BCA opposes legislating fee-free TAFE, marking new split with Albanese government

After previously welcoming government funding for free TAFE places, the BCA now says it is opposed to legislating it and it should instead be part of the ‘normal budget and policy setting process’.

Anthony Albanese and Business Council chief executive Bran Black. Picture: John Feder

The nation’s peak business lobby has cast fresh doubt on Anthony Albanese’s flagship skills policy, declaring it does not back legislating fee-free TAFE.

The Business Council of Australia had previously been a key backer of parts of the government’s skills and training agenda. The broader agenda had seen the Albanese government invest $1.5bn into free TAFE places.

However, BCA chief executive Bran Black said the measure should not be baked into legislation and should instead remain as part of the “normal budget and policy setting process” and that it was too early to assess the impact of the government’s previous investment into fee-free TAFE.

The government currently has legislation before the House of Representatives that seeks to give funding to states and territories to provide 100,000 free TAFE places per year from 2027.

Fee-free TAFE is one of the government’s main talking points in the lead-up to the election, with both the Prime Minister and Jim Chalmers spruiking it as one of their achievements in this term of government as recently as Wednesday morning.

“We’ve provided support for families under cost-of-living pressures, whether it be free TAFE, cheaper medicines, cheaper childcare, the tax cut for every single Australian taxpayer,” Mr Albanese told ABC TV.

The BCA stressed that it was “supportive of the government’s focus on reducing financial barriers to education and training” but said it was opposed to legislating free TAFE as an “enduring feature of the vocational education and training system”.

“The BCA has consistently supported increased assistance for the VET sector, including the intent of fee-free TAFE, but we believe more data needs to be gathered and assessed before any move to lock in the new program with legislation,” Mr Black said.

The Coalition welcomed the BCA’s position, saying Labor had lost the support of the business community on its “key skills policy for the election” and that this cast a “big question mark” over the fee-free TAFE policy.

Mr Black raised concerns about insufficient data to support the legislation.

“The BCA has heard from stakeholders from the (vocational education and training) sector that completion rates for fee-free places are around 20 per cent lower than the average VET completion rate of almost 50 per cent,” Mr Black said.

“It is vital we understand the study and employment outcomes of fee-free TAFE students to ascertain the program’s value, where it is most effective and how to overcome any shortcomings.”

He said he was “concerned about the use of legislation to pre­maturely hardwire this policy”.

Skills and Training Minister Andrew Giles told The Australian it was “disappointing” the BCA did not support legislating free TAFE.

Skills and Training Minister Andrew Giles. Picture: Tamati Smith / NewsWire

Opposition skills and training spokeswoman Sussan Ley. Picture: Martin Ollman / NewsWire

“Free TAFE is providing an accessible pathway to secure work and cost-of-living relief to more than half a million Australians,” he said. “The Albanese government is committed to building the future of our country which is why we’ve proposed legislation to make free TAFE ­enduring.

“It is disappointing that the BCA doesn’t support expanding access to affordable high-quality public education for Australians who want to get ahead. As I travel around the country, at every TAFE I visit, I meet students who tell me what a life-changer free TAFE has been for them.

“There is a clear choice: Peter Dutton and the Liberals will cut free TAFE funding and Australians will pay more for TAFE; under the Albanese government, free TAFE is here to stay.”

In welcoming the BCA’s position, opposition skills and training spokeswoman Sussan Ley said: “Labor’s key skills policy for the election has lost the support of the business community today.

“These are the very stakeholders Anthony Albanese used to justify his approach to skills and workforce and this means there is a big question mark over the entire free TAFE program.”

Ms Ley also welcomed the BCA’s argument that there was insufficient information to justify this legislation.

“Anthony Albanese and Andrew Giles are hiding the dropout rate of free TAFE so they can push their legislation through the parliament, and that has been called out today,” she said.

The Coalition declared in ­November it would oppose the bill, saying it was unfunded and that “Australian students deserve better than fake pledges on skills and training”.

“With TAFE at the heart of the vocational education and training sector, free TAFE supports Australians to acquire the skills and capabilities they need to obtain well-paid, secure jobs and ­ensures Australia has the skilled workforce it needs now and into the future,” the bill’s explanatory memorandum reads.

“It reduces cost of living and the debt that people can carry over their adult lives.”

Mr Black also warned the spending could distort the market for other VET vendors.

“Around 80 per cent of VET students study at non-TAFE institutions,” he wrote.

He said restricting fee-free places just to TAFE would disincentivise students from “selecting the course most suited to their career aspirations, and ultimately undermines national efforts to overcome workforce shortages”.

Mr Black said the distortion could be most acute in regional areas, where TAFE is not accessible and a non-TAFE institution may be the only option.

“The Victorian and NSW governments’ recent funding cuts to private providers, including in rural and regional communities, is a step in the wrong direction in this regard.

“At a minimum, fee-free TAFE placements must be expanded to include private (registered training providers) in rural areas where TAFE is not located.”