Research

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Research

Vocational education and training providers in competitive training markets Fran Ferrier, Tom Dumbrell and Gerald Burke, Monash University - ACER Centre for the Economics of Education and Training

The training industry in Australia has been through a series of regulatory changes since the early 1990s, with the aim of making it more market-oriented. There are now several thousand private providers, typically small and serving niche markets, competing against one another and against about another 60 technical and further education (TAFE) institutes. They compete for the publicly funded training dollar, which is contestable to varying degrees across states and territories, and also for the business of employers and individuals who are willing to purchase training on demand.

Ferrier, Dumbrell and Burke have produced a report that explores how both public and private providers do business in today's market. They focus on three particular aspects of operating in a competitive environment: income sources and mixes; thin markets for vocational education and training (VET); and research and development activity. In an overall sense it is clear that competition has provided a tremendous spur to how providers operate, encouraging adaptability and creativity, and often collaboration. The study offers a number of interesting lessons for regulators.

Key messages

Public and private providers are keenly interested in establishing and maintaining their financial security. They recognise that this means seeking out alternative sources of funds and reducing their reliance on one stream of income, especially when this comes from government sources of funding.
VET providers earn income through diverse arrangements, including direct fee-for-service training, ancillary trading and by leveraging government funds to increase private investment. The variety of these arrangements is not well captured in current VET data collections.
The extent of thin markets in VET may be overstated and sometimes used as a device to limit competition. Public and private providers argue that it is more costly to deliver training in thin markets.
The number of providers who are engaged in research and development - beyond market research and innovation in teaching and learning - is very small. Those who are engaged report benefits, including in reputation, funding, staff development and better training.

Tom Karmel
Managing Director, NCVER