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Interview with Kit McMahon

July 11, 2017

Kit McMahon has occupied the role of Chief Operating Officer for the Australian Council for Private Education and Training (ACPET), the national peak body for independent post-compulsory education providers in Australia. During that time, Ms McMahon worked tirelessly to advocate the rights and positions of the more than one thousand members of ACPET. This job was made all the more difficult by controversies that rocked the VET industry in 2015–2016, most notably the public accusations that certain high-profile education providers had exploited the now abandoned VET-FEE HELP scheme for financial gain. More recently, she has began a new role at Navitas, bringing across her many skills to work with government and stakeholder relations. I sat down with Kit to discuss the private education landscape in the aftermath of these developments, and find out what RTOs and other education providers should be focusing on to maximise their success in 2017 and beyond.

Reay Mackay: So I’d like to begin by asking how you first became involved with ACPET?

Kit McMahon: I actually started in retail and then found myself working for a private provider for many years. I cut my teeth in private education and training, and bore witness to some of the fundamental changes that took place nearly a decade ago. After that, I moved into the not-for-profit area. I’ve also had a role with Skills Councils for a period. So I’ve had a connection for some time with ACPET and when the opportunity last year came to work for Rod Camm (CEO of ACPET), I jumped at it. My main work now is running tuition assurance and managing activations (Ed: ‘Activations’ refer to the process of supporting students whose training provider can no longer fulfil their obligations). Those activations, coming up on about eighteen now, have occurred mainly since I started last year — would you believe it!

RM: Let’s talk about the industry’s response to the discontinuation of VET-Fee Help. Are we through the woods yet?

KM: To be honest, the trauma that the sector is going through has not really ended. If I speak from the heart, the private brand has been tarnished by the scandal. But in whatever sector you work in, whether it’s financial services, or disability, or not-for-profit, there will always be people that run businesses unethically. That was also the case in our sector. And I don’t think people understand that every time there’s a reference by a Minister, or the ABC, or the newspapers, to dodgy private providers, it reverberates across the world, causing immeasurable impact to our international market. Unfortunately, the fall-out also affects good-quality private providers. The real concern is that this ongoing negative impact on vocational education and training contributes to a pre-existing schism occurring across the sector; namely, that both secondary schools and higher education providers are increasingly offering courses in Cert IIs and IIIs. We’re seeing more and more vocational space being gobbled up.

RM: That’s an interesting perspective — almost like VET is being eaten from the top by the higher education providers, and nibbled at from below by the schools sector.

KM: Yes. There’s no definitive collaborative national conversation going on about the future of the skilling system. We have the Inquiry into Innovation and Creativity: Workforce for the New Economy, and the National Centre for Vocational Education and Training is running a conference on this topic (Ed: 5–7 July 2017) both asking the same question: “how do we get the skilling engine room of this country up and running?” But there’s really an ongoing challenge to bring people round the table in a bipartisan cooperative manner, to actually do something about the future skills of the country. It’s messy, it’s complicated. But the good news is I’ve had some recent conversations with what I call these “long-in-the-tooth wiseheads” and they’re alive to the crisis which is going on, so that’s really good!

RM: So we’ve had this shake-out — and we’ve now got the VET Student Loans policies that have been introduced. What feedback are you getting from your members about the situation on the ground for RTOs and education providers?

KM: I think one of the things that has happened is that we’re seeing prices being cut. For example, people will say a childcare qualification at the diploma level shouldn’t cost $18,000, so you now see providers charging $12,000 for it. The government means and waiver costs haven’t gone down, but what the provider has done is cut the price of the course to fit into that price range. The second thing that’s happening is we’re seeing people exiting from the market, either by closing their business altogether, or moving into higher education.

RM: RTOs moving from the traditional VET space to the higher education space?

KM: That’s right, they’re shifting their qualification. Another unique development is that providers are stopping delivering VET, assuming that their credentials, the brand of their organisation, has a higher level of credibility in the market than the Certificate III or the Certificate IV or Diploma. Which is saying something that we need to listen to.

RM: Are you saying that they’re choosing to offer their high quality courses as a non-accredited offering?

KM: Yes, because their overhead to manage under VET is too high, and it’s just too difficult. Finally, many providers are changing their business models. There’s many mergers and acquisitions going on, meaning you’ll either see the survival and growth of the big guys, or of highly niche providers.

RM: Yes — so real general consolidation of the market?

KM: Yes, there’s consolidation going on. The other thing that we’re seeing is that the market is starting to provide solutions in the absence of government endorsed student loans. We’re starting to see NAB, Bendigo Bank, and a few other banking organisations, develop loan products for students. This is a bit akin to what is going on in the US, and there’s an internal conversation within ACPET about what our role is. We certainly don’t want to be a banking loan broker, but there’s conversations concerning whether our quality assurance system on providers might be a ‘value add’ to the decision of banks to deliver loans through providers. I think, given my background in working with young people, that I’ve got ethical questions about whether young people are properly informed about taking on obligations to a commercial financial institution. ASIC’s MoneySmart have some really smart products that are already developed around educating people on that space. Ultimately, people still need funding to help them educate themselves.

RM: Treasurer Scott Morrison recently announced $1.5 billion in Federal funds for the period 2017–2021, for a new program to roll out apprenticeships and traineeships. What advice would you have for training providers and your members to take advantage or capitalise on this announcement? How can they optimise these additional funds that are going to be available in the market?

KM: Well, I think the first thing to say is to keep your ears to the ground in terms of the details, because that is still being worked out. We’re still learning about the National Partnership Agreement with the States. There’s a lot of work going on at the moment trying to define what an apprenticeship and a traineeship actually is. States will need to bid for project proposals, but as of yet there’s no criteria that we’re aware of about what that will be, or whether State funding will need to match the Commonwealth. These arrangements are set to commence on 1 July 2017. I think that’s the best advice — keep your ears to the ground about what that detail might be.

RM: In your view, what policy changes need to happen in order to help the sector be more successful in the future?

KM: The best thinking will be done by lots of different people, through a process that allows differences of opinion to come out. That’s crying out to be done! And we also need to ask how are we going to build our education sector — how we can adapt it — to meet the needs of our workforce. Those are the conversations we need to be considering. It should be tripartite; governments, unions, and industry, working out where the country is going, and how we can support it to get there. That conversation is yet to occur, at least from what we can see.

RM: It sounds a little bit bleak! Can you give me a sense of what your members are feeling in 2017? Now that we’ve experienced the end of VET-Fee Help, and a new audit framework from ASQA, what do you see as the main opportunities for RTOs over the next few years? If you were giving advice to members, what would be the key business focus areas or market opportunities that you can identify?

KM: 2017 is settling down, and I predict that 2018 will be the year that people start to raise their head up a bit. People are still changing their business models. RTOs and training providers that survive and thrive will have more robust business models with multiple, diverse arms of income. Whether that be different forms of training, it won’t all be in one pie. They’ll have government income, they’ll have some fees for service, they’ll have corporate. I think they’ll have business models in terms of great governance, clear governance that derives from management, and all those good things that make businesses thrive; investing in IT and systems, and investing in people, so you can evolve and adapt. That is vital.

RM: Do you see technology changing the way RTOs deliver learning and assessments services and improve their quality? What are the key things that RTOs in 2017 can be looking to do in the next few years?

KM: Making sure that the percentage of the balance sheet that is dedicated to administration expenses is as low as possible. Any investment that can help manage the increasing compliance workload will be vital. And I think training providers who are able to understand what makes them different or what makes them good or what is their core business — they stick to it. The trick is to then invest in the technology that helps them thrive. If you’re good at online learning, and that makes you different, then invest in that. But if you’re not good at that, and it’s not your core competence, then invest in things that help you deliver the face-to-face consultancy service that makes other organisations thrive and grow. We have members who continually talk about the cost of regulation and the cost of reporting to government; so technology that handles delivering up-to-date reports on student participation and financial reports, technology that’s going to enable backroom business processing to approve, is certainly going to help training providers and RTOs to keep focussed on the things they’re really good at.

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