State-wide IR agreements hobble TAFEs: Productivity Commission

TAFE industrial relations arrangements need to be overhauled, says the Productivity Commission. State and territory governments should give their TAFEs greater managerial independence and reject jurisdiction-wide industrial agreements for their TAFE employees, says a draft Productivity Commission report into the VET workforce. But governments should also resist the temptation to fully corporatise their TAFEs “given the number of non-commercial objectives public providers are likely to have, and the desire for governments to retain both ownership and control”. The report argues that TAFE IR arrangements need to be reformed urgently to boost productivity and help alleviate a “skills bottleneck” in Australia’s resource-rich but capacity-constrained economy. “The public segment of the VET sector has long been restricted in its ability to adapt, adjust and compete within the new VET paradigm of competition, contestability and user choice,” the report says. “IR arrangements that apply homogenised levels of pay and caps on some forms of employment are not adapted to an environment which requires TAFE to compete directly with private providers and industry for skilled workers.” The report says TAFE wage structures take no account of the scarcity or abundance of particular skills. “As a consequence TAFE can find it difficult to attract and retain some VET trainers and assessors, without resorting to over-award payments, while other trainers and assessors may be paid more than necessary,” it says. “TAFE institutes should be able to select the mix of employment arrangements, supported by contemporary human resource management practices, that best suits their business goals.” The report also finds that all VET providers should be compensated for their non-commercial activities. “Increased use of explicit on-budget community service obligation payments has the potential to improve transparency regarding the viability of government-owned VET providers, while also improving competitive neutrality across providers,” it says. The findings cut across both long-standing and evolving TAFE administrative arrangements. Each jurisdiction big enough to accommodate more than one TAFE institute has a state-wide industrial agreement for its TAFE teachers. And all but Victoria have state-wide agreements covering their general staff. Some states are also corporatising their TAFEs in an attempt to give them more business flexibility and the capacity to offer commonwealth-supported income-contingent loans. But this can lead to financial problems, particularly during the transition period. Queensland’s Southbank Institute of Technology, for example, reportedly lost $7 million within months of corporatising in late 2008. Competitive neutrality has also been a contentious issue in states pushing for more contestability in their VET systems – notably Victoria, where TAFEs are funded at a higher rate than their private sector competitors to help them meet their obligations as "full service providers". But some TAFE figures want more, while some private sector trainers highlight their own non-commercial activities. Meanwhile, the Productivity Commission report also argues for urgent reform to TAFE professional development arrangements, particularly the baseline teaching qualification. It says the certificate IV in training and assessment (TAE) is a “satisfactory minimum standard” if it is well delivered, but has been plagued by persistent quality concerns. A recent Western Australian audit, for example, found half of the providers were not delivering the TAE to the required standards. While the commission's report suggests people should be compelled to complete the TAE within two years of starting work as VET practitioners, it says the course should involve more supervised learning and evaluation by external assessors. It also says the TAE should continue to be regarded as a “high-risk qualification”, with its providers audited frequently and intensively. Other proposals among the report’s nine draft recommendations include assigning the National Centre for Vocational Education Research to devise better data reporting mechanisms. These include mechanisms for identifying the VET workforce and enabling quality VET teaching to be investigated quantitatively. TAFE Directors Australia welcomed the draft report, particularly its focus on the need for increased professional development. Campus Review also sought comment from the Australian Education Union, which was unable to respond within publication deadline. The Productivity Commission is seeking feedback on its draft findings and recommendations before it finalises its report in April. It has also asked for extra information on several topics including the impact of modern awards, funding for non-commercial activities and base qualifications for VET-in-schools teachers. Submissions are due by the end of February. Go to pc.gov.au/projects/study/education-workforce/vocational/draft