Price caps in VET policy would undermine innovation agenda

26th Oct, 2016   Feature story:

This piece was published in The Australian newspaper on Wednesday 26 October 2016.

If Australia is to successfully transition to a highly skilled and productive economy, we need a vocational education and training system that will deliver for learners and employers. This means policy must support high-quality providers whose primary purpose is education, and who achieve high completion rates and strong employment outcomes.

VET policy needs to be well designed, implemented and monitored. This has not been the case with VET FEE-HELP and many stakeholders have played a role in where we are now.

Governments have not successfully articulated the place and purpose of VET. We have seen numerous policy changes, poor policy design and implementation, lax regulation and inadequate oversight. Where governments provide funding and subsidies they must be accountable for managing and monitoring the market. They have not done this well.

Regulators have failed to deliver best-practice, risk-based case management and have not acted decisively against those abusing the system.

According to the National Centre for Vocational Education Research, there were 4.5 million enrolments in 2015. Over three million were delivered by private providers and TAFE delivered nearly one million. Over 85 per cent of graduates were satisfied with the overall quality of their training and over 80 per cent of employers with apprentices and trainees were satisfied they were obtaining the skills they required, up 2.9 per cent from 2013 and above satisfaction rates a decade ago. Most importantly, over 85 per cent of graduates from vocational programs were employed or enrolled in further study after training.

These are the kinds of outcomes Australia needs to build the skills of our future economy. They should be front of mind as parliament considers changes to the proposed new loans program.

Access to government subsidised schemes should be based on outcomes, not on whether they operate in the public or private sector. There is clear evidence of poor providers in both sectors.

Second, the government must consider the impact changes will have on skills development. The VET sector provides access to industry-relevant training for people of all ages and backgrounds. It’s a path to a meaningful first job for school-leavers and the unemployed. It’s also critical in upskilling the existing workforce.

Imposing loan caps would reduce access to tertiary education for these people. They would be forced to pay upfront fees, seek out a higher education qualification that may be less suited to their needs, or disengage completely.

Finally, rationalising course lists and introducing price caps would affect quality and hinder Australia’s ability to develop skills for future industries.

Learners and employers are better than governments at responding to supply and demand signals. The list of eligible courses focuses on current areas of skills need at the expense of emerging industries.

A great example is creative industries, where employment opportunities have grown 40 per cent faster than the broader economy in recent years.

A blanket loan cap of $10,000 would be a disincentive for industry-recognised niche providers to develop high quality courses that prepare Australians for future jobs.

It also undermines the federal government’s own agenda to secure Australia’s economic prosperity through innovation.

Rod Jones is Chief Executive Officer of Navitas Limited.

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