Skills development and vocational education and training
Carol
Kempner
Presented under the banner Skills for
Sustainable Growth, the vocational education and training
(VET) measures in the 2010–11 Budget have been highlighted as
a feature. This wide range of new measures has perhaps created the
impression that VET has received a significant injection of
additional funds. However, as Budget Strategy and Outlook:
Budget Paper No. 1: 2010–11 notes, ‘expenses under
the vocational and industry training sub-function are expected to
decline by 10.7 per cent in real terms from 2010–11 to
2013–14’, a decline that starts with this
Budget.[1]
The new measures effectively involve a
restructuring of Commonwealth VET programs. Expenditures on these
measures are offset by some of the declines in expenditure
associated with the cessation or redirection of funding from other
programs.
In summary the 2010–11 Budget
effectively has three main elements for VET:
- it maintains the level of assistance to the states and
territories for the running of their VET systems at approximately
$1.3 billion as prescribed by the intergovernmental agreement that
provides for the National Skills and Workforce Development Specific
Purpose Payment (SPP)[2]
- it restructures Commonwealth own VET programs and incentive
payments in response to changing economic circumstances. Planned
expenses are adjusted to take into account the cessation of some
programs and the redirection of funds to others. There is a
redirection from stimulus and structural adjustment initiatives
that were introduced to respond to the labour market fall-out from
the global financial crisis, towards new incentives and programs to
deal with the skills needs of a growing economy. The net effect of
this is a slight decline in outlays in relation to these programs
from approximately $2.1 billion in 2009–10 to $1.9 billion in
2010–11 in nominal terms and
- it facilitates structural changes to the VET system by
providing start-up funding to support regulatory reforms to the
national VET system as agreed by the Council of Australian
Governments (COAG). It also aims to drive quality improvements in
the VET system as well as reforms within individual state and
territory VET systems that would increase competition and student
provided funding. Though the initial investment in some of these
measures is substantial, the Commonwealth expects to recover some
of the costs through associated revenue measures.
Commonwealth own VET programs
Funding will be freed up from programs that
are ceasing—$300 million from the VET Teaching and Learning
Capital Fund which was a one-off injection of funds associated with
the 2008 Nation Building Package; and $375.9 million in
2013–14, from the early cessation of the Productivity Places
Program (PPP). PPP funding that was provided for structural
adjustment places for retrenched workers during the global
financial crisis is an example of funding that is being redirected
to meet new economic priorities. Following a mid-term review of the
PPP and some sustained criticism, it should not come as a surprise
that adjustments are being made to this program.[3]
The focus of the new Commonwealth own program
initiatives include: restoring, in part, the client reach of
foundation skills programs—the Language, Literacy and
Numeracy Program and the Workplace English Language and Literacy
Program—which has declined in recent years; increasing the
participation and completion rates of apprenticeships (for example,
through extending the Kickstart incentives for young apprentices
and the Smarter Apprenticeship initiatives to fast-track
apprenticeships); and addressing skill shortage areas.
The establishment of a Critical Skills
Investment Fund is a new budget measure aimed at boosting the
number of workers in skill shortage areas. Modelled on the
Enterprise Based Productivity Places Program (EBPPP) which has been
trialled successfully over the last year, it will leverage industry
co-investment by providing 50 per cent of the cost of training for
large firms and up to 90 per cent of the cost for small firms.
VET system structural changes
Departmental funding of $105.5 million is being
provided over four years for the establishment of a National VET
Regulator ($92.3 million) and a National Standards Council ($10.6
million), as agreed to by COAG. The initiative is expected to cost
the Commonwealth $55 million over four years—as the initial
expenses will be offset by $50.4 million in revenue as the
Regulator transitions to full cost recovery by 2014–15.
Furthermore, $15.7 million will be redirected from current expenses
for the National Audit and Registration Agency and the National
Quality Council whose functions will be subsumed by the National
VET Regulator.
Another measure—the Quality Skills
Incentive— which is potentially controversial in its
implementation, aims to improve quality in the VET system. This
will make funding available to the 100 largest Registered Training
Organisations (RTOs) to reward them for meeting performance
benchmarks. Funding of $129.8 million over three years has been
provided for this measure.
In addition, incentives such as those that have
already been taken up by Victoria, are being offered to the other
states and territories to encourage them to reform their VET
systems. The incentives include the cashing out of Commonwealth
funding for the PPP. More significantly, however, this measure
would provide states which engage in reform with increased access
to Commonwealth supported income contingent loans (ICLs) known as
VET FEE–HELP. The Budget measure is consequently labelled a
‘national entitlement to a quality training place’.
With Commonwealth grants assistance to the states for VET remaining
static for many years, and the states’ own capacity to
increase their training expenditure limited, governments have been
exploring other financing options to meet the skills needs of a
growing Australian economy. ICLs, which support students in meeting
the costs of their own training, have therefore been gaining
acceptance in policy-making circles.
The Commonwealth must have a reasonable
expectation that other states will follow Victoria down the
market-based reform path as annual expenses of approximately $40
million are allocated to this measure, totalling $159.5 million
over four years. As loans are repaid, there will be an associated
revenue stream to offset these costs, estimated to total $105.8
million over four years. Total annual expenditure on VET
FEE–HELP is expected to rise from $34.9 million in
2009–10 to $205.8 million in 2010–11, and $309.6
million in 2013–14. This is despite the lower than expected
take-up in 2009–10 when only 25 650 of the budgeted 73 000
students were assisted. Recent reports confirm that although VET
FEE–HELP has been extended to government subsidised students
in Victoria, there has been a low take-up rate in Victorian
Technical and Further Education Institutes (TAFEs).[4] Other reports have also noted that
the fee increases associated with the Victorian reforms supported
by the introduction of ICLs have led to a decline in enrolments in
Diploma and Advanced Diploma courses.[5]
[1]. Australian Government, Budget strategy
and outlook: budget paper no. 1: 2010–11, Commonwealth
of Australia, Canberra, 2010, p. 6-39. Other figures in this brief
are drawn from Australian Government, Budget measures: budget
paper no. 2: 2010–11, Commonwealth of Australia,
Canberra, 2010; Australian Government, Portfolio budget
statements 2010–11: budget related paper no. 1.6: Education,
Employment and Workplace Relations Portfolio, Canberra 2010;
and Australian Government, Portfolio budget statements
2009–10: budget related paper no. 1.5: Education, Employment
and Workplace Relations Portfolio, Commonwealth of Australia,
Canberra 2009.
[2]. Australian Government, Portfolio
budget statements 2010–11: budget related paper no. 1.18:
Treasury Portfolio, Canberra 2010, p. 40.
[3]. J
Ross, ‘Low funding and state differences plague the
PPP’, Campus Review, vol. 20, no. 5, 16 March 2010,
p. 4, viewed 13 May 2010,
http://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;query=Id%3A%22library%2Fjrnart%2FSQ8W6%22
[4]. J Ross, ‘Victorian TAFE students
reject no-brainer loans’, Campus Review, vol. 20,
no. 7, 13 April 2010, pp. 1, 7, viewed 13 May 2010,
http://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;query=Id%3A%22library%2Fjrnart%2FI9JW6%22
[5]. F
Tomazin, ‘Brumby plan to tackle skills shortage backfires:
TAFE fee increases deter students’, The Age, 24
March 2010, p.3, viewed 13 May 2010,
http://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;query=Id%3A%22media%2Fpressclp%2FEX8W6%22