A summary of submissions to the Productivity Commission’s VET funding inquiry (updated)

In an earlier post I provided a summary of what I see as the key issues identified by the Productivity Commission in its Interim Report on VET funding (as input into the next Commonwealth-State VET Funding Agreement). I have also made my own submission to the Commission’s Interim Report.

The following is my summary of the views contained in the 88 submissions on the Interim Report which have so far (9 August 2020) been uploaded to the Commission’s website:

• Almost all submissions are critical of the Commission’s simplistic “more competition and contestable funding will fix things” proposals.
• Most submissions were from people or institutions which had had direct experience of the different funding changes introduced into the sector (nationally and at a State level) over the last decade and been burned by their poor design and implementation.
• A number of individuals and organisations did not disclose any potential conflicts of interest in the positions they argue for in their submissions eg industry bodies which operate RTOs or represent other industry bodies which operate RTOs do not appear to have made this clear in their submissions.
• There was almost unanimous support for private providers continuing to receive government funding – even from unions, the TAFE Community Alliance, former TAFE leaders and a current TAFE Board member. A number of submissions suggested funding for private providers should be capped (30%) and a couple suggested it should only be available to not-for-profit providers.
• Most State and Territory government submissions and the TAFE Directors Australia submission sought to articulate a clearer role for TAFE as the basis for their argument for why it should not be treated as just another provider in a more competitive market. The ACT government has a self-imposed limit on the proportion of funding they make available to the private sector, while Tasmania knows all of the 99 private providers operating on the island and receiving government funding (most are micro and small businesses) – hence both governments argue the central role of TAFE in their jurisdictions. Victoria argued against more competition on the basis of their public policy history with the Victorian Training Guarantee as well as articulating the importance of TAFE – as did Queensland and NSW. In fact all jurisdictions except South Australia discussed the role of TAFE in their submissions. By contrast the South Australian government’s submission did not mention TAFE by name at all and had only two fleeting references to ‘the public provider’. It also agreed that “significant reforms are required to make Australia’s VET system a more efficient, competitive market, driven by the informed choices of students and employers.” TDA argued that the most important role TAFE Institutes play is “technology transfer” which they describe as being “the repository of knowledge and techniques of production and service processes that are systematised and codified for transfer via education, training and ancillary services. This is difficult to conceptualise given the complex nature of modern economies, however it would be known if this function were absent”. I was surprised TAFE Directors saw this ‘technology transfer’ role as being more important than their Institutes’ roles in a range of other areas which the TDA submission codified and which were much more aligned to the roles articulated in the various government submissions (eg educating all students irrespective of background, having a comprehensive scope of course offerings, the widespread nature of their campus locations, delivering VETiS, higher education and the bulk of apprenticeships, etc).
• Submissions from most training providers and their peak bodies as well as many other submissions from individuals and other organisations supported greater national consistency in government funding and subsidies.
• Unsurprisingly the government submissions (NSW, Victoria, Queensland, South Australia Tasmania and the ACT) did not support national consistency and instead argued against it. Their TAFE Institutes reflected this position in their submission (through TAFE Directors Australia).
• What was interesting was that even amongst those submissions which supported States and Territories continuing to maintain their own ‘flexibility’ in funding arrangements – most submissions were supportive of the National Skills Commission doing the heavy lifting on determining course costs/efficient prices, including most of the government submissions. You might remember that the Productivity Commission found no evidence in some States and Territories that they actually had any economic modelling/evidence base to guide their pricing and that amongst those jurisdictions which did have an evidence base underpinning their funding models – some had used TAFE data from nearly a decade ago as the basis for their costings.
• What the NSW government’s submission made explicit (and which was implicit in some of the other government submissions) was that having a national body working with the States and Territories on costings would be helpful. They would all learn from the costing work and they would then be likely to use it in their subsequent subsidy setting. Hence over time it was likely that the sector would see much more consistency in subsidies across the sector even if the Commonwealth does not get a specific commitment to national consistency in the next Agreement.
• There is fairly widespread support for the VSL scheme to be expanded to all qualifications at Diploma level and above and some support for it to be available for some Certificate III and IV courses. Most submissions which discussed the VSL scheme supported some further relaxation of the loan caps. Everyone urged caution about how the changes would be progressed based on the previous significant problems in the VFH scheme.
• There was almost no support for student vouchers. Some people were opposed to them in principle, some cited a lack of evidence that they worked, and others expressed real concerns that there is not enough information available to students to make good choices.
• A small number of proposals (especially from Queensland organisations) highlighted the need for more funding for VET in regional areas.
• Most submissions did not engage with the issue of national VET regulation and whether TAC and the VRQAshould continue. Those which argued for the retention of TAC and the VRQA did not focus on their role as VET regulators but rather because they are much more flexible and timely in their course accreditation work than ASQA is and that this is helpful to industry (eg Rio Tinto with TAC and Siemens with the VRQA). A few submissions argued for national regulation.
• Having read all of these submissions I am in despair of the sector ever getting anything sensible to happen with Training Packages. The Commission made what I thought was the eminently sensible suggestion to grant the Industry Reference Committees the power to manage minor, non-controversial, changes to Training Packages without queueing up at the AISC for approval. That triggered a raft of responses from the very proactive (SkillsIQ) ‘if you recommend this we are here to help our IRCs make it work and here is the work we have been doing to help the sector respond to COVID,’ (Skills Impact) ‘we have another plan to tackle this which is somewhere in between the status quo and Steven Joyce’s recommended Skills Organisations,’[1] and then a raft of employer/union/other responses saying things like “we’re not on an IRC and we urgently need to be”, “IRCs have too much power”, “there’s no issue with the timeliness of training package changes”, “you shouldn’t be looking at this issue” and the Mitchell Institute arguing for a stronger input-based focus to regulation (potentially meaning more not less prescription in Training Packages). As a side note – the Mitchell Institute also argued that the VET regulatory framework should be revised based on the early childhood regulatory regime – which was actually developed by policymakers drawn from VET and who used the VET regulatory framework as their starting point…? Back to Training Packages – a few submissions pointed out that the States and Territories had a role to play in Training Package approvals and this often delayed things unnecessarily. I am glad it is not me that has to sort out this part of VET’s policy conundrum.
• And on that point – it is noticeable that a number of submissions suggested that the Productivity Commission should stick to their knitting and focus their report on funding issues not other policy matters like Training Packages. As Dr Craig Fowler put it so eloquently “I am here urging the PC to be far more focussed in its Final Report. In my view, whilst the Interim Report is commendable in considering multiple facets of VET policy, funding and operations, including setting out valuable draft principles, it lacks both focus and rigour in analysis of options for a new National Agreement (NA)”.
• Despite the sector being the poor cousin of schools and higher education – there is a lot of love for it. A surprising number of submissions were made by former leaders in the sector – making really well thought through arguments on what is needed for the future of VET. It was heartening to read the very good ideas in them as well as their strong arguments about what not to do based on the lessons of the past.
• ASQA provided a well-balanced, thoughtful submission – the hand of Saxon Rice as the CEO continues to impress. The submission gives a very clear signal that ASQA supports independent assessment (noting how many providers have problems with Clause 1.8 of the Standards) and that this has been an issue for years. The submission also states that they would like more data on providers and for it to be made available more quickly, that online education is likely to continue to grow and that they are quite open to more use of simulated work environments but industry needs to take the lead on this, and that if VSL is to be expanded then the government needs to think about the controls it introduces to ensure genuine student engagement and course progression (and that one way to manage this would be to publish progression and completion rates for providers and assess against these benchmarks before each Census date). ASQA supports a VET Ombudsman managing student complaints and notes that they work well with the other State regulators and would like to do more and share more information with State and Territory governments re: provider compliance with contractual obligations.
• The Independent Tertiary Education Council Australia (ITECA), Independent Higher Education Australia (IHEA) and TAFE Directors Australia (TDA) submissions are all worth a read. There were no real surprises in the policy positions being advocated by the three key peaks although the extent of TDA’s focus on the AQF Review in their submission is notable. ITECA argued for a new Agreement that would provide nationally consistent policy, programs and funding over the decade ahead – and this need for stability was a point made in a number of other submissions. ITECA also want a Commonwealth takeover of VET which (fortunately in my view) will not happen in the next National Agreement. Unsurprisingly, the inequities and limitations in the VSL scheme were a key focus for IHEA’s dual sector members and theirs was one of the few submissions to explicitly support the introduction of vouchers.
• Most submissions focussed on VET. Those that did discuss VET and higher education were mixed in their views as to whether a single tertiary education sector was a good thing, although there was strong support for greater parity of funding between VET and higher education.
• Many submissions argued for more transparency in the next Agreement and specific constraints/commitments to stop governments withdrawing funding and to try and ensure greater funding and policy stability over the next decade. The Mitchell Institute had a useful graphic (see below) showing the shifts in State and Territory funding during the period of the current Agreement.

[1] I was surprised these were the only SSO submissions to the Commission’s Interim Report– at a time when the government is continuing with its pilots of alternative Skills Organisation arrangements.