KPMG releases damning recommending for complete overhaul of “patchy” tertiary system

02 August 2018

Global Big Four professional services firm KPMG has released a report which suggests Australia should reimagine its tertiary system in order to prepare for an ‘unknown’ and disrupted future. The core components of the plan are nationalising the VET/TAFE system and combining it with university through a unified and publicly-funded network. 

The report, which is titled ‘Reimagining Tertiary Education: From binary system to ecosystem’, does not intend to be an attack on the existing system but rather a voice to start a pivotal discussion.  

A cornerstone of KPMG’s proposal is to introduce a national tertiary education system and training system which spans from certificates and diplomas all the way to masters and PhDs. University and VET would be amalgamated into a singular, unified and publicly-funded higher education ecosystem. 

The extra bill to the Australian taxpayer would be between $1 billion and $2.4 billion according to the KPMG authors. “This ecosystem must be supported by public funds: experience shows that private markets alone will fail to deliver the education and training outcomes we seek as a whole,” states the report.

However, for the consultancy, the money is far less important than the outcome – which may determine the country’s competitiveness in the future. “Our nation needs to move beyond an unstable and outmoded distinction between higher education and VET,” states the report.

KPMG releases damning recommending for completeoverhaul of “patchy” tertiary system in Reimagining Tertiary Education: From binary system to ecosystem

By setting a level playing field where all providers can compete, higher education institutions – public or private – will become more innovative and provide higher quality services. Moreover, an overhaul will allow Australia to prepare for the huge global shift to the future of the workforce, driven by advances in technology.

Today’s binary system is so rigid that rethinking it seems almost impossible for the 52 experienced tertiary education professionals involved in the report. The back and forward situation which is endemic to Australian politics has created what KPMG describe as a “seemingly equal and opposite force of fatalism”.

“Conceptually, the distinction is unstable, with many university courses now strongly vocational, and many vocational courses with clear theoretical underpinnings,” says coauthor of the report Professor Stephen Parker AO, National Education Sector Lead.

“Nationally, the tertiary system, if indeed it is a system, could charitably be described as patchy. Funding and loan schemes work inconsistently, and are the product of ad hoc arguments over the decades between Commonwealth and States. Some jurisdictions invest more than others in skills training,” he added.

“Institutionally, we hear repeatedly about too much sameness within higher education – “mimetic drift” it has been called – due to internal culture, regulation, funding and social attitudes. From a workforce perspective, we produce more graduates than ever before but have chronic skills shortages in many parts of the country.”

According to the professional services firm, the change must happen in order to prepare Australia’s next generation workforce for the technological transition currently underway. The plan put forward by KPMG Australia is a tertiary system which has been designed to harness the complex challenge of a world turned upside down by technology.

“To lock ourselves too firmly into one model or one principle is highly dangerous. We don’t know whether the bachelor degree will remain the centre of gravity of higher education. We don’t know how far non-award, micro-credentials will take hold: if employers recognise them and students want them, the market will provide them.” 

“We don’t know whether the future really is about more skills and less disciplinary knowledge. Nor do we know which skills, or whether we have academic and training workforces able to pass them on.” KPMG goes on to issue a stark warning; “Get it right and Australia can thrive competitively, enjoy good standards of living, and have a fair and civilised society. Get it wrong, and the opposite will be true.”


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Commonwealth Bank working with McKinsey on massive job cuts

16 April 2019

The Commonwealth Bank could be set to cut up to 10,000 jobs and around $2 billion in costs according to reports, with the bank working on the plan with McKinsey.

Driven by new CEO Matt Comyn, who was appointed to the helm last year, the Commonwealth Bank of Australia (CBA) is said to be mulling a plan devised in conjunction with global strategy and management firm McKinsey & Company to axe up to 10,000 local jobs – saving about $2 billion in operating costs. It continues the close relationship between the bank and the consultancy dating back for more than 15 years.

The largest employer among Australia’s Big Four banks, the potential cuts could see an almost 25 percent reduction to its approximate workforce of 44,000, the CBA’s headcount then dropping below the ~34,000-strong staff at National Bank. The plan is also reported to include the shuttering of 300 of its 1000 branches around the country, although as customers shift to online banking the closures are not unexpected.

“My understanding is that the story is good and there has been a plan underway,” said Your Money’s chief reporter Leo Shanahan of the reports which first surfaced in The Australian (Your Money was formed through a partnership between Nine and NewsCorp subsidiary Australia News Channel). With its potential ramifications for the government’s hopes in the upcoming federal election, the reporting from Murdoch’s stable provides an unexpected twist.

“Matt Comyn has been wanting to shut branches in particular for a while and cut costs at the bank. There is broadly a plan underway over the next few years for [this cost-cutting] to happen,” continued Shanahan on Comyn, who replaced former McKinsey New Zealand head and global partner Ian Narev as CEO last year following the anti-money laundering breeches which saw the bank fined a record $700 million.Commonwealth Bank working with McKinsey on massive job cutsComyn has since broadly criticised his predecessor at the recent Royal Commission into misconduct in the banking and financial services sector, which stemmed in part from a Four Corners report on the profit-at-all-costs culture within the CBA’s financial planning division, but the bank’s relationship with McKinsey apparently remains strong – having dated back to before Narev’s arrival and featuring other close links.

In 2003, the CBA brought in McKinsey for an ongoing “benchmarking” project to cut $500 million in costs – with 600 staff said to be in the retrenchment cross-hairs at the time following a significant reduction in the years prior. McKinsey has continued to serve the CBA in the years following, and had throughout the 80s and 90s advised all of the NAB, Westpac and the ANZ on various cost-cutting and re-organisational measures – including saving Westpac from potential collapse.

Meanwhile, CBA’s Group Executive for Retail Banking Angus Sullivan, who will be responsible for overseeing any strategy to close branches and let go customer facing staff, was like Narev a former partner in McKinsey’s New York office, spending nine years with the strategy firm before joining CBA in 2011. Former CFO Rob Jesudason is also among others a McKinsey alumnus, while the leadership team of the CBA’s strategy division continues to feature a number of ex-McKinsey consultants.

For the Commonwealth Bank’s part, it has described the reports of a mass redundancy – which The Australian contends were meant to be kept secret until after the election – as “unnecessarily alarming” and “misleading”, while reiterating the need to manage costs. McKinsey meanwhile traditionally refuses to comment on matters concerning its clients, although the firm recently committed to greater transparency following a series of its own public image issues.

The financial sector accounts for nearly a quarter of Australia’s $5 billion management consulting spend, with the Big Four professional services quartet Deloitte, PwC, KPMG and EY in recent years all scoring multi-million dollar contracts with the big Australian banks – particularly around the areas of digitisation. McKinsey, meanwhile, was last year brought in by Telstra on another $1 billion cost-cutting program.