Balanced budgets sink public interest

Prominent economist John Quiggin explains why governments are taking funds from TAFE and promoting a free market, despite scandals. By John Mitchell

The only solution is for the federal government to take over and to then have a much more robust accreditation system for private providers

In one week in September, the Queensland government reduced the TAFE budget by $80 million, the NSW government said 800 jobs in TAFE would go over the next four years, and a leaked Victorian cabinet document described the effects on TAFE institutes of a $290 million cut.

In each state the public explanation given for the unprecedented reduction in TAFE funding was, quite simply, to balance budgets.

TAFE didn’t cause the blow-out in budgets, but it is now a favourite source of funds for balancing the books. And both sides of politics are tempted by any opportunity to cut into public services like TAFE where they can get away with it, said Professor John Quiggin, in an interview with Campus Review.

Quiggin is a professor of economics at the University of Queensland and Australian Research Council Federation Fellow. He is also an independent thinker who doesn’t shirk public debate, recently challenging the assumptions underpinning Peter Costello’s audit review of Queensland finances, which led to the announcement of large cutbacks in the public sector in that state, including TAFE.

He believed that previous governments were overly generous in better economic times and now needed to find savings. “Governments at every level used the relatively good times in the lead-up to the global [financial] crisis to provide some combination of cutting taxes and providing services, but now we’re seeing attempts both at state and federal level, but particularly the state level, to meet the gap [in income] by cutting services,” said Quiggin.

He explained why state governments were especially focused on savings. “State level services are more vulnerable to the ebb and flow of these things because their finances are more precarious. They tended to expand when times were good, but the states have much less room for manoeuvre than does the federal government [when economic conditions deteriorate]. The various sources of revenue that made things easy for both federal and state governments are drying up, and at the same time there’s a stronger ideology of ‘budget balance’ than we have had in the past.”

The reduction in income provided governments with the excuse to take initiatives like reducing the size of TAFE and introducing a VET market, which they had been afraid to implement in the good times, said Quiggin. “Governments see it as an opportunity to push through things which they would like to do anyway, but which they really need a kind of crisis atmosphere to force through.”

Both sides of politics are using this opportunity of a “perceived crisis” in funding to promote a free market ideology, said Quiggin. “While conservative governments are keen to actually wield the axe [on TAFE], in the Victorian case the problems were primarily created by the outgoing Labor government. They were the ones who opened the flood gates to shonky private providers, and the budget blow-out is now being balanced on the back of the [Victorian] TAFE sector.”

The major political parties “contain a significant element with the view that ‘never let a crisis go to waste’,” he said. This current period of tight economic conditions is a chance to push a free market ideology into sectors like VET, where it hasn’t been implemented before.

Quiggin added that the same governments imposing a market on VET are loath to push a free market ideology in the school sector “which has basically remained not-for-profit”, or in the higher education sector where for-profit experiments like Melbourne University Private have “largely failed”.

Despite the popularity among politicians and bureaucrats of a free market only in VET, Quiggin believed that its introduction in Victoria inevitably has led to scandals like those that emerged a few years ago around colleges catering for international students. The general principles of competition policy were being pushed in a number of areas, such as international education, and have largely blown up in governments’ faces – like the immigration racket business. “And now the attempts at introducing market competition [in VET] have not been properly evaluated. Looking globally, these kinds of policies have failed spectacularly.”

An independent evaluation of the Victorian VET fiascos was likely to reveal patterns Quiggin has monitored in the US and the UK: “Because of the nature of education, if you have sharp profit incentives, it’s very hard to set up a system which will produce good behaviour once you have purely for-profit providers in the business, because it’s just so easy to cut corners and lower standards.”

Around the world, and in all education sectors, attempts at introducing market incentives have failed consistently because it’s almost impossible to measure these things, like the quality of all providers, he said. “In some of the courses the students are paying for and being promised a qualification that isn’t really worthwhile; in other cases they are providing something which is essentially entertainment, passing it off as education.”

Quiggin stressed that the frequent media exposures of shonky providers has not deterred those who advocate a free market for VET. “The obvious point is that these problems have emerged in Victoria, but what we haven’t heard them saying is ‘Let’s step back from this and go back to a [TAFE] system which has worked for a long time and delivered very good outcomes’. They’re saying ‘Let’s cut that TAFE system in order to balance the budget’.”

Overall, Quiggin believed that national competition policy and COAG as a vehicle for the national reform process have “have been driving forward an assumption that we should do things this way”; that is, cut public providers to balance the books. “There are supposed to be, of course, public interest provisions [in the national policy], but there hasn’t been any careful assessment of them in the VET sector.”

Based on his international monitoring of profit-based operators in the school and university sectors, he predicted ongoing scandals around profiteering VET providers. “I think that we will continue to see many examples of the rorts by [dodgy] educational institutions. They are going to be much more common than examples of successful profit-driven training or education enterprises.”

Quiggin described the free market ideology in VET as “incredibly short sighted” because the main victims of profiteers are students at risk. “This is affecting the most vulnerable young people in the community; it’s cutting off opportunities which are aimed at the most vulnerable.”

He believed that, in the long term, VET needed to be removed from the fluctuations of state-Commonwealth relationships. “The only solution is ultimately for the federal government to take over this area [of VET] and to then have a much more robust accreditation system for private providers than we have, and a much more sceptical one.”

Get the news delivered straight to your inbox

Receive the top stories in our weekly newsletter Sign up now