The introduction of the O’Farrell Government’s Smart and Skilled policy will see TAFE NSW face even greater competition from private providers.
Cuts in government TAFE funding are leading to courses being cut and teachers losing their jobs. Meanwhile ASX listed companies worth billions of dollars are reorganising and consolidating, increasing profits and funds available for further expansion into the vocational education and training market.
The training corporates have invested massively in advertising and marketing with major players expanding their operations and their profits through mergers and acquisitions as well as “partnerships” with other providers and universities thus allowing a broad portfolio of course offerings. The emerging corporate market is competitive and full of strategic partnerships. The corporates are optimistic about the potential to increase their market share at the expense of TAFE.
The new corporates are politically well connected. Denise Bradley, who conducted an inquiry into higher education, is on the board of Seek, one of the new corporate education players. The most recently listed ASX corporate provider, Vocation, is chaired by former federal education minister and architect of deregulation in the education sector, John Dawkins. Until the Friday before the ASX listing of Vocation, Dawkins was the chair of the National Skills Standards Council, the body responsible for the development of national standards for regulation of vocational education and training (VET) and currently proposing higher regulatory standards.
Political lobbying is crucial for business survival. The business model is at considerable risk if state and federal governments were to turn away from funding being delivered contestably, or if “trainers” were to be paid and recognised as teachers.
Profitability is firmly based on a flexible workforce of low-paid trainers who are non-unionised. Much training is online. This provides continuous cash flow without the need for capital investment in specialised equipment or classrooms. There is no need for class size limits or fixed hours for teachers. Trainers can be working for multiple providers as part-time, casual or independent contractors.
Corporates are encouraging students to enrol in higher level qualifications at their colleges with the attractive slogan “study now, pay later”. When a student enrolled at a private college takes out a VET FEE-HELP loan, government funds are transferred to the corporation and its shareholders. Disadvantaged students are paying more to generate corporate profits.
Seek is currently valued at around $5.8 billion and hovers around position 60 of the top 150 companies on the ASX. Seek Learning, the training division of Seek, complements its online employment agency. Seek Learning provides professional and vocational training either through its own companies or as a placement provider or broker to other vocational providers and universities such as Swinburne Online and Deakin Worldly.
Last financial year proved very profitable for Seek, with earnings 94 per cent ahead of the previous year and around 70,000 students enrolled in Seek companies or partner companies across Australia. One of these partnerships is with Western Sydney Institute OTEN whereby students can enrol in selected OTEN offerings via Seek’s website. Seek is therefore both a competitor to TAFE and a partner for some OTEN courses that are marketed as “quality”.
Open Colleges, a non-ASX listed company, has a similar arrangement with the North Coast Institute of TAFE. The massive advertising spend of Seek and Open Colleges has led to OTEN Western Sydney Institute and the North Coast Institute having the highest increase in enrolments of all the TAFE NSW institutes.
Vocation, another company, aims to be a national rival to state-based TAFE systems; to provide not just enterprise and individual training but also the quality control that comes with the provision of administrative and compliance support to private providers. Its business model is based firmly on beating TAFE in gaining state and federal competitive tender contracts. The company Vocation, like Seek and Open Colleges, is pursuing growth through merger and acquisition.
Navitas, an ASX-listed company, is currently valued at about $2.7 billion. Its chief executive officer Rod Jones is a member of the Business Council of Australia and has been on the BRW Rich List. The multinational company provides English language courses and has a strong focus in Australia on international students articulating to university. The NSW Government and unionised Adult Migrant Education Service lost out to Navitas in 2010 in the tender for English language services, thus forcing some students to change providers midway through their courses and many permanent teachers to lose their jobs.
Navitas controls costs through a primarily casual and part-time teaching workforce, with face-to-face teaching, when required, being provided in “facilities either leased from third parties or provided by institutions under various partnership agreements”. In the past questions have been raised about the standard of some premises. Curriculum can also be developed under partnership agreements, though not exclusively so.
Another player is the Australian subsidiary Kaplan of the United States listed media education company Graham Company Holdings. It provides English language, vocational and degree business courses. The different divisions mean that a student who begins with a vocational qualification can then move to another of the company’s offerings in higher education.
The companies are run as businesses. Trainers and assessors are at the bottom of the hierarchy.