Trading places: The impact and outcomes of market reform in vocational education and training

Abstract

In 1990, Australian governments embarked upon a radical policy experiment to create an ‘open training market’, comprising public Technical and Further Education (TAFE) and private providers. The idea that vocational education and training could be traded in a marketplace, with provision subject to market forces and competition between public and private providers, was unthinkable for most at the time. Underwritten by government, TAFE had been the dominant post-school provider of trade and technical training, and ‘second chance’ education for disadvantaged groups since the early 1970s. From the early 1990s, however, vocational education and training was progressively redesigned within a market framework, and TAFE institutes have since been required to compete with private providers for government funding on a more ‘level playing field’. Justified by policy makers solely on the basis of economic theory, the construction of an ‘open training market’ has proceeded in the absence of any evidential support, and on the untested assumption that market-based competition produces better outcomes than government planning and coordination. Despite the unprecedented nature and potential implications of marketisation, ‘So far the great change in education has been undertheorised and under-investigated’ (Marginson 1999, p.229), not least in relation to vocational education and training. To rectify the knowledge deficit and promote informed policy debate, this thesis investigates and evaluates the impact and outcomes of market reforms in vocational education and training from a national perspective. The conceptual and evaluation framework for the thesis integrates the theory of ‘quasi-markets’ (Le Grand and Bartlett 1993) with insights and resources from the fields of political economy and the sociology of education policy. The thesis comprises a review of local and international literature on market reform in the public sector, particularly vocational education and training; an examination of the Australian policy, financial and regulatory framework for vocational education and training markets; an analysis of national data on student participation and finances; an investigation of the structure, composition and dynamics of the quasi-market for vocational education and training; and an evaluation of the operation and effects of market reform, with special emphasis on the two main market mechanisms of competitive tendering and ‘user choice’. The thesis employs a quantitative research methodology, and the main data collection instrument is a survey administered to a stratified sample of 2,581 public and private providers across Australia. The findings indicate that market reform in vocational education and training has produced mixed outcomes. Client choice, provider flexibility, and responsiveness to employers and private fee-paying clients have increased. But efficiency gains are questionable and the quality of educational provision, responsiveness to publicly subsidised students, and access and equity for disadvantaged groups appear to have declined. On balance, the costs appear to outweigh the benefits of market reform. The research also finds that, as a result of marketisation, TAFE and private providers are trading places with respect to organisational identity, values, priorities and income sources, with private providers becoming more dependent on government funds and TAFE institutes less so. Overall, the research casts doubt on the efficacy and desirability of markets in vocational education and training, and raises questions about their potentially adverse consequences from a public interest perspective. Policy alternatives are discussed, and areas for further research are proposed. The thesis concludes by arguing the need for a more creative and judicious mix of state planning and market forces; one that serves the needs and interests of all stakeholders and preserves the distinctive character and mission of the public TAFE sector. However in the wake of more recent market reforms, as discussed in the epilogue to the thesis, TAFE’s market share and financial base have shrunk to the point where its future viability is now in question.