Australian Greens' Additional Comments
The Australian Greens are deeply committed to a strong, well-funded,
public vocational education and training sector. We have long argued that vocational
education and training (VET) should be primarily provided through the public
TAFE system, while the community and not-for-profit VET sector should also be
supported in providing education and training where TAFE cannot achieve the
same outcomes. These commitments come from beliefs that education is
principally a public good and that everyone is entitled to free, well-funded
and high quality, life-long public education and training.
The 2013-14 inquiry into technical and further education in Australia
found that major and continuing cuts in government funding to the TAFE sector
around Australia under both Labor and Coalition governments, coupled with the
diversion of substantial public funding from TAFE to private for-profit
Registered Training Organisations (RTOs) under the contestability model, has
resulted in a funding crisis for TAFE institutes across the country, with major
losses of staff, resources and infrastructure. The inquiry also found that the
substantial amounts of public funding now available to private providers as
contestable funding has resulted in an 'explosion' of private providers
delivering cheap-to-run qualifications that are not meeting skills needs of
employers or students.
We have long suspected that the underlying cause of these serious
problems is the contestability model of funding for VET provision. The
contestability model rests on the assumption that education is a commodity that
should be bought and sold in order to produce the most ‘efficient’ outcomes.
This inquiry has successfully tested this assumption and found it to be false and
therefore the contestability model has been found to be fundamentally flawed.
The Committee’s majority report correctly notes that VET provision
should be designed in the name of social justice. This is essential because the
most vulnerable have been exploited to enrich individuals under current
arrangements. The Committee’s majority report also notes that the current VET
FEE-HELP funding arrangements are probably not achieving the objectives of the
VET sector. We agree with these assessments but argue the recommendations do
not address the root causes of the problems detailed in the submissions.
The exploitation and waste documented by the inquiry was predictable
given the nature of market-based policies. The National Tertiary Education
Union pointed to the Victorian experiment:
While the deregulated system has led to very impressive
growth in student enrolments, it also has had negative consequences,
particularly in terms of meeting skills shortages and in
workforce training and productivity.
The Consumer Action Law Centre argued:
Corporate private VET providers are obliged to act in the
interest of the company, which means generating returns for shareholders is a
priority. While not mutually exclusive to teaching and learning, scholarship
and quality education, this clearly creates a tension between acting in the
best interests of students (which often involves capital expenditure on support
services) and maximising profits.
The University of Sydney Workplace Research Centre pointed to tensions
between the incentives of the VET FEE-HELP scheme and sound educational
As a business model, for-profit training provision is
currently supported by strong demand-side factors, driven by the continued
rollout of VET entitlement funding and extension of VET FEE-HELP, and
underpinned by educational policy targeting higher levels of skills and
qualifications, and increasing credentialism across the labour market... The
profit maximisation principles of these providers (and the primacy of
shareholder and owner interests) provide strong incentives to offer training
which attracts the highest subsidy, at the lowest cost.
Even the Australian Chamber of Commerce and Industry admitted that the
needs of students and employers were not always the top priority for some training
There is no doubt that course offerings and training
behaviour is driven by government funding provision, and although this does not
always deliver a bad outcome, there is sufficient evidence that the needs of
students and employers are not always the top priority for some training
providers... Basing training course offerings on what funding is available has
led to a distinct disconnect between the types of courses being offered by RTOs
and the types of skills in demand by employers.
The problems documented by the inquiry are widespread and systemic. A
review from the Australian Skills Quality Authority (ASQA) in 2013 found 45.4%
of RTOs investigated had probably been in breach of national standards and/or
consumer and fair trading legislation. As at February 2015, ASQA had classified
30.8% of RTOs as having a high or medium risk of breaching standards.
Similarly, Australian Education Union Federal TAFE Secretary Pat Forward noted:
There is a system whereby providers are required to register
in order to deliver national qualifications. At the same time, we have a system
that allows registered training organisations to subcontract delivery to
organisations which are not registered. Is it widespread? My understanding is
that it is. The subcontracting of delivery occurs in, at least, all of the
eastern seaboard states.
This pattern cannot be said to be aberrations or the result of a few bad
The report recognises the systemic failure of a market-based approach
and recommends that these policies should not be extended to higher education.
The report correctly notes that the failed approaches seen in VET poses
unacceptable risks to the reputation of Australian higher education more
broadly. Surely if a market-based approach is irreparably harmful for higher
education, it should be abandoned in the VET sector.
The Committee’s recommendations do not address the root causes of these
problems. While they might ameliorate the most egregious abuses, market-based
approaches will always set up a tension between doing the right thing by
students and staff, and maximising profits. The Australian Greens’
recommendations seek to remove that tension by aligning the interests of
students, teachers and VET providers.
Abolishing the contestability model of funding. Education should
not be treated as a commodity and market-based approaches will not achieve the
goals of the VET sector. Therefore adequate public funds should be guaranteed
to public institutions to remove the competition incentives and the associated
race to the bottom in terms of quality and costs.
Capping funding to private RTOs to ensure the primacy of public
education. If the contestability model remains, the proportion of funds
allocated contestably should be capped at 15%, with TAFE guaranteed secure
access to at least 85% of all funds allocated to each course code. No private
provider should be funded for any course that TAFE can provide. This will at
least shield TAFE from the worst aspects of contestability and ensure some
stability for the sector.
Eliminating public funding for-profit private providers.
Government support should only be given to institutions which can guarantee
that student and staff interests come first. Funding is scarce and should be
spent where it will do the most good for the community. Public funds should not
be subsidising the profits of private providers.
Banning brokers to reduce perverse incentives. While the
Committee’s majority report recommends the government cap or otherwise regulate
the level of fees paid to brokers at a maximum of 15% of the loan, this will
not remove the perverse incentive for brokers to act against the interests of
the potential student. Regardless of the payment system, the whole practice of
brokering exacerbates the tension between profit maximisation and student
interests that private providers already have difficulty negotiating.
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