Report

The NSW vocational education and training market and tafe NSW's competitive position within it

Publisher
Vocational education and training Students TAFE New South Wales
Description

Executive Summary

TAFE NSW is operating in an increasingly competitive vocational education and training (VET) market in NSW. The Australian VET market is large and highly competitive. It is made up of nearly 2000 often small and highly specialised Registered Training Organisations ( RTOs ) with various financial management and models and commercial incentives (e.g., for profit, not - for - profit, cost centres). TAFE NSW is Australia's largest VET provider and continues to dominate the NSW market. However, TAFE NSW will face increased competition, especially in its largest areas of current provision, including government - funded and fee - for - service sector; value - seeking and price sensitive customers; lower - level certificates and main fields of education.

On - going changes within the VET market are negatively impacting TAFE NSW's competitive position. TAFE NSW has a strong reputation, with students rating the quality of its teaching above that of private RTOs . However, TAFE NSW lags the market – by up to 8ppt – on other key dimensions that students and employers value, such as job placement and convenience. While Open Training and Education Network ( OTEN ), TAFE's online platform, is very successful, TAFE NSW also lags competitors in the delivery of blended or digitally - enhanced training, which the majority of students now expect. In growing VET markets, such as international students and higher education, TAFE NSW also under - preforms, with a lower share of these markets than TAFEs in other states.

TAFE NSW's cost structure is uncompetitive, further undermining its market position. TAFE NSW is at a significant unit cost disadvantage versus reputable competitors, which makes it challenging to price competitively against more efficient providers. TAFE NSW's unit costs are double those of the most efficient reputable private providers and 60% above other TAFEs . Workforce and asset costs drive this cost differential. High teaching salaries and low teaching hours means delivery costs are high. High physical assets in multiple campuses across overlapping geographies and low utilisation of those assets drive up non - delivery costs. The structure of TAFE NSW as 10 Institutes and multiple online offerings also adds overhead by creating multiple small institutions and duplicating administrative functions.

Without change, TAFE NSW will be increasingly uncompetitive and may suffer financial losses. To remain competitive, TAFE NSW must improve its productivity, decrease its cost base, and maintain or grow enrolments up in order to defray high fixed costs. Without change, TAFE NSW could see market share decreases similar to those experienced by other state TAFEs following increased contestability. TAFE NSW will need to reform from its current traditional model to an efficient, modern, customer and commercially - focused business.

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