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Government employer subsidies and rebates

One submission claimed that in a couple of instances, apprentices/trainees have had to travel considerable distances to a provider when local providers, who were previously able to deliver the training, reached their cap.

Submissions and consultations around this Review have revealed widely differing views on the impact of the freeze. At one end, the view is that the freeze should remain as a means of restricting the number of private providers operating in the training market. At the other end are arguments that the freeze should be lifted forthwith.

The views of private providers are well reflected in the Australian Council for Private Education and Training’s submission to the Review.

The Victorian Government has a choice — try to recreate the past or work with the political and market pressures to develop a system which meets the future needs of apprentices, trainees and employers. Ultimately the Victorian Government, by its actions rather than its words, will demonstrate in whose interests the

apprenticeship and traineeship system exists.32

The Hon. Lynne Kosky, Minister for Post Compulsory Education, Training and Employment has given a reference to the State Training Board of Victoria to consider and report on the extent of contestability in the VET market. The extent of User Choice in this wider context of contestability will be one of its considerations.

competing in the marketplace against NACs) and from independent brokers who are the other ‘new kids’ who have emerged in the training market. Some of the ‘old kids’

have sought to confine NACs to administrative processing functions despite their wider contracted functions.

NACs have a key role to play in marketing New Apprenticeships and ensuring quality information on them is available to both employers and apprentices/trainees and ensuring that User Choice principles operate. They also have a useful role to play in brokering administrative processes with employers in relation to the payment of employer incentives to employ an apprentice/trainee. They are a key link between RTOs and employers.

The quality of the services they provide to employers, apprentices and trainees on the one hand, and to the Victorian apprenticeship and traineeship system on the other is a critical factor in the success of the whole system.

This Review is not a review of NACs — that function lies squarely with the

Commonwealth government through DETYA. Nor is this Review privy to DETYA evaluations and audits of New Apprenticeships and New Apprenticeship Centres.

However, the interface between NACs and the Victorian apprenticeship and

traineeship system is an important matter for this Review and the following comments relate to this interface. The Review is in no doubt that this interface is not good

enough and both NACs and RTOs have contributed to the problem.

The initial point to be made is that it was widely agreed amongst stakeholders that the first NAC contract contained inadequate performance criteria to ensure that both the Commonwealth and the Victorian government objectives were met. A radically different market-based system for promoting New Apprenticeships, combined with unfortunate guidelines on the application of incentives to existing employees, created a feeding frenzy in the marketplace.

Revised guidelines on incentives in 1999 and a much improved second round contract seem to have gone some way to rectifying this deficiency. Comments to this Review about NACs may therefore be skewed by negative experiences of the first contract round rather than reflecting the current situation.

Notwithstanding this comment, the standard of services provided by NACs remains highly variable across Victoria.

The Review became aware of a number of NACs who are providing top-quality services. This occurs most often where the NAC staff understand the nature of the industries in their area, employer requirements, Training Packages, work-based training and the VET system more broadly; attend to the interests of apprentices and trainees as well as employers; have efficient administrative systems; and manage conflicts of interest scrupulously. The commissioned survey indicated that 90% of those surveyed employers currently involved in the system were very satisfied or somewhat satisfied with the services provided by NACs. This does not give an indication of the views of those employers who are not currently participating in the system.

Some NACs advised the Review of the difficulties they have with RTOs, employers,

However, the Review is convinced that there are NACs whose services to the system are either inefficient or unethical.

Administrative services

The introduction of NACs into the training market in Victoria does not seem to have simplified paperwork or streamlined processes. Delays in NACs entering Training Agreement data on the DETYA data system before passing the Training Agreement to the AAB for registration via DELTA was frequently raised by providers and

employers in submissions and consultations. There is considerable frustration with these delays and their negative consequences for provider cash flows and the timing of training commencement.

Submissions and consultations suggest that basic errors on simple matters such as recording the correct qualification in the Agreement seem unacceptably high. PETE has confirmed this, noting also that illegible writing is a further factor contributing to delays in issuing DELTA numbers.

The NAC consultation indicated that heavy marketing by providers and brokers is making processing the primary activity of NACs. They have argued that this restricts their capacity to market to meet the targets in their contracts.

Information to employers

Some NACs are facing industry barriers in carrying out their legitimate functions. The Review was advised of one employer organisation which refuses to allow NACs to work directly with their members and will not deal with a particular NAC because it demands to be present to conduct the sign-up. One can only speculate what the employer organisation’s intentions might be in insisting on this practice.

On the other hand, some NACs or their agents are failing to provide employers with accurate information and advice on their role and responsibilities in workplace training and assessment.

. . . The present funding arrangements do not provide incentives for training- focused promotion, often resulting in a situation where employers are unaware of what the traineeship program, particularly the workplace delivery model,


Not all NACs appear to be providing employers with genuine User Choice. In some instances, employers not acquainted with User Choice principles are steered to particular providers with commercial links to the NAC. This is a special problem when the NAC is also an RTO, offering a particular range of Training Packages and programs.

Marketing to employers

Aggressive marketing of New Apprenticeships, User Choice and flexible delivery by NACs to employers has been highly successful in introducing many new employers and jobseekers to the apprenticeship and traineeship system.

The Review did not undertake a detailed analysis of NAC targets (which are set in consultation with PETE) or NAC performance against their set targets. It has relied on


knowledge from the field that suggests that not all NACs are servicing all industries and all employers equally — that is, they may be ‘cherry-picking’ the market.

This claim needs to be set against the views expressed during the NAC consultation that heavy marketing by brokers and RTOs in areas outside their targets made it difficult for them to reach their DETYA targets, that is, any perceptions of ‘cherry- picking’ may be a function of the marketing activities of brokers and RTOs as well as NACs.

However, in one of many similar examples offered to the Review, one industry experienced an immediate decline in the commencements of traineeships in their industry from 1 May 1998 when the Jobs Network and NACs commenced operations.

The industry body concerned offers the following analysis.

It is apparent that, under financial and contractual pressure to place significant numbers of trainees and apprentices, New Apprenticeship Centres are servicing larger employers with potential for multiple placements, and promoting

traineeships that are easily understood and can be sold in one visit. New Apprenticeship Centres do not seem to have the capacity, nor the desire, to promote more complex traineeships that require more than one visit to an employer.35

Similar views were expressed in regional consultations where concerns were

expressed that small employers, farmers and employers located at some distance from major regional centres were not being well serviced by NACs, who concentrated their marketing efforts on major employers in major population centres within the region to reach their sign-up targets with minimum marketing outlay.

Inappropriate sign-up

Some NACs are arranging inappropriate sign-ups in the volatile traineeship area, with negative consequences for RTOs, apprentices/trainees, employers and the integrity of the apprenticeship and traineeship system as a whole. The following example is illustrative of many received by the Review.

One NAC [named] signed 70 trainees in Small Business in one worksite. The trainees were actually employed in two restaurant operations under the one roof.

Clearly, the 70 trainees should have been (and were after a delay of more than six months) signed into Hospitality Traineeships . . . Trainees signed into ‘incorrect’

certificates occurs far too regularly. This occurs because many NAC personnel or NAC agents do not understand training.36

Other examples of inappropriate sign-ups provided to the Review included the following:

Ÿ a Small Business Package for farm workers in lieu of the more appropriate horticulture or agriculture programs;

Ÿ a chicken bar takeaway food fry cook signed up for a Frontline Management Traineeship;

Ÿ sign-up at Certificate III without due regard to trainee capability, because of the more favourable incentive payments at that level;

Ÿ a sign-up which failed to consider the literacy, numeracy and English proficiency levels of the trainee.

Conflict of interest

Because the market is so fiercely competitive, specialised and complex, there are very few players in it who do not have some real or potential conflict of interest. Very few players are in a position to provide objective advice untainted by financial self- interest.

In the Victorian NAC market there are GTCs, employer organisations, RTOs, industry training companies and ITBs. The DETYA contractual requirements for NACs have gone some way to ensure NACs handle such conflicts in transparent ways but, as one NAC submission noted, not all NACs operate in this manner.

RTOs argue that, in order to circumvent perceived anti-competitive behaviour by some NACs who are also RTOs, they have been forced to market directly to industry to ensure employers are aware of the full range of RTOs available. This in turn has increased employer confusion about who is responsible for what within the system.

The following comment expresses the overall judgment of the Review in relation to NACs.

The problem of NAC services has to be addressed at the NAC level. This problem is worse with NACs who are now in their second contract than those who have just started. There will need to be a combined approach by DETYA and OTFE on this issue. The credibility and hence the future of the NAC system depends on it. Ignore it and the system will break down.37

2.6 Legislative framework

In general terms, the legislative provisions governing the apprenticeship and traineeship system are considered adequate to support quality training.

Only a handful of stakeholders consider that legislative change is needed to improve quality. The following comment reflects the spirit of the majority of submissions.

Dependence on legislation and regulations supposes that government wants to be in the business of quality management via those instruments. In the past this required a significant workforce, fleet of cars and support staff. While it worked well at some levels it only attended to squeaky wheels. There is no way that government could manage the quality of the new, changing and expanding training environment in any physical sense.38

There are, however, four legislative and related matters raised during the Review which do require further consideration.