Vocational Education and Training

Concerns about labour force and skills shortages in recent years have led to increased attention and debate on Vocational Education and Training (VET) policies and funding arrangements. Some commentators have attributed the skills shortages to an under-investment in VET.

In 2005, government accounted for 77.6 per cent of VET funding—55.6 per cent from state and territory governments and 22 per cent from the Australian Government. Private sources of funding in the form of student fees and charges levied on publicly-funded students, and full-fees paid on a commercial basis, accounted for 4.7 per cent and 12.6 per cent of VET revenue, respectively.

There has been only 2 per cent real growth in total VET revenue, both public and private. However, the hours of training the sector has delivered have increased by 15 per cent. Recent projections that suggest that VET revenues would need to expand by 5 per cent a year from 2006 to meet anticipated need raise serious questions about how this growth will be funded.

While private sources of funding have experienced some growth, total government funds available to VET systems have barely grown in real terms since 1996. This is the result of disagreement between the two major sources of VET funding—the Commonwealth and the state and territory governments—about the levels of growth required in the VET system, how it should be achieved, and their respective funding commitments. While the Commonwealth Government has merely maintained its level of grants to the states and territories, it has increased its expenditure on student-centred payments (for example, scholarships, wage subsidies and top-ups, training vouchers and income support). Its policies have also supported the development of a competitive market of VET providers—for example, through competition for public funds between private VET providers and the state and territory government-run institutes of technical and further education (TAFE), and through the development of Australian Technical Colleges.

With apparent limits to the willingness of governments at all levels to fund further growth in the system, the recent introduction of government-supported student loans received the support of state and territory governments, business, and public and private VET providers. VET FEE-HELP for full-fee, higher-level VET qualifications has the capacity to draw more private funding into the VET sector, adding to the funds available for growth.

This competitive landscape for VET provision is focusing attention on the future resourcing and operations of the public TAFEs. TAFES are the largest providers in the market and have a specific public service role. Consequently, the Commonwealth and state and territory governments have agreed to review the mechanism for funding the state and territory VET systems in 2008.