Standing Committee on Employment, Education 
        and Workplace Relations 
      
      This document has been scanned from the original printed submission. 
        It may contain some errors 
      
Submission 52
      Monash University
       
      Inquiry into the role of TAFEs
      Submission to the House of Representatives Standing Committee on Employment, 
        Education and Training
       
      Prepared by the
      Monash University-ACER Centre for the Economics of Education and Training 
      October 1997
       
      Background
      1. To assist its Inquiry into the Role of TAFEs, the 
        House of Representatives Standing Committee on Employment, Education and 
        Training has called for submissions on:
      
        - the appropriate roles of institutes of technical and further education; 
          and 
- the extent to which those roles should overlap with universities.
2. In May 1997, the Victorian Minister of Tertiary Education and Training, 
        the Hon. Phil Honeywood, initiated a Review of the Provision of Technical 
        and Further Education (TAFE) in the Melbourne Metropolitan Area. The Review 
        is intended to build upon recent policy and structural reforms 
        with the aim of ensuring that the Victorian TAFE network is capable of 
        delivering high quality vocational education and training (VET) in an 
        efficient and effective manner well into the twenty-first century.
      3.The terms of reference for the Victorian Review are:
      
        - to consider the nature and extent of the provision of vocational education 
          and training in the Melbourne metropolitan area by TAFE Institutes, 
          and the likely effect on these Institutes of the development of an open 
          training market and associated public policy changes; and 
- to advise on appropriate structural arrangements for TAFE Institutes 
          in the Melbourne metropolitan area, including the desirable number and 
          scope of these Institutes and appropriate linkages with Victorian universities.
4. As part of the process, the Ministerial Review Committee identified 
        the need to examine research literature on institutional amalgamations, 
        both in Australia and overseas, to ensure that it is informed about recent 
        relevant experience.
      5. Towards this end, the Ministerial Review-Committee commissioned 
        the Monash University-ACER Centre for the Economics of Education and Training 
        (CEET) to prepare a review and annotated bibliography of Australian and 
        international research literature relating to institutional amalgamations 
        in the post-secondary education and training sector during the past ten 
        years. As requested in the project brief, the principal focus of the report 
        is on literature dealing with:
      
        - economies of scale and scope; 
- a issues relating to critical mass; 
- policy issues relating to mergers; and 
- advantages and disadvantages of mergers.
 
      Purpose
       6. The purpose of this submission is to bring some of the key findings 
        of this research to the attention of the House of Representatives Standing 
        Committee on Employment, Education and Training in its Inquiry into the 
        Role of TAFEs.
       
      Issues
      Several issues arising from this research are noteworthy as follows.
       
      Differences between TAFEs and universities
      Several important differences exist between TAFEs and universities as 
        follows: 
      
        - the variety of academic levels covered by TAFE colleges, ranging from 
          basic literacy 
- to diploma programs, is generally much wider than in universities; 
        
- educational programs in TAFE are shorter in duration, with two-year 
          diploma programs generally being the longest courses offered in TAFE 
          as opposed to universities in which the average length of degree programs 
          is three to four years; 
- TAFE institutes are almost solely teaching institutions whereas universities 
          produce 
- both teaching and research outputs, often in an integrated manner; 
        
- student enrolments in TAFE are predominantly part-time (90 per cent) 
          as opposed to 
- universities where they are predominantly full-time; 
- vocational programs in TAFE, particularly trade and technical courses, 
          tend to require a much larger investment in expensive and specialised 
          facilities and equipment than do universities programs which typically 
          include a higher proportion of generalist courses (eg. arts, social 
          sciences). The major exceptions to the rule are university courses in 
          areas such as medicine and engineering.
- the range and level of salaries for academic staff vary between TAFE 
          and universities, 
- as do the relative proportions of permanent to casual staff, 
- student/academic staff ratios differ substantially, as does the range 
          and type of support 
- services and facilities; and 
 
        
- TAFE institutes are also required to comply with a range of external 
          accountability requirements arising from their close linkages with industry 
          and government which in turn create a range of administrative costs 
          not apparent to the same extent in universities. Conversely, universities 
          shoulder the costs arising from internal course development and accreditation 
          procedures both of which functions are generally not performed by TAFE 
          institutes.
      
All of these factors have a significant impact on the nature, processes 
        and costs of educational provision in TAFEs as compared with universities.
       
      Economies of scale
      7. The most recent Australian research on amalgamations 
        in higher education suggests that most scale economies are realised in 
        universities with 11,500 EFTSU (Heaton and Throsby 1997). Such cost savings 
        appear to be due to scale effects rather than to changes in the scope 
        of institutional activities (eg. Lloyd et al. 1993). Heaton and Throsby 
        (1997) also find evidence of diseconomies of scale in large institutions 
        (ie. more than 11,500 EFTSU).
       
      Economies of scope
      8. Research findings on economies of scope in higher 
        education are contradictory. Most research suggests that large institutions 
        can experience scale-related diseconomies when their educational profile 
        is too broad whereas small institutions can overcome scale-related diseconomies 
        through specialisation. Colleges of Advanced Education (CAEs) which merged 
        with technical institutions in the 1980s experienced greater cost savings 
        than others, due primarily to program diversification and resource flexibility 
        (Abbott 1996).
       
      Vocational education and training
      9. Although research on scale economies in vocational education and training 
        is limited, it suggests that
      
        - even within the same institution, average costs for vocational education 
          in some cases exceed those in university programs;
- unit costs in vocational education are more sensitive to institutional 
          size than those in general education, due primarily to the use of relatively 
          expensive equipment and specialised instructors; and
- economies of scale can be realised in highly specialised institutions 
          at relatively modest levels of enrolment.
 
      Organisational flexibility and responsiveness
      10. Some of the literature suggests that a fewer number 
        of large multi-purpose educational institutions offers the potential for 
        greater organisational adaptability through qualitative flexibility. However, 
        there is some emerging evidence to suggest that a larger number of smaller, 
        specialised institutions may be provide greater numerical flexibility 
        and responsiveness to industry and community needs in a market-oriented 
        environment.
       
      International developments
      11. Large-scale processes of organisational restructuring 
        through amalgamation are occurring in the post-secondary vocational education 
        sectors in Finland and the Netherlands. In both cases, these processes 
        have aimed to consolidate institutions of higher vocational education 
        into a system of post-secondary education and training operating parallel 
        to, and in competition with, university systems. According 
        to the OECD, the maintenance of separate university and non-university 
        systems appears to have been adopted as a means to enhance flexibility, 
        diversity and responsiveness to changing industry and community needs.
      12. Neither the Dutch nor Finnish experiments have involved 
        mergers between vocational education institutes and universities, although 
        both have attempted to raise the status of higher vocational qualifications 
        to degree level. And both have attempted to create multi-disciplinary 
        institutes of higher vocational education capable of providing a broad 
        array of occupationally-relevant programs, in addition to applied research 
        and development activities for third parties.
       
      Conclusion
      13. Available research on amalgamations between universities 
        and institutes of technical education and training is somewhat inconclusive. 
        Proposals to alter the relationship between TAFEs and universities via 
        institutional mergers require careful consideration of a range of issues 
        including: economies of scale and scope; the relative merits of separation 
        versus integration with respect to vocational and academic education at 
        a tertiary level; and issues concerning organisational flexibility and 
        responsiveness in a market-oriented environment.
      14 The Victorian Ministerial Review Committee has kindly 
        agreed to allow Monash University to append the relevant review of research 
        to this submission to the Inquiry into the Role of TAFEs by the House 
        of Representatives Standing Committee on - Employment, Education and Training 
        (see Attachment).
      
      
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