No. 237

A COMMAND ECONOMY IN EDUCATION IS BACK ON THE AGENDA

Stone the crows! The Brezhnevites are back, and re-regulating education is the issue they are using.

Friends of the smaller state are less on the back foot than their bums as the idea of privatising public services takes a political pounding. The unpopularity of the privatisation was crucial in the Queensland state election.[i] Labor is running hard here on leaving electricity generation in in public hands.[ii]

But at a national level the argument is occurring on a loftier level, over higher and further education – where unions and the Labor left is using it as a proxy in a push to recreate what looks like a command economy, where the state allocates student places.

The fight over training began in 2012 back when the states and Commonwealth agreed to allow private providers to compete for an increased share of the market against TAFE providers. [iii]

This should have been a no-brainer – for-profit trainers are more efficient than the unionised TAFEs. In NSW, for example, the Auditor General reports that TAFE accounts for 85 per cent of public Vocational Education and Training (VET) spending but enrols 77 per cent of students.[iv]

However, governments, especially in Victoria which led the nation in creating contestable places, have stuffed up. Badly designed, wretchedly regulated funding systems meant private providers poured into low cost, high-profit training fields, regardless of workforce needs. The example always used is personal fitness courses.[v] Between 2008 and 2011, enrolments in all private courses in Victoria grew by 300 per cent while the TAFE system grew by 4 per cent. In consequence, the state training budget in 2010-11 blew out by half a billion dollars, to $1.33bn. [vi]

Providers won by getting into the honeypot that is public funding per place. Some students lost by taking government funded course loans, which many did not understand, for courses of dubious value. The way some were gulled by promises of “free” iPads is an oft-used example.[vii]

This rorting is far from universal. But it continues to be sufficiently common to call the credibility of the entire industry into question. Last week, the peak for-profit training lobby, the Australian Council for Private Education and Training, started investigating a major college it previously praised.[viii]

New federal training minister Simon Birmingham is promising more rigorous regulation.[ix] The newish head of the Australian Council of Private Education and Training, Rodd Camm, is also trying to restore industry credibility, talking of expelling unethical members and announcing new conduct codes, which Senator Birmingham will launch on Friday.

But, while the industry attempts to restore credibility, the TAFE lobby and its allies will keep piling on examples of rorters robbing kids and the market failing taxpayers.

Labor and the Greens have established a Senate committee inquiry into for-profit training with ten substantive terms of reference that the TAFE lobby will use to slam the competition.[x] And not just on the failure of regulators to prevent for-profits gaming the system. As the National Tertiary Education Union demonstrates, the real dispute is over whether deregulated markets have any role in training. Thus the Union’s Senate submission states:

Making VET funding fully contestable by opening it up to private providers has demonstrated the fundamental flaws of applying market based policies to education. The undesirable consequences extend to students, TAFE institutes and the broader community.[xi]

But protecting TAFE jobs is only part of the plan – the bigger objective is discrediting higher education deregulation. Universities can already enrol as many students as they choose. Currently, Education Minister Christopher Pyne wants to allow them to charge undergraduates what they like, with the state loaning students the money via HECS. (The incentive for universities to charge up is a cut in Commonwealth funding per student place plus the prospect of adding an extra margin of their own).

This is anathema to the NTEU and to Labor higher education spokesman, and sometime minister, Kim Carr. According to Senator Carr:

This move reflects an ideology of privatisation. An ideology that advocates handing the proper functions of government by and for the people to the vagaries of the marketplace, where profit is the only motive.[xii]

And NTEU national president Jeannie Rea argues, “The free market in places and fees is just won’t work. Universities have the responsibility to provide high quality courses that lead to professional careers. Quality education also requires staff continuity and employment security.” [xiii]

Instead they advocate regulation. Senator Carr is keen on compacts between the federal government and each university, where the former allocates funding to the latter based on negotiated objectives. They were introduced under Labor when Senator Carr was industry minister and his Senate colleague Chris Evans had the education portfolio and linked funding to teaching and research outcomes. “The agreements will relate the unique mission of each university to the government’s goals for the sector, and for the first time draw together information about the public funding received by each institution,” the then ministers said in 2010.[xiv]

The NTEU wants something similar:

A flexible but co-ordinated system for the allocation of commonwealth-supported places using strategic funding compacts between universities and government to agree on the number of places to be offered. … The compacts would be renegotiated every three or four years to give greater certainty in terms of public outlays as well as providing universities with the necessary stability to invest in capital works and staff.

What’s more it would make it easier for government to plan;

A better understanding of future workforce needs and tertiary education enrolments also would give government the opportunity to overcome market failure and provide students and universities with incentives to pursue certain areas of study.[xv]

While the cost of courses gets most of the media attention in the deregulation debate the bigger issue is who gets to decide who should study what where – students and universities or the state.

Anybody who thinks the command economy no longer appeals, think again.


 

Stephen4@hotkey.net.au

For bespoke policy writing call me, 0417 469 093


 

ENDNOTES

[i] Adele Ferguson, “The brutal politics of privatisation stark after Queensland election shock,” Sydney Morning Herald, February 3

[ii] Mark Coultan, “NSW election: privatization phobia stalks Mike Baird’s vision,” The Australian, March 7

[iii] John Ross, “Renewed push for contestable VET” The Australian, June 22 2011

[iv] Audit Office of NSW, Vocational Education and Training Reform, 2015 @ http://goo.gl/rna0bQ recovered on March 8

[v] Leesaa Wheelahan, “Victorian TAFE chaos: a lesson in how not to reform vocational education,” The Conversation May 30 2012 @ http://goo.gl/vBWh2J recovered on March 8

[vi] Mathew Dunckley and Joanna Mather, “Gillard’s training reform hit by blowout,” Australian Financial Review, July 2 2012

[vii] AAP, “Time almost up for dodgy training courses,” The Australian October 23

[viii] Campus Morning Mail, March 5 @ http://goo.gl/N17mVc recovered on March 8

[ix] Simon Birmingham, “New laws to strengthen VET standards, February 25 @ http://goo.gl/zkHI20 recovered on March 8

[x] Senate Education and Employment References Committee, “The operation, regulation and funding of private vocational education and training (VET) providers in Australia,” November 24 2014 @ http://goo.gl/SNmUW6 recovered on March 8

[xi] Senate Education and Employment Reference Committee, Submission 29 @ http://goo.gl/SNmUW6 recovered on March 8

[xii] Kim Carr, “The future of universities is a political matter,” November 12 204 @ http://goo.gl/Vn9FRO recovered on March 8

[xiii] Jeannie Rea, “The certainties,” NTEU, January 19 @ http://goo.gl/KTrmwz recovered on March 8

[xiv] Kim Carr, “University compacts to reward high performance,” October 26 2010 @ http://goo.gl/gGmtgH recovered on March 8

[xv] Jeannie Rea, “Free market is not the answer in university funding debate,” NTEU November 12 2014 @ http://goo.gl/Mrhckr recovered on March 8

'2012