Realigning the VET system

21 July 2015

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With the the Prime Minister and the Premiers and First Ministers  gathering in Sydney for a retreat on reform options for Australia’s fractitious, if not fractured, Federation, all the chatter is round increasing the rate of the GST from 10% to 15%,  either to “compensate” the states/territories for whacking cuts in Commonwealth grants in future years, which has a dark logic to it,  or to make way for income tax cuts, which doesn’t seem to have too much logic to it all.  But there are other proposals on the table.  SA Premier Jay Weatherill, in a speech to the National Press Club, has proposed, among other things, a realignment of Commonwealth and State responsibilities in education.  He proposes that States and Territories be responsible for the education of people from birth to the end of secondary schooling, and the Federal Government dealing with everything beyond – including higher education and vocational education and training (VET).  While the States retain nominal ownership of higher education, the Commonwealth calls the shots throgh its primary funding role and through the Tertiary Education Quality Standards Agency, which regulates the sector.  The Commonwealth has an important role in VET, particularly through the Australian Skills Quality Agency,  but in funding, the States retain primary responsibility in VET.   Similarly, the Commonwealth has an important role in funding schools education, particularly for equity purposes and as a catalyst for reform, but schools remain the province of the States (although the Commonwealth provides the overwhelming proportion of funding for private schools, which would be an issue).  There is considerable logic for a transfer of VET to the Commonwealth, to create consistency in funding and policy, and it’s an idea that has been around since at least the “New Federalism” of the early nineties and was actually agreed to in 1991, but fell over when Paul Keating knocked off Bob Hawke as Prime Minister.  Perhaps it’s an idea whose time has come, though you’d be right to be cautious of the equity implications of the Commonwealth vacating schools funding, particularly in the absence of some sort of funding settlement around Gonski (a point made by Weatherill).  But let’s at least keep the proposal on the table and see where it might lead.

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Jay WeatherillI believe that reforming the Federation is crucial and that we have the perfect opportunity to start the process at the Prime Minister’s Leaders’ Retreat in a fortnight’s time.

Our Federation isn’t broken, but it is under strain.

The Commonwealth’s decision to unilaterally break an agreement and impose $80 billion of cost shift to the States and Territories is an issue of fundamental importance that must be addressed at the Leaders’ Retreat.

It’s difficult to imagine any vision for an effective Federation that doesn’t involve each level of government keeping their promises to one another. Nevertheless, I’m excited by the opportunity for reform that the Retreat offers our nation.

I’m confident of our ability to bring about change because we’ve done it before – witness the economic reforms of the Hawke-Keating governments in the 1980s and 1990s. 9 Federal and State governments generally worked well together to achieve those results.

And we’re going to need a new attitude and framework for cooperation if we’re to improve the way we provide health, education and other social services to Australians.

It’s time now for Premiers and Chief Ministers to have more of a say.

Given that many of the major reforms requiring Federal decisions have already been made, from here on States and Territories are the next frontiers of reform.

I think the attitude of most Australians is that they expect decent services to be delivered properly by government, but that they’re not too fussed about which level of government does what. And they’re certainly turned off by useless political bickering among the jurisdictions.

Australians want to live in a country where they have access to secure, well-paid jobs, good health care and education, a home to raise a family, and where they receive adequate support as they age.

In light of all I’ve said, it’s time for Australia to consider major – not modest – reform of the Federation.

Our country needs to improve the productivity and effectiveness of our health services to underpin the wellbeing of families and communities. We need to create better education systems so that – ultimately – children can fulfil their potential and be in a position to take advantage of opportunity.

We need to unlock infrastructure investment, as failure in this area constrains our nation’s growth. And we need to make the dream of a place to call home a reality for more Australians.

I’ll be taking a comprehensive set of productivity reforms to the Leaders’ Retreat to help build a more certain and secure future for Australians, and I want to tell you about some of them now.

My first proposal is to reform the education system.

It essentially involves the States and Territories handling the education of people from birth to the end of secondary schooling, and the Federal Government dealing with everything beyond – including higher education and vocational education and training.

Put another way, it would be a new demarcation of responsibilities – the States responsible for the development and education of people, and the Commonwealth responsible for their work and welfare.

Under this split, State governments like mine would be the sole manager of early childhood development, prevention and early intervention services, primary and secondary education.

This would involve the transfer of responsibility for child care from the Commonwealth to the States. And we’d deal with policy, regulation and the delivery of public services.

As for funding arrangements, the current Commonwealth spend on these services would either continue through a single block-funding grant to the States or through some other ongoing funding transfer.

All this should take place in the context of my State’s and the Commonwealth’s continuing commitment to the Gonski funding arrangements.

My suggested change to education would mean better outcomes for children and young people – especially those with learning difficulties – through better investment in the early years. At the moment, State governments engage with children from birth to about age one through antenatal services, health checks and immunisations.

If a child is healthy and developing from age one to four, most of their contact is with Commonwealth-subsidised child care and the occasional visit to the family doctor.

This means that States often “lose sight” of children between one and four, unless it’s through episodic contact with specialist services. As a result, it’s often the case that – by the time they reenter the State preschool and schooling system – learning and other problems have deteriorated or become entrenched.

The long-term costs of addressing the effects of these issues – such as through health – are borne by the States.

Evidence shows that a person’s physical, neurocognitive and social foundations are well established by five years of age.

As a former Minister for Education, I’m acutely aware that those who fall short of key developmental milestones by five years find these gaps very difficult to close.

The late Dr Fraser Mustard – a Canadian expert in early childhood development and a former Adelaide Thinker in Residence – put the imperative in stark financial terms. He said that every dollar government spends supporting the development of children saves between four and eight dollars over the longer term.

Given that the principal focus of the Gonski reforms was the adequate funding of the bottom 20% of students with learning needs, all the evidence suggests this objective will be greatly assisted by starting earlier.

Education reform is profoundly important for the transition from the “old” to the “new” economy because knowledge industries need workers who are creative thinkers.

In my opinion, this is the real productivity agenda for the nation – not a narrow focus on punitive industrial relations measures.

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