Submission on redesigning VET FEE-HELP – draft 1 VET FEE HELP is a program of income contingent loans that the Australian Government makes available to all citizens enrolled in accredited vocational education and training diplomas. It is similar to HECS, the income contingent loans that have been unproblematic in higher education since they were introduced in 1989. However, VET FEE HELP has been scammed and successive Australian governments have introduced successive changes to try to stop the scams. On 29 April 2016 the Australian Government published a paper inviting discussion of a number of ideas for ending the scamming of VET FEE HELP https://docs.education.gov.au/documents/2017-vet-fee-help-scheme-redesign-discussion-paper I set out below my first draft submission and welcome comments. Submissions are due by 30 June 2016. Gavin Moodie 2 May 2016 I welcome this review of VET FEE HELP, congratulate the Government on its discussion paper which lets the Coalition’s ideology distort its discussion in only a few places, and welcome this opportunity to make a submission. However, I regret that the Government will again not publish submissions. Publishing submissions shares perspectives and expertise and contributes to developing mutual understanding of peoples’ positions. 1 VET FEE HELP’s problems can’t be fixed by changing just VET FEE HELP 1.1 Many of the problems identified with VET FEE HELP exist thruout Australian vocational education such as low quality provision (as the discussion paper notes on page 19), low student engagement, low student progression, inconsistent assessment, low completion (page 19 again), unscrupulous providers and wasted financing. 1.2 The discussion paper on redesigning VET FEE HELP presents these issues thru the lense of VET FEE-HELP but the same problems arise, tho in different forms, for students, State governments, vocational education teachers, high quality vocational education providers, employers and immigration policy. 1.3 VET FEE HELP’s problems arise from the interaction of vocational education’s curriculum, pedagogy, assessment, financing and quality assurance. VET FEE HELP’s problems can’t be fixed by changing only VET FEE HELP: they will need changes to other parts of vocational education. 1.4 While there have been numerous reports and reviews of various aspects of vocational education, these have been narrowly confined to just 1 aspect or 1 issue and few have been open. 1.5 There has been only 1 comprehensive and open public review of Australian vocational education: Kangan, Myer (chair) Australian Committee on Technical and Further Education (1974) TAFE in Australia. Report on needs in technical and further education, Australian Government Publishing Service, Canberra. 1.6 By confining the current review to VET FEE HELP the Australian Government is perpetuating and exacerbating the fragmentation of vocational education that is an important source of the problems of VET FEE HELP. 1.7 There should be a comprehensive and open public review of Australian vocational education. 2 Markets fail at allocating public goods such as education 2.1 The discussion paper persists with the view that a public good such as education can be allocated by the market and that all that is needed to end the problems arising from the designed market is more market design. 2.2 Yet as the discussion paper notes, there have been numerous different designs and redesigns of markets in Australian vocational education. All have caused major problems, requiring substantial changes which in turn cause new problems which have led to subsequent changes and redesigns. 2.3 Yet all the evidence offered in the discussion paper is of problems arising from the marketisation of vocational education, of market failure and the impossibility of designing problems out of markets for public goods. 2.4 The discussion paper’s perseverance with more market redesign is a defeat of evidence with ideology. 2.5 The Government should relinquish its ideological commitment to allocating public goods by markets and instead base its policy on evidence. 3 The importance of inputs and processes 3.1 In several places the discussion paper notes the lack of mechanisms and measures of educational processes in Australian vocational education such as student engagement and progress. 3.2 Australian vocational education also mostly ignores inputs such as level of resourcing, quality of teachers, quality of facilities and length of courses. 3.3 A cut in resourcing per student in Australian vocational education is considered an increase in efficiency and productivity, while in every other educational sector it warns of a possible cut in quality. 3.4 The discussion paper suggests piecemeal monitoring of processes such as vocational student engagement and progress. But the applicability and effectiveness of any monitoring of vocational education’s processes are limited by persisting with basing vocational education on competencies, which assume that inputs and processes are irrelevant to student outcomes. 3.5 Australian vocational education should rejoin the other educational sectors in giving appropriate weight to the inputs and processes of education as well as its outputs. 4 Problematic embedding is an artifact of the design of VET FEE HELP 4.1 Embedding or nesting programs are common in higher education, but are a problem for VET FEE HELP mainly because VET FEE HELP introduces an artificial distinction between high level vocational education eligible for VET FEE HELP and low and middle level vocational education which is not eligible for VET FEE HELP. 4.2 Embedded programs are hard to monitor in Australian vocational education because competency based education lacks indicators of student progress. 4.3 It would be best to solve VET FEE HELP’s problem with embedded courses not by making progression from low and middle level to higher level vocational programs harder, but by redesigning VET FEE HELP. 4.4 Providers are keen to embed low and mid level courses in high level courses because (1) the funding available for low and mid level courses is too low, and (2) VET FEE HELP allows providers to gain excessive funding for high level vocational education. 4.5 Some of the problems from the excessive reliance on VET FEE HELP and cost shifting from the States to the Commonwealth are due to the poor funding of low and mid level vocational education. 4.6 Others of the problems from embedding arise from VET FEE HELP financing excessive revenue, which can be fixed by setting borrowing limits for each period of enrolment in vocational programs. 5 Completion is an indicator of success because it has better outcomes 5.1 The discussion paper notes on page 21 the common claim that completion rates aren’t meaningful in Australian vocational education because many students enrol in vocational education to complete just 1 or a few units. 5.2 This claim would be relevant if students who completed only a few units had strong outcomes in transfer to further education, employment or higher pay so that they could repay their HELP debt. 5.3 Low completion is as much an issue for vocational education as it is for school and higher education because students who do not complete vocational education qualifications have poor outcomes: few transfer to further education, few improve their employment position and few earn higher pay. 6 Overlook the big weakness in Australian vocational education 6.1 The discussion paper notes that a system designed for higher education could not be applied to vocational education because of the low barrier to entry for vocational education providers (page 7), because vocational education is ‘competency based . . . . This means that diplomas are not subject to grades – a student is assessed as competent or not’ (page 11), and because of the nature and regulation of institutions and the relative instability and explosive growth of vocational education (page 12). 6.2 But of course the nature and regulation of institutions and the relative instability and explosive growth of institutions are not inherent to vocational education: they do not exist, for example, in vocational education in Canada, the UK and continental Europe. These characteristics of Australian vocational education are direct outcomes of government policies, most of which the discussion paper seeks to define as being outside its scope. 6.3 The problems with VET FEE HELP and other problems with Australian vocational education will not be fixed until it is no longer based on competences and until it relinquishes is related preoccupation with outcomes and underplaying of inputs and processes. 6.4 To fix the problems with VET FEE HELP and other problems with Australian vocational education it will have to rejoin the other sectors in paying appropriate attention to: inputs such as financing per student, curriculum, length of courses, teacher quality and facilities; processes such as pedagogy, student engagement and progress; and outcomes such as assessment and completion. 7 Alternatively, return to VET FEE HELP which was unproblematic 7.1 In several places the discussion paper notes that VET FEE HELP was abused only after the Australian Government removed the requirement that courses be accepted for credit toward a higher education award (pages 9-11). 7.2 If the Australian Government is unwilling yet to reintroduce monitoring of vocational education inputs, processes and outcomes it could readily end the abuses of VET FEE HELP by reintroducing the requirement that to be eligible for VET FEE HELP courses must be accepted for credit toward a higher education award. 7.3 The Government could ask the Tertiary Education Quality and Standards Agency to clarify how higher education institutions can maintain standards and their high quality while accepting vocational education diplomas for credit. 7.4 The Government could state its expectations for the processes and fees that higher education institutions may adopt in accrediting vocational education diplomas. 8 ‘Industry needs’ should not defeat students’ interests 8.1 Seeking to relate VET FEE HELP to ‘industry needs’ would bring ‘industry needs’ into the scope of VET FEE HELP while declaring vocational education’s curriculum, pedagogy, assessment, financing and quality assurance outside the scope of VET FEE HELP. 8.2 There is no rigorous national mechanism for determining ‘industry needs’ and it is very doubtful that the state mechanisms for determining ‘industry needs’ are rigorous. 8.3 Labour market forecasting is notoriously unreliable. Labour market forecasting was invented to give astrology a good name. 8.4 Industry contributes nothing to publicly funded vocational education and little or nothing to enrolments supported by VET FEE HELP. Industry is not a ‘stakeholder’ in this form of vocational education because it contributes no stake to this form of vocational education. 8.5 In stark contrast to industry, students contribute substantially to VET FEE HELP. Students also contribute their effort, time and foregone income to education. Students should be supported in their choices where to invest in education, which should not be distorted by the interests of industry or governments’ attempts to read the employment market. 9 Relate loan fees to graduates’ repayment rates? 9.1 One possibility would be to increase VET FEE HELP loan fees to cover more of the cost of VET FEE HELP loans and to reduce loan fees for providers which have higher repayment rates by former students. 9.2 Such a policy would have the perverse effect in higher education of discouraging universities’ admission of older students, women and members of equity groups. (It would also discourage offering places in the creative arts, for example, which may or may not be perverse, depending on how instrumental one is. However, the creative arts are only 8% of all student load in higher education which is perhaps modest enough for even the most ardent utilitarians to ignore.) 9.3 Such possibly perverse incentives may not be so important in VET FEE HELP which, the discussion paper notes, apparently exploits members of equity groups. 10 Prohibit paying agents by commission? 10.1 One possibility would be to adopt the USA federal government’s policy of prohibiting recipients of federal loans from paying their agents by commission for recruiting domestic students. The USA federal government adopted this policy to end the type of abuses now seen in Australian vocational education. 11 The scams and explosive growth have been by the private for profit providers 11.1 The discussion paper is wrong in claiming that ‘This is not simply a matter of private versus public sector provision, VET has always been a blended sector and should remain so’ (page 6). 11.2 The national system established in 1975 on the recommendation of Australian Committee on Technical and Further Education was of TAFE, not of TAFE ‘blended’ with private for profit providers. 11.3 As the discussion paper notes on page 10, making government subsidies available to private for profit providers was a condition of the Australian Government’s VET provider guidelines which were introduced only in 2009. 11.4 The discussion paper notes on page 17 that average VET FEE HELP tuition fees are from twice to five times the price of corresponding NSW Tafe courses. 11.5 The discussion paper’s table 8 on page 28 shows that the amount of VET FEE HELP loans increased from 2012 to 2015 by a very strong 300% at TAFEs, but it exploded by 1,000% at private providers. Table 1: change in loan amounts by provider type, 2012 – 2015, millions $ Provider type 2012 2013 2014 2015 change 2012 to 2015 $ Change 2012 to 2015 % Other public 15.5 32.3 36.8 50.1 34.6 223 Private 223.7 498.8 1,400.3 2,467.2 2,243.5 1,003 TAFE 85.4 168.1 320.2 403.4 318 372 Total 324.6 699.2 1,757.3 2,920.7 2,596.1 800 Source: adapted from discussion paper Table 8: Loan amounts by provider type (millions $), page 28. 12 Next steps 12.1 I look forward to the discussion paper being completed with the parts that are missing so that the paper could be published before the Coalition’s premature caretaker period: Table 5: Course completion rates by major provider on page 20 and Appendix 1: VET FEE-HELP changes (2015 and 2016) on page 50. 12.2 I look forward to the Government’s proposals for changing VET FEE HELP being accompanied by a rationale for the proposals and reasons for not adopting other proposals. 12.3 The Government’s proposals should also be accompanied by targets and performance indicators to inform judgments of whether the changes succeed, and should include a process for evaluating the changes. 12.4 The Government should establish a comprehensive and open public review of Australian vocational education. Gavin Moodie Gavin.Moodie@telstra.com https://utoronto.academia.edu/GavinMoodie 2 May 2016 Gavin Moodie 1 Submission to the review of VET FEE HELP