1. SKILLS VICTORIA 1 VET Reform in Victoria Lee Watts, Executive Director, Skills Victoria 14 December 2011

2. SKILLS VICTORIA 2 Presentation outline The challenge Fees and funding changes for 2012 The opportunity Maximising the benefits of skills reforms – current work Next Steps?

3. SKILLS VICTORIA 3 The challenge 1. Ensuring more Victorians benefit from tertiary education and training 2. Building skills for a modern workforce to boost Victoria’s productivity We need higher level skills to arrest Victoria’s declining productivity… 2001 to 2005: Victoria’s multifactor productivity growth rate was half the national average 2006 to 2010: Victoria’s growth rate declined at five times the average annual rate of NSW At a time when we know that… Only half of working age Victorians have the core literacy and numeracy skills they need for work at a time of increasing structural change in our economy... We need to increase workforce participation to mitigate the costs of an ageing population and key workforce shortages (e.g. community services)… But 625,000 low skilled Victorians are in low skilled work or disengaged from work…

4. SKILLS VICTORIA 4 In an uncertain economic environment  2010-11 over 50 organisations in Victoria announced cutbacks, closures and retrenchments, affecting more than 5000 employees

5. SKILLS VICTORIA 5 And a more fluid tertiary education landscape Incrementalist More partnerships between VET and higher education institutions to offer better pathways Making it easier for students to simultaneously enrol in VET and higher education institutions More practical and workplace learning opportunities within higher education Diverse VET providers offering degrees - including "2 plus 2" diploma/degree programs Universities offering double enrolment in a degree and certificate qualification More "mixed institutions" specialising in particular fields - e.g. polytechnics Teaching-only institutions offering undergraduate degrees Integrated End to structural and institutional divisions between VET and higher education A single entitlement funding model The rise of the "omni- institution" Lower degree of change Higher degree of change

6. SKILLS VICTORIA 6 The challenge Next Steps? The opportunity Maximising skills reforms – current work Fees and funding changes for 2012

7. SKILLS VICTORIA 7 Victoria is the first jurisdiction to have a life-long entitlement to education and training Compulsory service Voluntary fees for government schools Choice of public schooling is unrestricted but there is no entitlement to non- government schooling Mass access VET entitlement through Victorian Training Guarantee Eligible students can choose what and where they study and receive a partial subsidy In higher education choice of subsidised place largely limited to public universities Early childhoodSchools VET and Higher Education Universal access Free access to maternal and child health Partial subsidy with co- contribution for kindergarten Choice of kindergarten is limited by local supply Pathways and fault lines between sectors and providers remain a challenge

8. SKILLS VICTORIA 8 The Victorian Training Guarantee was designed to increase access and participation and deepen and broaden Victoria’s skills base Centralised purchasingDemand-driven market Set funding purchasing limited places; first-in-first-served basis Demand-driven funding (with eligibility criteria) Centrally planned responsiveness to industry RTOs responsive to demand from individuals and businesses Limited competition for government funded training All contracted RTO can access government funding Flat tuition fees at all qualification levels (13% approx.) Capped, increasing fees for higher level qualifications – with VET FEE-HELP Less structured approach to incentivising up skilling Open entitlement for under 20, up skilling requirements for 20+ Fewer barriers to reskilling, but greater prevalence of “churn” Exemptions for disadvantage and skills shortage areas Concessions address disadvantage

9. SKILLS VICTORIA 9 1 Early results show Victoria’s demand driven training entitlement provides the foundation to deliver the skills Victoria needs to increase productivity, participation and pathways into work and higher level skills: Stimulates demand for training Responds to industry needs Deepens skills Engages people with low level or no qualifications More choice More training undertaken by Victorians: training increased at all levels and for all age groups - More training in: important industries; occupations in shortage; and specialised occupations, such as child care and construction More training in higher level qualifications: 24% growth in diploma- level and above enrolments* More training by people with low or no qualifications: additional 20% enrolments by people without Certificate III or above* More training providers who meet quality standards delivering training across the State* Which is an investment in employment outcomes and in improving capabilities such as parenting (with positive impacts on child development) and reducing costs to the State’s health and social services… Training providers have responded. There are more Victorians participating in training than ever before (~425,000 in 2011 – up 44% from 2008)– and in areas that are important to Victoria’s economy

10. SKILLS VICTORIA 10 Training is happening in the areas most beneficial to individuals and industries

11. SKILLS VICTORIA 11 Backed by a significant increase in government funding * Note: 2011-12 figures are estimates only. No definitive level of expenditure for 2011-12 can be given due to the demand driven nature of the system.

12. SKILLS VICTORIA 12 The challenge Next Steps? The opportunity Maximising the benefits of skills reforms – current work Fees and funding changes for 2012

13. SKILLS VICTORIA 13 There are a number of critical pre-conditions for an effective market Strengthened system performance and educational outcomes Quality Quality measures and systems to promote excellence in training and training products and to protect consumers Industry Engagement Active participation and investment by businesses to help ensure training and skills are relevant and provide direct feedback loops on quality Client Information Accessible price, product, quality and labour market information to inform student / family / employer choice Governance Effective and contemporary Governance that recognises the distinct role of public providers and enables those providers to compete Fees and funding mechanisms that enable providers to compete, supports participation and student transitions and effectively target government subsidies

14. SKILLS VICTORIA 14 Quality What does quality mean in VET? How can quality be assured and raised? Qualifications that are recognised and valued by employers Teaching and learning that builds student competencies and can be trusted by learners and employers alike Skills that are relevant in the workplace Training that fits around the competing priorities of businesses and individuals Strong regulation – which allows for innovation, while responding to malpractice Effective contracting – which supplements regulatory protections Accessible consumer protection – clear avenues for complaint Informed consumers – exercising their entitlement at quality providers Engaged industries – informing curriculum, shaping demand, supporting assessment Good information - publicly available reporting on quality and outcome measures Direct feedback - from individuals and businesses/industries Priorities for further reform 1.National reforms to agree a common set of outcome indicators for all regulated providers and additional indicators for funded providers 2.Requiring all contracted providers to publish this information 3.Strengthening direct feedback loops from learners and businesses

15. SKILLS VICTORIA 15 Quality – NCVER Survey of Employer Use and Views of the VET system 2011 Employer satisfaction with training quality:  Apprentices and trainees  80.3% for private RTOs; 80.8% for TAFE  Nationally recognised training  92.2% for privates; 90.3% for TAFE (Australia)  92% for privates; 85.3% for TAFE (Victoria) Graduate satisfaction with training quality:  88.3% for private RTOs  87.6% for TAFE

16. SKILLS VICTORIA 16 Client information What client information is important? What client information is currently available Course offerings Employment prospects – what training leads to jobs? Cost Quality and outcomes Priorities for further reform 1.Provider register – strengthened by quality work 2.Requirements for RTOs to disclose indicative prices 3.Requirements for RTOs to publish performance information All of the above, but it is Limited in detail Often hard to access – fragmented Unclear or incomplete Often inadequate to inform training decisions

17. SKILLS VICTORIA 17 The challenge Next Steps? The opportunity Maximising the benefits of skills reforms – current work Fees and funding changes for 2012

18. SKILLS VICTORIA 18 1. Changes to weightings for some high growth courses Industry sectorCurrent weighting that applies New weighting to apply Business and Clerical0.80.7 Finance0.80.7 Hospitality10.9 Property Services0.80.7 Recreation1.10.8 Tourism10.9 Wholesale and Retail0.80.7 What isn’t changing: Youth loading and Indigenous loading remains unchanged for all courses Weightings for 44 of the 51 industry groups remain unchanged

19. SKILLS VICTORIA 19 2. Removal of minimum and maximum student fee caps/ Retention of maximum hourly student fee rates as previously published for 2012 Qualification levelApprox. % of students hitting capFee rate per SCH Foundation11%Up to $1.08 Skills Creation5%Up to $1.62 Apprenticeship4%Up to $2.17 Traineeship8%Up to $2.17 Skills Building16%Up to $2.17 Skills Deepening35%Up to $4.33 What isn’t changing:  There is no change to the maximum hourly rate – so no student will pay more than the maximum hourly rate for the total number of Scheduled Hours for their course

20. SKILLS VICTORIA 20 3. Cessation of special arrangements for apprentices Fee arrangements for enrolments in apprenticeships will be brought back into line with traineeships – equivalent to the Skill Building rates for 2012. What isn’t changing: There is no change to eligibility criteria for apprenticeships in 2012 – meaning that any apprentice can access a subsidised training place regardless of age or previous qualifications

21. SKILLS VICTORIA 21 The challenge Next Steps? The opportunity Maximising the benefits of skills reforms – current work Fees and funding changes for 2012