1. Changing Needs: Analysis of Industry Training Need Trends in Victoria Angel Calderon Policy and Planning 22 May 2012 New Directions for Success 2012 VISTA Residential Conference at Balgownie Estate, Yarra Valley, Victoria Keywords: Vocational education reforms; private education; TAFE changes; training and industry trends

2. RMIT University©2011 Information Technology Services 2 Introduction – The present and a view to the future The past present we knew – Policy settings prior to 2008 –Victoria: 2000s –VET alignment - 2004 –VET trends – in numbers The Contestability of the change –The 2008 environment in Victoria –Policy and trends 2008 to today Drivers of change: Australia’s economic reform The future ahead: –A tumultuous TAFE? –Latin Americanisation of VET? –Educational services the new manufacturing industry? Student needs: Are they changing?

3. The past present that we knew… Creation of a national, industry-driven VET system based on a competitive and open training market (1992): TAFE is a monopoly. (nb1&2) ‘Knowledge & Skills for the Innovation Economy’ (2002) statement outlined the future directions for the Victorian vocational educational and training sector: It sought to reposition Victoria’s VET system to work towards achieving the Government’s goals and targets for education, but it also sought to address the future skills requirements for the Victorian labour force. VET alignment: Strategic dialogues that sought to redistribute about 25% of government funded student contact hours from areas identified as low priority to the Victorian government (2004-06). Skills Reform program –Growing Victoria together: A vision for Victoria to 2010 and beyond (2001) –Maintaining the advantage (2006) –Securing jobs for your future – Skills for Victoria (2008). RMIT University©2011 Information Technology Services 3

4. Student contact hours by provider type, 1997-2006 RMIT University©2011 Information Technology Services 4 Table 1: Student Contact Hours by provider type, 1997-2006 (OTTE) Year Victoria VET System TAFEPrivate RTOsACE 1997 91,031,76080.5%11.5%8.0% 1998 91,670,42980.6%11.4%8.0% 1999 91,754,71980.6%11.4%8.0% 2000 96,323,78979.9%12.0%8.1% 2001 104,041,72080.7%11.9%7.5% 2002 108,185,91580.1%12.2%7.6% 2003 112,016,96280.3%11.3%8.4% 2004 111,225,78280.2%11.9%7.9% 2005 111,348,97179.0%13.0%8.0% 2006 116,159,82879.7%12.1%8.2%

5. The Contestability (and ferocity) of change Victoria VET reforms introduced an entitlement system within a contestable market. Victoria reforms are ahead of the rest of Australia COAG VET reforms through the National Agreement for Skills and Workforce Development had underpin the whole Australia approach. Securing Jobs for Your Future – Skills for Victoria has four clear goals: –increasing the number of people undertaking training in the areas and at the levels where skills are needed for Victoria’s economic and social development; –developing a training system that engages more effectively with individuals and businesses and is easier to navigate; –ensuring our skills system is responsive to the changing needs of Victoria’s industry and workforce, and –creating a culture of lifelong skills development. RMIT University©2011 Information Technology Services 5

6. Government expenditure on VET Victorian government financing of VET was $951.4 million in 2010, increasing: –17% between 2009 and 2010 –16% over the 3 year (2008-10) –30% over the 5 year (2006-10) –51% over the 7 year period (2004-10). Victorian government payments to non-TAFE providers represented 18% of VET expenditure in 2004 and it increased to 28.9% in 2010. Victorian government payments to non-TAFE providers was $275.0 million in 2010, increasing –102% between 2009 and 2010 –109% over the 3 year (2008-10) –109% over the 5 year (2006-10) –157% over the 7 year period (2004-10). Source: NCVER, Financial Reports, 2010 and 2008. RMIT University©2011 Information Technology Services 6

7. Government expenditure on VET Table 2 - Victorian government expenditure on VET (AU$'000), 2004-2010 State expenditurePayments to non-TAFE providers YearAU $'000 Annual change AU $'000 As a % of total government expenditure Annual change 2004 631,547 107,21518.0% 2005 671,5516% 114,09518.0%6% 2006 732,4079% 131,59418.0%15% 2007 759,8404% 132,30317.4%1% 2008 823,0798% 131,29916.0%-1% 2009 810,566-2% 135,97716.8%4% 2010 951,44017% 275,04528.9%102% Source: NCVER, Finance Statistics, 2010 and 2008 reports RMIT University©2011 Information Technology Services 7

8. VET delivery (student contact hours - SCH) The number of student contact hours (Cert 1 and above) delivered by all VET providers was 186.5 million in 2011, increasing –35% between 2009 (the first year of the VET reform agenda) and 2011 –20% between 2010 and 2011. Private RTOs delivery increased by 299% between 2009 and 2011, compared to 5% across ACE and 0% for TAFE institutes. In 2009, private RTOS delivered 16.0 million SCH increasing to 64.0 million by 2011. TAFE delivery decreased from 116.8 million SCH to 113.3 million SCH. RMIT University©2011 Information Technology Services 8 Student contact hours (Cert 1 and above) by provider type, 2008-2011 Provider type2008200920102011 ACE7,349,6748,732,2678,688,8079,147,888 Private RTOs16,061,85616,053,94230,184,52564,045,380 TAFE100,925,908113,532,781116,789,677113,271,311 Total124,337,438138,318,990155,663,009186,464,579 As a % of total: ACE5.9%6.3%5.6%4.9% Private RTOs13%12%19%34% TAFE81%82%75%61% Source: Skills Victoria.

9. VET delivery (student contact hours - SCH) RMIT University©2011 Information Technology Services 9 Even though there was a growth in fee-for-service delivery by all providers, its proportion decreased from 34% in 2008 to 25%. –In turn, government funded delivery increased from 66% in 2009 to 75% in 2011. The share of fee-for-service delivery by TAFE providers decreased from 29% in 2008 to 21% in 2011. –Interestingly, private RTOs proportion remained relatively unchanged between 2008 and 2011. The share of government funded delivery by private RTOs increased from 10% in 2008 to 31% in 2011. –By contrast, TAFE share of delivery decreased from 52% in 2008 to 40% in 2011.

10. VET delivery (student contact hours - SCH) Student contact hours (Cert 1 and above) by funding source by provider type, 2008-2011 2008200920102011 Fee for service34%35%31%25% ACE2% 1% Private RTOs3% 4%3% TAFE29%30%26%21% Government Funded66%65%69%75% ACE4% Private10%8%16%31% TAFE52%53%49%40% Total124,337,438138,318,990155,663,009186,464,579 Source: Skills Victoria. RMIT University©2011 Information Technology Services 10

11. Changing patterns of student delivery - 1 Number of providers delivering government funded, Certificate 1 and above programs were –201 private RTOs in 2008 and increasing to 430 in 2011 –18 TAFE institutes in both 2008 and 2011 –342 ACE in 2008 and decreasing to 310 in 2011. Number of enrolments per provider delivering government funded, Certificate 1 and above programs were –On average, 226 enrolments per Private RTO provider in 2008 and increasing to 495 by 2011 –On average, 11,884 enrolments per TAFE in 2008 and 11,585 in 2011. Source: Skills Victoria, 2012, Victorian Training Quarterly Report Full Year 2011. RMIT University©2011 Information Technology Services 11

12. Changing patterns of student delivery - 2 Delivery of Diploma and Associate Diploma level qualifications were the domain of TAFE institutes –In 2008, TAFEs delivered 96% of all Diploma and Assoc Dip level but decreased to 75% by 2011 (across all fund sources). –21 percentage points decrease during this period. The share of government funded delivery by TAFE decreased from 95% in 2008 to 65% in 2011. Source: Skills Victoria. RMIT University©2011 Information Technology Services 12 TAFE share of government-funded delivery by qualification level TAFE share of all delivery by qualification level Qualification level 2008200920102011 % change 08-11 % change 10-11 Qualification level 2008200920102011 % change 08-11 % change 10-11 Certificate 1-273%71%66%52%-21%-15% Certificate 1-274%75%71%60%-15%-11% Certificate 3-472%77%70%49%-23%-21% Certificate 3-474%77%71%53%-21%-18% Diploma and Assoc Dip 95%94%77%65%-30%-12% Diploma and Assoc Dip 96%95%84%75%-21%-9%

13. Shifts in industry delivery There are differences in delivery by industry between providers. In terms of volume, private RTOs focus in the following By contrast, TAFE institutes focus RMIT University©2011 Information Technology Services 13 2011 ('m SCH) Health Care and Social Assistance 11.3 Administrative and Support Services 8.4 Arts and Recreation Services 6.1 Accommodation and Food Services 5.7 Transport, Postal and Warehousing 5.6 Retail Trade 5.4 2011 ('m SCH) Construction 14.9 Health Care and Social Assistance 12.0 Foundation Skills and LOTE 9.8 Professional, Scientific and Tech Serv 9.1 Manufacturing 6.9 Administrative and Support Services 6.7

14. Shifts in industry delivery - 2 Private RTOs growth between 2008 and 2011, occurred most significantly in the following industries By contrast, TAFE institutes grew in RMIT University©2011 Information Technology Services 14 % change Financial and Insurance Services3282% Arts and Recreation Services2602% Professional, Scientific and Tech Serv1585% Foundation Skills and LOTE896% Education and Training563% % change Rental, Hiring and Real Estate Serv237% Agriculture, Forestry and Fishing74% Elect, Gas, Water and Waste Serv57% Transport, Postal and Warehousing51% Foundation Skills and LOTE32%

15. Shifts in industry delivery - 3 Share of Private RTOs in five industries compared to TAFE institutes These five industries represented 58% of delivery for Private RTOs compared to 35% for TAFE institutes. RMIT University©2011 Information Technology Services 15 Private RTOs 2011 TAFE 2011 Health Care and Social Assistance18%13% Administrative and Support Services13%7% Arts and Recreation Services10%7% Accommodation and Food Services9%5% Transport, Postal and Warehousing9%3%

16. Drivers of change: Australia’s economic and VET reforms A wide ranging economic reform auspiced by the Council of Australian Governments (COAG) in three broad reform streams –A competition and regulation stream –A human capital stream –An environmental stream. Education and training reforms form part of the human capital stream. Previous major Australian achievements in regulation reform, of significant importance to education, is trade liberalisation. This reform brought reduction in the rate of assistance from government to manufacturing from 35% in the 1970s to 5% by 2000 ( Productivity Commission 2012 ). RMIT University©2011 Information Technology Services 16

17. Drivers of change: Pressure points VET reforms like many others in Australia’s economy can have profound repercussions – Terms of trade have remained relatively unchanged in recent years –Flow of resources likely to have a greater impact in the composition of the labour force and industry development –Demographic demands –Ageing population is changing structure of population –Rate of fertility – fewer children per family –Greater workforce participation as well as changes to career patterns –Migration –Reconciling globalisation with national and local actions –Impact of technology and knowledge transfer. RMIT University©2011 Information Technology Services 17

18. Victoria government – 2012 budget announcement Need to refocus VET training –Sustainable VET: –AU$1.2 billion a year investment –Maintaining opportunity: Victorian training entitlement –Supporting those in need Who is likely to benefit from these opportunities? –Quality VET –Government supports ‘high-quality training that can better support job growth’ What does this really mean? –Higher expectations of training providers –Stronger monitoring and compliance checks? Does this mean a greater level of reporting? Reporting all activity for Private RTOs? Or TAFEs? –Consumer choice: MyVicVET? RMIT University©2011 Information Technology Services 18

19. Victoria government – 2012 budget announcement –Industry driven VET –Industry voice in the training market: Reduce reliance on intermediaries? –Better information: One stop shop? One solution to fit all? –Pathways to short term employment / skills demands. RMIT University©2011 Information Technology Services 19

20. Implications of VET reforms Government committed to maintain level of investment in VET at AU$1.2 billion per year. –Evidence of growth in recent years is that it has benefited Private RTOS –TAFE decline: –in enrolment opportunities; –in funding (capital, wages and maintaining infrastructure) –Inefficient government investment: Productivity Commission TAFE is a natural monopoly –Maintaining VET quality: –Delivery ? Teaching instruction? Student experience and satisfaction? –Market oriented: Focus on the outcome. RMIT University©2011 Information Technology Services 20

21. The Future Ahead: A Tumultuous TAFE Reducing government funding will hinder TAFE institute robustness; integrity and viability Rapid not increment change: Race for survival? Economic pressures that will immediately impact on program / course viability; academic and service delivery; wages; capital and infrastructure programs – additional pressure on backlog maintenance –Is it tangible to sell of TAFE land / building? –What is the future of satellite / unviable campuses? Economically unviable as an investment by government (inefficiency of scale and public service) The rationale of maximising government investment: Is the privatisation of TAFE a viable proposition? Will TAFE institutes be able to establish ‘private’ branches as a business extension? RMIT University©2011 Information Technology Services 21

22. The Future Ahead: Latin Americanisation of VET In Latin America, about 50% of enrolments in tertiary education are through private / for-profit institutions (PROPHE, 2010). The share of enrolments in private institutions vary –Argentina 23.9%Mexico 33.4% Colombia 49.6%Peru 51.1% –Brazil 74.6%Chile 77.6% Victoria share of SCH delivery by Private RTOs stood at 34% in 2011. Private providers focus in areas of skills in demand and employment outcomes. –What Latin American path is ideal for Victoria? –How is quality in delivery and service provision going to be maintained? –Is the private provision of education the long term for VET in Victoria? –Is this shift in provision an opening for consolidation and, subsequently, foreign providers to enter the VET market? RMIT University©2011 Information Technology Services 22

23. The Future Ahead: Manufacturing VET The various economic reforms point to consider the scenario: Is it possible that Educational services as one of the economic sectors liberalised and subject to the General Agreement of Trade in Services (GATS) is heading the same path as manufacturing, communications, finance or aviation industry? In the manufacturing industry, government support / assistance declined over time – from a high of 35% in the 1970s to 5% in 2000 ( Productivity Commission, 2012 ). –Is this the future for TAFE institutes? –Is the share of payments to non-TAFE providers likely to continue increasing as experienced over the past 5 years? –The share of government payment to non-TAFE providers increased to 28.9% in 2010 from 16.8% in 2009. RMIT University©2011 Information Technology Services 23

24. RMIT University©2011 Information Technology Services 24 As a way to finish… Changing student needs? Student motivations remain the same: –Achieve / gain a qualification –Learning and applying it The medium is diversifying: –Through provision (public, private) –Service type (fee for service, ‘entitlement’) The dilemma of the right of education –Public vs private good –Usefulness of the qualification value –Student life: On campus ? Off campus? Who pays for the student life? –Distributed and dispersed through in-house ad-hoc plus various ‘external’ services?