Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
Education and Employment References Committee
02/02/2018
Vocational education and training in South Australia

QUIGGIN, Professor John, Private capacity

[15:23]

Evidence was taken via teleconference—

CHAIR: Good afternoon. I understand that information on the giving of evidence before a parliamentary committee and issues of privilege has been provided to you. You are invited to give a verbal presentation, which will be followed by questions from senators.

Prof. Quiggin : I don't have any specific information regarding the issues relating to the South Australian TAFE system. My concerns relate to vocational education policy, in general, which I have been working on for a number of years and, in my view, it has been an area of consistent policy failure throughout the period in which I have been working. That reflects both substantial cuts in funding and a failed attempt to rely on a competitive market dominated by for-profit providers, beginning, I suppose, in Victoria, with the first case I looked at. We've seen declining performance, declining outcomes, declining funding and, of course, the loss of very large sums of public money through the collapse of fraudulent or dubious providers. Therefore, I'm recommending policies that are, in many respects, in line with those recently put forward by the Business Council of Australia.

I think there are two aspects to this. The first is trying to break down the division between university education, which, on the whole, despite a lot of stress, is performing well as a rule, and vocational education, which clearly is not. Here I'm on board with the Business Council of Australia in suggesting that we need a national system which encompasses both vocational education and university education. My second point is that the attempt to regulate and control for-profit providers through bodies like ASQA has been a failure. That failure is reflected in national experience. We should eliminate for-profit provision from the sector or at least minimise it and make sure that, as far as possible, it's contracted through bodies like TAFE rather than being able to go out into the market and purchase the kind of practices we've seen. Of course, some of the worst abuses have been reined back, but in my view these problems can't be ultimately controlled. The history of for-profit provision of education at every level has been one of failure. Thank you.

Senator CAMERON: Thanks for your submission, Professor Quiggin. I want to go to page 4 of your submission and look at the Mitchell Institute ABS data. That shows significant funding increases for higher education and significant increases for schools but a decline in the VET system. What are your comments about the implications of these funding declines? I was surprised to hear the regulator tell us that they don't necessarily impact on the quality outcome. Mr Paterson, the chief commissioner, was very defensive of the system as it stands. He also indicated that there was good satisfaction from business about the system and that there are no systemic problems in the system. Now, if the regulator is saying this, that's obviously influential, but it doesn't equate to any of my experience and understanding of the mess the industry is in at the moment.

Prof. Quiggin : I would have to say that I have been puzzled throughout by the regulator's position. Clearly, in leading ASQA reports right up to the crisis which led to radical changes in the funding of the system, it was hard to detect any indication that anything at all was going wrong, yet obviously the government came to the conclusion that, indeed, things were going catastrophically wrong and reined in and radically changed the funding system. I think the very fact of the inquiry being held now suggests that, indeed, there are problems. It would be absurd, I think, to suggest that the TAFE system is doing worse than the private sector in this respect, given the many failures we've seen of very large-scale private providers. But obviously it comes under the same pressures, both funding pressures and also pressures to be more competitive, more market oriented and so forth. These pressures have produced, as you would expect, a very strong incentive to skimp on the quality of courses. Indeed, that's what we're seeing in things like completion rates. I really find the position of the regulator throughout this period to be incomprehensible.

Senator CAMERON: Well, I'm glad I'm not the only one, Professor! The other context is that there's a race to the bottom by competition policy. We even have the TAFE directors saying, 'There's a need for some competition.' But hasn't competition policy really been a massive failure in the VET system, to the extent that even the Productivity Commission is saying that the place is in a mess?

Prof. Quiggin : Yes, it's striking. I took part in the Productivity Commission's inquiry and it is notable that, although in the abstract they maintain strong enthusiasm for competition in the provision of human services—and until very recently they extended that enthusiasm to VET and TAFE, perhaps in consultation with the quality regulator—their reports indicated that this was a disaster. They unfortunately did not have any concrete suggestions as to how to improve regulation. But the Productivity Commission, which is certainly a strong advocate of competition and continues to put it forward, agreed that it has been a failure in this area.

Senator CAMERON: I put it to the regulator that business run the show. The regulator was extremely vocal in his argument that that's not the case. But the legislation basically has a specific and clear role for business. Business would argue it is okay because they've got significant funding coming out of this. But can you understand why business would continue to argue that this is okay while it's clearly having an effect on the productive performance of the economy?

Prof. Quiggin : Business, of course, is a large casualty, but as I mentioned the Business Council of Australia clearly doesn't seem to think that things are okay. They are suggesting some quite radical changes, some of which I agree with. So it may be that they have some data suggesting that businesses are still getting some good graduates out of the system. I would hope so. But, among other things, depending on how they got the data, that's not reflected in the very poor completion rates. A large number of people get a qualification so worthless that they presumably don't present to employers at all. So, without exactly knowing what data they are presenting, I don't think it could be said that the business sector as a whole is satisfied with the performance of the system.

Senator CAMERON: When I put it to the regulator, Mr Paterson, that the Chief Scientist, Professor Finkel, had said that the VET system was marred by rorting and funding changes and that the Productivity Commission had said it was in disarray and the system was in a mess, I did indicate that Ms Westacott from the BCA had said it would take billions of dollars to put it back together. When I indicated that a number of the key academics in this area, such as yourself, Professor Moodie, Professor Buchanan and Dr Toner, had all indicated that there were system design problems, he said that these were just the views of individuals. But the academics I have mentioned, including you, have spent a fair bit of time analysing that system and surely you should not just be dismissed as having the views of an individual.

Prof. Quiggin : I suppose all views are held by individuals. I don't know what kind of response that is. I don't believe it's the case that it's not to do with quality. The authority has an extensive research capacity to look at performance of the system as a whole. When you look at its functioning, it's working within the regulatory system of which the successful delivery of education is very hard to reach. It's really about compliance rather than meeting social goals. So I don't know from what source the regulator is getting their collective information. It doesn't seem to me to be obviously superior to that of individual academics or bodies like the Business Council of Australia.

Senator CAMERON: I suppose if all the individuals and organisations like the Productivity Commission and the BCA are indicating significant problems with the system and the position's been put that there are systemic problems—the regulator is saying that there are no systemic problems—doesn't that lead you to the view that there has to be another broad-based, detailed review of the VET system? Otherwise, the mess that we're in is going to continue?

Prof. Quiggin : Absolutely. I would point out, of course, that the same regulator was making the same claims two or three years ago. I remember when I reported on this to the National Centre for Vocational Education Research in 2012 or 2013 I was described as a 'flat earther' for suggesting that there would be problems. But of course the current government has indeed found, despite the continued assurances of the regulator, that in fact the system was radically defective, and they were forced to introduce emergency changes to it.

Senator REYNOLDS: I want to pick up a couple of issues arising out of your discussion mostly with Senator Cameron. I've got to say, I was very pleased to see Senator Cameron acknowledge your table there, which demonstrates a very significant increase in the higher education funding from the federal government. But, that aside—

Senator CAMERON: Not what it should be!

Senator REYNOLDS: But significant increases from your government, Senator Cameron—but we digress.

CHAIR: Let's get back on topic.

Senator REYNOLDS: I just want to go to the issue of ministerial accountability. Being from Western Australia, I'm not familiar with all the details of this long and sorry saga. But I just wondered: having a look at the timing of this, QASA and ASQA made findings in September last year, and then the minister, to her credit, got a task force up and running on 28 September. So, that was a pretty quick response. But then she went on leave for three or four weeks the same day, or the next day. It just seems to me—what responsibility does the state government have for all their funding cuts and any other policy decisions they've got? It doesn't seem that we've looked much yet at the responsibility of those who are accountable. I'm just wondering what your thoughts are in all of this mess.

Prof. Quiggin : As I mentioned in my opening statement, I haven't done a detailed study of the particular problems in South Australia. I suppose what I'd say is that what we're seeing across the board—I'm certainly familiar with the situation in New South Wales, which is at least equally as bad—is that the system by which the federal government essentially handles university education and the states handle vocational education is broken beyond repair. And I hope one of the outcomes of this inquiry will be a consideration of whether, despite the many obstacles in moving things between the federal government and the states, we couldn't have a unified system of post-school education. I think that's what we need—

Senator REYNOLDS: Can I just clarify what you're saying? If I have understood correctly, you're saying that the state government—in this case the South Australian state government—is so incompetent that they can't even manage their own TAFE system anymore, and you want the federal government to look after it. Or have I misinterpreted what you've said?

Prof. Quiggin : Well, I would say, looking at the outcomes, that that's essentially true, to a greater or lesser degree, of all the state governments. Victorian governments of both parties I think were the first into this area. I think [inaudible] has been spectacularly bad, and obviously there are problems here in South Australia that are sufficient to justify an inquiry. So, in that context I guess I would tend to see the failure as structural rather than being incompetence on the part of individual ministers or governments of particular parties.

Senator REYNOLDS: But they are the government who are responsible for actually delivering these TAFE services. So, if you are, as you've just confirmed, suggesting that they are so incompetent—and, as I understand it, you're saying Victoria is heading in the same direction—then the federal government should take on the state's constitutional responsibilities. What's left for the state governments to do?

Prof. Quiggin : Sorry: I should say that the Victorian governments that I'm referring to were actually in the past, going back to the first decade of the 2000s. So I'm not in this context reflecting on the current Victorian government. Obviously there is always a problem about how to divide things up between the federal government and the states. There are merits to having some things decided locally. I have a lot of thoughts on how I would rearrange things.

Senator REYNOLDS: I have to say, it will come as no surprise to you to know that as a West Australian I'm a very proud federalist, and I would prefer to see states pick up their game and to what they're responsible for, rather than keep seeing it all go to Canberra. But that's just a personal opinion on the Constitution.

CHAIR: You guys were late in joining the Federation!

Senator REYNOLDS: You have to wonder what the South Australian government is doing with the tax dollars it's getting from us. But that's another issue. Professor, what would you see as some of the policy failures, in a broader policy sense, that have led to these outcomes? What lessons would there be for other states and territories, presuming it doesn't all go to the Commonwealth government, which is unlikely?

Prof. Quiggin : Obviously, as I have mentioned, and as evidenced in the Mitchell Institute reports, funding cuts are a big deal. That's essentially—if there was obvious evidence of the potential for big savings—but big cuts have been made. The data I have is national, but that's true in South Australia as well. Secondly, I think this enthusiasm, dating back to National Competition Policy, for competition in human services is still going on, when the evidence has really been overwhelming for a long time that for-profit provision of education combined with public subsidy is a recipe for disaster.

Senator REYNOLDS: I have to wind up, but a final question: in relation to private companies and your point then and the discussion you had with Senator Cameron, I understand that in South Australia the state government at least two years ago stopped funding the private provision of these services. So in relation to the current issues, to put it politely, that the South Australian TAFE faces, how is this discussion about privates relevant if they're not being publicly funded anymore?

Senator CAMERON: It's the system.

Prof. Quiggin : We had and still have the VET FEE-HELP system, which was a major diversion of funds into essentially pure waste.

Senator REYNOLDS: But specifically in relation to South Australia, they're not taxpayer funded in South Australia and haven't been for at least two years, as I understand it.

Prof. Quiggin : VET FEE-HELP is national.

Senator REYNOLDS: I have run out of time. Thank you.

CHAIR: If you would like to consider that question and provide a short written response, you are invited to do so.

Senator PATRICK: Good afternoon, professor. You're indicating in your other answers that you have mostly looked at things from a national level. I might ask this anyway. In your submission you cite that damage that has been caused to the VET sector by opening it up and making public funds available to the private sector. Do you think that has played out differently in South Australia than anywhere else?

Prof. Quiggin : As I said in my opening statement, I'd don't have detailed knowledge of South Australia. I think the general pattern has been the same. I would want to avoid the term 'private sector'. I think the crucial distinction in education is not between private and public, but between for-profit and not-for-profit. The real problem area in terms of opening up funding has been contestability by for-profit providers.

Senator PATRICK: Just looking at the ASQA audit. You may have missed Senator Reynolds playing dangerously with the maths and coming to the conclusion that South Australia may perhaps have more difficulties than other states, just based on the number of non-compliances that ASQA presented. Do you have a view on that?

Prof. Quiggin : I think compliance and non-compliance is really a second-order issue here. I don't think the whole system configuration under which ASQA is operating is fit for purpose. I would be looking not at things like compliance and non-compliance. I would look at aggregate outcomes, participation of vocational education, completions and independent assessments of the quality of the training rather than this compliance-based focus which, as ASQA has mentioned, says everything is going swimmingly except possibly in a few isolated spots.

Senator PATRICK: In some sense, an audit of quality that reveals non-compliance does tell you something, at least, about the performance.

Prof. Quiggin : It certainly is an indication of problems. As I say, it's clear that, although I've stressed the problems of the for-profit sector, the funding model is essentially one which pushes all institutions to act like for-profits, and so you would expect to see compliance problems. As I say, I haven't done any comparative research between the states other than enough across-state research to know that these problems are not localised in South Australia. I think it would be a challenging exercise to determine which state has done the worst, but very straightforward to say that none of them have done well.

Senator PATRICK: Going back to a national level: in some sense you're saying that the big disruptor here has been for-profit being introduced. However, the graph that you provided on page 4 of your submission, which Senator Cameron was talking about, shows a definite reduction in funding right across organisations like TAFE irrespective of profit versus non-profit.

Prof. Quiggin : Absolutely. What we've been presented with as a coherent package is the idea that we could bring in for-profit competition and that this would reduce costs, which would enable VET and TAFE to be delivered at a lower cost and therefore give state governments, which are always short of money, the capacity to take that money and spend it somewhere else. What we've seen, in my view, is that the state governments have assumed it's going to work and made the cuts, but the commerce reductions and promised increases in efficiencies haven't taken place. What we've seen instead is reduced delivery. It is the combination, undoubtedly, of reduced funding and reliance on market competition to drive costs down.

Senator PATRICK: Do you think that the reduction in funding is actually predominantly policy driven or is it, in some sense, social engineering, as everyone has to have a degree and no-one gets to have a trade certificate? Is it market-driven?

Prof. Quiggin : It's a complicated story. Obviously there are many different players out there. I don't think there is a widespread social view that people are getting VET and TAFE qualifications; on the contrary, it's the opposite. I suppose what I'm concerned about, coming back to the university sector, which hasn't suffered nearly so badly—I think the real problem is nostalgia for an economy in which a large portion of the population could get decent jobs without any kind of postschool qualification. In my view, that economy has essentially disappeared and, certainly, it's disappearing rapidly year by year. In my view, we need to not pit vocational education against university education but to expand both of them. You have at least had some success in expanding university education, whereas of course the vocational sector has been hit so hard. Obviously the top priority in my view would be expanding access to vocational education.

Senator PATRICK: Last year, during the negotiations on changes to higher education funding, my predecessor, Senator Xenophon, suggested that a review was required that would look at things holistically. Would you support the view that we really do need to take a long, hard look at all of this before we venture into any changes to the funding schemes?

Prof. Quiggin : I certainly think we need to take a long, hard look at things. Obviously, there is a danger in taking too long over things but I think we need a fundamental re-examination of the way we think about this. Obviously, if that involved a shift to national responsibility for vocational education that would be a major step that would require a good deal of thinking. I think we may need an emergency injection of funds because it is in such a dire state. Obviously we need to think carefully about what structural changes we should make. Indeed, I think it's fair to say that the rounds of reform we've seen were undertaken in a very cavalier way, with no real attempt to assess whether competition was appropriate or whether the kinds of regulations that ASQA has managed for quite a number of years would be fit for purpose or not. So, I certainly wouldn't be advocating radical change without a careful holistic view, as you say.

CHAIR: Thank you, Professor, for your submission and your participation in our inquiry today.