Data on total investment in VET: what should be collected

By Gerald Burke Technical Paper 14 July 2016 978 1 925173 56 7

Description

This report examines the feasibility of collecting information on investment in vocational education and training (VET) that falls outside the current National VET Financial Data Collection. Potential alternative sources include all government spending on vocational education, investment made by industry and the training-related costs individuals contribute. A more complete picture of investment will help inform national VET policy in order to improve the efficiency, effectiveness and equity in the system. This report finds that some sources of investment could possibly be collected in the shorter-term; however, others remain a long-term aim.

Summary

About the research

The financing of vocational education and training (VET) entails investment primarily from three sources: governments, industry and individuals. Currently, the annual publication of national VET finance information covers government funding for training (although not every aspect), as well as revenues for fee-for-service and student fees and charges, as recorded by the various government departments responsible for training. It also details the operating expenditures and training costs of these departments.

While comprehensive, this collection does not cover the full terrain of national VET resource inputs and expenditures. A more complete picture of all sources of investment in VET would be useful for better measuring and understanding the full spectrum of national investment in VET − by governments, industry and individuals. This could more effectively inform national policy, in terms of efficiency, effectiveness and equity, with the aim of ensuring that the VET system develops skills for individuals, industry and the economy.

A more complete picture of financing would also complement the new collection of all student activity in the VET system, known as ‘total VET activity’ (TVA).

The purpose of this report is to explore from first principles a framework for a more comprehensive record of VET investment in Australia, both direct and indirect support, if indeed the latter could be meaningfully defined. The report focuses in particular on what is presently ‘missing’ and might be collected above and beyond that currently collected in the National VET Financial Data Collection, maintained by the National Centre for Vocational Education Research (NCVER). To do so, it considers, for each type of investment: its materiality, the availability of data, its potential importance for policy or accountability, its likely quality and the cost of collection. The in-principle findings are that:

  • In general there is a good case for extending the regular collection of information on investment in vocational education and training. While NCVER’s current financial collection can be used for accountability and efficiency, it is not easily linked to equity and the other objectives of the system.
  • There are some items of investment that may be collected in the shorter term. These include student assistance grants, information on employer incentives for apprenticeships, the cost of non-repayment of VET FEE-HELP loans, and possibly the funding of VET in Schools.
  • More difficult to collect, at least in the shorter term, and constituting a large component of all sources of investment in VET, are household, international and employer spending on private registered training organisations (RTOs), and broader expenditure on training by employers.
  • Most of the extended information on investment in VET can be collected through government departments. In all probability, the only feasible approach to any understanding of the broader expenditure on training by employers would be a periodic survey.

Dr Craig Fowler
Managing Director, NCVER

Executive summary

This report concerns the data on the investments in vocational education and training (VET) not captured in the National Centre for Vocational Education Research’s (NCVER) Financial information. That publicationprovides data on government-funded vocational education and training, which is ‘broadly defined as all activity delivered by government providers and government-funded activity delivered by community education providers and private training providers’. The data in Financial information are taken from NCVER’s National VET Financial Data Collection.

The term ‘investment’ is used in this report to mean the revenues received for vocational education and training and their expenditure. The areas covered will be the direct provision of training and also the funding provided to support training, including student assistance and incentives paid to employers.

A framework is used to organise the data. It classifies an investment according to whether:

  • it is for core training and education or for non-core matters such as student support or employer incentives
  • it is received by registered training organisations (RTOs) or by other bodies
  • it is a government (public) or private investment, with private considered in three domains — enterprises/employers, households and rest of the world.

Using this classification, the following main items were identified as not covered or only partially covered in the NCVER collection:

  • enterprises/employers − most of their training expenditures
  • rest of the world − spending by international students on private and community RTOs
  • household spending on fees for training at private and community RTOs
  • government incentives to employers and other support for apprentices
  • government student assistance grants to students and apprentices
  • the cost to governments of non-repayment and interest subsidy on VET FEE-HELP
  • tax expenditures (concessions and exemptions) for households and enterprises from the Australian and state and territory governments
  • funding of VET in Schools.

These items are assessed for:

  • the possible size of the investment
  • the importance of the data for accountability, policy and research
  • the ways of collecting data, its likely quality, and the costs of collection.

The conclusion is that there is a good case for NCVER to extend its financial data collections. Some items should be collected almost immediately; others over a longer term; and some are subject to further analyses before attempting collection. The items have been regrouped and put into the order in which their collection might be attempted. The bodies with the capacity to supply the data have also been included.

  • Student assistance grants: this includes grants such as Youth Allowance and the characteristics of persons receiving them, with data supplied by the Department of Social Services.
  • Employer incentives: this includes Commonwealth and state funding and the characteristics of the apprentices supported, with data from the Department of Education and Training and state and territory authorities.
  • VET FEE-HELP: this focuses on the cost of non-repayment and of the subsidy due to charging interest on the debt at lower-than-market rates, with data from the Department of Education and Training and Treasury.
  • VET in Schools funding: this involves identifying the relevant funding in school budgets and/or in the VET sector financial information, with data from state authorities.
  • Enterprise/employer, rest of the world and household expenditure on private RTOs: these funds would best be captured by a requirement that all RTOs receiving public subsidy or VET FEE-HELP report their income and expenditures. Such reporting is required for schools and for universities.
  • Rest of the world: pending reporting by all RTOs receiving government support, more detail on spending by international students could be sought from the Department of Education and Training’s International Education Group (IEG), supplemented by Australian Bureau of Statistics (ABS) data.
  • Employer expenditure other than on RTOs: for an overall understanding of the expenditure on training by employers (including spending on RTOs) a survey on the lines of the UK Employer Skills Survey could be undertaken. Discussions could be held with the Department of Education and Training and the ABS.
  • Tax expenditures: for estimates of deductions and concessions for education and VET, discussions could be held with Treasury but without optimism that useful data will be obtained.

If additional data on these items can be collected, they could be included in the NCVER publication Financial information, but perhaps reported separately from the main collection, which would remain focused on the delivery of education and training.

A final observation: where data are not available on an activity, the activity is likely to be neglected in policy debate and research.

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