Vocational T raining in Victoria: Reform & Performance

1. Vocational Training in Victoria: Reform & Performance

2. A higher skilled workforce will be critical to securing Victoria’s future competitiveness Only half of working age Victorians have the core literacy and numeracyskills they need for work at a time of increasing structural change in our economy... We need higher level skills to arrest Victoria’s declining productivity… 2001 to 2005: Victoria’s multifactor productivity growth rate was half the national average 2006 to 2010: Victoria’s growth rate declined at five times the average annual rate of NSW We need to increase workforce participation to mitigate the costs of an ageing population and key workforce shortages (e.g. community services)… But 625,000 low skilled Victorians are in low skilled work or disengaged from work…

3. 2012 - Refocusing VET 2008 - 2012 mid 1990s - 2000s Student entitlement Fully contestable market e arly 1990s Purchaser provider Open contestable market Profile funding Student entitlement and Portion of funding choice of provider Student entitlement and contestable No market choice of provider Government purchased Uncapped places places, mostly with TAFE TAFE budget funded Uncapped places Subsidy reflects supply - through contract Planned course provision demand and public value Subsidy based on course with capped places TAFE attracts students cost Subsidy based on historical Flexible fees cost Fees regulated/capped Profile of activity funded Goal: Modern system based on choice and competition Fees regulated/capped Goal: Meet student Regulated fees Goal: Drive demand Goal: Funding efficiency TAFE Victoria’s VT system has been on a reform trajectory from a centrally planned model to a demand-driven model • Problems with centrally-planned models: • Inefficient system with misaligned activity, both unmet demand and churn • Objectives not being met

4. The introduction of the Victorian Training Guarantee in 2009 placed purchasing power in the hands of students Victorian Training Guarantee: • Victorians aged under 20 can access training at any level, regardless of prior qualifications • Victorians aged 20 or over can access training in qualifications higher than those they already hold • Access to apprenticeship qualifications is unlimited to Victorians, regardless of age or prior qualifications

5. Government allocates fixed number of training places in specific courses Studentsaccess places on a first-come first-served basis Training providers Compete to attract students & employers The role of industry and employers in the training system has evolved, from passively lobbying government for places to actively engaging with individuals and providers Old model: Passive industry New model: Active industry Students Personal entitlement to subsidised training at provider of choice Industry & EmployersInfluence student choice and provider offerings Training Providers offer fixed number of subsidised places Funds Facilitates Regulates Industry & Employers lobby for training places to meet skills needs Government

6. Recent growth in national context…

7. ‘Refocusing Vocational Training’ builds on the gains of the demand-driven system, while improving core elements of market design • Victorian Training Guarantee retained Entitlement Supply-driven system Fundamentals retained • Funding directed to providers who meet quality requirements and attract students Diversity of providers • Lower subsidies for higher quals that deliver greater private returns, but income –contingent loans so no upfront-fees Differentiated subsidies • Subsidies targeted towards real job pathways • Deregulation of fees • Concessions and loadings for effective participation Unbalanced public investment • Redesign of industry engagement • Improved information to the market Gaps addressed Gaps in quality assurance & market oversight • Better commissioning • Improved monitoring of provider and market performance • TAFE transition • ACFE 10 year strategy Government policy constraining market-driven industry restructuring

8. Training activity to Q1 2013 Enrolments patterns to Q1 2013 Patterns of Delivery to Q1 2013 Apprenticeship and Traineeship trends to Q1 2013

9. Activity is moving towards courses of higher public value and labour market need

10. Direct Consultation The Minister for Higher Education and Skills talking directly to industry and employers DEECD Market Facilitation and Information Industry Skills Consultative Committee meets 3-4 times a year Monthly Industry Forums hosted by the Minister Seven to date Employers Industry Associations HESG Regional Facilitation Managers

11. The objectives of vocational training • delivers a productive and highly skilled workforce • enables all working age Australians to develop the skills and qualifications needed to participate effectively in the labour market • contributes to Australia’s economic future • supports increased rates of workforce participation National Agreement for Skills and Workforce Development

12. In shortage and specialised occupations

13. Enrolments in Victoria’s largest employing industries • 54% enrolments in Victoria’s five largest employing industries (51% employment) • Enrolment shares exceed employment shares in health and construction - areas of relatively high shortages • Gap in Professional Services largely reflects the need for degrees or above

14. Health care and social assistance Enrolments patterns to Q1 2013 Enrolments by Provider Type, Q1 2013 Enrolments in specialised & in-shortage related courses to Q1 2013 Top 5 Qualifications in Q1 2013

15. Construction Enrolments patterns to Q1 2013 Enrolments by Provider Type, Q1 2013 Enrolments in specialised & in-shortage related courses to Q1 2013 Top 5 Qualifications in Q1 2013

16. Manufacturing Enrolments patterns to Q1 2013 Enrolments by Provider Type, Q1 2013 Enrolments in specialised & in-shortage related courses to Q1 2013 Top 5 Qualifications in Q1 2013

17. Victorian Training Market Quarterly Report Q1 2013 available at: www.education.vic.gov.au/training/providers/market/Pages/reports.aspx