Funding of Private Vocational Training Providers Questioned

The Australian Education Union has released the report "The Capture of Public Wealth by the for-profit VET Sector" (Serena Yu and
Damian Oliver, Workplace Research Centre, University of Sydney). As clear from its title, this report questions the practices of for-profit Vocational Education and Training (VET) institutions receiving public finding. But also as made clear, this report was commissioned by union which represents the interests of workers who's jobs are threatened by for-proft VET institutions and is no unbiased in tone or content.

As the report points out, in 2012, federal and state governments agreed on a "market driven" model for VET funding. Private Registered Training Organizations (RTOs) have done well in this new environment, compared to government owned TAFEs. The report's authors point to high profits by some RTOs. Of itself, companies making profits is not a bad thing, but the authors claim the RTOs are cherry-picking the easiest to teach most profitable students and leaving early school leavers, regional students, and students with a disability to TAFEs. The authors question the quality of RTO courses, subcontracting of course delivery, exclusive use of on-line learning and accelerated courses.

The Australian higher education sector needs to take these issues seriously. Reforms underway, and more proposed, could see similar issues arising in Australia's university system. This could tarnish the reputation of Australian higher education and place at risk Australia's fourth largest export industry.

This is not to say there is not a place for for-profit education providers in Australia (or that problems are confined to the for-profit providers). The report makes five of recommendations some of which could be applied to improve all Australian higher education institutions. However, the recommendations start from an assumption that non-profit government run TAFEs are inherently better than private providers, rather than from ensuring all providers meet required standards:

1. Minimum hours of delivery for courses: The authors suggest a set minimum number of hours of delivery, to prevent unrealistically accelerated courses (which have high failure rates). This could be a difficult metric to define, as modern courses are usually bended and what is an hour of "delivery" for the on-line component is hard to estimate. Typically a one hour classroom presentation will be replaced with seven to 20 minutes of video, which with accompanying student exercises provides the same or better learning. There is a risk that providers could simply produce long (cheap) videos (or live classroom death-by-powerpoint sessions) to make up the hours, with a reduction in learning. The issue of quality of courses could be addressed in part by ensuring qualification requirements for teaching staff (and instructional designers) are met. Ironically these requirements could be more difficult for traditional universities to meet than RTOs, as they have few quality control processes. A more useful metric might be the progress rate of students. That is, it does not matter how the course was delivered, provided the students learn to the required standard in a reasonable time.

2. Capping funding to private RTOs to ensure TAFEs remain able to provide quality education: The authors provide no compelling justification for this proposal for TAFEs to be protected from competition. If there is a requirement for training in areas of skills shortages or to disadvantaged groups, this could be built into the funding model and available to RTOs and TAFEs. More funding could be provided for students who cost more to educate.

3. Ban on subcontracting delivery of courses to unregistered providers: The authors propose banning subcontracting education delivery. However, this is based on the assertion that the subcontractors do not meet the standards required for RTOs. If the RTO meets the required standard, there is no reason to ban subcontracting. This requirement would also be difficult for universities to meet, where much of the teaching is contracted out to non-registered entities.

4. Better regulation of RTOs’ recruiting practices and business models: The authors propose to scrutinize the business
models of for-profit providers, including how they market to and recruit students. However, it is not clear what role a regulator could have beyond enforcing required standards.The model the business uses should be up to it, provided they deliver the required educational outcomes.

5. An end to governments manipulating subsidies for private RTOs: The report's authors propose to require RTOs to "meet quality requirements that are stricter than the AQTF". However, it would be a waste of public money to subsidize courses at above the standard required.