Competition in the training market Editors Tom Karmel Francesca Beddie Susan Dawe

References

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Kemenade, EV, Pupius, M & Hardjono, TW 2008, ‘More value to defining quality’, Quality in Higher Education, vol.14, no.2, pp.175–85.

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Sallis, DE 2002, Total quality management in education, Routledge, London.

Seddon, T 1996, ‘Markets and the English: Reconceptualising educational restructuring as institutional design’, British Journal of Sociology of Education, vol.8, no.2, pp.165–85.

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Stensaker, B 2008, ‘Outcomes of quality assurance: A discussion of knowledge, methodology and validity’, Quality in Higher Education, vol.14, no.1, pp.3–13.

Discussant: Dr Robyn Tudor
JMC Academy

In this paper, Terri Seddon of Monash University examines characteristics and quality options of an emerging market-oriented system for training in Australia, a system set to become increasingly competitive, as public and private providers are ushered into the same ‘contested’ professional sphere to vie for students and bid for associated funding.

Factors identified in the paper impinging on skills demand and the supply of training will preempt national policy changes, potentially reshape Commonwealth and state government relations and necessarily redefine procedural mechanisms to govern more flexible delivery arrangements of vocational education and training at the local level.

These factors involve the introduction of stimulus measures to increase the contestability of public funding and broaden domestic student entitlements. Such demand-led measures challenge institutional traditions (especially for TAFE) and disrupt the operational status quo with respect to government purchasing of targeted training. They will open further avenues for appropriately registered universities and higher education providers to access VET funding and also fundamentally alter the commercial premise that underpins previously non-government-funded full-fee VET delivery in the private for-profit and not-for-profit sectors, which already contribute very significant independent investment into the Australian training effort.

Seddon makes the point that, while policy-makers may exert influence, they cannot control the ‘meaningfulness’ of market communication between training providers, buyers and competitors about what constitutes value propositions operating within complex VET transactions, practices, networks, decision centres and organisational nodes, concluding that: ‘Legislating top down for quality signals is meaningless because they are not embedded in community practices.’

This assertion raises very substantial questions about the intended and actual market relevance of the Australian Quality Training Framework (AQTF) Quality Indicators developed by the Australian Council for Educational Research (ACER) and endorsed by the National Quality Council in December 2008.

Irrespective of the source of VET funding or the market design priorities of an emerging competitive training market, the AQTF Quality Indicators do not focus on the quality or relevance of specific training products or differentiate between the relative merits of delivery strategies used by VET providers. Rather the AQTF Quality Indicators invoke blunt top-down instruments that demand systemic conformity with non-discipline-specific, externally developed documentation for verifying generalised provider compliance with legislative requirements. As such, the AQTF Quality Indicators would seem to have usurped, if not subverted, the market role of ‘quality signals’ as described by Seddon.

Commencing 1 July 2009, the AQTF Quality Indicators impose additional mandatory annual data-collection requirements on registered training organisations, enforcing use of entirely generic survey instruments for learner and employer feedback. Obligatory online reporting direct to regulators of specified organisational data then becomes mandatory from 1 July 2010. The information generated is to be used selectively by the regulators to determine the risk classification of training institutions for AQTF auditing purposes, with as-yet-unspecified and potentially punitive implications for provider registration.

In its current format, therefore, information derived from the AQTF Quality Indicators cannot shed light on the qualitative values of ‘commitment’ and ‘breakthrough’ innovation of any particular registered training organisation because the analysis of survey responses and other mandatory reporting of predetermined data sets are entirely mediated for and by the regulators.

As such, the AQTF Quality Indicators would seem to redefine the purpose and occupy the position of the ‘quality signals’, while failing to deliver any ‘meaningful and trustworthy’ source of internal or external information relevant to VET stakeholders attempting to operate competitively within increasingly unpredictable training markets. Information derived from the AQTF Quality Indicators may round out the government statistics on the overall size and scope of activity in a national VET marketplace, but this will contribute nothing of substance to inform a ‘commonsense’ community understanding of what might constitute competitive ‘value for money’, let alone educational quality in a contested training market at the local level.

The paper contains some very welcome, long overdue and eminently logical suggestions for qualitative revision of quality assurance principles and practices in VET. Especially interesting is the proposed (re)valuing of the distinctive mission and respect for practitioner knowledge and experience in VET and the call for ‘professional renewal that consolidates and sustains applied adult education’.

However, Seddon’s paper unfortunately stops short of addressing the interface between the hypothetical vision for a new quality assurance regime in a contestable training market and the pragmatic means of transitioning from the current AQTF (2007) system of VET quality assurance.

Such policy disjuncture between theory and practice is highly problematic for independent registered training organisations, whose very right to exist as institutions with approval to compete (or not) in training delivery on designated courses is enshrined in their AQTF scope of registration. Both institutional registration of registered training organisations and the scope of approved VET qualifications are predicated upon full compliance with existing AQTF quality assurance requirements, which take no account of market considerations.

In terms of institutional competitiveness, lessons learned from past training reform in Australia since 1990 confirm that, for private providers especially, the devil is always in the detail and in the timing of any proposal for change. Often lengthy delays in transitioning from rhetoric to reality constitute genuine business risks and inevitable cost burdens. Opportunities are lost, client relations are disrupted, academic delivery and progression become increasingly difficult to manage, market position is compromised and trade is potentially restricted, due to the bureaucratic time it takes to turn vision into action. In the process of drafting enabling legislation and promulgating the operational regulations and procedures required to implement even minor national policy revisions in each jurisdiction, negotiations between Commonwealth and state government authorities trade policy intent off against the consequences; for example, adverse business consequences can then arise for providers. The resulting confusion and lack of certainty in VET is destabilising, threatening stakeholder viability and presenting bitter-sweet challenges along with opportunities.

For the Commonwealth Government to achieve major reform in the short-to-medium term, fulfil its market design goals in VET, and act upon the recommendations of the Bradley Review noted in this paper will require a fundamental re-engineering of AQTF. Therefore, serious proposals for policy change, such as those outlined by Seddon, are contingent upon the contribution of workable strategies for quickly uncoupling quality assurance from the interlocking network of systemic constraints under AQTF. This work is vital to facilitating prompt implementation of a more cooperative, flexible and responsive model of quality assurance in post-secondary education and training in Australia, one which encourages equitable provider participation and ensures fair competition in a ‘managed’ training market.

If pragmatic solutions for transitioning from AQTF to some other quality assurance regime are not readily available, then the initiative to instigate a competitive training market under national administration in Australia is prone to delay, ‘white-anting’, and significant compromise at a bureaucratic level, which will be likely to further undermine stakeholder confidence in the training sector.

References

Department of Education, Employment and Workplace Relations 2008, Review of Australian higher education: Final report, Denise Bradley, chair, DEEWR, Canberra.

Improving information flows for users of post-secondary education

Nicholas Gruen^xliii
Lateral Economics

The normal market mechanism for dealing with asymmetric information is reputation. When we place a deposit with a bank, or visit a doctor, we rely on the reputation of the bank and the doctor to assure the security of our deposit and the wisdom of the advice. No regulation can ensure that banks will not go broke or that doctors will make correct diagnoses, and regulation directed to information disclosure – rules that compel banks to display their balance sheets, or require doctors to explain fully risks and prognoses – does not work well either. (Kay 2003, p.370) Сегодня мы работаем на репутацию. Завтра репутация будет работать на нас [Today we work for our reputation. Tomorrow our reputation will work for us.] Russian saying (Picci 2007b, p.1)

Introduction

In the last generation we have moved towards greater reliance on competition and private provision. Nevertheless, some naïve enthusiasms notwithstanding, a central tenet of economic orthodoxy going back to Adam Smith himself is that markets comprise an ecology of private and public goods. We ignore that proposition at our peril, as indicated by the various more and less botched liberalisations of former communist countries in the 1990s.

Thomas Friedman makes a similar point in his racy op-ed journalese:

[C]ome to Africa – it’s a freshmen Republican’s paradise. Yes sir, nobody in Liberia pays taxes. There’s no gun control in Angola. There’s no welfare as we know it in Burundi, and no big government to interfere in the market in Rwanda. But a lot of their people sure wish there were. (Friedman 1999, p.435)

Public goods such as property rights and their enforcement are necessary even where trade occurs, as it does in local vegetable markets, in pure private goods. Much of microeconomics is devoted to analysis of circumstances in which traded private goods nevertheless take on certain qualities of public goods by virtue of various technical characteristics such as scale economies or externalities. Where these issues are too prominent to ignore, a case for public provision arises—at least in the textbook. In fact we have moved away from public provision and yet have sought to address the concerns of the textbook with hybrid public–private institutions. Thus, although we have corporatised and privatised many utilities and so moved away from public provision, where there are strong natural monopoly characteristics for nationally significant infrastructure, Australia’s competition policy regime encourages private investment, but nevertheless subjects it to various public disciplines on access to potential competitors.

The two technical characteristics of a public good are non-rivalrousness in consumption and non-excludability.^xliv As information economists like Arrow, Akerlof and Stiglitz have pointed out, information has powerful public good characteristics. Increasingly in the age of the internet, information and media ‘content’ have these characteristics to a substantial extent. Thus the cost of an additional person downloading an ABC podcast or this year’s Budget Papers is next to nothing. At the same time, as recording companies and other publishers of content are discovering, it is increasingly difficult to allow access to one, without allowing access to others.

Further, discrete items of information themselves comprise both private and collective aspects. Thus, for instance, although this essay is one of many addressing the theme in this volume and in this sense is a private, potentially competitive contribution, it is written in the English language using Roman script. It would be unintelligible without these standards, which are of course pretty close to pure public goods.

If this helps us to understand why competitive markets can produce unsatisfactory results in the generation and dissemination of information, we need a dose of Hayek to remind us of the pitfalls of too crude a reliance on public provision. Hayek’s focus was not so much on the technical characteristics of discrete items of information, but on the fact that so much important information is decentralised throughout the economy.

This reasoning leads us to a presumption on which this paper is predicated. Even more than the market for those goods and services with ‘imperfections’, which require some collective involvement in their production and/or sale, the market for information requires a felicitous hybrid of private and public institutions to achieve the best possible outcomes.

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