The fall out between Careerforce and Health Ed Trust signals a new chapter for aged care training. JUDE BARBACK investigates what went wrong and why, and what it means for the sector.

Twelve years ago, Careerforce and Health Ed Trust (HET) began a rolling annual contract. The agreement was for Careerforce, the aged care sector’s industry training organisation (ITO), to provide HET, one of the major providers of health and aged care training through its ACE programmes, with funds for credits and completed training agreements.

But time passes, politics interfere, agendas change. Fast-forward to March 2012 and any illusions of agreement between the two parties have been shattered. On 1 March, HET announced it would not be amalgamating with Careerforce, despite talks of a proposed merger last year. Instead, owing to the ‘overwhelming support’ from subscribers, the HET board made the decision to continue its operations without funding from the ITO.

Where did it all go wrong?

Upon learning that Careerforce had no intentions of renewing the agreement when it expired in December, HET expressed concerns about Careerforce forming a potential monopoly situation in the sector. HET also indicated it would have difficulty continuing in the absence of ITO funding. Careerforce subsequently arranged a conference call with HET to address these claims. Reconciliation appeared within grasp when Careerforce were in support of HET’s suggestion to create a merger between the two organisations.

However, the proposed amalgamation slipped quickly away when Careerforce laid money on the table. The sum of $500,000 was offered to HET. Careerforce says the money was to support HET’s ACE programmes; HET says it was to buy them out.

“There was no question of a merger,” says John Ryder, chairman of the HET board. “They offered us $500,000 to hand our business over to them and said our material would disappear in two years. It was a complete takeover. This was industry money offered to us to close us down, effectively.”

Consequently HET revised their decision to amalgamate with Careerforce.

Ray Lind, chief executive of Careerforce, refutes the claim that the $500,000 was an attempt to buy HET out and close down the ACE programmes. He says the money was to help HET meet obligations to employers who had purchased the ACE programmes.

“We have no idea why there is confusion as both groups agreed in principle to the merger document,” says Lind.

A total of $655,000 was paid to HET in good faith in accordance with the operational contract, which came into play at the time the proposed merger was agreed. Even though the merger was cancelled, HET are under no obligation to repay the money.

Lind also disputes Ryder’s claims that the ACE programmes would be axed under the proposed merger principles. He believes the alleged two-year expiry date for the programmes is likely to be a misinterpretation of the timeframe outlined in the merger document, which indicates the curriculum is likely to be reviewed at that point.

Ryder is not alone in his fears for the ACE programmes under a merger arrangement. John Collyns, executive director of the Retirement Villages Association (RVA), believes a merger arrangement could see the ACE programmes disappear over time.

“There are a lot of individuals who have trained under ACE who would like to see the qualification survive,” says Collyns.

Tip of the iceberg

Although tensions are clearly running high at present, according to Ryder, the cracks in the relationship between HET and Careerforce started appearing long ago.

“When we started this, there were a group of providers, it was an industry initiative, and we boxed along with the ITO in a partnership, trying to educate – to the best of our ability and theirs – everybody we could. They then became competitive and political. It would be fair to say, in the last decade, not a single staff member of the ITO has approached our board with any positive suggestions on education apart from wanting to terminate our contract or take us over.”

What drove Careerforce to become, as Ryder asserts, “competitive and political”? Why did they choose not to renew their contract with HET?

Pushed by the TEC

Many signs point to the Tertiary Education Commission (TEC) as a catalyst for driving change in Careerforce’s policies and operations. The ITO concedes that it has had to make changes along the way to comply with the rapid belt-tightening of the TEC.

In 2010, the TEC began a series of reviews into the compliance of ITOs with the alarming discovery that 18 ITOs needed to repay funding totalling $4.3 million for trainees not actively engaged in training in 2009. The findings prompted the TEC to make significant changes to the way ITOs operate, including aligning the funding to the progress of trainees, thereby making the system more focused on performance. Consequently, greater emphasis was placed on the industry cash contribution – an expectation of the Government that has been in place for a number of years for 30 per cent of an ITO’s revenue to be contributed by the ITO’s industries.

The reviews also led the TEC, acting on a governmental directive, to reduce the number of ITOs in 2011, urging smaller organisations to pair with larger ones. Accordingly, Careerforce merged with the Social Services ITO.

The TEC says the Government is seeking more efficiency in the industry training sector, and to this end has supported ITOs by facilitating ways in which these efficiencies can be gained.

“While this has led to some mergers within the ITO sector, this is not the only way efficiencies are being addressed,” says Grant Klinkum, general manager for tertiary investment at the TEC.

Even so, the increasing pressure and squeeze on funding from the TEC in ensuring “efficiencies are being addressed” perhaps gives some context to Careerforce’s actions in failing to renew the HET contract in 2011. Careerforce maintain that in light of the restricted funding, it had to find a cost-effective way to service the training needs across the aged-care sectors.

Klinkum claims the TEC had no direct role in the proposed and failed merger between Careerforce and HET, but he reiterates the point about achieving efficiency within the ITOs.

“With the tightening of operational policy, the TEC has encouraged all ITOs to look at areas where efficiencies can be made, and to work at collaborating across the tertiary sector for the betterment of trainees, employers, and their industries,” he says.

While the TEC’s changes have not directly altered the role of Careerforce, they have certainly had an impact on the funding that is available, and this, in turn, has altered the focus of the ITO’s activities. It seems clear that Careerforce’s decisions regarding its agreement with HET are the result of the ITO heeding TEC advice and creating efficiency.

A level playing field …

Lind says Careerforce is just trying to create a level playing field.

“We’re trying to move to a fair and equitable basis that applies to everybody. We’re very reluctant to enter into an arrangement with HET that is different to other training providers. It could be argued that if we were to do so, we would be creating a barrier to entry for other training providers.

“There may be other trainers who might be very keen to deliver training to the aged care sector, and they need a fair and equal opportunity to do so,” says Lind.

Questions have been asked by some whether Careerforce, in the interests of creating an even playing field, would pay HET the same $8 rebate for newly registered level 3 unit standards if they meet all the same criteria as Careerforce has to meet with the TEC.

Lind says Careerforce wouldn’t consider this.

“The payment needs to go to the employer. The employer can pass it on to HET if they wish, but what has been unfair with the arrangement with HET in the past is that we have treated them differently to any other training provider. If HET’s clients choose to take the money we give them and give it to HET, that’s their business.”

… or driving a monopoly?

HET claims that instead of driving more choice, Careerforce are veering toward a monopoly situation, something many employers are fearful of, according to Ryder. Fears of a Careerforce monopoly are driven by the fact that, in addition to money received from the Industry Training Fund, the ITO charges employers and students for their services and resources and therefore could possibly increase prices.

In official communication to subscribers, Ryder does little to conceal his contempt for the way Careerforce operates: “To this day, the commercial education arm of Careerforce is funded from industry education money, together with what they charge on a per student basis. It is a distinctly uneven playing field.”

Ryder’s concerns run deep. He claims that Careerforce’s actions are not only unfair, but also illegal, pointing to a possible contravention in sections 27 and 36 of the Commerce Act, which imply that a large portion of the industry cannot act against a competitor to create a monopoly.

Furthermore, Ryder believes Careerforce is also infringing sections of the Industry Training Act.

“Under section 10 of the Act, it says they are not allowed to monitor, assess, or deliver education in any way – but they are. We believe they are contravening the Act; they believe they aren’t. We have a QC’s opinion that says they infringe sections 10 and 13 of the Act.”

These are serious allegations indeed. Lind is adamant Careerforce is not a training provider.

“TEC has previously considered HET’s concerns and rejected their view in support of Careerforce continuing to operate as they had previously operated under the Act, and which we have continued to do. Whether TEC wish to review this again is not something we could comment on,” says Lind. However, the TEC was happy to comment, and supports Lind’s claim, indicating it does not wish to review this matter.

“As far as the TEC is aware, no breach has been made,” says Grant Klinkum of the TEC.

In the event that Ryder makes a formal accusation against Careerforce, the TEC says it would investigate the accusation to determine if a breach has been made.

“If it is found that there has been a breach, the resulting action will be dependent on the seriousness of the breach,” says Klinkum.

Given that many ITOs apparently operate in the same manner as Careerforce in terms of the provision of training resources to their respective sectors, one has to wonder what the repercussions might be for the TEC if a breach was found in this instance.

Confusion over the ITO role

There is no smoke without fire. Even if it transpires that Careerforce hasn’t officially breached the Industry Training Act, there appears to be much confusion surrounding the role of the ITO in the aged care sector.

This confusion is confirmed by the Health Care Providers New Zealand’s (now NZACA) 2007 Aged Care Unregulated Workforce Paper. Although the paper was completed some years ago, its findings bear relevance to the current situation, stating that providers indicated a need for better clarification of the ITO role and its relationship to the providers with which it contracts.

The document states: “As legislation prevents ITOs from delivering training, Careerforce should not be viewed as ‘competing’ with education providers, and this issue is worth further investigation. However, the strong signal from providers is that they do not wish the ITO to have any role in the delivery of education.”

It is understandable how confusion arose; it is a fine line indeed between supporting the delivery of training and delivering the training itself. VisionWest Baptist Rest Home’s website says that ‘Careerforce works in partnerships with employees, employers, and funders to provide vocational training, assessment and qualifications that are recognized by the New Zealand Qualifications Authority (NZQA).’ Is working in partnership to provide training the same as providing training?

Gina Langlands, Bupa’s general manager for quality and risk, says Careerforce are not training providers.

“Some people think Careerforce is a training provider – but they aren’t,” she says.

John Collyns says the RVA has a strong opinion on this matter.

“We believe that there would be a serious conflict of interest where the funder, Careerforce, is also the provider as this could stifle any creativity and innovation. Government funding for training is meant to be distributed by the ITO for the benefit of the industry. It is inappropriate that the only entity which receives funding is the same organisation that provides the training, as effectively, they are paying themselves, regardless of the quality of the job. This will not benefit the industry,” says Collyns.

A swift digression into the history of ITOs reveals this is not just about semantics.

Sir William Birch found the tertiary education system disconnected; in many cases, the needs of the employer weren’t being met by the qualifications of the polytechnics and other education providers. The ITO system was therefore established in order to meet the needs of employers and learning establishments. ITOs still serve that purpose today – to fill that gap between what employers need and what learning establishments can provide.

Lind says, like many ITOs, Careerforce offer trainees, employers, and providers training resource packages that they can purchase if they wish. While Careerforce wants people to pass the assessments, Lind says it is up to the employer which training method they use – in other words, they can take or leave the Careerforce resources. Lind says Careerforce supports workplace learning by providing training resources to employers to help them train their staff, but in doing so, they are not education providers themselves.

“Otherwise, anyone who has ever written a textbook could be called an education provider,” he says.

Sector reaction

Reaction from the sector to the news of the failed merger shows strong support for a choice of training materials and providers.

Julie Haggie, chief executive of New Zealand Home Health Association (NZHHA), says, “As a general principle, we support an even playing field where training funding is concerned.”

With representatives on both Careerforce and HET boards, the New Zealand Aged Care Association (NZACA) occupies an uncomfortable middle ground in the fray. However, in their public comment, the association declared that as representatives of aged residential care employers, the NZACA must look at what is in the short-, medium-, and long-term interests of employers regardless of what training materials they use.

“Our goal is for members to have a choice of training materials, but we also do not want to see competition between training material providers leading to a situation where services decline or options are lost. We have an obligation to ensure all employers are equally supported by our organisation regardless if they use Careerforce, Health Ed Trust, or their own materials. In this regard, we will balance our positions to ensure we are not favouring one group of employers over another,” the NZACA statement reads.

Many employers have contacted the NZACA expressing their disappointment at what has happened and how changes have been communicated by both Careerforce and HET. The NZACA subsequently has adopted the view that each party should take a step back and focus on doing what is best for aged care employers and then agree on a way forward to achieve that goal.

Reaction from the RVA also indicates a frustration with the way things have transpired since the changes implemented by the TEC. Collyns strongly believes that there should not be a monopoly provider of aged-care training programmes.

“There must be alternative training programmes available. While many RVA members have staff trained under the ACE programme, it need not be the only option,” he says.

Casting the spotlight onto the employers themselves, Gina Langlands says the changing relationship between Careerforce and HET won’t have a huge impact on Bupa, as they have developed their own training programmes, which have been validated by Careerforce. While she concedes that smaller operators might find HET’s ACE programmes suitable, larger operators like Bupa have the resources to do their own thing. Langlands says they will continue working with Careerforce in the manner they do now.

Smaller operators like Althorp Private Hospital in Tauranaga are mostly concerned with ease of use, cost-effectiveness, and freedom from administrative hassle when it comes to training their staff. Ginni Cashell, general manager of Althorp, says they previously used HET then moved to Careerforce – they were initially attracted to the administrative ease Careerforce provided; the resources were accessible and all the paperwork was supplied. However, now that Careerforce has stopped supplying the paperwork, Cashell says they are back to considering their options again.

“We really hoped HET would amalgamate with Careerforce. It is perplexing to support too many players. The sector is too small,” she says. “Ultimately, we want a system that is easy, simple, accessible, well-supported by a national framework, and the costs have to be realistic.”

Like the employers, training providers also appear more interested in educating the workforce than the political and funding aspects.

Clinical Update New Zealand Ltd is one such provider. Managing director, Leigh Kelly, says her ultimate goal is to provide good quality training to caregivers. “We’ve simply got to have a well-trained workforce,” says Kelly, whose business currently does not seek funding from Careerforce.

While Kelly believes the ACE programmes are “excellent”, she doesn’t believe they cater for everybody in the aged-care workforce. Kelly divides employers into three categories: those who love to train their staff; those who would like to but are cautious because they haven’t had a good experience with training, often because of literacy issues; and those who simply aren’t interested. Kelly believes HET’s ACE programmes are not well suited to the latter groups, and this is where she feels other training programmes like hers certainly have their place.

The Clinical Update training is not NZQA-accredited. Instead, it is designed to provide training to support the credits in place. To this end, Careerforce has recently been in contact with Kelly regarding the possibility of aligning future credits with the Clinical Update programmes, clearly stating they were “not in the business of providing training programmes”.

Future directions

The relationship with the sector will be more critical than ever for HET now that the trust has virtually cut ties with Careerforce. A recent letter sent to subscribers reflects this. Ryder pleads with employers to “use it or lose it”, regarding the survival of its popular ACE programmes. “We need your support,” the letter emphatically states. Support appears to be forthcoming for HET, which claims a 60 per cent share of the market. Ryder says the trust has been offered assistance by concerned employers in the industry and is able to restructure staff and premises for a reduced operating model.

With speculation rife that HET will reduce its current number of staff from around 10 to just three or four, it is unclear how HET will be able to continue to support the industry with fewer staff and without its major source of income. Ryder says the trust is keeping its future strategy private for “commercial reasons”.

One thing is clear: if HET is going to go it alone and retain their large market share, the trust would do well to heed the sage advice of employers and providers and keep things clear, easy to use, and accessible.

The same could be said for Careerforce. Ultimately, what is needed is transparency. Questions are emerging from different corners of the sector about how much money Careerforce is spending and where it is being spent. Employers want to rest assured their fees are being reinvested into aged care and not into the other sectors supported by Careerforce.

The aforementioned HCPNZ paper on the unregulated workforce shows that in 2007, just under half of the sector (47 per cent) believed the aged care sector should have its own ITO. This belief is clearly at odds with governmental thinking and the TEC’s push for fewer ITOs. In the absence of more targeted support for the aged care sector, Careerforce would do well to heed their espoused values of transparency, integrity, fairness, and ‘one Careerforce’.

Can HET survive without the funding of Careerforce? Time will tell. The bigger question is what impact this partition will have on the provision of training for the thousands of people in the aged-care workforce and the swiftly growing ageing population in their care? It is hoped by many in the sector that Careerforce and HET can move past the hiccup in their relationship and focus on what they are here to do – ensure New Zealand’s aged care workforce receives the training it needs.

How things unravelled between Careerforce and HET

Date What happened?

Late 1990s Careerforce is established. Initially known as Realising Potential before becoming Community Support Services Industry Training Organisation (CSSITO). It was rebranded as Careerforce in 2006.

1997 Health Ed Trust (HET) established as a private training establishment (PTE). Introduced an alternative model to polytechnics, which charged on a student-by-student basis by providing educational programmes to employers for a one-off fee and employees at a low cost.

2000 Careerforce begins its rolling annual contract with HET. Careerforce provides funding for HET’s credits. This funding comes from the Industry Training Fund, which is supplied by the Tertiary Education Commission (TEC).

2006 Careerforce informs HET they would not renew their contract, but due to negative industry response, the contract was restored.

2009 Careerforce and HET signed a three-year Heads of Agreement – an overarching agreement that outlined the main principles of their relationship. This was in addition to the rolling annual contract.

2010 The TEC’s 2010 compliance reviews of ITOs found that 18 ITOs needed to repay funding totalling $4.3 million for trainees not actively engaged in training in 2009. This led to a number of changes, including greater emphasis on the industry cash contribution (ICC): ITOs must achieve a minimum of 30% ICC from employers to balance funding from the Industry Training Fund.

Early 2011 A governmental directive tasks the TEC with reducing the number of ITOs, urging smaller ITOs to pair with larger ones.

May 2011 Careerforce notifies HET that the three year Heads of Agreement between Careerforce and HET couldn’t continue beyond its end date in December 2011.

Early August 2011 HET outlines to Careerforce their financial losses to 31 March 2011 and for the first three months of 2011/12 financial year and describes the situation as untenable. HET voices concerns about Careerforce creating a monopoly through breaching sections of the Commerce Act.

Later in August 2011 Careerforce arranges a conference call with HET in which HET suggests a merger between Careerforce and HET.

September 2011 Merger discussions continue in which HET says it will have difficulty retaining staff. Careerforce agree with the merger concept, and subsequent to that meeting, offer $500k to take on HET staff and to support ACE programmes.

December 2011 The Heads of Agreement ends and is not renewed. The operational contract that was entered into in good faith following the proposed merger also ends and funding to HET is ceased.

February 2012

Friday, 24th: HET chairman John Ryder briefs Careerforce board that he will be recommending to the HET board that they no longer wish to continue with the amalgamation with Careerforce.

Monday, 27th: Careerforce sends out communication to their five sectors and main shareholders (including HET subscribers) informing them of HET’s imminent decision.

Wednesday 29th: HET board members officially decide that HET will not amalgamate with Careerforce.

March 2012 HET announce the decision publicly and further communication from both Careerforce and HET is sent out to employers within the sector.

Who said what?

“We’re trying to move to a fair and equitable basis that applies to everybody. We’re very reluctant to enter into an arrangement with HET that is different to other training providers.”

– Ray Lind, CEO, Careerforce

“It would be fair to say, in the last decade, not a single staff member of the ITO has approached our board with any positive suggestions on education apart from wanting to terminate our contract or take us over.”

– John Ryder, Chairman, Health Ed Trust

“With the tightening of operational policy, the TEC has encouraged all ITOs to look at areas where efficiencies can be made.”

– Grant Klinkum, General Manager, Tertiary Investment, Tertiary Education Commission

“We are of the view that each party should take a step back and focus on doing what is best for aged care employers and then agree on a way forward to achieve that goal.”

– New Zealand Aged Care Association

“We believe that there would be a serious conflict of interest where the funder, Careerforce, is also the provider as this could stifle any creativity and innovation. Government funding for training is meant to be distributed by the ITO for the benefit of the industry.”

– John Collyns, Executive Director, Retirement Villages Association

“As a general principle, we support an even playing field where training funding is concerned.”

– Julie Haggie, CEO, New Zealand Home Health Association

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