30 Aug 5 Practical Ways to Improve VET Regulation
Introduction and Overview
There’s been a lot of very passionate discussion on VET regulation in the last two weeks, not least the excellent speech from the Hon Andrew Laming MP regarding his views on some of the issues in the sector and potential solutions.
It’s clear that a growing number of providers believe that ASQA is focussed on reducing the number of RTOs rather than on improving the quality of outcomes in the sector (which is different to compliance but that’s a topic for a future article). Adding to quality provider concerns is the worry that despite producing potentially fantastic student outcomes that serve the student and their industry well, the provider will be harshly dealt with if they don’t have all their “i’s dotted and t’s crossed”. Given the number of appeals to the AAT that are negotiated and settled between ASQA and the provider before a decision is brought down, it seems some of these concerns are genuine (i.e. in many cases ASQA may be moving too quickly to cancel a provider’s registration).
One of the implications of this approach is that providers spend a lot of time trying to second-guess how ASQA will view their practices and how particular aspects of the Standards will be interpreted. It also means that a growing ‘industry’ of RTO compliance consultants is thriving as providers can’t get insights directly from ASQA on important issues such as interpreting the Standards. If consultants were licensed by the regulator to confirm their status as experts, then the sector could have confidence in their services and opinions just as we do with accountants for example.
Unfortunately, there’s no licensing system for VET compliance consultants nor are there training programs offered by the regulator. The only potential training would be accredited TAE qualifications, offered by public and private providers. Unfortunately, while valuable and important professional development for professionals in the sector, they do not qualify a consultant to have a credible view of how ASQA will or will not think about any particular interpretation of the Standards. Even those who’ve audited for ASQA previously (which is now a defecto mechanism used by some consultants to justify premium prices for their day rates) say they can’t give any guarantees on how ASQA will interpret a provider’s practices.
5 Practical Ways to Improve VET Regulation
To improve provider quality and compliance at the same time, and to allow providers to focus more on outcomes and innovation to meet industry needs, than inputs and interpretation, I propose the following five practical reforms:
Reform #1 – Develop a Rulings/Advice Database and ATO-style Private Binding Rulings Approach
We need to increase transparency on how ASQA is interpreting the Standards. It’s critical that providers can understand how decisions have been made in the past so they can make better decisions in the future.
It’s unlikely however, given confidentiality considerations, that ASQA or providers would support a model where all ASQA audit reports were published. AAT rulings are published but they’re not super easy to access for non-lawyers or in a format that acts as a database for education providers to search easily as a reference (i.e. cross referenced with the Standards).
Furthermore, ASQA has no published database that helps to build guidance and precedent for providers trying to understand how previous decisions have been made and to inform decisions they’re trying to make in interpreting the Standards. The ATO however has a Private Ruling system which could work well for the VET sector if adopted with a few changes.
Any taxpayer can apply to the ATO for a ruling on a particular circumstance. That ruling is published (with certain editing to protect the applicant’s privacy) and is only binding on the ATO in respect of that taxpayer but is obviously helpful in providing guidance to other people. ASQA has no equivalent. Providers rely on guidance from unregulated compliance experts, myth or just hope they’ve made the right decisions in relation to their interpretations when it comes to audit time.
If ASQA were to adopt the Private Ruling model, it could be accompanied with an amnesty so that if a practice was found in the ruling to be contrary to the Standards, you would have a certain number of days to remedy on account of you coming forward and seeking a ruling (i.e. it encourages parties to seek clarification rather than hide and hope).
The other relevant part of the model is a Public Ruling where the ATO publishes its view on some aspect of tax law. That ruling is binding upon the ATO and may be relied upon by any taxpayer. This is similar to what ASQA has just published on third party agreements except that in the ATO’s case, it is legally binding upon the ATO so there is no room for the ATO to interpret differently unless they withdraw the ruling and re-issue. In the VET context, this would provide greater certainty for providers when relying upon ASQA’s interpretations of its own Standards.
These reforms would constitute a major change but having this sort of database and rulings system would reduce the support and cost burden of ASQA providing a “provider support desk” of sorts, as I’ve proposed in Reform #5 below, and likely reduce the overall compliance burden on ASQA given the greater transparency on interpretation of the Standards.
Reform #2 – Licence VET Compliance Consultants
Under this reform, I propose that ASQA license compliance consultants who meet appropriate standards and undergo regular appropriate professional development. This would allow providers to work confidently with experts to ensure their operations are compliant and allow a greater focus on delivery. These licensed consultants could conduct “health checks” at any time for providers and providers could have confidence that this service would provide real insight into what continuous improvement areas to prioritise and how their interpretations of the Standards will be received by the regulator.
This would be a user pay model: consultants would pay a registration fee and ongoing annual fees just like RTOs and so would be cost neutral for ASQA. Ultimately however, over time it would deliver significant savings for both ASQA and providers through an increase in the overall level of compliance in the sector as better compliance means faster audits, less remediation, fewer cancellations, mediation, court cases and so on.
It’s worth noting that these consultants would ultimately become the most likely lodgers of applications for private rulings on behalf of their clients.
Reform #3 – Establish Benchmarks for Provider Quality (New Zealand Quality Provider Categories Model)
Introduce provider categories as the New Zealand regulator (the NZQA) does based on the regulator’s confidence in the provider – so providers can be rated as Highly Confident, Confident, Not Yet Confident, and Not Confident, or Categories 1 (Highly Confident) through 4 (Not Confident).
Being evaluated as a Category 1 provider is a signal to the market that a provider meets the highest standards of educational performance and organisational self-assessment. The provider’s rating and report are published on the regulator’s website and these organisations experience “greater freedom, lower compliance costs and performance-responsive quality assurance processes.”
It’s a system that works well in New Zealand and could be used by Australian State and Commonwealth governments to determine approval to deliver government-funded training, and used as a mechanism to match the amount of funding with the quality of provider (i.e. the higher the category of quality achieved, the greater the access to government funding sources for training).
This would assist the government to direct monies towards those providers the regulator has a high degree of confidence in. The provider would then choose if they wanted to avail themselves of that funding. This would also reduce the duplicate nature of audits and checks providers currently go through for state funding applications. Details are here if you’re not familiar with the NZ model.
Australian Home Affairs Immigration Risk Rating Model
Another reference point for quality benchmarking that already exists in Australian education is the Immigration Risk Rating model that is applied to education providers licensed to accept international enrolments. In this model providers are rated Immigration Risk Rating 1, 2 or 3 and also countries’ immigration (and therefore potential student) risks are assessed and rated 1, 2 or 3. For the provider a risk rating of 1 means their risk is assessed as “steadily reducing”, 2 is “stable”, and 3 is “steadily increasing”. Student visa cancellations and visa refusal ratings are key criteria amongst other indicators.
The combination of the two determines as per the table below, whether streamlined evidentiary requirements are required, or regular evidentiary requirements are required. A useful document detailing the simplified student visa framework (SSVF) can be found here, and whilst a bit dated, it is easy to read and the below table is an extract.
Whilst a useful reference point, the NZQA model is far easier and more relevant to adopt than the Immigration Risk Rating model, but it does serve as an interesting reference for evaluating student risk (likelihood of completing based on range of factors?) alongside provider risk.
Reform #4 – Introduce a Case Management Model that Differentiates Service Based on Complexity and Risk
Introduce a case management model for larger, more complex RTOs or education groups and those whose scope includes high risk courses. Currently, providers cannot easily arrange meetings with ASQA representatives to discuss issues, seek guidance, raise proposals, workshop solutions or build relationships. An appropriately designed case management model would go a long way to creating stronger relationships between providers and regulators. It would also provide insights into practices of high-impact providers in the sector and provide familiarity with their key management personnel, which I would imagine would be of interest to ASQA. This is a similar approach adopted by corporate and prudential regulators that recognises that a ‘one size fits all’ approach is not effective.
Reform #5 – Answer the Real Questions Everyone Wants to Know the Answers to
Following the practices of many other regulators, provide the ability to get real answers to questions relating to the interpretation of the Standards, for example “we’re reading standard X, we’re thinking of doing Y, what do you think?”. Then, publish those answers to build knowledge across the sector about ASQA’s interpretation of the Standards.
If my proposed Reform #1 was implemented, Reform #5 would really represent a Private Ruling. In the absence of Reform #1’s implementation, Reform #5 would save an enormous amount of time for providers, reducing ambiguity, confusion and create more space for providers to focus on innovating products, developing relationships with industry and enabling students to achieve the outcomes industry wants and needs.
Whilst the above list is far from an exhaustive one, I believe these simple (I didn’t say easy) strategies would greatly assist in moving the needle away from a fear-based focus on compliance-above-all-else, towards a stronger focus on student outcomes and relationships with industry which are so critical in building a thriving and responsive VPET sector.
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 ‘Quality providers’ is a subjective term, I know. I’m talking about those with a strong history of compliance, reputation in their industry with employers and who consistently produce students adequately equipped and skilled to address the needs of their role and industry. The fact that I can’t point to a benchmark for quality in any credible way highlights the need for Reform #3; we need to be able to categorise provider quality using clear, transparent and trusted benchmarks.
 NZQA Provider Categories: https://www.nzqa.govt.nz/providers-partners/approval-accreditation-and-registration/provider-categories/provider-categories-eer/ 20 August 2019