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Transcript Thurs-A-1600-J-Pardy

Guaranteeing what in a
contestable market?
John Pardy
Monash University
Victorian Training Guarantee
 VTG represents a decisive shift in market reforms to
VET in Victoria
 Purchaser-provider arrangement that focused upon
supply (government as purchaser of training from
public and other RTOs )
 VTG premised upon a focus on consumer demand and
choice and a price structure allocated to qualifications
From market reform to market
The Victorian Training Guarantee segments VET qualifications, courses, and programs
through different classifications with different price structures
Qualifications and skills funding categories.
Foundation skills
Skills Creation (Certificate I and II)
Skills Building (Certificate III and IV)
Skills Deepening (Diploma and Advanced Diploma)
Apprenticeships (Certificate III)
Traineeeships (Certificate II, III, IV & Diploma)
Setting the rules for a contestable
 The Minster responsible for Vocational Education and
Training approves the classification of courses and each
year is charged with fixing the maximum hourly tuition fee.
 Concessions are available for all courses excepting those at
Diploma and Advanced Diploma levels (Skills deepening).
 Stringent eligibility criteria for funding have been introduced
(if you have an existing qualification at a certain level or
higher to the one you are seeking access to you cannot get
government funding, Less than 20y.o can access
government funding)
Contestability without
 Five principles of the contestable VET market as
arranged through the VTG…
 Simplicity, Certainty, Efficiency, Consistency and
 No cooperation resulting in more precarious conditions
for consumer protections and quality VET
 Intensified competition and wasted effort
 Altruistic exchanges, win-win exchanges, differentiated
exchanges, zero-sum exchanges, winner-takes-all
 VET sector/market in Victoria involves a mix of
providers types, schools (secondary), TAFE, Private
(for and not for profit) RTOs, Adult and Community,
Enterprises and AMES- and these types different
amongst and between them
 A contestable market without cooperation results in
complex, uncertain, inefficient, patchy and distorted
VET market
Fees and funding review
 Newly elected Victorian government undertook a policy
 Essential Services Commission and was known as the
“Inquiry into Vocational Education and Training Fees
and Funding Arrangements”.
 Outcome- policy continuity
 Public airing of the issues and impact of contestability
as arranged through the VTG
VTG impacts and issues
 The ACFE sector submissions raised issues about the
lower level funding arrangements in the sector in
contrast to that allocated to the public and private
 A community provider does not have the scale of large
public providers, and specialist private providers who
are also differentiated by their particular focus and
VTG impacts and issues
 The Adult and Community Education sector has a 13%
share of government funded VET activity, with TAFE
having 61% and private sector having 26% (Allen,
 Concern was expressed in several submissions that a
preoccupation with completion rates would marginalise
many ACE learners and that the benefits of
participation was being devalued through the focus on
outcome and completions.
VTG impacts and issues
The funding and fee structures were identified as
working against intensive engagements with learners
with extra support needs. Learners with intellectual
disabilities or acquired brain injuries, it was pointed out
required continual education opportunities to reinforce
learning and that the possibilities for such approaches
were being undermined by the funding and fee
VTG Impacts and issues
‘Sally’, a 21 year old, has been working in a café since
leaving school 4 years ago. She wants to improve her
earning capacity and change career through becoming a
plumber, realising the benefit of having a trade in an area
that has great potential. The best way to enter this industry
is through a pre-apprenticeship – a Certificate II in
Plumbing. During her first year of employment at the café
Sally’s employer put her through a 6 month Certificate II
traineeship in Hospitality. Sally is now ineligible for
government funding and what would have been a $600
course is now $2000, on her current income she cannot
afford this fee (Building Industry Consultative Committee).
VTG impacts and issues
 The dairy industry raised the issue of ‘fees shock’ and was actively
negotiating through its submission and other activity for the recategorisation of its skills to a lower qualification level to make
skills development more affordable. What was once a $387
program had increased to $2,272 (Dairy industry).
 Housing sector expressed concern about the eligibility criteria of
prior qualifications foreclosing the option of a government
subsidized place and suggested that a ‘sunset clause for prior
qualifications’ be adopted to make the criteria more flexible.
VTG impacts and issues
Many TAFE submissions reported a decrease in their
enrolments because of the fee increases. One TAFE
explained that the funding of training did not reflect the
true cost of training. While another TAFE submission
argued there was a need for investment in training from
industry and employers and not just the present focus
on increasing student contributions
VTG impacts and issues
‘The Skills Reform policy is a thinly disguised initiative to
increase statistical VET participation across Victoria,
regardless of training quality and integrity, and delivered at
times on a user pays/cost recovery basis, regardless of the
training requirements of industry and the needs of
individuals across the life span.” This TAFE believed from
the outset that this was an attempt to largely privatise the
VET system by stealth based on unproven and spurious
VTG impacts and issues (private
 Submissions from private RTOs critiqued the restrictive nature of
the eligibility criteria and the equivalence between senior
secondary certificates of education with a Certificate II.
 “Private training institutions are now arguably the ‘engine room’ of
the Australian training sector”.
 One submission by a private RTO argued that, “the non-subsidised
cost of our most popular course (Diploma of Nursing) is “beyond
the reach of the majority of our potential student demographic”.
VTG impacts and issues
 If the Government makes it so hard for lower class young people
to get an
education most of us will end up relying on the
government for the rest of
our lives (Student)
 I suggest that people making funding decisions need to come out
and see what we do and talk to us about how we can put a better
system in place where we are able to focus on the quality of our
training rather than trying to make our training match an ill
conceived funding model. I would also like to spend more time with
each student than dotting i’s and crossing T’s because someone
doesn’t trust that we are doing our job (Teacher)
Guaranteeing what ???
 The current market as arranged in Victoria based on
contestability misrecognises that there can be no contest
without cooperation.
 An unfettered market that does not know and recognize
differences and the differentiated of VET suppliers/providers
character is socially, politically and economically
irresponsible as it provides very little basis for cooperation
and engagement.
 It results in costly and destructive practices that foster the
exploitation of differences as divisions.
Guaranteeing what???
The important function of VET in offering education opportunities to
diverse groups of learners in a breadth of vocational fields and
through a range of organisations is central to growing the base of
workforce skills. Yet the submissions to the policy review contain
important critiques of the market and its haphazard character as it is
currently struck. The submissions made also contained information
that competition for the sake of competition has little real dividend in
terms of quality. Such competitive jostling guarantees a contestable
VET market/system that errs on the side of winner-takes-all, where
the annihilation of important players in the VET market/system is
enabled through a contest without cooperation.