Vocation training open market schemes a disaster

Open market training schemes have backfired, as governments spent billions of dollars to help fewer students.

Tertiary education expert Peter Noonan in Melbourne. Picture: Stuart McEvoy

Open market schemes to reinvigorate vocational training have backfired disastrously, with governments spending billions of dollars to train fewer students.

Newly released figures show the proportion of adults completing vocational qualifications on the public purse fell by almost one-third in five years, despite a flurry of costly programs designed to broaden access to training.

The falls were steepest in Victoria and South Australia, the first states to make their training funds widely available to private ­colleges. The decline also co­incides with the massive growth in the federal government’s VET FEE-HELP loans program.

The new figures, outlined in the Productivity Commission’s annual report on government services, cover the period from 2012 to 2016. In 2012, the Gillard government signed an agreement with states and territories to ramp up training through a “national training entitlement” for students to obtain subsidised study at the colleges of their choice. The idea was to make training more accessible by extending funding to more colleges, especially private col­leges, which were considered better than cumbersome TAFE bureaucracies at responding to ­labour market changes.

In 2012, about 520,000 government-funded students — equating to 34.2 for every 1000 Australian adults — completed publicly funded vocational certificates or diplomas. By 2016, this had fallen to 367,000 students, or 23.1 adults in every 1000.

The commission’s figures show that so-called entitlement funding rose from $160 million in 2012 to $1.68 billion the following year, and remained at roughly that level for the following three years. ­Despite this, government-funded training completions fell steadily.

Tertiary education policy analyst Peter Noonan said it had become an entitlement “in name only”, after state governments put “pincers” on the types and levels of courses supported and the amount of government funding available. “The entitlement may be to a course that’s so poorly subsidised that you’re still facing a gap fee of $5000,” he said.

He said skyrocketing upfront fees were just one reason for a drop in appetite for government-funded training.

Others included labour market fluctuations, a preference for university education and “damage to the brand” as a result of widespread rorting of government training funds.

Professor Noonan said the rorts also helped explain why so few students had completed publicly funded courses, even though so much money had been thrown at them. He said “lax enrolment practices” had seen thousands of students enticed into courses they were never likely to complete.

The rorting began in Victoria, which opened its training funds to private competition from 2008. By 2012, its training budget had blown out by about $400m, ­forcing the state to slash subsidy levels for many courses.

South Australia, which followed suit in 2012, drastically revised its funding policies following a similar cost explosion.

The most colossal losses were sustained by the federal government after it relaxed rules around its training loan scheme.

Allocations snowballed from a little over $300m in 2012 to about $700m in 2013, $1.7bn in 2014 and $2.9bn in 2015, before reforms ­finally reduced the outlay to about $1.5bn in 2016.

The government has now written off any hope of recouping at least $2bn of this money.

Professor Noonan, of Victoria University’s Mitchell Institute, said targeted government funding of private colleges had worked well for years. “When states like Victoria completely opened the market up, that’s when all the bottom feeders were able to get in.”