VET funding continues to drop

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9 February 2017

New figures have confirmed the continuing decline in government funding for vocational education and the damaging shift towards funding private VET providers.

The latest analysis from the Productivity Commission’s Report on Government Services confirms the slide in government funding for VET, as jobs and courses are cut in TAFEs and costs are passed on to students through higher fees and student loans.

The analysis found that per-student funding has plunged almost one-third in a decade, and combined federal and state funding per contact hour has dropped from $16.42 in 2006 to $13.99 in 2015 – a decrease of 14.8%.

AEU TAFE Secretary Pat Forward said the figures confirmed the need to revamp funding and increase investment in TAFEs, in the wake of the scrapping of the disastrous VET FEE-HELP loans scheme.

“VET has for too long been the poor relation of post-school education. Privatisation and the expansion of student loans have been used as an excuse to cut government funding.

“The current national agreements between state and federal governments for the funding of VET expire on June 30, 2017. This is an opportunity for all governments to properly fund TAFEs and restore trust in the VET system.”

Ms Forward said that prior to the introduction of VET FEE-HELP loans costs of courses were modest and since its introduction, course fees and charges to students have increased by many hundreds of percentage points.

“The attempt to save money on VET by providing government-funded loans for private providers has left thousands of students with huge debts for low-quality courses. Ironically it will end up costing governments and taxpayers more because many students will be unable to repay their loans.

The PC report found that the amount of this contestable funding now going to private providers has also increased dramatically, from $464m in 2005 to $1497m in 2014, but there had been a slight decline in 2015.

This figure still represents 27% of recurrent funding nationally. In Victoria, the proportion of government funding allocated to for-profit providers is 55%. In Queensland, the figure is 40%.

These figures must be set against the massive growth in student loans through VET FEE-HELP. Figures released late last year showed that spending on VFH in 2015 had reached $2.9b, with more than $6b expended on the scheme since 2009. In 2015, 85% of VET FEE-HELP loans went to private for profit providers.

The Federal Government has replaced VET FEE-HELP with a new scheme, VET Student Loans, which it claims will be more accountable, and will stop dodgy operators from ripping off the system.

But Ms Forward said the new scheme repeated many of the mistakes of VET FEE-HELP and was no substitute for proper government investment in TAFEs.

“There is still insufficient oversight of private providers, poor accounting and record keeping, and worst of all: no requirement by providers to deliver a minimum number of hours to students for their courses.

“Without minimum hours private providers will still be able to cut corners to make huge windfall profits at the expense of students and taxpayers.

“The new system has been further weakened by a provision that would allow the Federal Education Minister to approve private providers who would otherwise have failed to qualify for the new loans system.

Ms Forward said governments needed to act to restore funding to TAFEs and raise confidence in the sector.

“The explosion of dodgy private providers has had a negative effect on the VET sector as a whole. Student numbers have dropped by 13.7% in 2015 alone.

“Guaranteed funding to TAFEs and real regulation of private providers will lift the quality of our system and deliver the best outcome for students.”