Standing Committee on Employment, Education
and Workplace Relations
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Submission 52
Monash University
Inquiry into the role of TAFEs
Submission to the House of Representatives Standing Committee on Employment,
Education and Training
Prepared by the
Monash University-ACER Centre for the Economics of Education and Training
October 1997
Background
1. To assist its Inquiry into the Role of TAFEs, the
House of Representatives Standing Committee on Employment, Education and
Training has called for submissions on:
- the appropriate roles of institutes of technical and further education;
and
- the extent to which those roles should overlap with universities.
2. In May 1997, the Victorian Minister of Tertiary Education and Training,
the Hon. Phil Honeywood, initiated a Review of the Provision of Technical
and Further Education (TAFE) in the Melbourne Metropolitan Area. The Review
is intended to build upon recent policy and structural reforms
with the aim of ensuring that the Victorian TAFE network is capable of
delivering high quality vocational education and training (VET) in an
efficient and effective manner well into the twenty-first century.
3.The terms of reference for the Victorian Review are:
- to consider the nature and extent of the provision of vocational education
and training in the Melbourne metropolitan area by TAFE Institutes,
and the likely effect on these Institutes of the development of an open
training market and associated public policy changes; and
- to advise on appropriate structural arrangements for TAFE Institutes
in the Melbourne metropolitan area, including the desirable number and
scope of these Institutes and appropriate linkages with Victorian universities.
4. As part of the process, the Ministerial Review Committee identified
the need to examine research literature on institutional amalgamations,
both in Australia and overseas, to ensure that it is informed about recent
relevant experience.
5. Towards this end, the Ministerial Review-Committee commissioned
the Monash University-ACER Centre for the Economics of Education and Training
(CEET) to prepare a review and annotated bibliography of Australian and
international research literature relating to institutional amalgamations
in the post-secondary education and training sector during the past ten
years. As requested in the project brief, the principal focus of the report
is on literature dealing with:
- economies of scale and scope;
- a issues relating to critical mass;
- policy issues relating to mergers; and
- advantages and disadvantages of mergers.
Purpose
6. The purpose of this submission is to bring some of the key findings
of this research to the attention of the House of Representatives Standing
Committee on Employment, Education and Training in its Inquiry into the
Role of TAFEs.
Issues
Several issues arising from this research are noteworthy as follows.
Differences between TAFEs and universities
Several important differences exist between TAFEs and universities as
follows:
- the variety of academic levels covered by TAFE colleges, ranging from
basic literacy
- to diploma programs, is generally much wider than in universities;
- educational programs in TAFE are shorter in duration, with two-year
diploma programs generally being the longest courses offered in TAFE
as opposed to universities in which the average length of degree programs
is three to four years;
- TAFE institutes are almost solely teaching institutions whereas universities
produce
- both teaching and research outputs, often in an integrated manner;
- student enrolments in TAFE are predominantly part-time (90 per cent)
as opposed to
- universities where they are predominantly full-time;
- vocational programs in TAFE, particularly trade and technical courses,
tend to require a much larger investment in expensive and specialised
facilities and equipment than do universities programs which typically
include a higher proportion of generalist courses (eg. arts, social
sciences). The major exceptions to the rule are university courses in
areas such as medicine and engineering.
- the range and level of salaries for academic staff vary between TAFE
and universities,
- as do the relative proportions of permanent to casual staff,
- student/academic staff ratios differ substantially, as does the range
and type of support
- services and facilities; and
- TAFE institutes are also required to comply with a range of external
accountability requirements arising from their close linkages with industry
and government which in turn create a range of administrative costs
not apparent to the same extent in universities. Conversely, universities
shoulder the costs arising from internal course development and accreditation
procedures both of which functions are generally not performed by TAFE
institutes.
All of these factors have a significant impact on the nature, processes
and costs of educational provision in TAFEs as compared with universities.
Economies of scale
7. The most recent Australian research on amalgamations
in higher education suggests that most scale economies are realised in
universities with 11,500 EFTSU (Heaton and Throsby 1997). Such cost savings
appear to be due to scale effects rather than to changes in the scope
of institutional activities (eg. Lloyd et al. 1993). Heaton and Throsby
(1997) also find evidence of diseconomies of scale in large institutions
(ie. more than 11,500 EFTSU).
Economies of scope
8. Research findings on economies of scope in higher
education are contradictory. Most research suggests that large institutions
can experience scale-related diseconomies when their educational profile
is too broad whereas small institutions can overcome scale-related diseconomies
through specialisation. Colleges of Advanced Education (CAEs) which merged
with technical institutions in the 1980s experienced greater cost savings
than others, due primarily to program diversification and resource flexibility
(Abbott 1996).
Vocational education and training
9. Although research on scale economies in vocational education and training
is limited, it suggests that
- even within the same institution, average costs for vocational education
in some cases exceed those in university programs;
- unit costs in vocational education are more sensitive to institutional
size than those in general education, due primarily to the use of relatively
expensive equipment and specialised instructors; and
- economies of scale can be realised in highly specialised institutions
at relatively modest levels of enrolment.
Organisational flexibility and responsiveness
10. Some of the literature suggests that a fewer number
of large multi-purpose educational institutions offers the potential for
greater organisational adaptability through qualitative flexibility. However,
there is some emerging evidence to suggest that a larger number of smaller,
specialised institutions may be provide greater numerical flexibility
and responsiveness to industry and community needs in a market-oriented
environment.
International developments
11. Large-scale processes of organisational restructuring
through amalgamation are occurring in the post-secondary vocational education
sectors in Finland and the Netherlands. In both cases, these processes
have aimed to consolidate institutions of higher vocational education
into a system of post-secondary education and training operating parallel
to, and in competition with, university systems. According
to the OECD, the maintenance of separate university and non-university
systems appears to have been adopted as a means to enhance flexibility,
diversity and responsiveness to changing industry and community needs.
12. Neither the Dutch nor Finnish experiments have involved
mergers between vocational education institutes and universities, although
both have attempted to raise the status of higher vocational qualifications
to degree level. And both have attempted to create multi-disciplinary
institutes of higher vocational education capable of providing a broad
array of occupationally-relevant programs, in addition to applied research
and development activities for third parties.
Conclusion
13. Available research on amalgamations between universities
and institutes of technical education and training is somewhat inconclusive.
Proposals to alter the relationship between TAFEs and universities via
institutional mergers require careful consideration of a range of issues
including: economies of scale and scope; the relative merits of separation
versus integration with respect to vocational and academic education at
a tertiary level; and issues concerning organisational flexibility and
responsiveness in a market-oriented environment.
14 The Victorian Ministerial Review Committee has kindly
agreed to allow Monash University to append the relevant review of research
to this submission to the Inquiry into the Role of TAFEs by the House
of Representatives Standing Committee on - Employment, Education and Training
(see Attachment).
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