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'Skills crisis': VET and TAFE undone by rampant neoliberalism

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Ian Learmonth, Ai Group boss Innes Willox and Luke Menzel. Willox is calling for an improvement to our skills systems (image via Twitter).

Late last week Innes Willox – head of Australian Industry Group – sent a letter to Scott Morrison, alerting him to the dire skills crisis in Australia.

Our Vocational Education and Training (VET) system was a complete “debacle” he remarked: '75 per cent of employers experiencing difficulty in recruiting suitably qualified or skilled people into vacancies'.

But Willox stopped short of citing the real cause of our broken national training system: namely the ideology of extreme neoliberalism ⁠— the unwavering belief that unregulated markets will produce superior results even when the evidence suggests otherwise.

It all started back in the early 1990s, when Australian politicians and policymakers became infatuated with Thatcherism. From their perspective, TAFEs were an affront to the credo of free market capitalism. Too unresponsive to industry. A drain of public resources. Yet another case of "big government" getting in the way market forces. Welfare by stealth.  

A new system was introduced that allowed private providers – Registered Training Organizations (or RTOs) – to compete for government funding. By 2015, 42 per cent of government spending on vocational training was awarded to non-TAFE providers, today numbering in their thousands as TAFEs wither on the vine.

The content of training changed too. Rather than building a standardised skillset that individuals might use in a variety of jobs, targeted "training packages" were proposed by employers instead, keying them in specific work settings.

This revamped approach to VET was no government handout either. Following the holy commandments of Thatcherism, students would require a loan to pay for the training via the FEE-HELP system. Skills were recast as a strictly private good, not a public one.   

This setup follows a familiar neoliberal formula. Employers loved it because they didn’t have to invest in training. The government would do so for them, using private businesses and with the final bill shoulder by individual trainees in the form of personal debt. 

Loans that many would never repay.

Direct government funding – especially to TAFEs – was then cut because it was assumed that a flexible and competitive marketplace would generate efficiency gains and push down overall costs.

So, did we see a tremendous increase in skilled tradies, sparkies and engineering designers as a result?

No, the opposite.

Shady RTOs learned how to rort the system early on. They were less hindered by national regulations and gleefully soaked up the flood of government cash. Unfortunately, their mind was on the money rather than skills, hell-bent on signing up as many students to useless programs as possible. Between 2011-2016, RTO compliance to national standards stood at a dismal 22 per cent

RTOs have little pressure to invest in buildings and capital, or even hire properly trained teachers. Low entry and exit barriers diminish commitment to industry best-practice. And given the lack of government oversight, investigators discovered that corruption is a major problem in the private training market, as RTOs find ever more creative ways to make money.    

Neoliberal economists expected RTOs to compete with each other, allowing newly "empowered" trainees to choose providers with the best quality and reputation. In reality, most students – especially those from lower-economic groups – simply opted for the cheapest package. As a result, the training they received was inferior.

Sadly, this part of the industry has rapidly grown. As researcher Phillip Toner found, there has been a veritable boom in low-quality training, controlled by businesses that ultimately seek to maximise profits rather than enrich the national skills pool.

In the meantime, apprenticeships have fallen from 446,000 in 2012 to 259,000 today.

It is testimony to the power of ideology – in this case, extreme neoliberalism – that despite the patent failure of the private training market, successive governments and industry leaders have continued to prop it up for decades. Billions of dollars have disappeared down a black hole in the hope that the "god" of market forces might save the day.

No wonder global private equity firms are now circling Australian RTOs. This is too-easy cash and lots of it. And it’s us – the taxpayer – who is helping to pay for it

Clearly, Australia needs to follow the example of countries that actually do have a vibrant vocational training system, renationalise it and start again. That would allow its funding structure (as a semi-public good) and overarching purpose be thought afresh.

Most importantly, an end has to be put to the rampant "corporate welfare" that has blighted the system for years at the expense of our national skills base.  

Peter Fleming is a Professor at the University of Technology Sydney.

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'Skills crisis': VET and TAFE undone by rampant neoliberalism

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