16 July 2015
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Consistent with the Terms of Reference, the Review assumes that a contestable system will continue and will need to operate within the existing budget. If properly implemented, contestability has the ability to drive innovation, efficiency and improvement, and empower students and industry to choose their training and provider.
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Funding should be targeted towards education and training that is high quality, meets Government’s objectives, and is delivered 
by capable providers. The design of the system should place greater emphasis on quality and less emphasis on the number of providers. A provider classification system could help government prioritise its investment in VET to fewer, capable providers. Government funding could be directed to areas of labour market need.
The Review has had the benefit of considering the Review of Quality Assurance in Victoria’s VET System, which was separately commissioned by Government, and its findings are consistent with what the Review has observed. The Review considers that its work is complementary to it, and will continue to consider it as the Final Report is developed.
Students need to be better protected and supported, to make informed training decisions that have the best chance of meeting their needs, and to avoid being overly influenced by providers. This could include more and better information and support services, and tighter regulation of marketing, brokers and aggregators. Reintroducing a compulsory student contribution to training (with appropriate concession arrangements) may also assist student decision making by making them more conscious of the costs of their VET choices.
The Review considers a sustainable TAFE sector is essential to the provision of VET. However, arrangements for TAFEs need to be reconsidered to ensure they are reasonable and allow TAFEs to survive and thrive in the future. Such arrangements could include an additional funding stream that recognises their contribution and costs. In the longer term, the establishment of polytechnic universities in key areas to improve educational and economic outcomes could also be considered. For example, a regional polytechnic could deliver a broad range of qualifications, including at bachelor degree level, across the state.
VET must meet the skill needs of industry. Most students undertake VET in order to get a job, or a better job. But the training is not matching industry skill needs to the extent that it could or should, and this is limiting the potential of the system. There is scope for the funding system to better reflect priorities, and for greater cooperation and information sharing between employers, training providers, government and students.
Finally, VET has an important role in providing training and access to further education by vulnerable, disadvantaged and high needs groups, and the funding system should ensure that this is recognised and supported. This could include a new way of thinking about community service obligations, changes to loadings and concessions, and creation of a new preparatory year to provide students with foundational skills.
Summary of changes being considered by the VET Funding Review
Better targeting funding
- Establish a training provider classification system
- Clearly articulate to the market the role and objectives of VET
- Retain the student entitlement but ensure investment is targeted
- Improve teacher training
- Reduce the number of funded courses
- Fund courses based on labour market and industry priorities
Supporting and protecting students
- Reintroduce a compulsory or minimum student fee
- Provide more support for students to make training choices
- Tighten restrictions on the type of marketing activity a provider can use
- Regulate or ban brokers and aggregators
- Tightly regulate subcontracting
- Introduce protocols for online learning
- Introduce protocols for work-based training
- Greater use of summative testing
- New regulatory options for private providers
Sustainable and supported TAFEs
- Clearly articulate the role of TAFE
- Fund TAFE fairly and sustainably
- Use TAFEs to expand access to higher education
Supporting jobs and industries
- Increase industry input in setting labour market priorities
- Establish a workforce training innovation fund
- Encourage specialisation in industry training
- Limit funding of courses at Diploma level to skill shortage areas
Supporting training for vulnerable, disadvantaged and high needs groups
- Reform the funding of Certificates I and II
- Clearly articulate community service activities, and move toward outcomes-based funding
- Consider reforming loadings and use other mechanisms to address areas of high need
- Consider changes to rural and regional training arrangements
- Consider changes to the administration of concession arrangements