The review of vocational education: following the funding

Note: This article was published originally in the now-discontinued NZME journal Education Central on 20 February 2019.

In the 12 months following the February 2011 Christchurch earthquakes, there was a crisis in vocational education in the region.  Once the immediate response to the disaster wound down, the labour market stalled while government, insurers and property owners argued over the scale of the task ahead and what approach to take.    What could be repaired and how, what was to be rebuilt, what should be demolished, how to fix the wrecked horizontal infrastructure.  And in what order. All the while, everyone was waiting for the frequency and severity of aftershocks to die down.

Everyone could see the coming need for more and more tradies.  Government agencies developed eye-watering estimates of the scale of the workforce needed for the rebuild. But in the meantime, the hundreds of small employers waited.  Few construction or infrastructure firms had the work that enabled them to take on apprentices.

So, here is the problem.  Industry training funding can’t be triggered unless the potential trainee gets a job.  But, in the wake of the earthquakes, recruiting stopped, meaning no new trainees.  The risk was that the skills pipeline would break.  Local trades firms would be even less able to deal with the deluge of work, increasing the reliance on overseas markets to supply skills.

The solution came in the form of an understanding between the industry training organisations (ITOs) that covered the construction-related trades and the Christchurch Polytechnic Institute of Technology (now Ara Institute of Canterbury) – plus the three other institutes of technology/ polytechnics (ITPs) then operating in Christchurch.  By resequencing training, students could start working towards a trades qualification at an ITP, incorporating with industry placements, and then transfer to the industry training system once jobs came up.  It was a great example of the two parts of the vocational education system working together and in cooperation, and putting to rest the suspicion and competitiveness that has often characterised the ITO/ITP relationship.  It took a crisis to make the system work.

The testy relationship between the two halves of our vocational education system shapes much of the analysis that underpins the current review of vocational education (ROVE).  While the proposal to merge the 16 ITPs dominated the headlines when the government released the ROVE consultation document on 13 February, it’s worth standing back and thinking about how we ended up like this.

For more than 25 years NZ has had, in effect, two VE systems – the industry training system and the network of ITPs.

The industry training system has a primary emphasis on on-job learning, complemented by off-job courses. The ITPs are the reverse; they start with institution-based learning, complemented by learning in the workplace.  Each ITO is focused on a small set of industries and occupations and has a national role in training for those industries.  Each ITP trains for multiple industries and occupations and each has a role in leading skill development for its region.  ITOs have particular expertise in managing the learner/employer relationship and in supporting the on-job learning.  ITPs have particular expertise in instructional design but their record in supporting on-job training is more mixed.  Demand for industry training is pro-cyclical – meaning that, when the economy turns down and unemployment rises, trainee numbers will fall because many employers don’t have the volume of work that enables them to employ trainees.  With the ITPs, it’s the reverse; when the economy turns down, people find it hard to get jobs so many will queue up at their local polytechnic.

The two systems are intended to be complementary.  The industry training system – based on industry-owned ITOs that had a standard-setting role and that were responsible for arranging and supporting training – was expected to purchase off-job training from ITPs; each side was expected to capitalise on the strengths and focus of the other.

But that’s not how it’s played out in practice.  ITO funding has been relatively low and ITP costs high – meaning that ITOs and ITPs struggled to find a satisfactory price for off-job training for industry trainees.  

Part of the difference relates to the cost of capital.  As brokers, ITOs don’t need to buy or maintain the equipment used in the workplace; industry trainees learn using their employers’ machinery, the costs of which are passed on to the firm’s clients.  On the other hand, ITPs must have, maintain and depreciate the machinery used to teach their students and to give them experience of the occupation they are training for.   Those costs are met through Student Achievement Component funding and through student fees.

ITOs are rational purchasers; they found ways to sidestep the high cost of ITP training, in many cases by using private training establishments or by using distance learning packages to provide theoretical elements.

As a result, the two parts of the system have often gone it alone, rather than together.  Many ITPs have developed “managed apprenticeship” programmes (funded at the higher ITP rates) that more or less replicate ITO programmes.  Many ITOs have avoided using expensive ITP off-job courses, using self-directed learning supported by mobile training advisors – officials doing the initial ROVE consultation were told that: “… Most ITOs have shifted from off-job provision, as it’s cheaper [if you can by-pass off-job courses], particularly using online assessment”.  In some cases, there has been direct competition for students between the two sides.  There have been accusations of predatory behaviour.  ITOs have complained about the disparity in the funding of ITP managed apprenticeships and ITO-brokered NZ apprenticeships – when these are similar programmes with similar goals.

Of course, it’s not all bad.  The Christchurch earthquakes case, discussed above, is only one example.  Reporting on the ROVE consultation, officials wrote:

We saw several examples of how ITO/ITP collaboration could support and strengthen regional provision of training.

A regional ITO representative told us about how her ITO and the local ITP collaborated …. The ITP provided pre-trades training, then supported learners to transition to an apprenticeship through the ITO.

But while the ITO/ITP relationship is not all bad, it could be so much better.  That’s why the government needed to review the system.  Yes, the ITPs faced a bleak financial outlook, but the underlying design of the funding system for vocational education system were equally critical.

A big part of the solution has to lie in a new funding system for vocational education, one that recognises all the elements of vocational education – brokering; supporting employers to undertake training; supporting learners on the job; high quality off-job courses; the cost of capital; the cost of bringing expert industry practitioners into training to complement the employer as trainer.  And the costs of managing the proposed industry skills body system in a way that gives those bodies a genuine leadership role (rather than a consultative/ rubber stamp role).

The government’s technical discussion document on the funding of vocational education poses many of the right questions. 

But, whether this massive reform programme works; whether, as proposed, the ITOs’ brokering and learning support roles remain as effective once they transfer to a massive new institute; whether the current pockets of excellence in the ITPs can perform as well in a single merged institute; whether the innovations of many of the ITOs and ITPs survives; whether the work of the ITPs outside the vocational education system – their degree work, their foundation education work – can flourish in the proposed new institute … these are the critical questions.  They all depend on the next round of decisions and on the detailed policy design.

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