Insights Blog

A Vocational Education and Training Sector for the Future

A Vocational Education and Training Sector for the Future

29 June 2017, by Martin Riordan

Below is an edited version of Martin Riordan’s address to the National Jobs and Skills Summit on 17 March 2017 at the Canberra Institute of Technology.


TAFE enrols more than 2 million students a year, 80% in accredited, but increasingly in unaccredited courses for industries seeking short or specialized training.

The reach of TAFE is very extensive:

• It plays a critical role in apprenticeships as it delivers the vast majority of apprenticeships directly or via group training.

• Regional student enrolments in the critical area for delivery of regional and remote Australia rank at 35% even in the restricted area of higher education, vis-à-vis universities enrolling 10% regional students.

• TAFE’s role has extended to become a specialized higher education provider, especially in para-professional and health care sectors, and in core areas which had previously been restricted to trades such as building and construction, hospitality and hotel management.

• TAFE supports many Asia-region government technical education systems. For instance, through bilateral college partnerships we enrol several hundred thousand students in those regional polytechnics and colleges in mainly business and service-sector-oriented diploma courses and English programs, and TAFE Directors Australia (TDA) consults on system upgrades such as recently in the polytechnic sector in Indonesia.

So how does TAFE approach Opposition Leader Bill Shorten’s pledge at the National Press Club earlier this year when announcing the initiative of today’s Summit, where Mr Shorten spoke of three principles that would guide a TAFE-centred policy on jobs and skills?

TDA wants outcomes from today’s Summit, so I’ll align to Bill’s own methodology in my comments.

Principle one: Access for Australians to the skills and training they need for decent jobs to support their families through their working lives. 

The recent debacle with entitlement linked to the Vocational Education and Training (VET) Student Loans system wasted in excess of $3 billion, and neither Labor nor the Coalition could stop the extraordinary excesses that were demonstrated under new Commonwealth referral of powers for vocational education regulation. This is highly relevant.

What do we understand when Labor or the Commonwealth talk of jobs and skills in this vocational education space? TAFE knows all too well the unintended impacts of recent bad experiences in federal policy. 

TAFE produced between 63% and 73% of accredited training on average during these past years, yet TAFE students received 13% of those federal student loans.

Added to this poor alignment to funds were cuts in most states and territories to vocational skills funding. Together, this combined to produce an almost catastrophic squeeze which continues across TAFE systems, TAFE teachers and TAFE industry partners. Ultimately, our TAFE students received a raw deal.

Yet even despite these setbacks, The National Centre for Vocational Education Research (NCVER)’s Graduate Jobs Outcomes 2016 data confirms that in terms of student satisfaction on completion, TAFE remained significantly well supported and in fact superior to universities, community colleges, and private colleges for student satisfaction.

Australians trust TAFE.

Industry remains our closest supporter – the data confirming industry usually outranks student satisfaction – a sign that corporate Australia is tired of news about ‘shonky’ colleges, and families equally disillusioned to find students frequently told their training left them unprepared for the jobs market.

So TAFE has a voice on decent jobs and support to families.

The NCVER showed in a recently completed commissioned analysis of total VET activity, that in at least 10 out of the top 20 training packages delivered in Australia, TAFE not only still delivers by far the majority of occupational training, but is extremely dominant in almost all apprenticeship areas, even in the VET in Schools space.

Our TAFE Directors voice on Principle One is clear: 

• The Commonwealth should motivate vocational education as an equal career choice to university higher education.

• Funding in vocational education needs to be more targeted, and better managed. 

For instance, let’s look at funding to skilled occupational areas channelled with priority to those industry skills in need, and priority to TAFE and not-for-profit providers. Ditto student loans.

This public funding to public colleges and not-for-profits is a proven benchmark and is accepted in Canada and the USA, New Zealand and the UK – so why not Australia? 

Student loans should not replace student funding. 

In recent times the Commonwealth lists loan funds under its total VET funding, obviously to boast its own leadership over states and territories in vocational education. I find this confusing, and it adds to the complexity of the current shared federal system. Let’s strip away the rhetoric.

We support Labor’s call for a national vocational education review. Let’s focus that on quality and outcomes for students, and how best to motivate employers to once again take on apprentices. The success of the Bradley Review of Higher Education showed more than a decade ago that a coherent national inquiry should now be applied to vocational education. 

Finally, my personal opinion is that VET funding ideally should revert to direct funding by the Commonwealth for diplomas and above. The Mitchell Institute’s work on this area has been quite conclusive on the benefits of this diploma and the above approach.

Principle Two: A seamless tertiary and vocational system, producing job-ready graduates and high-skilled workers.

The elephant in the room today is the failure or refusal to find solutions to the divide between Canberra funding universities and TAFEs and vocational education remaining a state and territory responsibility.

Benchmark countries in which the same governments have funding responsibility for both universities AND colleges demonstrate marked efficiencies in contrast to Australia to produce more seamless tertiary and vocational systems. Canberra spent $17.5B on universities in 2014-15 vs. $5.7B for VET - which includes loans.

One example may suffice for this session: while the Commonwealth operates registration and regulation for both higher education and VET, regulation is largely silent on universities being required to accept articulation for vocational students – a key essential for the vast majority of American states which directly fund their community colleges and state universities.

This is very relevant to today’s Summit, as according to NCVER 36% of all 2016 TAFE graduates were enrolled in further study (8.4% at a university), many of these women. Interestingly, 12.5% of university grads were studying at TAFE – 25% or more of these in many of our city campuses.

The waste resulting from this one impasse illustrates the extraordinary opportunity for a more seamless tertiary and vocational system. That is not to mention the exceptional waste from that other elephant in the room, which is continuing uncapped Commonwealth Supported Places (CSPs) for university undergraduates, so often with evidence of this system luring school graduates without the criterion needed for these scarce resources. 

For instance, official data confirmed that universities last year enrolled more than 18% of undergraduate students with ATARs of 60 or below, and many still entering teaching courses. Drop-out rates were equally very high.

Dual-sector institutions resulting from structural adjustment funding (SAF) from past federal budgets proved not to be the grand solution which was envisaged from rationalisations between TAFEs and universities. 

In most of those dual sector universities, VET has fallen dramatically while funding has switched to the higher education source of the money pot. Numerous American states have very successful community college chancellery models – the chancellery operates under legislation allowing all the community colleges to operate and compete – under a structure of a cluster of colleges, which allows them to retain their own identity for local communities and industry, while benefiting from articulation for associate degree students to encourage pathways into state universities.

This model has been very popular, and accounts for far higher levels of direct school-to-college pathways, often with greater success rates for many marginal students. Frequently, these colleges additionally operate their own specialist degree courses, and in Canada, applied industry research centres.

This is not to ignore efficiency savings that may be still available to TAFEs. It may be timely to also look at how states and territories may be motivated to clean up quite irregular approaches to governance created under statutory authorities recently created for TAFEs, often with very centralist-style models, and little regard to benchmarking universities for wider efficiencies. These include control to manage their own campus properties, for example via property trusts and on-campus industry partnerships. 

This benchmark experience points to options for our apparent federal impasse on TAFE. It is important to see TAFE not only more effectively involved in Australian tertiary education, but also how to lift current outcomes and opportunities for marginal students, while effecting a significant restructure and balance across our federal spend in the vocational and higher education systems.

Principle Three: A pledge that every dollar of taxpayers’ money should be directed to achieve the best student outcomes and best employment opportunities – not wasting taxpayer money boosting private profits.

TDA obviously has a vested interest in this item.

So if it is time to tackle how to proceed for vocational education and TAFE in future years, let’s learn from the excesses of what fundamentally remains the original open market experiment. This is an issue totally relevant to the Summit.

The last decade has featured numerous federal schemes such as the Productivity Places Program, special monies for infrastructure to VET in Schools, and the VET FEE-HELP loan program to name a few, with each providing ample evidence that the rules of funding and criteria have been astray. 

TDA estimates that with these schemes alone, the waste is in excess of $7 billion.

Surely we have also learned from how Australia’s leadership in the higher education sector ultimately rejected full deregulation legislation that Christopher Pyne had tried so desperately to introduce over two unsuccessful legislative attempts in the last Parliament. Pyne tried to align vocational education with higher education in Australia, and push taxpayer funds directly into private hands under the auspice of an open market. This was not merely into bachelor-level qualifications, but also a robust push into granting this to sub-bachelor qualifications, too.

What is the answer?

On behalf of TAFE Directors last year, we proposed three reforms:

1. Standards

We need to recognize that with 5000 registered training organisations (RTOs) now registered by the Australian Skills Quality Authority (ASQA), it is senseless that governments continue to justify trying to regulate and fund all providers equally.

TDA argues for Threshold Standards, which govern universities, TAFEs and private college Higher Education Providers (HEPs). This is a protocol which should be extended to vocational education. This higher-standards approach would deliver more uniform tertiary-wide linkages between standards and funding, and create a more transparent platform to justify government funding access certainly in the vocational education sector. This gap has otherwise allowed federal funds to flow on a platform or bar far too low. 

Currently, every state and territory has been forced to create its own criteria for assessing and dispersing skills and placing funding in jurisdictions. 

Amazingly, even as late as last year, the Commonwealth created yet another standard (beyond ASQA registration standards), in its bid to assess providers under the new VET Student Loans scheme. That makes eight or nine different standards now operating, all beyond ASQA registration standards. This surely is inefficient, and we know the Commonwealth has every power already to order Threshold Standards, and manage that process.

For the public provider, as I recall Heather Riddout (formerly of AI Group) told me at a Skills Australia board meeting some years back, the mission of Australia’s public provider TAFE network is to lead on quality, so TDA has every confidence that TAFE can and must retain that quality leader benchmark. Threshold Standards is an attainment that is now needed along with TAFE as the quality provider standard. 

2. Industry focus

Along with Threshold Standards, public TAFEs and private colleges which achieve this higher registration protocol or standard, should have rights for self-accreditation of courses. 

This is a fundamental power of Australia’s self-accrediting university sector, and increasingly granted by the Tertiary Education Quality Standards Agency (TEQSA) to many in the HEP space, and is tied to trust in what we know are the different responsibilities of self-accrediting and non-self-accrediting institutions as HEPs.

Again, the Commonwealth has the power, under ASQA, to enforce this arrangement.

This also aligns with open market forces. It motivates high-quality providers to work more closely with industry, and especially benchmarks for industry those providers who can and have the capability and credentials to align courses to modern technological learning, with internships for applied learning, innovation and research, as they may demand.

3. Innovation & applied research

The absence of vocational education to the National Innovation and Science Agenda Initiative was extraordinary. 

When benchmarked with Canada and New Zealand, we know these countries have for some years demonstrated genuine success to extend their research and applied science agenda to polytechnics and similar not-for-profit institutions, with better reach into industry as a result.

So Australia’s innovation and STEM agenda is wholly relevant to TAFE and vocational education, and not some exclusive role nominated for the university research sector.

In both countries for some years now, the equivalent of Australian Research Council (ARC) funding is also open to Canadian community college or NZ polytechnic institutions. In these cases, industry or equivalent of our Cooperative Research agencies, can partner with a college or polytechnic. Whereas in Australia, ARC designates partnerships with universities. 

If we are to accelerate innovation and productivity, let’s do it at the shopfloor level, and so if a brick firm wished to review more sustainable brick-making, maybe they don’t need to find a solution at the Australian National University or equivalent.

These steps support jobs, and future jobs.

There is real urgency to create a seamless tertiary education system, and bring efficiencies across the sector.

Benchmark evidence shows it is possible to link vocational education to the innovation agenda. TAFE is ideally placed as an iconic and trusted brand to link that process, and will show the dividends of direct collaborations with Australia’s very effective Cooperative Research Centres, and other relevant public and private sector research agencies.

Martin Riordan is former CEO of TAFE Directors Australia and an Honorary Senior Fellow at the LH Martin Institute.

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