This report considers the past and present structure of the Australian vocational education and training (VET) market. Increasing competition in the VET sector over the last two decades means it is timely to understand how the market structure has changed.
This research builds on our understanding of the VET sector and the diversity within it. It also prompts important and fundamental questions about the current structure of the market and whether it is best placed to deliver the desired skills and knowledge that students and the Australian economy require.
About the research
The paper tracks the development of the Australian vocational education and training (VET) provider market over the last two decades in the context of significant policy changes and generally increased competition. It provides an insight into how the sector has arrived at its current position, painting a present-day picture of great diversity. More importantly, it prompts further, more fundamental, questions about the current structure of the provider market and whether it is optimally placed to deliver the skills and knowledge that students and the Australian economy require.
The now wider scope of the National VET Provider Collection has enabled reports on total VET activity (TVA). TVA data have been instrumental in this initial analysis of provider and student numbers, which builds on the paper Making sense of total VET activity: an initial market analysis (NCVER 2016).
- The VET provider market has been relatively stable over the last 15 years, with the number of providers remaining relatively stable during this time, although fewer providers entered and exited the system over the last five years than in the ten preceding years. VET market reforms and changing funding regimes over this period appear not to have driven major changes in provider numbers, despite the underlying turnover of providers.
- In terms of student numbers, the VET sector displays great diversity within and between different types of training organisations. While there are private providers with as many students as the largest TAFE (technical and further education) institutes, there are also many private providers with very small numbers of students. The top 100 providers represent around 50% of the total student population.
- The sector is characterised by a very large proportion of relatively small providers, with almost 2000 providers (around 40% of the total) with 100 or far fewer students. No evidence is provided, nor should any inferences be drawn, about provider quality. However, the challenges of ensuring that students are given sufficient information and regulating such diversity with so many small to very small providers should be recognised.
- The VET sector also has a larger number of providers relative to the higher education sector, noting that the sectors have many differences, including their purpose, funding and regulation, and that VET students are far more likely to be part-time than those in higher education. There are almost three times as many VET students than higher education students in Australia, but at least 35 times as many VET providers.
- Australia also has a larger number of VET providers than comparable markets overseas, based on the number of people of working age per provider. However, there are inherent difficulties in making such trans-national comparisons, particularly in the context of differing institutional arrangements.
- These observations indicate the need to further examine provider output and quality within and across different provider types and, in the light of this, consider whether or not the current provider market structure, as it has evolved, best serves Australia’s future skills and training needs.
Dr Craig Fowler
Managing Director, NCVER
The vocational education and training (VET) market in Australia has, by way of policy changes over the last two decades, been incrementally and increasingly opened up to competition. Initiatives and policy reforms such as the National Framework for the Recognition of Training (NFROT), user choice and the National Partnerships Agreement on Skills Reform, as well as VET regulation, have to a lesser or greater extent impacted on the number and diversity of training providers, including all TAFE (technical and further education) institutes, schools and community-based, enterprise, industry association and private providers.
This paper explores how these changes may have impacted on the numbers and structure of the VET provider market. We examine five aspects of this market to understand its historical and current state. We looked at:
- trends in VET providers in the market over the last 20 years
- comparisons between different types of providers, according to the number of students they have (based on 2014 data)
- comparisons with higher education providers in Australia
- comparisons with VET provider markets overseas
- any evident impact of the VET FEE-HELP policy.
We tracked the number of providers entering and exiting the market over the last 20 years using registration data from <training.gov.au>. Despite changes in policy and in funding regimes, the number of registered VET providers has remained relatively stable over that time. In fact, there have generally been fewer providers entering and exiting the system over the last five years than in the preceding 10 years.
We also found that private training providers comprise an increasing proportion of the new providers entering the market. There has also been a recent rise in the number of cancellations by the regulators.
Using data now available under the expanded National VET Provider Collection, along with new total VET activity (TVA) data (NCVER 2015a), we were able to compare the structures and characteristics of the VET market. For the first time we have a more comprehensive view of the VET provider market.
It has become clear that there is much diversity in the VET provider market. What stands out is that the market is characterised by a handful of larger providers with upwards of around 10 000 students and a substantial number of medium-sized providers with around 1000 students. However, there are nearly 2000 providers (around 40% of the total) with 100 or fewer students.
This large proportion of providers with relatively few students is striking and warrants future investigation. What factors have limited their growth? Do they provide niche training or crucial service in more isolated locations? How do they manage their operations? How can such diversity be effectively regulated? These issues immediately raise questions of the VET provider market’s comparability − its differences and similarities − with the higher education sector in Australia and also with comparable VET sectors in other countries.
The large VET providers (of all types, including public and private) with upwards of 10 000 students are similar in size to Australian public universities. The large group of medium-sized VET providers (with around 1000 students) are similar in size to Australian private higher education providers, although they are more numerous. However, there is not a substantial group of small to very small higher education providers, as seen in the VET sector, acknowledging that the sectors have inherent differences in students and missions.
Looking at the number of providers in the VET sectors of comparator countries, we see that Australian policy and practice appears to have supported the establishment of a relatively large number of providers. We have compared the ratio of the ‘working age’ population (as a proxy for persons who may be engaged in training) with the number of providers in each country. Of all of the countries in the comparison, Australia has the lowest ratio of working-age population to providers.
There are nominally 3129 people per provider in Australia, compared with 15 725 people per provider in Ontario, at the other end of the spectrum. While the estimate of working-age population is soundly based, it is acknowledged that comparability of ‘providers’, given international institutional differences, is more problematic. This initial assessment, placing Australia at one extreme of providers per working-age population, requires a more detailed and complex analysis of provider size dispersion on a trans-national basis.
The VET FEE-HELP student loan arrangements are a more recent policy initiative, one that has seen significant growth, especially since about 2011−12. An examination of registration data reveals that 19 of the top 20 VET FEE-HELP providers in 2014 (in terms of numbers of students and amount of loans) were already in the market before the introduction of the scheme. While enrolments at these providers may have grown as a result of their being approved as VET FEE-HELP providers, the evidence indicates that these were established providers rather than new providers entering the market.
The structure of the sector may change as the market matures and further initiatives and reforms are implemented. As we collect more years of data with total VET activity scope, and our research uses this data, we will have a more complete view of the sector and the training market, their associated structures and performance.
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