Home > Economic policy > The failure of vocational education and training policy in Australia

The failure of vocational education and training policy in Australia

January 18th, 2018

I mentioned a while ago that I was making a submission to a Senate inquiry into Vocational Education and Training in South Australia. My submission has now been published on the Committee website with the title “The failure of vocational education and training policy in Australia”

I was a bit surprised to be told it was Submission Number 1, but it turns out they’ve only published two so far. The other one, from Dr Gavin Moodie makes most of the same points as mine.

As I mentioned the inquiry appears to have been called as a stunt to embarrass the SA Labor government, but it has provided an opportunity to bring the Senate’s attention to the continuing bipartisan failure of vocational education policy. To restate my key points, they were

* The impact of decades of cuts in public support for vocational training
* The disastrous effects of subsidising for-profit providers
* The goal of universal participation in post-school education and training
* Integration of technical/vocational and university education

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  1. January 18th, 2018 at 19:41 | #1

    A nice paper, hard-hitting, short, and illustrated. I missed any discussion why for-profit education fails. The reasons include:
    – dramatic asymmetries of information – learners cannot correctly value knowledge they don’t have. This applies a bit less to technical than theoretical knowledge, butvut still applies, see IT skills. Learning is always buying a pig in a poke. This makes markets inefficient.
    – when the for-profit model is applied to TAFE and not to higher education, the overall effect is a massive regressive redistribution against the working class. This is unfair. A “fair go” for all young Australians does not require equal funding per head for post-school learning, but ur does require appropriate (in some sense) public funding opportunities for all, whatever their career path.
    – the externalities from education and training are very high. The gains cannot be captured by a single purchaser, whether parents, ab employer, or the learner themself. Civilised countries accepted this argument 150 years ago for primary education, more recently for secondary. But the same reasoning applies to higher education and TAFE.

  2. Ikonoclast
    January 18th, 2018 at 22:06 | #2

    I notice the number of times J.Q. has to refer to failure in our nation’s policies, and he is right.

    – failure of vocational education and training policy
    – failure of national electricity market
    – failure of the NBN
    – failure of energy policy

    I am sure I have missed quite a few that J.Q. has covered.

  3. peter
    January 19th, 2018 at 09:23 | #3

    @James Wimberley

    Regarding asymmetric information: Learners may not be able to value their education even after they have received it, in fact, even long after. Is a PhD from Harvard a good education or not? Perhaps any career success that Harvard PhDs achieve is due the prior calibre of the applicants to Harvard, not anything Harvard does to them while they are students. Or perhaps their career success is due to the connections they make there, rather than any particular things they learn.

  4. Lt. Fred
    January 19th, 2018 at 09:50 | #4

    Failure of industry policy

  5. John Quiggin
    January 19th, 2018 at 13:14 | #5

    @James Wimberley

    All good points with which I agree. I’ll pinch some of them next time.

  6. January 19th, 2018 at 18:55 | #6


  7. Vegetarian
    January 20th, 2018 at 17:24 | #7

    @James Wimberley
    Absolutely right about asymmetries of information – in fact this applies for all types of education, from pre-school to post grad. It’s impossible to know what the “product” is really like until you try it, and by then you’re often so committed (timetables; textbooks, uniforms and equipment bought, travel arrangements….) you’re locked in.

  8. boconnor
    January 20th, 2018 at 21:36 | #8

    Given the inherent uncertainty of future outcomes, there are similarities between private expenditure on VET and private expenditure on health insurance. Both attempt to mitigate potential risks. In the case of health insurance, it’s to put a ceiling on potential costs from future ill-health. In private VET education, it’s to reduce the risk of potential low future income from poor quality or dead-end jobs.

    Both expenditures are less efficient than full provided public expenditure, where individual risk is distributed, and smoothed, across the common wealth. Its one of the reasons VET education should be entirely publicly funded.

  9. Peter T
    January 20th, 2018 at 21:46 | #9

    People don’t choose a vocation or career the way they choose a new shirt. They mostly go with some combination of interest, inclination, family tradition and happenstance. They have very little idea – nor does anyone – what the demand for their training will be in five years. And much training of considerable value has no market at all (eg anything artistic or high academic). Consider the current gluts of lawyers, hairdressers and beauty therapists.

    The gutting of TAFE was not just free-market ideology. It also got at the unions and allowed the states to sell valuable real estate to developers.

    One hard to remedy aspect is that the trades which need large amounts of capital to teach have been hit hardest. These include the foundational skills of an industrial economy – machinists, sheet-metal workers, heavy vehicle mechanics and the like. The workshops have been let go, the teachers retired. If you want to make almost anything, or even maintain anything, these are essential.

  10. ZM
    January 21st, 2018 at 22:07 | #10

    @Peter T

    “These include the foundational skills of an industrial economy – machinists, sheet-metal workers, heavy vehicle mechanics and the like. The workshops have been let go, the teachers retired. If you want to make almost anything, or even maintain anything, these are essential.”

    But there aren’t jobs in those areas anymore. And where there are jobs, the factories are often foreign owned now, and have international workforces.

    Where I live when I grew up in the 80s and 90s there were 3 big locally owned factories that employed a lot of people: the bacon factory, the carpet factory, and the foundry. They are all foreign owned now.

    The carpet factory has been closed and the building turned into a mixed use development with small businesses and a vintage bazaar. The foundry is now two businesses and both are foreign owned and it is much smaller than it was, they have management level people that fly in and out from Europe, and my impression is that some of the engineers are fly in fly out too. The bacon factory is owned by George Weston now after a few changes of hand, they have cut the need for staff by using robotics, management and engineers also fly in and out, although I think the idea last I heard was for local engineers to run it but you need university education for that not TAFE, and the pigs come frozen from Europe since the slaughterhouse was shutdown, which is better in terms of smells, but bad for Australian pig farmers.

    An interesting dystopian book Closing Down by local author Sally Abbott is an interesting take on industry closing down in rural Victoria.

    Sally worked for the Indonesian company who controversially bought the Windsor Hotel and wanted to build it bigger than the State Parliament where the planning precinct design guidelines stipulate all buildings must not exceed the height of the Parliament, which the Labor planning Minister Justin Madden approved. Sally did the PR for that and wrote an Op Ed in The Age in support of the Windsor redevelopment, but has now written a dystopia about foreign ownership:

    “But the factory had closed just a year later, a few years before all the rumours began about the closing-down towns and inclusion zones and cities and the buy-outs of farms and forests and water by one day China, another day the US or the Arabs, whoever, who knew? For years now the factory had sat empty in the shadows of weak floodlights and the red blinking of an alarm system.”

    My impression from Victoria, and from Melbourne University, is that technical and vocational education is not seen as important anymore due to deindustrialisation.

    If you look at Victorian TAFE Courses they are full of service sector courses like creative industries, aged and disability care, and hospitality.

    Deindustrialisation has meant there is less of a need for the skills that TAFEs have traditionally been used for. In my area of Victoria the TAFEs took over the old School of Mines, when the mining was replaced by factories. Now the factories are closing down. I don’t know what will replace them.

    The State Government’s economic plan for Bendigo is for a health and community services economy. When I read that I couldn’t believe it. It doesn’t make economic sense at all, how are taxpayer funded services supposed to be the basis for the economy of a big regional city?

    Even in courses at Melbourne University, there is a lack of attention paid to economic planning for cities.

    There appears to be some idea of keeping the cores of the major cities prosperous, but a lack of attention to the outer cities and regions.

    In some cases its like they just give up on the regions all together.

    I did this interesting UNESCO course “facilities for social sustainability” and it was all about tourism. Like if you live out in the bush or regional cities you just have to have a tourist economy these days and that’s that. Then from that basis the focus at Melbourne University is identifying what are the “cultural” or “environmental” factors that can be the basis for tourism, and defining the community around those for the economy.

    I grew up in Maldon which became a tourist town in the 1980s after Miles Lewis did a big heritage study of the town in the late 60s, looking at the old buildings. At the time Maldon was almost a ghost town after the mining had run out. Then there was an influx of artists and hippies in the 70s and 80s.

    There’s definite downsides to tourism as the major economic driver of an area. One that I find a particular downside is what I call the “Twin Peaks” effect — you have to present as perfect for the tourists, every weekend, every tourist, no matter what is actually going on in town. Depending on what is actually going on, it can create a fair bit of cognitive dissonance I think.

  11. Greg Pius
    January 22nd, 2018 at 06:35 | #11

    Could not agree more. As a secondary school teacher in the 1970s I had to put up with Dr. Doug Swan’s Transed “transition to a trade” programme. This had Year 11 students turning up on only three days to school lessons. One day a week was spent at a trade training facility. One day a week was spent doing on the job training.
    It did not work because the students were trapped in two different demand streams. Since the 1970s successive NSW Education Directors have tried reheated versions of this flawed option. VET must be focused on the efficient provisions of facilities to get young people trade certificates and on the job training.

  12. Peter T
    January 22nd, 2018 at 09:48 | #12


    We tend to think of these skills as being used in large factories. In fact they are used wherever there is complex machinery – large bakeries have machinists in site doing maintenance, all earth-moving or mining equipment has machinists in the background and so on.

    And if you design something, then you need a machinist (and often a sheet-metal worker) to prototype, make the initial production die and work with you to ensure that the design is actually make-able. Likewise, most industrial testing has a machinist on the team.

    You can import people but it’s more like immigration than contracting – the local conditions are always important. Or you can send a design offshore, wait for the prototype to come back, send a second iteration, wait for that to come back….And you can just let your machinery lie idle while you source a fly-in worker.

    This country runs on complex stuff. Not having the skills to maintain it is not sensible.

  13. ZM
    January 22nd, 2018 at 13:30 | #13

    @Peter T

    I agree with you, but it’s not my impression of what the policy makers want.

    In Victoria the trades side of education was slashed at the secondary school level in the 1990s when Jeff Kennett’s government closed the technical schools and amalgamated them with the high schools. The tech schools trained kids for the trades before the vocational education level, so they were ready for apprentice jobs as soon as they left secondary schooling.

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  15. may
    January 25th, 2018 at 13:46 | #15

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