The state of VET in Australia

A fractured system

16 March 2016

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In a policy paper, VET funding in Australia: Background trends and future directions, Peter Noonan from Victoria University’s Mitchell Institute says the low priority traditionally accorded the vocational sector has been exacerbated in recent years by wild inconsistencies between states on what they funded and for how much, ad hoc federal funding programs, rorting and distortions caused by VET FEE-HELP and the relentless push to reduce costs for both levels of government.

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While there are 200,000 more VET enrolments than there were 10 years ago, enrolments have been trending downwards since 2012.

This compares to higher education enrolments which have risen 43% over the same period and which continue to rise.  Given the full implementation of the demand driven system in 2012, which enables universities to enrol as many students as they choose, there’s an obviousa causal link there, which has particularly hit TAFE enrolments (a double whammy for TAFE, given aggressive growth in the private VET sector).

The paper notes that the Bradley Review (of which Noonan was a member) identified the risk

…that some states and territories face major fiscal constraints, which may lead them to reduce their investment in VET in the near future, leading to skewed and uneven investment between the sectors over time if a demand-based funding model is adopted for higher education.

The Bradley Review further argued that:

moving to a demand-based approach to funding higher education cannot be done in isolation from VET. Changing higher education funding but leaving VET funding untouched would compound existing distortions.

Which is exactly what seems to have happened.  The paper shows that state funding is now falling in absolute terms and in proportional terms relative to Commonwealth expenditure per working age resident.

VET funding shares by major source 2009-2014

VET funding1

It suggests that:

A further deterioration in VET funding levels is highly likely. The gap in funding between VET and the other sectors of education will widen, diminishing pathways for school-leavers wishing to enter VET, potentially distorting choices between VET and higher education and limiting workforce retraining and upskilling.

In 2014, Commonwealth funding for VET including VET FEE-HELP was 44% of total VET funding and will exceed 50% of total funding in 2015 (noting that a proportion of VET FEE-HELP revenue will be repaid by students in subsequent years). A proposal last year for a federal takeover of the vocational education sector has now hit a roadblock, further stymieing much needed funding reform, Noonan says.  He says it is becoming crucial that governments take a holistic view of the VET sector, including the role of TAFE and its role in the future economy.

Noonan says agreement needs to be reached on fundamentals such as benchmark prices for qualifications, and even which qualifications should be funded under a national system. He says further agreement is needed to establish the appropriate balance in public and private contributions.

He also calls for a redesign, but not dismantlement, of the VET FEE-HELP system, saying it needs to be extended to all federally funded VET qualifications while maintaining the scheme is sustainable.

However, the most pressing issue facing the VET sector is the decline in government funding.

It is well worth reading the historical context set out in the report, particularly concerning the creation of  the Australian National Training Authority (ANTA).  Its  abolition in 2004 seems,  from this point in time, a particularly retrograde step for VET in Australia.

Download the paper:

VET_funding_in_Australia_Background_trends_and_future_directions_2016_03… (002)

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