40.
This dropped to $11.96 in 2009!
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SA “reform” aims
• South Australian reforms aim to reduce funding per student
contact hour. Skills for All sets a target of a reduction of 10% by 2012
“to match other Australian jurisdictions”.
• Since 2005 the VET cost per hour in SA has dropped 14.1%
• The aim of Skills for All is to move the South Australian VET system
closer to the national funding average, which will “require further
efficiencies from TAFE SA”
• Signals a number of areas where TAFE must change to make it
“more responsive” to industry and student needs.
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•SA Government says the establishment of TAFE as a statutory
authority will give TAFE greater commercial autonomy, financial
independence and autonomy. Skills for All articulates a number of
critical and ongoing functions which may be required of TAFE…
•But…no details about how these additional requirements are to be
funded
•Government says TAFE will receive (unspecified) additional funds
for the purchase of specific services, CSOs and market transition
risks through the implementation phase through purchasing
agreement with the government.
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Crisis in Victorian TAFE
• TAFE market share dropped from 75% (2008) to 52% (2011)
• Private provider share has grown from 15% to 32%
• 16 out of 18 TAFE institutes now reporting significant deficits
• VET budget has been Victoria overspent by $400 million
• Unprecedented growth in a number of high volume, non skills
shortage training areas
• 3000% growth in the delivery of personal training
qualifications
• Decline in delivery of diplomas and advanced
diplomas.
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Victorian Essential Services Commission Review
The Commission conducted a review and recommended:
•Progressively removing the increased funding that TAFE institutes
received over the next four years
•Altering industry weightings to control the growth of training in
some industry areas
•Decreasing funding to university diplomas and advanced diplomas to
act as a disincentive to universities picking up market share in these
areas
•Defining and specifying, and then separately purchasing community
service obligations from all providers
•Removing the caps and floors on fees
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Victorian Government response to the crisis
•Reduced the TAFE funding differential in the largest 8 metropolitan
institutes by 25%
•Removed the caps and floors on fees
•Removed the differential funding arrangements for apprentices
•Altered the weightings in some industry areas in an attempt to
influence market behavior.
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Changes to TAFE Funding Rates
In Victoria
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What does this mean?
TAFEs in metropolitan areas are being punished by the government
for the budget blowout - there has been massive growth in private
provision, but the response targets TAFE, not private providers.
The removal of caps and floors in fees will have two effects:
• Providers will be able to charge whatever the market can bear
for popular VET courses and shift costs directly onto students.
• Private providers will now be able to charge students nothing
for training – deliver training in a fraction of the time, and reap
the government subsidy for minimal or no effort.
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What are the lessons of the Victorian market reform?
Victoria is the second largest and most commercially oriented TAFE
system in Australia. It cannot compete on costs with private
providers. It cannot survive market reform if it continues to offer
high quality training .
And:
The Victorian government is still considering the Essential Services
Commission Review – and all 45 recommendations are for further
marketisation!
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What governments are saying and what it really means:
They want to give students an entitlement to training
Students already have an “entitlement” to training at TAFE
They want to make the system “demand driven”
The TAFE system is and always has been “demand driven”!
TAFE receives funding directly from government in response
to demand from students and industry.
TAFEs need to become more flexible and responsive
TAFEs deliver training when and where it is required in every
industry sector in the Australian economy. Calling for more
flexibility is really a call to cut teachers’ wages and
conditions
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Low completions could be fixed by outcomes based funding
Low completion rates are a serious problem, but the only
response has been a call to use outcomes based funding.
Little or no attention has been paid to the low funding
rates, attack on students services and support and the cut
backs on teachers time.
Making students pay more for training, offering income contingent loans, and
making funding fully competitive will fix the problems
The VET sector is the worst funded education sector in the
country. Reforms being proposed are not about increasing
funding, but shifting funding from government to
individuals through increasing student fees. Also, it is clear
that there are significant concerns with quality in a system
where the funding per student contact hour continues to
decline
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Nationally, funding per student per contact hour has declined annually for almost 16 years
It has declined by
-25.7% from 1997-2009
-17.7% from 1998-2009
-15.4% from 2005-2009
In SA, funding per student contact hour has declined for 16 years
It has declined by
-26.4% from 1997-2009
-3.0% from 1998-2009
-19.5% from 2005-2009
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Rent-seekers, industry leadership and subsidies for business – the truth behind market reform
“In economics, rent-seeking is an attempt to derive economic rent by manipulating the
social or political environment in which economic activities occur”
The Commonwealth government spends almost a billion dollars a year on
subsidies or incentives to industry through apprenticeships and traineeships.
State governments have their own industry welfare schemes. Governments
applaud the fact that the Australian VET system is “industry led”. They fund
employer subsidies through traineeships and apprenticeships, they fund industry
skills councils which determine the Training Packages and qualifications which
underpin, and drive the system. They give industry a voice through
representation on boards and government committees. There is an argument
that industry does a lot of its own training, without calling on government funding
to deliver, but there is no accurate account of how much non-government funding
goes into VET. Industry bodies provide government with advice about VET policy,
and then they set up their own RTOs to bid for government funding and to
deliver training. This is rent seeking behavior.
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What one Victorian TAFE said about the Victorian reforms in their submission to
The Essential Services Review …
... (the Victorian Training Guarantee is) a thinly disguised
initiative to increase statistical VET participation, regardless of
training quality and integrity, and regardless of the training
requirements of industry and the needs of individuals.
Northern Metropolitan Institute of TAFE believed from the
outset that this was an attempt to largely privatise the VET
system by stealth, based on unproven and spurious
assumptions.
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Collapse in Diplomas and above in Victoria 2009-2010
Percentage increase/decrease in Diplomas
and above 2009-2010
30.0%
26.4%
20.0%
11.8%
10.0%
10.6%
4.8%
TAFE SA
0.0%
NSW TAFE
Victoria
TAFE SA
NSW TAFE
QLD TAFE
-10.0%
-20.0%
Victoria
WA TAFE
QLD TAFE
WA TAFE
-19.3%
-30.0%
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Skills for All is a strategy to:
• Further decrease SA government funding in TAFE and VET by shifting costs
to students.
• Undermine TAFE teachers’ wages and conditions.
It will result in:
• The destruction of public TAFEs
• The reduction of quality in the VET sector
• Reduced capacity to respond to industry needs and skills shortages
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