These are important questions but, despite the fact that the fifth of the current five national research priorities is Enabling VET providers to compete effectively: by identifying the barriers VET providers face to operating effectively in a competitive environment, the specific issue of competition did not whet the appetite of researchers bidding for grants funded by the National VET Research and Evaluation Program. Perhaps this is because market design in VET is an area still shrouded in fog.
To assist in lifting the fog, in late 2008, NCVER commissioned six people to write essays about competition in the Australian training market. Most were from outside the VET sector. In order to ensure their ideas were tied into current concerns within VET, NCVER went on to invite six insiders to respond to the essays. The results from both groups are contained in this volume.
The participants in this exercise do not entirely agree with each other. But there is general acknowledgement that the risks associated with the state determining the supply and demand for training mean that governments cannot retreat from the training market. However, the role of the state, relative to that of individuals and employers, is contentious.
I hope these essays and the responses to them make a useful contribution to the debate about market design in the VET sector.
Competition in the training market 1
Editors Tom Karmel Francesca Beddie Susan Dawe 1
National Centre for Vocational Education Research 1
About the research 3
Competition in the training market 3
Editors: Tom Karmel, Francesca Beddie and Susan Dawe, NCVER 3
Contents 5
Contributors 9
Editors 9
Authors 9
Discussants 10
Overview 12
Tom Karmel NCVER 12
Tom Karmel 156
References 22
Markets and central planning in meeting labour market needs: Lessons from higher education 23
Andrew Norton Centre for Independent Studies 23
Introduction 23
Andrew Norton 156
Competing models 24
Allocative mechanisms in higher education 25
Allocative mechanisms in vocational education 27
Predicting labour force needs 28
The record of the vocational education sector in meeting skills needs 30
Demand in higher education 32
Application ‘bubbles’ 33
The record of the higher education sector in meeting skills needs 35
Supply floods 38
Conclusion 39
References 41
Discussant: Leslie Loble NSW Department of Education and Training 44
Introduction 44
Response 45
Training sector differs from other education 46
Training and strategic interests 46
Alternatives for better outcomes 48
New governance model 50
References 53
A market for vocational education and training in the Australian Federation 54
Mark Burford Public Policy Consultant 54
Introduction 54
Mark Burford 158
Shaping and taking part in markets: Role for governments nationally and locally 56
Focus on client choice and customised, responsive provision 58
A national (maybe international) market in tertiary education services 58
Role of government to shape conditions for choice, competition and supply: Key features of arrangements 59
Sharing tasks in a federation: Focus on national market-shaping and local delivery 60
Public investment in VET and the importance of TAFE 65
The Victorian entitlement, choice and competition initiative 65
References 66
Discussant: Pat Forward Australian Education Union 67
Pat Forward 158
References 72
Competition policy and the VET sector 73
Richard Denniss The Australia Institute 73
Introduction 73
Richard Denniss 159
Why markets work well 74
Why markets don’t always work well 74
Externalities 75
Public goods 75
Natural monopoly 76
Imperfect information 77
Independence of tastes and preferences 77
VET-specific market failures 78
Inter-temporal mismatch of agent decision-making 78
Imperfect information, interdependent decision-making and risk 79
Price and past performance may be a poor proxy for quality 79
Skills and knowledge have increasing returns, are non-rivalrous and non‑excludable 80
Can markets efficiently allocate resources in the VET sector? 81
Conclusions 82
References 83
Discussant: Megan Kirchner Victorian Department of Premier and Cabinet 84
References 87
Contestability, information asymmetry and quality signals in a competitive training market 88
Terri Seddon Monash University 88
Introduction 88
Contestability and risks of information asymmetry 89
What are quality signals? 91
Quality signals communicate value propositions in a market 91
Quality signals are coordinated through publicly agreed and endorsed institutional rules 92
Ways of developing quality signals 93
Quality in Australian VET 94
Other approaches to quality assurance 95
Europe as an example 96
Suggestions for a quality framework in Australian VET 100
Context: What kind of contestability and competition is emerging? 100
Purposes: Why have quality signals? 102
Values: What is valued in the design of quality signals? 102
Object: What is observed and represented through quality signals? 103
Subject: Who is involved in decision-making about quality signals? 103
Standards: What are appropriate ways of measuring quality signals? 104
A distinct mission for VET 105
References 105
Discussant: Dr Robyn Tudor JMC Academy 107
References 109
Improving information flows for users of post-secondary education 110
Nicholas Gruen Lateral Economics 110
Nicholas Gruen 159
Introduction 110
The structure of the paper 111
The value of student evaluation of tertiary education 112
The VET Student Outcomes Survey 113
Ratemyprofessors.com 113
Unistats.com 114
Improving existing models 115
Conclusion: Some speculations about the need to develop hybrid institutions, and the potential of Web 2.0 122
References 124
Discussant: Gerald Burke Adjunct Professor, Monash University 127
Special features of VET 127
Immediate developments 128
Gerald Burke 163
V Lynn Meek 163
References 129
Possible governance structures and autonomy of TAFE institutes 130
V Lynn Meek University of Melbourne 130
Introduction 130
Understanding tertiary education governance 132
‘New public management’ 135
Institutional autonomy and academic freedom 137
Institutional governance models 139
Governance structures and autonomy at the sector level: Diversity or homogeneity 141
Conclusion 148
References 148
Attachment A: How flexible and commercially focused are publicly owned providers? 151
Discussant: Michael Keating Skills Australia and SA Training and Skills Commission 152
References 154
Endnotes 155
ompetition in the training market