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With the national election settled, the vocational education and training (VET) sector will look to early implementation of recommendations in the Joyce Review of VET as funded in the 2019/20 national budget. The higher education (HE) sector anticipates forthcoming advice on the HE Provider Category Standards; Performance Based Funding; and allocation of sub-bachelor and post graduate places, all these inquiries being initiated pre-election (Table 1). Both sectors will potentially be impacted by the ongoing Review of the Australian Qualification Framework (AQF) given its inherently tertiary-wide remit.
Here’s a prediction: The AQF Review will find the AQF is not broken but needs to be modernised. It will adroitly deal with issues such as ‘micro-credentials’ (and similar). But what will be further exposed, if not already blindingly obvious, is a problem upon which the AQF review can’t directly advise. The problem is students not having fair and equitable access to it qualifications, VET in particular. This is for the lack of a coherent, federally supported and nationally operating tertiary funding framework that spans the AQF.
This problem will not go away. A new Government has opportunity to look at the post-schooling ‘tertiary system’ and give fresh consideration to its ‘architectural policies’ and ‘foundational enablers’, upon which both sectors rely. Outcomes would ideally deliver equally strong, distinctive and complementary HE and VET sectors in a better-connected tertiary system, so benefiting both students and employers.
The purpose of this paper is to summarise and analyse some of the stock of ideas and advocacy on this issue.
A stock of ideas and advocacy
Works authored outside of governments (Table 1) express an urgency and necessity of national reforms.
Table 1 – Selected examples: Recent proposals and reviews on Australia’s tertiary education system
The ground swell is that the current state of Australia’s tertiary education system; VET in particular relative to HE; is not operating anywhere close to ‘fit-for-future purpose’ in propelling Australia’s economic performance, nor its social equity. These works (and others) have like views in diagnosing the forces of change and directions for reform, but offer differing solutions. In summary this narrative describes:
Future labour markets and participation:
Technology-driven change (eg digital/AI/Industry 4.0/etc) is impacting present day job tasks and is in early stages of both driving redundancy of old and creation of new job types. This gives rise to shifting in occupational shares and structures in the labour market. It is confounded by an aging workforce (increasing the dependency ratio) that can only be partly offset by longer workforce participation and higher workplace productivity. Employees compete in a more febrile jobs market in which employers have labour cost constraints yet expect their staff to have higher analytical, technical and enterprise skills.
Individual opportunity and jobs:
This relative labour market turmoil plays out in the day to day experiences of individuals who expect to both live and work longer, are globally more mobile and who may have multiple jobs (concurrent and increasingly self-created) over their working life, balanced against their other compressed personal commitments. This changes their needs and preferred modes of education, skilling and continuous updating.
Tertiary system providers and reform:
Quality, diversity, access and equity of opportunity remain pivotal to learners in pursuing their interests. This frames tertiary-system design principles, these crisply stated by the dual-sector universities:
- Universal access for young people and lifelong learning for adults
- New and continuing learners make informed decisions
- Stronger, distinctive but better-connected systems
- Assessment and skills recognition support learner’s access and progress
- Funding is demand driven, system neutral and priced to meet diverse needs
- Learning and work are integrated.
Key architectural principles
Provider convergence or diversity
The Objectives of the HE Support Act 2003 speak of an ‘HE system appropriate to meet Australia’s social and economic needs for a highly educated and skilled population’, that is advancement of knowledge and research for its own sake as well as applied benefit. It does not say ‘educate students for jobs’. Rather it is Government that urges universities to offer students courses that lead to worthwhile employment (and repayment of student loans).
The VET sector is purposed to training students for jobs, but future jobs and graduate attributes increasingly requires greater skills, theoretical knowledge and analytical capabilities.
So there are differing views of extent of reform; for example:
- “better connect the two (sectors) under a common policy framework…. to support learner centred pathways across the continuum of AQF qualifications” ; or
- “move from a binary system to (an) ecosystem...not hierarchical … but flipped on its side with different types of providers each aiming to be…best of their type”.
The latter is a more visionary view with a single yet diverse ‘tertiary system’ with graduates assembling chosen combinations of education and skills. It would render more irrelevant sectoral and funding debate as to which of either VET or HE graduates are best aligned to future job openings.
Such views make advice on the forthcoming HE Provider Standards and the AQF Review (Table 1) highly pertinent, especially any tweaking to definition of ‘university’ by way of required mix of education and research fields, or any new nuance for institutional definitions by way of emphasis on industry/workplace engagement. Similarly advice on better resolving present overlaps between HE and VET at AQF 5/6 levels.
A coherent funding framework for both HE and VET
Equity of opportunity and access for students in both sectors relies on fair funding/financing regimes. Devising a ‘coherent funding framework for HE and VET’ that is ideally ‘demand driven, system neutral and priced to meet diverse needs’ starts from a different reality. This is evidence of a recent trend decline in public investment in VET relative to other sectors, cost shifting and a now seemingly demise of the HE ‘demand-driven’ policy to have funding now conditional on population growth and university performance.
One approach is a further ‘roll down’ of a tertiary-wide student loan system into lower AQF levels, into AQF 2/3/4 (Cert II, III, IV) to underpin a tertiary ‘life-long’ learner’s loan account. Loans have been trialled at Certificate IV and kick in at course-specified VET Diplomas. ‘Roll down’ has merit but complexity and risk.
Firstly, there are some 1.2 million VET students that have at present some (mix of Commonwealth and State) government subsidy, with the majority enrolled at Certificate III. Such a ‘roll down’ could double the present number and greatly increase the current quantum of student loans. Further there are all up 4.2 million estimated students engaged in the VET sector (including the 1.2 million above), so the pool of loan accounts is potentially far larger. Running a separate ‘loan book’ for HE and VET would be needed along with re-calibration of loan risk in debts unpaid, likely requiring further adjustment to loan re-payment parameters.
Secondly, by way of example, would such policy mean say Certificate II/III ‘school based’ learners on the cusp of adulthood being saddled with a loan? There are social equity arguments. Students achieving Certificate III climb to a ‘first safe level’ in having a reasonable chance of getting a job. Some of these graduates may get full/part public funding but have no access to government ‘top up’ loans to fully cover tuition fees. Many other students have neither government subsidy, nor loan, and presently learn fee for service.
This makes all the more critical sufficient and long term sustainable resources being committed by States/Territories and the Commonwealth for the bulk of VET training (Certificate I-III) so as to avoid too early and unbalanced resort to loans (at lower AQF levels), including avoiding students having to carry an unreasonable loan burden (against modest income) into any subsequent higher education or upskilling.
Funding/financing for any or a specified course
Universities have greatly benefitted from ‘demand driven’ funding. As rule of thumb (with exceptions) HE undergraduates roughly fund half the costs of their education (by access to HECS-HELP) and the Commonwealth subsidises the other half. Universities (and a few HE providers with self-accreditation) offer undergraduates courses of independent institutional decision, subject to legislated quality requirements.
By contrast, TAFEs and private RTOs in VET depend on national training package qualifications and regulator approved course accreditations, and, have State governments then decide if and any levels of public subsidy applies (the Commonwealth decides Diploma-level VET student courses and any loans). Students then pay any balance out of pocket; so except for some Diploma’s there is no public loan facility. Only 46.3 per cent of all VET subject-level enrolments attract government funding. Further, State and Commonwealth Governments will not invest in training (subsidy or loan) without evidence that courses meet ‘current and future job needs’.
So universities will likely have to accept moderated funding growth but have no externally imposed demand management. The evidence is that they value their autonomy, being ever more market-attuned in decision making on curriculum and adjustments to courses so as to give HE students both a quality education and chance of meaningful employment. The VET sector does not operate with these degrees of freedom.
So a big challenge is to find ways of tackling funding and operational differences in autonomy that advantage universities and disadvantage TAFEs/RTOs. Explicit proposals for policy step change at AQF 5/6 levels being the overlap of HE and VET is a constructive start point in better ‘open planning’ between the sectors.
National governance, resource allocation and control
Two reports advocate major centralisation of national policy development, governance and resource allocation. The Joyce Review proposed and the Commonwealth has accepted and budgeted for an overarching new National Skills Commission (NSC). Its ‘wing span’ is the VET sector but its full coverage is yet unclear. It will be advisory on future labour markets and jobs/careers including hosting a national Careers Institute. It should stretch into establishing pilot Skills Organisations with the intent industry better leads development of VET qualifications and training products. The NSC is to also devise and oversee a nationally consistent funding model of VET courses with the ‘Commonwealth preparing agreed national average costs and subsidy levels’ to apply nation-wide. All the above risks duplication of existing State investments and capabilities, with the last step overlapping deeply into areas presently managed and controlled by them.
The Monash Commission advocated a more sweeping national statutory agency to ‘advice all governments on post-compulsory education and training…and strategic development’… and to ‘be the single funding authority distributing the allocated budget for all state, territory and Commonwealth subsidised post-compulsory education’ and to ‘engage industry, relevant state and territory agencies, and providers of post-compulsory education and training to better align future workforce education and training needs with demands’. This is a tertiary ‘wing-span’, an independent (arms-length and non-partisan) authority from government modelled on practices in other jurisdictions.
It is improbable the nascent ‘VET-scoped’ NSC will be expanded to a tertiary-scoped authority. Further, under present federated Constitutional arrangements that govern VET, the Commonwealth cannot unilaterally establish an authority like the NSC with broad national powers in price setting and resourcing controls. As the Joyce Review affirmed, it will need the States’ full cooperation by way of intergovernmental agreements or by other means. Such Authorities have also been built and dismantled. They also call to question what are the residual/complementary purposes and roles of relevant government (Commonwealth) department(s).
Quality is multifaceted having many perspectives
Quality of any education or training experience and graduate outcomes is much in the ‘eye of the beholder’. The key stakeholder ‘eyes’ are: students, provider institutions, regulators, funders, and employers (plus professional accreditation bodies).
Consider the proposal for ‘reforms to the AQF... to support learner centred pathways across the continuum of ….qualifications’. Students’ progress by competency in VET or examination of knowledge in HE. Attainments and academic standing are judgements made within institutions, but given student mobility, increasingly inter-institutional. This is the more problematic at HE/VET sectoral boundaries to satisfy entry standards or awarding credit. Quality requires negotiation and trust between institutions. This is but one reason for widespread calls for radical changes to ‘modernise present VET qualifications and their development to focus competencies on broad and future skills requirements’.
What of stakeholder perceptions of quality as the tertiary system embraces more education and training accumulated in small aggregates of ‘just in time, only what’s needed now’? Such are the practices of short courses; ‘MOOCs/skill sets/’micro-credentials’ etc. A student’s ‘portfolio’ may also include non-accredited (e.g. warranted) components from industry proprietary courses or other ‘online’ content. This will force all stakeholders to adjust their perceptions in recognition or reward of quality in an individual’s ‘portfolio’.
Such accumulation resembles micro-fabrication by 3D printing. Learners may start with foundational qualifications and then add components (from different quality sources) to scaffold up a portfolio of knowledge/skills/work experience over a working lifetime.
In building and upgrading such personal assets, it is expected: learners will need constant pathway advice; education and training institutions must be both objective and ethical in their quality standards; employers will more rely on aggregate ‘portfolio’ resumes not degrees/qualifications; and regulators may need revised legislation or at least reinterpret and nuance their regulatory practices.
It is then but a short jump to argue learners should hold a personal ‘life-long skills account’. Learners can then decide what, when and how to periodically ‘micro-fabricate’ by upgrading their knowledge/skill assets. This will inevitably face scrutiny of governments (but should it?) who will test ‘loans for what course/skill purposes’. Governments’ will want a say in quality, best use of public monies and to limit loan risks.
Whilst formal AQF qualifications from Certificate I/II to PhD will no doubt remain dominant currency, there is tidal drift to a learner’s self-assembly of such portfolios (making advice on the AQF critical). This is not some fanciful drift - the Business Council and Monash Commission advocate its recognition as part of main-stream.
‘Line of engagement’ with industry/employers
There is a unity of aspiration across all HE and VET provider institutions in ‘engagement’ with employers and industry. It’s the same aspiration for all governments in their sectoral regulation policies and in particular policies promoting, investing and rewarding ‘engagement’ to support education, training and research.
Imagine then a ‘line of engagement’ between VET and HE institutions and employers/industry spanning end-to-end from say school-based apprentices to PhDs (say AQF 2/3 to 10) and all points between. What is the evidence for the quality and quantum of public and private co-investment from partnering along this line? What estimates of returns on public investment and economic/social impacts inform government policy?
Examples of good: Both VET and HE students report broadly positive results on graduate outcomes in gaining jobs and improved work opportunity. Cooperative Research Centres flourish, the Business/Higher Education Round Table and ARC Linkage program are effective, echoed in the recent ARC ‘Engagement and Impact’ report. Governments’ policies in support of entrepreneurial start-ups, innovation hubs and ‘seed funding’, eg Medical Research Future Fund are gaining traction. Industry peaks bodies and universities agreed a strategy to stimulate, with now evidence of work integrated learning. Industry bodies contribute extensively to professional accreditation in HE and VET. In 2017, compared with 2016, school-based apprentices and trainees increased by 16.1 per cent. Advisory networks are active under the Australian Industry Skills Committee.
Examples less good: Little is known of the purpose and quantum spent by employers on staff education and training especially co-investment with the tertiary system. Employer training expenditure and practices were last measured by the ABS in 2002. Businesses prefer non-accredited or informal in-house training rather than engage with the formal VET sector. The OECD Survey of Adult Skills (PIAAC) to measure and benchmark Australian adult workforce literacy, numeracy and problem solving was last conducted in 2011/12. It is suspected many company directors have insufficient knowledge of company skills investment, despite the urgency of upskilling staff for job skills digitalisation. Net numbers of withdrawals and cancellations for trade and non-trade apprentices was greater than completion numbers over the latest reported year. Australia has a few pilot examples of higher apprenticeships compared with other nations, who have faster responded to Industry 4.0 needs. PaTH internships have not met targeted numbers. Stakeholders differ in their views over approach, governance and solutions to speed up the development of national training package qualifications. There is limited practice of HE/VET staff co-employed in industry, nor project-specific R&D conducted in TAFEs, compared with other nations. Some employers bemoan that university graduates have to be ‘trained to do their job’ on starting work. Australia has one of the lowest numbers of researchers in business enterprises in developed nations.
From these and other examples, what might be made of all relevant data and case studies along this ‘line of engagement’? Does Government test the relative merits of multi-million $ public support of say: a 10% premium on the R&D tax incentive for eligible companies to invest with universities and like public institutions [vs.] greater employment subsidies for employers to invest in and retain more apprentices? Most unlikely but if the comparative optics are only sectoral and not a tertiary-wide horizon such questions will never be asked.
Without any deep analysis of the evidence, and noting wide variation in performance along this ‘line of engagement’, compared with other nations Australia overall rates a B+ score with improvements possible.
Other key ‘foundational enablers’
Besides the AQF and finance/funding, there are three other identified ‘foundational enablers’ that matter to both the HE and VET sectors spanning the tertiary system: data/surveys and analytics; regulation and system governance; and international/visa policies. Comment is made here briefly only on the first two of these.
There is need to consider tertiary wide common data standards; ‘closer to real-time’ data collection; common student experience, graduate outcomes and industry/employer surveys - all underpinned by a unique student identifier. This requires same unit record data standards and full interoperability of systems (and not necessarily aggregation of dispersed data resources and expertise). For surveys it means using the same e-platforms with questions nuanced to sector. It means unified protocols for data access, disclosure and release of provider-specific performance. It means shared, not hoarded data. It means curating and making public (mindful of privacy) all worthy longitudinal data sets useful to data linkage about students and graduates, the national labour market and related skills inventories so that all governments, researchers and education/training providers have equal access to pursue data analytics specific to their needs. It means dumping legacy systems and creating a jobs and education relational data base that details and tracks core and transferable ‘work-place job-specific skills’.
By way of regulation, ASQA and TEQSA would remain separate authorities prominent in their “front facing”. However there could be a closer alignment in their approach to risk-based regulation; common information management systems and data analytics; cross training of staff and overlap in advisory input. Examples illustrate ways to unify underlying foundational enablers yet respect sectoral differences.
New opportunity for a reset of fit-for-future policy
Modest albeit constructive ‘policy nudges’ in siloed HE/VET domains will not address sector inequities, nor in the longer term go to establishing a ‘tertiary’ education, research and training system as effective or as competitive as the economy needs. It needs a rebuilding of VET and an invigorating of HE with both better connected by revised tertiary-wide architectural policies and foundational enablers. The arguments have been set out clearly in a recent and well-argued paper Rethinking and Revitalising Tertiary Education. The UK Review of Post-18 Education and Funding makes findings and recommendations that resonate the same.
A coherent, federally supported and nationally operating tertiary funding framework that spans the AQF is by far and away the most important reform.
The new Government, working closely within the federation of states and territories, now has opportunity to consider all expert external stakeholder views in any redesign and implementation of transformative, tertiary-system, ‘fit-for-future’ reforms.
Dr Craig Fowler is an analyst and observer of national policies impacting tertiary education, science and innovation after decades of experience in private, public and university sectors.
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