Meeting the need for higher level skills through tertiary education reform

Dr Coral Dow and Carol Kempner, Social Policy Section

Structural reform of the tertiary education sector will be required to meet targets for higher level qualification attainment, part of the national push for a more highly qualified population to meet the demands of the modern economy.

The Australian Government aims to have:

  • 40 per cent of 25 to 34 year olds with a degree by 2025
  • 20 per cent of higher education enrolments from people of low socio-economic status (SES) backgrounds by 2020.

COAG has set targets to double the number of people with diploma and advanced diploma qualifications by 2020.

Higher education funding and reforms

Structural and funding reforms to meet these targets is partially underway in the higher education sector through the Rudd Government’s response to the major review of Australia’s higher education system chaired by Professor Denise Bradley in 2008. The Rudd Government accepted a substantial number of the Review’s recommendations including deregulating the allocation of university places through a demand-driven entitlement system for domestic students (sometimes referred to as a voucher system); changing the indexation rate of university funding; increasing funding aimed at improving low SES participation; and, establishing a new Tertiary Education Quality and Standards Agency (TEQSA). Further legislation will be required to enable the full implementation and funding of the reforms with the demand driven system due to commence in 2012.

Adequate funding is an ongoing issue with the Rudd Government rejecting a Bradley Review recommendation to increase the base funding for teaching and learning by 10 per cent from 2010. Universities argue that public funding to higher education as a share of GDP should be increased to the OECD average by 2020 (about 1 per cent of GDP compared with 0.58 per cent for Australia in 2009–2010). The gap left by inadequate public funding has been filled by a cross subsidy from overseas students who in 2008 provided 15.5 per cent of university total revenue. However, there are indications of a downturn in international student enrolments and an increase in domestic demand. Modelling of demographic trends and participation rates suggests that the 40 per cent target of 25 to 34 year olds with a degree could be reached by 2015 and that an additional 450 000 domestic students will be enrolled by 2030. Such growth will exert pressures on university revenue, infrastructure and staffing to the extent that it is predicted that more than 20 new universities and 26 000 extra academic staff may be needed over the next 30 years if it were left to the university sector alone. Delivery of higher education through the vocational education and training (VET) sector is therefore considered a viable alternative to meeting these targets and relieving the pressure on universities particularly as Technical and Further Education (TAFE) campuses are more widely distributed in outer metropolitan and regional locations. This will be important in improving access and participation rates of regional and remote students who remain seriously under represented in higher education.

The role of the VET sector

The VET sector has traditionally been regarded as the sector of trades and skills training but there is an overlap between the two sectors in the delivery of Diploma, Advanced Diploma, Graduate Diploma, and Graduate Certificate courses. Since 2003 the sector has also provided undergraduate education. Initially TAFE institutions, mainly in Victoria, offered degrees in disciplines unavailable in universities. However, TAFEs now offer degrees in vocationally orientated courses such as nursing and business that are also offered at universities. Further expansion is likely with the recent decision to enrol undergraduates in the NSW TAFE system.

This ‘blurring’ of the sectors is further pronounced by VET provision through five ‘dual sector’ universities that evolved from technical colleges; universities offering diploma courses as bridging courses for degrees; universities offering degrees through TAFEs as third party providers; and a number of private providers delivering both VET and higher education.

The Bradley Review made recommendations aimed at integration and improved articulation of the sectors but there are major administrative and organisational barriers which prevent this ‘blurring’ evolving into an integrated tertiary sector. These barriers include differences in funding, regulatory frameworks, governance, curriculum development and staffing. Overcoming these barriers may also prove difficult whilst some parts of the higher education sector wish to preserve universities as the main providers of bachelor education within the broader framework of teaching and research.

Unlike higher education, VET reform is mainly in the hands of the state and territory governments. The Howard and Rudd Governments, in their own different ways, have supported competitive market reforms in VET. The Rudd Government also advanced the development of a national VET regulator. These reforms are influencing change in the way that state and territory TAFEs operate in the system.

However, owing to the split in responsibilities for funding the two sectors—the Commonwealth funding higher education and the states funding VET—the funding of student places is a major anomaly. The student demand driven system, due to be implemented in universities in 2012 with a guarantee that the Commonwealth will fund all Commonwealth Supported Places (previously HECS places) that universities offer, is not being extended to higher level course enrolments in TAFEs and other VET institutions.

The higher education funding model of cost sharing between government and individuals (supported by income contingent loans) is relatively new to the VET sector. The sector is still highly dependent on government funds which account for 75 per cent of its revenue as student fees account for only 4.5 per cent. However, since 2007, Commonwealth government income contingent loans have been made available to those studying at the Diploma level or above in state VET systems. Only available for full-fee courses in the first instance, they were extended to government subsidised students in Victoria to reward that state for its competitive market reforms. In the 2010–11 Commonwealth Budget they have been offered as a ‘national entitlement to a quality training place’ in all states who undertake such reforms. As tapping these private sources of income offers VET the best prospect for financing more training places, it is likely to prove a powerful force for bringing about reform in VET institutions, particularly in the state run TAFEs.

Library publications and Key documents

F Beddie and P Curtin (eds), The future of VET: A medley of views, National Centre for Vocational Education Research (NCVER), Adelaide, 2010,

Group of Eight, ‘Future demand for higher education in Australia’, Go8 Backgrounder, no. 10, Canberra, June 2010,

Review of Australian Higher Education, Final report, (Professor Bradley, Chairperson), Department of Education, Employment and Workplace Relations, Canberra, December 2008,

G Moodie, L Wheelahan, S Billett and A Kelly, Higher education in TAFE: research overviews, NCVER, Adelaide, 2009,