VET loan scheme unfair to TAFE students

The new VET student loan application process is difficult to navigate and laden with disincentives.

Next time you go to a job interview, take a moment to gauge just what the interviewer is trying to find out. While it’s true they might have an interest in what you know, they’re likely to be much more focused on what you can do. On what you can do for them.

A key focus of the new operating model at TAFE NSW is designing training programs that are relevant to industry, and therefore most useful to the economy and most empowering to the individual.

Indeed, we are nearing the midpoint of our One TAFE reforms — consolidating 10 autonomous Institutes of TAFE into a single public provider, operating under commercial principles.

A recent Deloitte audit, applying global benchmarking methodology, ranked our modernisation program ahead of the NBN in terms of complexity and schedule.

By adopting technology in learning and rethinking the way we engage with business, we intend to be the unequivocal leader in the vocational education and training sector. That is, learning that involves doing, not just theory.

But the task of training a workforce to deliver on the future needs of our economy is too great for any single organisation, sector or government alone.

If we are to have a fighting chance of addressing the skills shortage, the first thing we need to acknowledge is that we’re starting from behind the eight-ball.

Data from peak industry associations highlights the need for 50,000 skilled construction workers and 19,000 chefs in NSW alone over the next 12 months.

We need an additional 80,000 nurses nationwide by 2021 to meet the needs of an ageing population.

Thankfully, funding of more than $1.3 billion a year from the NSW government is driving a surge of enrolments in a range of critical entry-level areas.

Enrolments for apprentice electricians at TAFE NSW are up 19 per cent, and enrolments for both carpentry and plumbing apprentices are up 11 per cent.

But enrolments in our higher-level qualifications are suffering badly due to a significant overcorrection in federal government policy on student loans.

To be clear, the previous loan scheme was a disaster and we applaud the federal government for intervening to stop the rorts, protect the taxpayer and put the dodgy providers out of business.

However, the new VET student loan application process is difficult to navigate, laden with disincentives, and, critically, much more complicated than the equivalent process for HECS university students.

In many cases, students who may have had an appetite to study a TAFE diploma are becoming so frustrated by the process that they are simply giving up.

It’s now well known that only 18.3 per cent of the federal government’s $120 million funding allocation for TAFE NSW VET student loans was drawn down in 2017.

Or, in other words, the federal government fell more than 80 per cent short of its own target.

Additionally, as reported in this paper yesterday, Canberra also appears to be double-dipping at the expense of the VET sector.

Students at TAFE NSW who successfully apply for a VET student loan are slugged with a 20 per cent fee — a charge, of course, that university HECS students do not pay.

The commonwealth says this fee is needed to cover administration costs associated with the loan program.

However, at the same time, training organisations like TAFE NSW are being hit with an $80,000 annual fee for that same purpose.

The rationale behind these regulated biases against the VET sector escapes me, especially as universities churn out 20 law graduates for every graduate position, while enrolments in the top 20 diploma areas at TAFE NSW plummet.

We often hear from the federal government that if you want more of something, you should tax it less, and that if you want less of something, you should tax it more. I’m not going to engage in the debate around whether the 20 per cent loan fee is or is not a tax, but there can be little argument that the same principle applies: charging VET students a fee for taking out a loan will discourage them from doing so.

Faced with the choice, why would you go through the hassle of a complex and expensive VET Student Loan, when you can get a fee-free HECS loan at the click of a mouse?

I know how easy the HECS application process is from personal experience — I watched my son do it in no time flat.

In cleaning up the VET sector, the federal government appears, on this count, to have used a sledge hammer where a surgeon’s scalpel may have been more appropriate.

Successfully addressing the skills shortage relies on raising the esteem of the VET sector, achieving real buy-in from the private sector and winning policy support from all levels of government.

That’s why TAFE NSW has embarked on a campaign to sell the dream offered by a vocational pathway to work, education and a great lifestyle.

We need to confront an apparent commonwealth bias that favours academic learning at university over skills training in vocational education, and change these perceptions.

What’s waiting at the other end is a highly-skilled, highly-trained, highly motivated workforce, where students are job-ready from the moment they graduate.

And who knows? Those students may find themselves attractive to employers on the basis of what they can do — not simply what they know.

Jon Black is the managing director of TAFE NSW

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Content produced in association with TAFE Enterprise.