VET sector has $93bn impact but students miss out on funding, says Centre for Future Work

Learning trade skills delivers a huge benefit, but VET students aren’t getting a fair deal, a new report says. Uni students get six times as much from governments.

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VET students are short-changed by governments compared to those at school or university, a new study shows.

Federal and state governments spend an average $6479/year on VET students but double that on school students and six times as much on university students, analysis by Centre for Future Work economist Alison Pennington has found.

“This gross imbalance in government funding to VET hinders Australia’s ability to deliver high-quality vocational education and to prepare for future jobs,” she said.

In addition, VET students often faced upfront fees and were not able to defer paying for courses as easily as university students can through HECS-HELP.

This distorted decision-making and sent young people down career pathways which might not be the best choice

“The huge unemployment crisis we face requires pretty serious and targeted action to support job pathways for youth,” Ms Pennington said.

“We think TAFE is a critical part of that policy approach.”

Alison Pennington, senior economist at the Centre for Future Work.

The Centre for Future Work is part of The Australia Institute, an independent policy and research think tank.

Its report argues that investment in TAFE delivers handsome returns – costing Australia about $6bn a year but delivering $92.5bn in benefits.

It measured the benefits by counting the economic impact of TAFE as a business with paid staff and supply chains, the higher earning and taxpaying capacity of TAFE graduates, improved productivity in workplaces which have TAFE-trained employees and reduced welfare costs because graduates find jobs.

Among seven recommendations, it called for:

PRIORITY courses at TAFE to be offered free.

STRONGER regulation and quality assurance across the sector.

THE share of government funding for VET going to TAFEs rather than privately-owned training organisations be increased from 56 per cent to 70 per cent.

WAGE subsidies for apprentices.

Ms Pennington, an Adelaide University and Woodville High School graduate, said the changing composition of businesses had led to less capacity to support apprentices.

In the last 15 years, Australia had lost thousands of medium and big companies but gained 200,000 micro companies of five or fewer employees.

“Smaller firms are far less likely to be investing in the skills of their workforce as well as research and development, innovation, and new capital,” Ms Pennington said.

TAFE students Jack Martin and Jessica Meree. TAFE graduates have better earning and taxpaying capacity than workers with only a school-leaving certificate.

The report comes as the Productivity Commission reviews the VET system.

The commission found only half of domestic students undertaking a recognised training program received government funding.

In a submission to the commission, the State Government said there was a “need to rebuild trust and confidence and make the system more responsive and adaptable to changing economic, labour market and social conditions”.

It urged national reform, including greater certainty on funding, but continued state flexibility.

The government said the student loan system for VET students was “bound by complex restrictions and poorly targeted and burdensome administration”.

“Current settings for VET Student Loans have limited student choice and created barriers to undertaking vocational training at higher levels,” it said.

The Productivity Commission is due to report in November.