Canberra threatens to withhold $9BN from states over training reforms

THE federal government has threatened to withhold up to $8.75 billion in training funding.

Chris Evans

THE federal government has threatened to withhold up to $8.75 billion in funding if the states and territories don't agree to vocational training reforms at next month's Council of Australian Governments meeting.

Tertiary Education Minister Chris Evans said the federal government would allocate training funds through businesses rather than the states and territories if their governments decided to "baulk at reform".

Senator Evans said that on top of the $1.4bn already allocated to the states each year, a $1.75bn incentive deal was "on the table" if states cooperated on training reforms over the next five years.

But he said the federal government's $550 million National Workforce Development Fund provided an alternative funding model.

"We have other options," Senator Evans told the National Press Club yesterday.

But Western Australian Training Minister Peter Collier said he didn't "like any conditional funding at all".

"It's a pariah in terms of an effective and cooperative federal system," he said.

Mr Collier said the commonwealth was reducing funding for WA while insisting on reforms. He said preliminary advice from his department was that WA would be $75m worse off, even with its share of the $1.75bn incentive funding.

Victorian Training Minister Peter Hall said the states had been negotiating in good faith. "The commonwealth's threat to walk away from the negotiations is not helpful, and fails to give the [training] sector certainty," Mr Hall said.

"It is critical that there is an appropriate balance between guaranteed levels of funding and money [dependent on] arbitrary - and as yet undefined - state service delivery targets."

NSW declined to respond to Senator Evans's comments, saying the matter would be discussed at COAG.

Senator Evans said that if pushed, the federal government would use an "industry-led funding model to ensure individuals and businesses do not miss out on their training entitlement".

"Our clear preference is to work with the states to deliver these critical reforms but it's not a challenge that can be ducked. It's not a reform that can be stymied."

The reforms include HECS-style loans for diploma students and guaranteed training places up to certificate III, the level of most apprenticeships.

The states may also have to agree to new measures to reinforce the quality of courses and stamp out rorting of training funds. The Australian understands Prime Minister Julia Gillard will outline these measures on Monday.

Brendan Sheehan, a public policy consultant and former education bureaucrat, said while the states were unlikely to rebel over loans and training entitlements, there was likely to be a "brawl" over the extent to which states were sidelined from defining training priorities in a system strongly influenced by industry.

But he said the commonwealth usually got its way in "this sort of argy bargy".

University of Melbourne tertiary education expert Leesa Wheelahan said most states would willingly sign up to income-contingent loans.

"It means they can cost-shift to students," Dr Wheelahan said.

But Gavin Moodie, a policy analyst with RMIT University, said WA and Victoria had opted out of national training regulation and an incoming Liberal National Government in Queensland could follow suit.

"I expect [Senator Evans's] threat is real," Dr Moodie said.

The Australian Council for Private Education and Training said it supported both the proposed reforms and the industry-led alternative.

The Australian Education Union said the federal government was unlikely to cancel its regular training funding, but the $1.75bn incentive deal was "at risk".