Representing quality private education
providers in Australia

As the calls grow louder

Monday, February 5 2018

Last week I commented on the need for clear direction in Tertiary Education. 

Following my call during the week there has been even more evidence of the need to save the VET sector from its demise.

The Productivity Commission released its Report on Government Services for 2018 and what a sobering read it is.

It still perplexes me that as each year goes by governments are spending less and less on creating the skills Australia needs for the future. Total government appropriations for VET were $4.7 billion in 2016 – down from $5.1 Billion in 2015. The states and territories reduced their funding to $2.88 billion from $3.30 billion in 2015.

You saw what happened when Government tried to shave some funding from Higher Education, and yet in VET it seems that chopping funds every year is ok. This downward spiral has been going on now for 10 years.

So, less money, what have governments done with it?

45.7% ($2.15 billion was allocated through competitive processes in 2016, compared to 44.4% in 2015 ($2.27 billion) in 2015. That means while the proportion of contestable funding has been maintained the pool has actually declined by 4.9% in real terms, which of course means less choice for students.

If we look at efficiency, real recurrent expenditure per annual hour was $15.29 in 2016 - down from $15.70 in 2015 and $18.02 a decade ago (2007). Now some might argue that the sector is simply becoming more efficient. I don’t buy that. Governments are paying less for training outcomes, which highlights the squeeze on the sector over the last decade as governments have reduced their spending.

Need any more signs of decline? Real recurrent expenditure per person 15-64 years has declined from $340 to $312. It was $359 in 2007.

One pleasing indicator is that 7.8% of 15-64 year olds undertook government-funded training, an improvement on the 7.6% in 2015. However, closer scrutiny shows the improvement was largely due to a rebound in NSW and this masks some very significant declines in Victoria (9.6% down to 8.2%) and South Australia (7.6% down to 6.3%).

Governments have long held they have a responsibility to target skills shortages. Unfortunately, this role also seems to be fast dissipating.  Around 1.27 million students were enrolled in government-funded training in 2016. While a slight increase on 2015 (1.22 million), it pales in comparison to the 4.2 million of total students trained in the year. 

While governments are reducing their commitment to skills development, providers on the whole are continuing to deliver high quality outcomes for students and industry.  Government-funded graduate satisfaction with their training has increased to 87.8% from 86.2% in 2015. These high levels of satisfaction have been a constant for many years.

Likewise, employer engagement with the VET sector remains significant with 54.4% of employers engaging in the sector, up from 52.8% the previous year.

I touched last week on the Australia 2030: Prosperity for Innovation Report. I saw comments in the media from Vice Chancellors calling for a review of VET. Interesting indeed!

The Report dedicated a chapter to VET, and comments that VET is a major part of the education system that will play a major role in helping Australians adapt to changing skills requirements. In 2016, it cites that private providers delivered 430,000 program completions and TAFE 215,000.

However, current production is just not enough. The Report identifies that the demand for VET qualifications in NSW alone will grow from 30% of workers in 2015 to 45% in 2036.

Add in the impact across all occupations of automation, robotics and other elements of technology the role for VET is critical. Perhaps not always for full qualifications, as skill sets will certainly play a role.

The risk is that Governments will allow the sector to decline to such an extent it will not be able to produce skills of the quantity and quality that are sorely needed.

However, the Report is adamant that the sector plays a role.

The Report’s ultimate recommendations are that the Australian Government (Department of Education and Training) undertakes a review of vocational education and training on:

  • a strategy to make the sector increasingly responsive to new priorities presented by innovation, automation and new technologies
  • ensuring the system will be internationally competitive in the provision of initial skills training, in supporting a life of learning and helping businesses to compete, and ensuring VET interfaces and intersects productively with other parts of the higher education system
  • establishing metrics of VET success to be evaluated by 2022, and
  • increasing the amount and granularity of information made available to students.

There are also other recommendations about employer access to funding and regulation. It is well worth a read.

The recommendations don’t tell us anything new. We have contemplated these types of reforms before.
However, it really is time.

The big problem facing the sector right now is rebuilding government support and funding so that students and industry can get the skills.

I don’t agree that the Department conduct the Review. It needs to capture the entire system, so it should include State and Territories and Industry. Start with a high powered industry leader to drive the process and let’s get on with it.

Rod Camm
Chief Executive Officer


ACPET | Members Login | Search | Legal