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Is “market failure” emerging?

17 April 2014

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All the signs point to evidence that neglect and a rush towards privatisation are dragging the vocational sector into crisis.

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For sale3After four years of marketisation in Victoria, there are certainly signs of, at least, incipient market failure in that jurisdiction. There have been numerous TAFE campus closures, particularly in the peri-urban fringe and throughout regional Victoria. Even larger, well established and strong TAFE metropolitan institutes, such as NMIT, have been severely affected, with consequent scaling down of activity in some areas.

The most publicised closure has been the former Lilydale campus of Swinburne University, announced in (DATE), which provided both VET and higher education in purpose built facilities to several thousand students. The former campus site sits at the gateway to the Yarra Valley and the Gippsland region, which has generally poor levels of education attainments. The region contains low socio economic pockets, significant population of young Indigenous people, high levels of student disengagement and low levels of tertiary and vocational education. The availability of tertiary and vocational education at Lilydale has acted as a positive incentive for many disadvantaged people to continue their education.

Intensive efforts to attract other education providers to the site have failed and the site is now on the general market and may well be lost to training and education altogether. The Lilydale campus had a relatively comprehensive range of training and education offerings and there is no sign at all that the hole created by its closure is being filled or, indeed, that it can be filled.

This scenario is being played out across the State and there are signs of similar failures beginning to emerge in other jurisdictions, particularly South Australia, which is also well advanced along the path of marketisation.
It is not as if the private provider sector is well placed to fill holes in provision created by the withdrawal of TAFE from both certain activities and localities. In many cases, private providers lack the relevant capacity and the vagaries of the funding system, as governments struggle to contain costs, are not conducive to long term planning and investment. Most private providers need to game the system to address constant funding changes and maintain the viability of their own operations.

The chair of one Victorian regional TAFE observed that:

We are removing courses that aren’t profitable, but there are some courses you have to do for the benefit of the community. If we were a private provider you’d say ‘Oh, get rid of that because we can’t make a dollar out of it.’ But there are some things we have to do because of our ‘embeddedness’ in the regional community, and there’s a pain factor in that. That’s part of what we do. You can’t make a quid everywhere; there are some things you have to do to fit the community.

The whole training system – and, with it, entire communities – will be weakened to the extent that TAFE institutes are forced down the path of “rationalisation” by dropping activities they undertake for the “benefit of the community” in order to sustain their overall operations.

The capability and reach of the system will become rundown and what is now a diverse and polychromatic system will be reduced to a disturbingly homogenous and monochromatic system.
Lilydale is a case in point.

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