Monday, March 8, 2010

Making money - the cost of Regulation

ACPET's website now has a page dedicated to Policy, and the first policy notice that caught my attention is their summary of their report on the uptake of and use of the PPP funding available to RTO's. Guess what it says ...
Many ACPET Members are encountering an enormous regulatory burden due to different reporting requirements, systems and timelines. This regulatory burden is a serious drawback of PPP and as an outcome is a disincentive for PPP providers. A commitment is required from the states to harmonise data reporting requirements. As Australia’s tertiary education sector continues to move towards a national system it is no longer acceptable for data reporting anomalies to exist from state to state. I raised the cost of meeting regulatory requirements in an earlier blog, `RTO as Business...', on the 31/01/2010. In that blog I focussed on the costs of insurance to meet regulatory requirements, the ACPET report picks up on the costs of meeting reporting requirements that vary from State to State in what should be a National system. I recently calculated the cost of implementing new reporting capabilities for an SME RTO. Taking into account the need for AVETMISS compliant RTO software, trained staff capable of managing various data systems (the internal RTO system plus the HEIM system, a different data reporting system for each state that they operate in and the QI data system), and the cost of employing a QA officer able to manage the various governance requirements of audit systems, funding systems and reporting systems, this cost burden becomes an effective barrier to SME RTO's. The argument for this cost burden is that improved management through regulated systems leads to continuous improvement while ensuring the client receives a quality product by validating academic and fiscal processes of the RTO. The argument against this cost burden is that the market place will determine quality and that to survive, business's need to be doing all the continuous improvement processes anyway, and a smart business will be integrating QI and fiscal controls appropriate to their size and scope, without having to meet externally imposed system criteria. The imposition of external criteria does nothing to add value to the RTO's product, and the real measure of quality is in the clients response. The collapse of the market for international students is an exemplary illustration of this point and has occured in spite of external (read State & Federal regulatory authorities) criteria being applied. Would it have collapsed sooner if left to market forces and if it had not been falsely supported by claims that the regulatory system we have in Australia ensures that RTO's meet quality standards?
What do you think? Leave a comment and add your voice.