‘It’s just madness’: Registered Training Organisations scramble after funded placement cuts

Victorian registered training organisations say their services have been “cut off at the knees” after the state government reduced funding to some manufacturing and building training providers.

RTO operators have fears for the construction and manufacturing industry after the state government modified funded placement contracts for some trainers.

Vocational training programs that upskill workers across industries including manufacturing, childcare and building, say their services have been “cut off at the knees” after the state government reduced funded placement allocations for some providers.

Registered Training Organisation (RTO) managers have told the Herald Sun they’ve been left with little choice but to fire staff and send their clients to competitors following changes to Skills First funding contracts.

They also fear the cuts will further exacerbate skill shortages in some already struggling industries.

RTOs are privately-run training organisations that provide nationally-accredited courses to students through both hands-on learning and theory-based workplace training.

For example, RTOs that specialise in manufacturing might offer forklift training, while RTOs that focus on childcare equip staff with knowledge on child welfare and safety.

Some RTOs have access to the Victorian government’s Skills First initiative, which allows them to deliver subsidised courses so students can pay less for training.

But recent changes saw 242 RTOs get new, two-year contracts, with a small portion receiving a reduction in the number of funded places.

Meanwhile, Skills First contracts at 22 training organisations were not renewed this year, Skills and TAFE minister Gayle Tierney acknowledged last month.

Registered training providers fear some organisations will have to close after the state government issued renewed some Skills First contracts, reducing funded placement offers.

Leadership Management Australia founder and executive chairman Grant Sexton said the changes will put some training providers “out of business”.

Mr Sexton’s company received 1000 funded places in 2022, but now can only sell 10 government funded places per program annually.

“It was such a significant cut with no warning whatsoever,” Mr Sexton said.

“We’re going to lose a big part of our revenue and unfortunately, it does mean five jobs are going.”

Mr Sexton’s “real concern” was the skill shortages in the manufacturing sector.

“The manufacturing industry in Victoria is reeling. It’s so hard to get experienced people,” he said.

“When (new staff) come on, they need to be upskilled quickly, because the safety issues are frightening.

“If you haven’t worked around heavy equipment, forklifts, Gantry Cranes, the risks are high.”

Complete Lean Solutions managing director Andy Kelsall said “work was drying up” as a result of cuts.

The lean consultancy firm, which coaches clients including Qantas, Amazon and Aldi, had its funded placements slashed from 500 to 30 this year.

“We were in demand … we were telling clients to wait until the new year to register for the program,” Mr Kelsall said.

“It’s just madness … It won’t be long before I have to start (telling workers to go) part time, or have to start laying people off.”

RTO managers fear industries where there are skill shortages including manufacturing and construction, will suffer as a result of the changes.

Opposition skills and training spokeswoman Bridget Vallence said funded placement cuts were making it harder for young people to gain skills in industries suffering from labour shortages.

“More training organisations are coming forward with stories of significant cuts to Skills First funding, and how this will have detrimental and long-term impacts for many industries, including construction, manufacturing, and early childhood education,” she said.

“With Victoria facing widespread skills shortages, it makes no sense that Labor is axing funding for training.”

But the state government said funded places were determined by the highest priority workforce needs.

“We’ve given our RTOs more certainty this year so they can plan for the future and deliver quality training to Victorians that is aligned with real industry and workforce needs,” a Victorian Government spokesman said.

“Consultation with industry and RTOs is an important part of the process, which guides the number of places available for each course.”