The PC’s VET report card: no ‘crisis’ but ‘acknowledged weaknesses’ and ‘where to now’?

This article has two purposes. The first is to summarise the Productivity Commission’s Report on the National Skills and Workforce Development Agreement which has just been released with little fanfare in the heat haze of the summer holidays. As yet, there is no formal response from the Australian Government, neither from the Treasurer who commissioned the review in November 2019, nor from the portfolio Minister responsible. The second is to look forward and question whether or not the nation has in place effective VET governance structures that are capable of driving swift and practical reforms that the PC recommends.

Some summary highlights of the review 

The PC’s headline message is that it “has not found evidence of a vocational education and training (VET) system in crisis” but that VET has “acknowledged weaknesses” (p.2). So whilst not broke, it needs fixing and the PC sets out a detailed VET Reform Agenda to address its weaknesses. The review’s coverage is far wider than just funding. It’s a chunky 500+ pages tome that’s a tour de force of many of VET’s high priority “acknowledged weaknesses”. The VET Reform Agenda map (p.34) is a useful summary display of the full terrain of the PC’s recommendations.

The review is centrally about federal financial relations, specifically how to increase effective value and public accountability for the Australian Government’s transfer of funds (~$1.6 billion per annum) to the States/Territories. The PC’s report details improvements that need to be made to the structure and terms of any revamped National Agreement (NA). The important headline is that the PC recommends this transfer of funding should remain “largely untied for base funding but subject to much greater accountability and transparency” (pg.2) based on a revision of the NA’s principles and far sharpened accountability under the Intergovernmental Agreement on Federal Financial Relations.

Its proposal includes the National Skills Commission (NSC) estimating VET course prices, efficient costs and loadings for setting and simplifying course subsidies, having State and Territory governments adopt these as a “common basis for setting their subsidy rates” (p.2) (and) leaving jurisdictions the “flexibility to determine their subsidy rates according to their own priorities for courses and student cohorts” (p.21). 

This is a significant walk back of the Joyce Review’s ‘simpler funding’ which was a stricter ‘control by centralise’ view that ill fitted a federated system. The PC’s seeks a balance between subsidiarity and accountability, giving States and Territories scope to run their own VET systems but no longer able to just take the money and go off and do their own (different) thing. Further, State/Territory own VET funding and its effective use of public funds will also get far greater scrutiny. The devil in the detail will be in the exact operational and reporting requirements in any new NA.

Whilst presenting a balanced and comprehensive account of the widely divergent stakeholder views about the role and purpose of TAFEs and ‘public VET provision’, the PC’s report is lame in proffering anything new. The PC’s prescription is to keep pushing on with VET system contestability, market testing and overt ‘competitive neutrality’, with the PC seeing ‘free TAFE places’ as market distorting (p.94). It recommends government-owners allow TAFEs greater ‘operational autonomy’ to have “control over their assets, industrial relations arrangements and financial performance” (p.38), which gets low marks for political do-ability and will struggle to get great traction. The report documents a range of reasons for TAFE’s higher costs compared with private RTO provision (p.291) with limited quantitative estimates of difference. As part kybosh to those voices that forcefully argue ‘TAFE costs more because its quality is better’, such opinions need now to counter the PC’s findings there is “no evidence that public RTOs deliver consistently better student outcomes than private RTOs, or vice versa” (p.37) and indeed it reports that “employer satisfaction is significantly higher among those who use private RTOs” (p.102) but that “students experiencing disadvantage report higher satisfaction at public RTOs” (p.37).

The PC recommends loosening the current excessive straight-jacket on VET Student Loans for VET Diplomas and to extend loans to include VET Certificate IVs, for all but ‘blacklisted’ (low value job-unaligned) courses. If income contingent loans trickle down to Cert IVs, such a financing regime will much widen student access to higher VET qualifications. It also indirectly supports proposals of the AQF Review which advised better integrating VET-Higher Education student pathways and indeed proposed eliminating distinctions between AQF 5/6 HE-VET courses. The PC also supports trials of loans for mature learners for short VET courses.

The PC is big on ‘closing information gaps’ (p.43) and improved data/information transparency by proposing that all RTOs will be required to disclose their course pricing and also to make public select data like student training and job outcomes, student surveys, and industry views, all subject to statistical robustness, at a provider-named level. Career information, plus RTO-specific data on courses, prices and performance covering the good and the less good is proposed to be found for all providers on a rebuilt MySkills.

The PC in addition offers recommendations in areas such as improving throughput of training product development and renewal (by limited delegation to ISCs) and queries the hasty overthrow of the existing industry advisory bodies and systems to be replaced by Skills Organisations. It also makes recommendations on pre-apprentice ‘screening’, apprentice pathways and adjusting current employer incentives, on foundational learning and skills in schools-age and ‘second-chance’ adult learners, on VET quality by investing in deep analysis of present VET professional staff teaching and standards, and on expanding (third party) independent assessment of qualifications. See the VET Reform Agenda map (p.34).

The way forward

As a first step, the PC’s report is to the national Treasurer. Its recommendations then may or may not be supported by the Australian Government. Assume here they are all ticked off, as indeed none of the PC’s ‘to do’ list is greatly surprising, given they address what the PC calls VET’s ‘acknowledged weaknesses’. After such reviews leading to a renewal of a NA, the traditional approach is for the First/Skills Ministers with their Treasury/VET agencies to engage in jurisdictional ‘argie-bargie’ to settle agreements, and then for VET bureaucracies to implement cooperative change in our federated VET system. This is the normal process.

But how did it get to this and are present VET governance structures up to any reform job?

Ask this – on the basis of past track record does the federation have in place effective VET governance structures that are capable of swiftly implementing the practical reforms that the PC recommends? Why has an overhang of VET’s ‘acknowledged weaknesses’, some evident for 5 years or more, not been resolved? Is the present national VET governance system part root cause of the ‘acknowledged weaknesses’ backlog.

The PC was not required to analyse in depth the reasons why the VET system has slid back into its present ‘less than fit for purpose’ state. The PC does offer one polite critique, being “Governments have stepped back from some of (the Agreement’s) policy aspirations. Targets have not been met and the performance framework has not held governments to account” (p.2).  In plainer words, despite the genuineness of constant rhetoric about VET’s importance, in the face of other priorities, governments have let it slide down the pole of political and practiced relevance to the nation. So if the PC’s VET Reform Agenda is to go anywhere, who will now get in and fix the VET sector for the better, and with urgency? 

It takes an existential threat to get things moving. Humankind can get vaccines done and global in about 18 months. The COVID-19 virus crisis gave a sharp stress-test to reveal if public health agencies in their structures, investments and operations had any backlog of ‘acknowledged weaknesses’ e.g. in infection control and contact tracing. Similarly, Australia’s tertiary education institutions faced a real test of business survival and continuance of teaching services as a result of the pandemic.  The traditions of face-to-face teaching with some digital input have been frantically, and mostly successfully, reversed to sustain delivery.

So the PC correctly says there is no VET ‘crisis’ (nor any existential threat), but this is not reason for VET reform to be a career in finessing ‘road-maps’ with 4/5 year delivery timelines, with dubious endpoints and slovenly delivered ‘road repairs and rebuilds’. The ‘formal’ VET sector is at risk of creeping decline especially in serving industry’s needs, if this continues.  The PC notes VET is “one major, but not the only, avenue for skills acquisition” (p.166) and that “all types of training… contribute… including higher education, non-nationally recognised training and workplace skills” (p.167).  Whilst there is “no measurement of training outside the formal VET system” (p.143), employers will increasingly rely on non-accredited ‘just as needed’ or industry proprietary training, with potential risk to quality as this may fall outside regulatory reach.

Effectiveness of mechanics and relationships in pursuing government-led VET reform

The PC’s report details governments’ role and its guiding ‘stewardship’ by a cycle that links ‘design, deliver and improvement’ of the VET system (p.122). At worst practice this risks being ‘write terms of reference for yet another review, consult, and dither over implementation’ (there are exceptions, the ASQA fast review was rapid, its implementation staggered).  Note: the Australian National Audit Office has started an audit to examine the effectiveness of the ASQA’s planning and implementation of reform in its regulation of VET.

The PC made no findings or recommendations on the suitability of current national VET policy organisational structures to implement its Reform Agenda, nor offered any on how to optimise government-led VET reform implementation, nor engage VET stakeholders in such work. So run this hypothetical via a corporate lens point. Being a citizen tax-payer and imaginary stakeholder and beneficiary of the ideal ‘VET Reform-Inc. Australia’, what positive actions might take the game forward fast?

You will find that COAG as a process is now history, Skills Ministers Councils are out, and the new untried route seems via the Council on Federal Financial Relations and National Cabinet Reform Committees (NCRC). The NCRC can access, as needed, Expert Advisory Groups to provide advice as tasked by National Cabinet. Here is opportunity to make ‘VET Reform-Inc. Australia’ working reality. You would urge a business case for implementation of the PC’s Reform Agenda to be led by an expert, independent and time bound (say two years) task-leaders group recruited from outside of government and given the authority, as guided by National Cabinet, to push through and practically deliver priority VET reforms, serviced by a suitable secretariat.   

Thinking beyond two years, you would seek preparation of best options for future national VET governance examining merits and failings of past examples like Skills Australia or the Australian National Training Authority (ANTA). The NSC is not a substitute. Whilst it has a legislated basis, can convene and has conferred with an external expert committee, neither the NSC nor NCI are constituted as having either an independent, high level, expert-led governance, or as an all-jurisdictional representative body with national clout and reach. Rather, the NSC (with a Statutory Officer) and NCI are named as such but in working reality contribute their valued functions whilst being placed in a host agency as per its organisation chart.

You would also lobby for stability, with history showing a total of five versions of an ‘education agency’ in the Australian Government since December 2007, including the current Department of Education Skills and Employment, that have mostly included VET (at least one not), noting the current NA was first signed in 2009. This is not stability, noting by comparison the lifespan of ANTA was comparatively long (1992-2005). 

You would ask how the directions of the Thodey Review on the performance of the Australian Public Service are infused into national VET reforms. This would test the effectiveness of government ‘stewardship’ by ‘design-deliver-improve’, via case studies. Rather than being self-initiated, it seems to need reviews like the PC’s to point out that MySkills will be far more informative to consumers if it provides clear RTO-specific information, or that there is need to adjust policy to presently over-restricted VET Student Loans. Similarly, the AQF review’s recommendations were supported by the Australian Government over a year ago but with little public evidence yet of any ‘next steps’ in their implementation. (Note: inserting the HE undergraduate certificate into the existing AQF to fund university short courses is not reform).

This ‘corporate hypothetical’ is not disguised critique of the passing fleet of national bureaucrats (this author was once a member). Make an objective assessment about past performance and future needs. It is not the well-credentialed people in such roles at fault. It is more the structures they work within and the career protective rewards for being risk-averse. And they won’t normally write high in listing their résumé credentials, ‘effective cooperation with other governments’. But that is what is needed.

Cooperative federalism is what has been asked for and now it needs to deliver

First Ministers in their Vision for VET made it clear “delivering high quality VET is a shared responsibility across the Commonwealth and States and Territories”. This model may not be preferred by some VET stakeholders; like it or not it stands. The PC’s Reform Agenda, especially in regards to VET’s funding under the Intergovernmental Agreement on Federal Financial Relations, clearly reaffirms this shared relationship. 

VET reforms now need an all-party commitment to cooperative federalism.  Things aren’t national or nationally effective because of a title, big data and bulging websites. The whole system needs to reach together to get expert input and learn from across all parts of the country and its VET stakeholders. In announcing the new Department of Education, Skills and Employment, it’s also what the Prime Minister expected in seeking ‘continuity of policy and service delivery and engagement with the States’.

Consider two practical examples. It is under recognised, including in the Joyce Review, that States/Territories have long functioned with some form of (often legislated) local skills demand, training and industry advisory bodies, appointed by governments. This existing expertise could be better drawn into any national VET advisory network, recognising their local mandate and knowledge to especially inform and indeed help implement change. In the same vein, the PC expressed support for the recent Shergold Review of Senior Secondary Pathways in regards to regional career hubs: “A career guidance ecosystem… to draw together schools, community career hubs and real-time industry advice… coordinated… by the NCI”.  These two examples illustrate not only the directions but the needed ethos of what cooperative federalism looks like.

Subsidiarity with accountability, evidenced by trust, partnering and networked national governance offers the best chance of making swift and accepted reforms under VET’s cooperative federalism model. The lessons for success from the COVID-19 pandemic demonstrate – at the overall – the virtues of Australia’s robust yet good-willed joint and rapid response, all being possible under our federation. Taking up this spirit, the PC’s recommendations are mostly sound and deserve like consideration and implementation.    

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.

Do you have an idea for a story?
Email [email protected]