TDA Submission to the Review of the Demand Driven Funding Model

5 January 2014

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TAFE Directors Australia submission to the review of the demand driven system has a number of propositions in support of extending the Commonwealth fee subsidy (Commonwealth supported places) enjoyed by university undergraduate students to higher education students at non-university HE providers such as TAFEs.  It also argues for  creation of a special provider category of ‘Polytechnic university’ or ‘University college’ , as teaching only institutions,  that recognises the increasingly important role of the non-university provider and upholds the status of their qualifications offerings as an alternative equivalent to a traditional university qualification.

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While supporting a demand driven tertiary education system, TDA advocates for significant changes to policy and funding models that ensure a more equitable, efficient and diverse tertiary sector.

TDA argues that the current policy environment has not kept pace with the rapidly changing tertiary sector.

The role of non-university providers in providing alternative pathways into higher education for a diverse range of students is critical in meeting Council of Australian Government’s (COAG) targets for increased participation in higher education and greater productivity in the workforce.

Ten member TAFE Institutes are registered by the Tertiary Education Quality Standards Agency (TEQSA) as higher education providers in Australia, delivering higher education programmes at over 23 TAFE campuses in a range of specialist industry areas. Many TAFE Institutes also enjoy extensive university partnerships including the recent establishment of several partner institutions as the Australian Polytechnic, and from 1st January 2014, Federation University. TAFE’s strength in this sector lies in the applied and supportive nature of the learning, its strong connections with industry and innovative, high quality and cost-effective models of delivery in niche areas of skill demand.

NCVER data confirms TAFE as Australia’s leader in vocational education and training courses with some 1.7 million students enrolled in 2012. An important trend is a steady interest for students seeking enrolments in TAFE higher education programs. These enrolments are largely driven by demand from industry for more ‘work ready’ degree graduates, especially in technical and specialist course areas. These TAFE based higher education courses complement rather than compete with university courses. It should be noted that higher education provision by TAFE institutes is teaching only and does not compete with the research agenda of universities.

TAFE Institute’s long tradition of practice based, applied and work-based learning provides relevant and alternative learning approaches. Smaller class sizes also provide students with a more supportive environment than universities. Additionally Institutes offering higher education can leverage their organisation’s existing infrastructure, such as counselling, learner support and careers advice, education pathways, and exposure to employers.

The growth of higher education in Australia (public TAFE and private Registered Training Organisation) has followed international trends; the technology institutes in leading EU countries Germany, France and Italy, further education colleges offering foundation degree and higher education programs in the United Kingdom, with almost half of American and Canadian community colleges offering four-year baccalaureate degrees for some eight years. Similarly, key Asia-Pacific college and polytechnic trends show higher education courses in the new Technological and Higher Education Institute as part of the VTC in Hong Kong, Indonesia polytechnics, Singapore polytechnics, and New Zealand polytechnics. Relevant to this Inquiry, the TAFE delivery of higher education courses was led by several Victorian TAFEs, with others interstate following. However at a national level these initiatives have largely lagged international College experience because uniquely the Australian uncapped places regime stymied the innovative and diversified vision originally envisaged by the Bradley Review of Higher Education. The cost of launching HE courses by TAFEs has been steep, and overwhelmingly, student costs have been equally steep supported only by FEE HELP student loans. In contrast, the international experience noted above each have been strongly supported by public funding input, and co-funding to student places which otherwise was only allowed in Australia for public university students.

These industry dynamics, and supporting Australia’s increased integration in Asian economies and workplace mobility highlight the shortcomings of Australia’s current demand driven university funding model, and the ‘one size fits all’ uncapped places quarantined only for universities.

The restriction to just two TAFE institutes in Melbourne of Commonwealth Supported Place (CSP) funding, further illustrates the discriminatory approach of current CSP policy, and why this restrictive regime is in urgent need of overhaul.

It is an issue of equitable treatment of students studying similar courses. The lack of access to CSPs stifles growth in an area of higher education provision that meets the needs of different students accessing higher education.

An overhaul of the current demand driven system of funding would further enable the Commonwealth to meet its participation and productivity targets.

Principles for reform

TDA argues the review of demand driven funding is an opportunity for the Commonwealth to work toward a new industry-connected approach to CSPs which exhibits stronger market application and greater transparency. Therefore our recommendations are based on four principles for consideration by the review:

1. Relevance to industry trends for technological and specialist skilled higher education qualifications;
2. Accelerated workforce participation and productivity with greater enrolments in pathway programs into higher education;
3. Recognition of the role under a reformed demand driven system, that students in non- university higher education should receive equity in receipt of CSP subsidies vis-à-vis universities;
4. Greater alignment under a reformed demand driven regime with the ‘entitlement’ training models for VET being phased in under the National Partnerships Agreement in Skills and Workforce Development.

Together these principles may facilitate, for the first time, a ‘pathways platform’ for the tertiary sector where a greater range of technologically focused ‘work ready’ higher education qualifications are recognised and supported.From a financial perspective, this specialised segment of the Australian higher education market remains relatively small and contained. While indicating strong growth of undergraduate enrolments in TAFE from 2009 – 2102, recent research undertaken by ACER1   in 2013 shows these numbers to be very small relative to the university sector. In this context, TDA has formulated recommendations for migrating from the uncapped funding system, to a demand-driven higher education system in Australia:

TDA Recommendations

1. Support higher education students studying at non-university providers through reforms to current funding models, with several options:

a.       Extending eligibility to Commonwealth Supported Places (CSP) for students of non-university providers in the interests of a more effectively delivering on Australia’s workforce development needs and creating a more diverse tertiary market.Often students at TAFE are from low socio-economic backgrounds  and are disadvantaged by paying full fees; or

b.      Capping the Government contribution to funding for places– As for Option (a),but capping the Government contribution and allow institutions to charge fees to makeup the difference; or

c.       Creating savings to fund more places – Introducing a minimum ATAR and redirecting the savings generated to support additional places for new cohorts of students in alternative pathways [This option is not a preferred position from TDA, but noted as being canvassed by certain universities in the context of switching low ATAR funding to pathways];

d.      Striking a different formula for non-university higher education places– Applying a different formula for non-university places, omitting the research component. Funding arrangements might apply criteria that give effect to support government policy,for example:

• addressing priority industry areas and productivity needs;
• improving qualification pathways;
• boosting participation of people from low SES backgrounds and from rural and remote areas; or

e.      Introducing direct funding of non-university places – Establishing a mechanism for the Commonwealth to fund places in non-university providers directly on a contestable basis, using criteria such as those listed in Option(d).

2.     A special provider category of ‘Polytechnic university’ or ‘University college’ in the Higher Education Standards Framework, 2011 (Threshold Standards) that recognises the important role of the non-university provider and upholds the status of their qualifications offerings as an alternative equivalent to a traditional university qualification. This would be a ‘teaching only’ category.

3.    A reconsideration of the loading of 20% +on VET Fee HELP for TAFE  higher education  students who, again, are financially disadvantaged in comparison to university counterparts.

1 Edwards, D. and Radloff, A. (2013). Higher Education enrolment growth, change and the role of Private HEPs. Prepared for the Australian  Council for Private Education and Training , Australian Council for Educational Research (ACER)

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