Budget Review 2009-10 Index

Budget 2009 10: Education

Vocational Education and Training

Carol Kempner

Vocational education and training (VET) policy has remained central to the Government’s response to the dramatic change in economic circumstances that has seen a shift from a labour market characterised by skilled labour shortages to one of rising levels of unemployment. In the light of these changing conditions the Government is realigning some of its VET programs to focus on skills maintenance through support for the unemployed, re-skilling of mature workers and the achievement of higher level qualifications that will be required for economic recovery. Some additional funding has also been provided to the VET sector through its nation‑building package, the Productivity Places Program and the Education Investment Fund (EIF). In addition, by extending access to government provided income contingent loans (ICLs), the Commonwealth is increasing the opportunities to grow the number of VET places through private sources of funding.

The 2009–10 VET budget, however, held few surprises as the framework for new funding arrangements with the states and territories, including their funding levels, was put in place at the end of 2008. Measures to extend the availability of the relatively new ICLs for VET, known as VET FEE-HELP, had also been flagged in legislation currently before the Parliament.[1] The savings from the streamlining of Australian Apprenticeship incentive payments that will enable better targeting in response to changing economic circumstances and needs was however a new budget initiative. The following notes provide an overview of these changed arrangements and how they are presented in the Budget papers.

The Rudd Government’s restructuring of federal financial arrangements under the Intergovernmental Agreement on Federal Financial Relations has resulted in changed arrangements for VET specific purpose payments (SPPs) to the states and territories to support them in the running of their VET systems.[2] These payments are now being made through what are generically known as National SPPs. The grants made under the Skills and Workforce Development SPP are governed by the new National Agreement for Skills and Workforce Development  (the Agreement), which effectively replaces the former 2005–08 Commonwealth–State Agreement for Skilling Australia’s Workforce.[3] Formerly appropriated by the Skilling Australia’s Workforce Act, these new SPPs are now provided for under the Federal Financial Relations Act 2009. They are consequently now accounted for under Program 1.7 in the Treasury’s Portfolio Budget Statements. As determined by the Agreement, the Commonwealth will provide approximately $1.3 billion in base funding for this VET SPP in 2009–10 and each of the out years.[4] The Rudd Government, like its predecessor, has merely continued to maintain funding for these grants in real terms.

An additional funding source for the states and territories is, however, provided by the Rudd Government’s new National Partnership arrangements; also accounted for under the Treasury portfolio (Program 1.10). Under the National Partnership Agreement on Productivity Places Program the Commonwealth will provide approximately $208 million to the states and territories in 2009–10.[5] This program, the cost of which was significantly offset by the abolition of the Coalition Government’s Australian Skills Vouchers, has provided a mechanism for the Rudd Government to increase the number and determine the type of VET places in response to changing economic needs. Since the program began there have been several increases to the number of places being provided. The latest of these is the additional funding of $77.2 million in 2009–10, provided for in this Budget, for places at the Certificate III level or higher. This is estimated to increase the total number of places available during the five years of this program to approximately 711 000.[6]

The Commonwealth also continues to fund its own VET programs including Australian Apprenticeships (largely accounted for under the Department of Education, Employment and Workplace Relations’ (DEEWR) ‘Program 3.5: VET National Support’). The restructuring of the Australian Apprenticeship incentives will deliver savings in some areas enabling the Government to maintain expenditure levels by redirecting the savings toward selected trade and agricultural occupations and adults needing to re-skill to improve their employment prospects.

Expenditure under Program 3.5 has been primarily boosted in 2009–10 by the VET Training and Learning Capital Fund (TLCF (VET)) which was announced by the Prime Minister in December 2008 as part of the nation-building infrastructure package. The $300 million DEEWR component of the $500 million to be allocated under the TLCF (VET) during 2009–10, is comprised of $200 million for ‘Training Infrastructure Investment for Tomorrow’ for eligible applicants, and $100 million for ‘Investing in Community Education and Training’ for community education and training (CET) providers to develop or enhance their infrastructure.[7] The remaining $200 million is being distributed to the states and territories by Treasury to improve infrastructure in TAFEs under the ‘Better TAFE Facilities’ National Partnership arrangement.

Other capital funding for VET providers has been made available under Round 2 of the Education Investment Fund (EIF). Twelve of the successful projects are for VET infrastructure totalling approximately $132 million.

The VET FEE-HELP estimates in the budget relate to the extension of VET FEE-HELP to state-subsidised students in Victoria to support that state’s VET reforms. VET FEE-HELP was originally limited to only full-fee places for specified higher level courses and where credit transfer to higher level courses was available. Extending availability in Victoria to state-subsidised students and relaxing the credit transfer requirements will lead to increased availability. Even before this expansion, it is worth noting that the 2008–09 Budget estimate of $9.6 million has been significantly revised to $22.5 million. Following the  initiatives in this budget VET FEE-HELP expenditure is estimated to increase to $72.9 million in 2009–10 and as VET FEE-HELP becomes more established expenditure is expected to increase even further to a high of $110 million in 2011–12.

[1].    The Higher Education Legislation Amendment (Student Services and Amenities, and Other Measures) Bill 2009 and the Higher Education Support Amendment (VET FEE-HELP and Providers) Bill 2009.

[2].    See Council of Australian Governments (COAG), Intergovernmental Agreement on Federal Financial Relations, COAG, viewed 18 May 2009,

[3].    COAG, National Agreement for Skills and Workforce Development, viewed 18 February 2009,

[4].    For National SPP base funding for 2009–10 and a state by state distribution of National SPP shares for the first five years see Schedule D of the Intergovernmental Agreement on Federal financial Relations: Payment Arrangements, pp. D–3, D–8, D–9, viewed 20 February 2009,

[5].    For more information see COAG, National Partnership Agreement for Productivity Places Program, viewed 14 May 2009,
docs/national_partnership/ national_partnership_on_productivity_places_program.pdf
; COAG, National Partnership Agreement for Productivity Places Program: Fact Sheet, viewed 14 May 2009,

[6].    J Gillard (Minister for Education, Employment and Workplace Relations), Immediate access to employment services to support retrenched employees, media release, 12 May 2009, viewed 14 May 2009, http://parlinfo/parlInfo/download/media/pressrel/ESJT6/upload_binary/

[7].    Department of Education, Employment and Workplace Relations (DEEWR), ‘Teaching and Learning Capital Fund (TLCF)’, viewed 14 May 2009,