VET & TAFE
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steadily. The Australian government
treasury bought into (perhaps until
recently) the principle of demand-
driven funding, but S&T treasuries
never bought into demand-driven
‘VET entitlements’ (the language of
training post the Global Financial
Crisis). The flow-on consequences are
profound. It has tilted student demand
to universities, institutions that carry
the prestige, marketing and funding
capacity to enrol students, subject to
entry standards, at bachelor level and
fed by sub-bachelor entries. Universities
have ‘self-accreditation’ status and
curriculum agility when working with
industry, whereas registered training
organisations (RTOs) are anchored
on training packages, qualifications
and accredited courses approved by
regulators. Policy to extend the higher
education demand-driven system
to higher education sub-bachelor
programs while not pursued, was
endorsed by Universities Australia. In
response to the Business Council of
Australia’s Future Proof proposals, UA
proposed universities partner with
industry to (inter alia) ‘jointly develop
higher-end vocational programs in
higher education; co-invest with
universities in quality work placements,
including internships; and increase the
number of apprenticeships offered
by business and industry’. This is
mostly traditional VET terrain.
State and regional economic
development increasingly values local
universities as being central to supply of
skilled graduates. In fast-evolving labour
markets, employers have equally high
expectations of discipline knowledge
and technical skills in employees, as
well as wanting enterprise capabilities
in graduates. Besides ministers of
training, S&T cabinets may also include
ministers for higher/international
education, science and innovation and
the like. This helps reinforce arguments
that future labour market demand
will be increasingly met by university
graduate supply. Some universities are
unambiguous in promoting both their
educational and vocational credentials
in aligning courses to future jobs.
Universities have not yet entered into
the core VET domain of trades and
apprentices, other than on a small
trial basis. All this risks eroding and
Figure 1: ‘Revenues from government’ funding source
State & Territory Funding
2016
Fee for service government agencies
2015
National Agreement Funding
2014 National Partnership Funding
2013 Commonwealth Portfolio Funding
2012 VET FEE-HELP payments – to students
training at non-government providers
0
2000
4000
6000
(Reporting in nominal terms)
$m
Note: Reporting does not include capital revenue.
underselling the role and value of VET.
Nevertheless, S&Ts are also well aware
that increased university places are
funded by the Commonwealth, and that
these graduates increasingly encompass
vocational credentials.
5. The knowledge gained from the full
VET market capture of all VET activities
regardless of fund source (with now
four years of Total VET Activity data)
highlights that Commonwealth or
state-funded VET subject enrolments
represent ~46.3 per cent of all subject
enrolments in 2017, with fee-for-service
53.7 per cent. Governments have been
keen to know what they might not need
to fund, or fund less.
In summary, cost shifting may not be
formal treasury language, but given S&T
priorities like health, schools, policing
and welfare, and that VET is funded
under a federated system, there is a big
chance VET will be pushed lower in
priority given the above. So while S&T
governments may make new funded
VET policy announcements, in the end
treasuries extract efficiency dividends.
S&T training ministers of all colours face
unenviable circumstances in managing
the politics and quality of VET provision
by best balancing TAFE versus private
RTO contribution. Training is ‘demand
managed’ with scarce public funds best
aligned to current and future job openings.
Governments have modest intelligence
tools to do this, so shooting ‘time-delayed
arrows’ at fast moving ‘job market targets’
means they don’t always get it right, based
on the view of one state auditor-general.
The NPSR was intended to encourage
contestability and improve efficiency in
quality VET provision. Efficiency improved
for a while, but recent recurrent expenditure
per annual hour has now risen in 2015 and
2016. While it is predicted that S&T VET
funding will marginally increase in 2017, all
trend data for government-funded student
8000
activity is down. In 2017, it shows a 5.9 per
cent decrease in student numbers from
2016. Costs in delivering quality training
must over time go up and government-
funded training output is falling. The ‘do
more with less’ arguments have now run
thin.
So, circling back to Recommendation 1
in the KPMG report, any dialogue between
governments on these matters would be
pivotal to change. The bulk of VET training
funds are presently split about ~2/3s S&T
revenue to 1/3 NASWD (Figure 1). Lesser
but other significant resources include VET
Student Loans for diplomas (~$200 million in
provider payments 2017), income from visas
to part cover the Skilling Australians Fund
(total budget ~$300 million 2017/18, and for
which S&Ts must invest matching funds in
agreed projects); plus, quite separately, the
Commonwealth invests in the apprentice
support network and incentives programs
(~$580 million in 2017/18).
Finally, KPMG’s suggestion to allow
access to income contingent loans for
all levels of the AQF is to be cautioned.
There are outright social equity concerns
as Certificate III is not much higher than
school level. This certificate is the lowest
‘safe-ledge’ for early job-seekers in any
qualification ‘climb’, so loans only above this
level might be justified.
The second reason is the overall
numbers. There are about 4.2 million
participants in the national VET system, the
bulk (53 per cent) are studying at Certificate
III and below. The nation’s HELP debt is
already stretched with growing concerns
about its sustainability, even though new
lower threshold repayment measures have
just been legislated. ■
Dr Craig Fowler is an analyst and observer
of national policies impacting tertiary
education, science and innovation, after
decades of experience in private, public
and university sectors.
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