Skills Reform – challenges and opportunities

1. Skills Reform – challenges and opportunities Claire Field, Chief Executive Officer

2. History • Late 1980s/early 1990s concerns TAFE curriculum not meeting industry needs • ANTA • national regulatory standards • training packages • nationally consistent data collection & reporting (incl employer satisfaction) • funding reforms - User Choice/competition • Efficiency & effectiveness of government funding become focus of system

3. Who benefits from VET? Considerable research showing strong ‘public good’ argument for government investment in lower level qualifications Stronger returns to individuals from study at diploma level and above (employment participation and earnings) Question then becomes – what should government fund? Should government fund VET study for those who already hold high level qualifications?

4. 2012 Skills Reforms • Focus of government funding - student entitlement comprising foundation level courses, Cert I, Cert II up to Cert III • approved providers • pricing signals, and in some cases caps on places, based on importance of courses/qualifications to state economy • Less government funding for Diploma/Adv Diplomas – students supported with VET FEE-HELP loans • Concessions still available for disadvantaged learners • Genuine competition – not ‘purchasing’

5. The private sector • Deloitte estimates for ACPET • approx $7 billion pa earned by private tertiary providers from non-government funded training • 2 – 3 times size of government funding to private RTOs • Highly diversified sector • international vs domestic students • on-shore vs off-shore • online, face-to-face, in the workplace • dual-sector vs multi-sector

6. The private sector • ‘VET only’ providers • Student fee-for-service (eg Open Colleges) • International education (eg Academies Australasia) • Employer fee-for-service (egPerformance Training) • Not-for-profit (egEncompass Community Services) • Government-funded student delivery (eg MEGT) • Other government funded (eg BCA National) • Provider funding models are typically a mix of government and fee-for-service revenues

7. Challenges for the private sector • Established student fee-for-service providers • Significant risks in entering government funded market • Risks if competitors enter and undercut a provider because of government subsidy • Experience in Victoria is ‘proceed with extreme caution’ • Established government-funded student delivery (providers already on APL list) • Keep business operating for 18 months during implementation • No guarantees on prices for different courses/industry areas

8. TAFE NSW Well known brand and reputation Trusted VET provider Excellence in some fields – eg Enmore Design School Important part of community – especially in rural areas BUT Most protected of all state-TAFE systems from competition in domestic market TAFE NSW = 8% of international VET students (15% for TAFE nationally) Growth in private, domestic higher education following lifting of university CSP caps shows differentiated, quality product

9. Impediments to competition Enterprise agreement – union resistance to change Ageing infrastructure Bureaucratic ‘head office’ limits ability to innovate Managers ‘administer’ government funding – different skills needed in a competitive environment Public perception of TAFE Too little emphasis on marketing Lack of knowledge of competitors

10. Evidence from Vic reforms • Learners from disadvantaged backgrounds relish choice of provider – increases in one year: • 20% Indigenous learners • 21% learners with a disability • 21% 15-19 year olds with no Year 12 • 32% 45-64 year olds • 36% unemployed learners • 39% learners from CALD backgrounds • 132% enrolments in foundation courses

11. To prosper… A TAFE Institute will have to: • develop a dynamic competitive strategy as well as pursuing operational efficiency • target its clients and respond to client needs quickly with quality learning experiences • get ahead of competitors in its chosen markets when it comes to innovation and new technology • make sure its staff are highly professional Terry Moran, TAFE’s Role in the New World, 1998 Education for Employment Conference

12. The quality stamp