The effects of the funding cuts in Victoria

The effects of the funding cuts in Victoria

The effects of the funding cuts in Victoria on training for the Service Skills industries Hugh Guthrie OctoberVET, Ballarat October 17 2014 vu.edu.au CRICOS Provider No: 00124K This presentation In this presentation I will cover: Service Skills: its coverage and offerings The aims of the research Funding approaches in Victoria and how they have changed between 2008 and the present Some issues with contestable markets and entitlement funding How the research was conducted What the research found And finally What conclusions we have drawn Service skills coverage and offerings Wholesale, Retail and Personal Services. This sector includes retail and wholesale, hairdressing, beauty, floristry, community pharmacy and funeral services Tourism, Travel and Hospitality, including travel, tours, meetings and events, accommodation, restaurants and catering, holiday parks and resorts, and Sport, Fitness and Recreation, including sport, fitness, community recreation and outdoor recreation. The research questions 1. What are the changes in provider and enrolment numbers in the

industry sectors and related qualifications covered by Service Skills Training Packages over the time course 2009 to 2013? 2. What have been the effects of the changes on employers and employees? 3. What have been the effects of the changes on training providers, and consequential effects on students and communities? Some issues with contestable markets and entitlement funding The difficulty of establishing objective measures of inputs, outputs and quality to advise contracting processes by Government That the principal client in the purchasing decision is clear That students will be rational consumers and use their entitlement wisely There are particular market conditions that may create perverse incentives for students and employers not to demand quality training and for providers to supply to a low-quality market Low barriers to market entry for some courses Ownership and incentives, skin in the game and a commitment to their students and employers rather than being focused and strongly incentivized by personal and organisational returns Funding approaches in Victoria Stable from 2008 to mid-2012 Changes to subsidy rates foreshadowed in May 2012 First changes in subsidy rates introduced for new enrolments from 1 July 2012 New subsidy rates apply for all enrolments from 1 January 2013 Continual adjustment since with little notification. There have also been changes to eligibility criteria for entitlements The research process We ran three forums, involving (respectively) industry and both public and private providers. This involved 10 organisations and 12 respondents We interviewed 35 individuals from 27 organisations, covering

community providers, public, private and enterprise RTOs, an employer and industry associations We called for submissions and received 7, most of which were from providers We monitored the press, and drew upon submissions to the Senate and HoR enquiries into TAFE and the literature What the research found for Service Skills qualifications Effects on funding bands Effects on enrolment numbers Effects on provider numbers In summary, the public providers have lost market share to private providers Funding level band against number (Percentage) of Service Skills qualifications subsidised in both 2013 and 2014 Band and rate/Year A B C D E Total >$10 $7.50 - 10

$5 - 7 $2 4.50 <$2 2013 7 (9.7%) 13 (18.1%) 18 (25%) 15 (20.8%) 19 (26.4%) 72 2014 6 (8.3%) 5 (7.0%) 10 (13.9%) 27 (37.5%) 24 (33.3%) 72 Enrolments in Victorian Government subsidised vocational training overall and for Service Skills qualifications 20082013 Enrolments Total enrolments, Victoria Service Skills enrolments, Victoria 2008 2009 2010 2011 2012 2013 381,300 376,800 426,900 548,700 670,400 645,000 100% 99% 112% 144% 176% 169% 79,385 100% 85,669 108% 94,091 121,443 132,288 119% 153%

167% 89,879 113% Number of providers overall by provider type, and for Service Skills qualifications, 2008-2013, Victoria Provider type and numbers 2008 2009 2010 2011 2012 2013 Learn Local (community providers) 342 320 316 309 298 282 Private RTO

201 246 344 422 445 428 18 18 18 18 18 18 561 100% 584 104% 678 121% 749 134%

761 136% 728 130% Service Skills Learn Local (community providers) 64 70 58 57 56 47 Service Skills Private RTO 105 110 169 208 210 194

18 18 18 18 18 18 187 100% 198 106% 245 131% 283 151% 284 152% 259 139% Public RTO or university dual sector Total Service Skills public RTO or

university dual sector Total Load in Service Skills qualifications, by provider type, 20082013, Victoria 120 100 80 Other registered providers 60 Community education providers TAFE and other government providers 40 20 0 2008 2009 2010 2011 2012 2013 What effects the research found for Service

Skills qualifications and providers Effects on qualification and provider viability The rapid changes in subsidy rates have led to adjustment to operation and teaching and learning practices, profile, levels of fees and staffing levels Planning and budgeting has become very difficult There appear to have been significant regional effects And finally: While the level of training in Service Skills in 2013 remained well above the level in 2008 (around one third higher) the level of funding in 2013 for Service Skills qualifications was around 70% of the funding in 2008. This raises the issue of whether or not Service Skills occupations are receiving their fair share of subsidised funding. FYTEs for selected Skills Councils, 2008-2013, Victoria 70000 60000 50000 Service skills Agri-Food Auto Skills Australia Community Services and Health Construction and Property Services E-Oz Energy Innovation and Business Manufacturing SkillsDMC Transport and Logistics 40000 30000

20000 10000 0 2007 2008 2009 2010 2011 2012 2013 2014 FYTEs by Service Skills area, 2008-2013, Victoria 25000 20000 15000 10000 2008 2009 2010 2011 2012 2013

5000 0 ty au e B y ac m r a ph y it un m m Co ry ist r Flo v er lS a r ne Fu s

ice ird Ha g in ss e r y lit ta i sp Ho il ta Re or Sp nd ta n tio a e cr re m ris u

To d an l ve tra W ale es l ho FYTEs by Service Skills area, 2008-2013, Australia, all jurisdictions excluding Victoria 25000 20000 15000 2008 2009 2010 2011 2012 2013 10000 5000 0 ty

au e B y ac m r ha p ity un m m Co ry ist r Flo s ice v r Se al r ne Fu g sin s re ird

a H y lit ta i sp Ho il ta Re or Sp nd ta on ati e cr re m ris u To d an l ve rt a

W ale es l ho What we have concluded based on the research Initially greeted favourably, but problems soon began to emerge Corrective action has involved the use of subsidy level as a blunt instrument of market control Constant tinkering is having an adverse effect on providers, students and employer stakeholders The approach treats the training market as uniform across Victoria. It is not Quality is suffering; planning and budgeting for providers is difficult if not impossible An urgent rethink of the Victorian funding model is needed if the system is not to collapse, and confidence in service skills qualifications is to be restored. CONTACT DETAILS The report can be accessed at http://behc.com.au/REPORT.pdf My contact details are: Hugh Guthrie Principal Research Fellow Work-based Education Research Centre 300 Queens St, Melbourne PHONE +61 3 99198529 EMAIL [email protected] http://www.vu.edu.au/contact-us/hugh-berkeley-guthrie

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