The case for Free TAFE – comment by CEO Craig Robertson

In conversations with several people they have lamented the introduction of Free TAFE courses in some states and territories, although each scheme varies in scale and scope. There has not been the chance to test their logic, but it has caused me to think it through. I assume they are concerned that they distort the VET market due to the moral hazard.

According to the economics boffins, moral hazard is a situation in which one party gets involved in a risky event knowing that it is protected against the risk and the other party will incur the cost.

In post compulsory education it is the perceived risk (to government) that free courses encourage frivolous enrolments or early dropouts as there is no apparent cost to the students to make them think before enrolling. Or there is free‑riding from those who can afford to pay fees and should. Costs are borne by governments. This deserves some unpacking.

There is cost to those who take a Free TAFE place. Apart from foregoing earnings or their free time (the most common understanding of cost) there is also significant emotional cost in making the decision to study. I am reminded of a story we presented some time back about a lady who walked past a Skills and Jobs Centre three times before plucking up the courage to enter, such was her anxiety about failing. Deciding to study is a huge undertaking.

When TDA spoke to students displaced from closed VET FEE-HELP providers almost 100% enrolled because they were intent on building their career chances, not because they could rip-off the government.

From what I hear, Free TAFE is presenting people with a chance to study that they thought was not available to them. Even a token fee acts as a barrier – when every dollar counts, paying for training ranks it down the order of things, regardless of its long-term benefits.

Given that government fee waivers would have been available for people in these circumstances, why has Free TAFE made the difference? I suspect those taking them up are responding to the message from governments – we care about your future, education and training is the pathway to success and we offer you a government-guaranteed service.

There is another possibility. Many people are uncertain about the occupation and industry they want to enter, let alone their capacity to study or adjust their life to make way for study. In a sector structured around selection of courses aligned almost exclusively to an occupation, it is a logical consequence that people will need to try several courses before they find their bearings. Free TAFE liberates students to go on this journey. After all it’s better to try several times and eventually find your way than be limited to just one shot.

Free-at-TAFE stands up also. In the face of uncertainty, TAFE students know they have access and the freedom to survey and move to courses that resonate with their aspirations and their capability, supported by TAFE staff. This is the public mission of TAFEs and why we regard them as comprehensive learning institutions.

If concern remains about distortions and moral hazard, there are other areas more deserving of the concern. The combination of Government subsidy and deferred payment of student loans effectively saddle universities with a moral hazard dilemma, maybe we should call it free-Bachelors. The financial return from university study mitigates that risk, however. Or, how much is industry control of VET qualifications a moral hazard – a prevalence to over-specify its expectations from the VET sector at a cost to governments (and providers), or employers’ free-riding off public subsidy for what is their responsibility for skilling workers? These are issues yet to be rigorously tested in policy discourse.

Overriding everything are ethical considerations. What kind of society are we to exclude a person from study, deliberately or accidentally, because it messes with market settings or there’s a risk of free‑riders? Do we not accept sick patients in our hospitals even though there’s a risk they’ll disregard the treatment and present again, or that free-riders who can afford to pay for their health care access the services?

These are the dilemmas typical of universal services such as health but there are sophisticated preventive and triaging strategies that go with it. It is not too inconceivable that TAFEs are also regarded as a universal service, especially given the challenge for citizens to recover from COVID.

Governments for the last decade or so have seen a market can solve these issues. Starting with TAFE as a universal service, then adjusting other supply to round out the dimensions VET needs to serve makes far more sense. For example, community education providers can reach into the community to start citizens into the education journey and industry-owned providers can train to suit their needs. The sense that a blind invisible hand of competition can meet the multi‑faceted needs of society and industry is misplaced.

TAFE First allows governments to meet a range of outcomes for the community, whether it’s the passage to success for those at risk, the key for core skills needed across each state and territory and the trusted government entity in which it can invest to design, deliver and foster new skills.

The propensity of governments to outsource their responsibilities and a short-term focus on market design hide the longer-term costs. Governments around the world are wrestling with climate change action because they can now see the impact down the track. Action now may not be cost‑effective in today’s terms but it is compared to the environmental cost that is not that far down the track. If action now makes sense for the planet counting for the cost over centuries, then the right action now makes sense for the life of someone wishing to pursue further education to improve their life. Free TAFE makes sense.