Who Pays for TAFE? An Overview of Key Themes (Provider Perspective)

1. Who Pays for TAFE?An Overview of Key Themes (Provider Perspective) VTA Conference May, 2004 Virginia Simmons CEO, Chisholm Institute of TAFE

2. Sub - theme FromLifelong LearningToLifelong Earning

3. VTA Position CEO Council Funding Standing Committee Initiatives • Position Paper: New Skills for All: Investing in Victoria’s Public TAFE Institutes (2003) • Submission: Senate Inquiry into Current and Future Skill Needs (2003) • Submission to OTTE: Analysis of TAFE Institute Financial Plans for 2004 and Beyond (2003) • Response: OTTE Review of Student Fees and Charges (2004) • Response to VLESC Paper: Vocational Education & Training Priorities in an Innovation Economy (2004)

4. Role of the Commonwealth 1974 Kangan Report ‘The Australian Government has not previously made grants to the States towards recurrent expenditure for technical and further education. The Committee considers financial assistance to the states absolutely necessary if TAFE is to develop in the directions indicated by its conclusions.’ TAFE in Australia, Vol 1 April, 1974 p.117

5. Too Much Money? 1986 Review of TAFE Funding (Hawke era) ‘The review of TAFE funding was undertaken because … TAFE systems were becoming increasingly concerned with the plethora of Commonwealth programs and funding bodies, which were imposing heavy administrative pressures on the States. As the NSW TAFE submission stated: … the growth of Commonwealth funding sources … has added substantially to the administrative burdens and costs imposed upon TAFE.’ Goozee G 2001The Development of TAFE in Australia, p.55

6. Industry Investment Training Guarantee Legislation Legislation came into force on July 1, 1990. From July 1992 onwards, it required employers to with a payroll over $200,000 to spend at least 1.5% on ‘structured training’. Employers who failed to meet this level of expenditure were required to pay the shortfall to the ATO. From the outset, the Training Guarantee was opposed by a range of business interests and was ‘suspended’ in 1994. ‘Industry Training in Australia: The Need for Change, 1989, NBEET

7. Government Investment in Growth 1990 Deveson Review ‘Governments need to commit themselves to a steady increase in the volume of publicly funded TAFE activity. For the next five years,increases of 5% p.a. in real terms would be an appropriate response as a national target... …the personal financial benefits to individuals arising from TAFE training are ... quite modest … there is no persuasive case for substantial individual contributions to meet the cost of TAFE.’ ‘Training Costs of Award Restructuring’ Vol 1, 1990 page 67 - 8

8. The Too Hard Basket - HECS in TAFE ‘…there is no single blueprint for a deferred payment system in TAFE. Factors which need to be taken into account in designing possible systems include fee levels, exemptions and access arrangements, revenue needs, etc. …there will need to be detailed discussions between all of the States the ATO and and Commonwealth DEET officials once there is broad agreement …..’ DEET, 1990,‘Deferred Fee Payment Systems in Technical & Further Education

9. Spreading the Costs 1991 Finn Review ‘ The costs of education and training will be met from a combination of sources: • individuals, directly through fees and charges and indirectly through foregone wages… • industry through direct involvement in training and through contributions in-kind to education and training institutions • entrepreneurial activity by institutions, for example the sale of education overseas • the public purse, through costs to government Young People’s Participation in Post Compulsory Education & Training, p181

10. Relativities with Other Sectors 1996 Review of the ANTA Agreement ‘It is widely recognised that acquisition of vocational skills by an individual benefits the community generally as well as the individual. Community benefit ... arises from the existence of a common skill pool available to all enterprises, especially those of small and medium size. … as government accepts an obligation to provide secondary and first-degree higher education largely at public cost , there is no strong case for imposing disproportionate burdens on individual students within VET or on the employers of TAFE graduates’ ‘Report of the Review of the ANTA Agreement, page116-7

11. Coalition Policy: New Apprenticeships Industry-led System: User Choice Principles • Clients are able to negotiate their publicly funded training needs • Clients have the right to chose a registered provider and negotiate specific aspects of the training • User choice is part of a national training market • Pricing should reflect program costs  Growth in private RTOs ‘Report of the Review of the ANTA Agreement, page116-7

12. Funding Shrinks - Options Widen Apprenticeships and Traineeships • Additional Funding • by governments - Commonwealth or State • by industry • by individuals • by other parts of the training system e.g. shift from General Profile Funding • Restrict funding • by age • by employment status • by qualifications • by type of skill/occupation • by industry sector Options for Managing Growth in Publicly Funded Apprenticeships/Traineeships, 2000, STB

13. Public and Private Benefit There are clearly benefits that accrue from participation in VET to individuals, to the public interest and to businesses and industry. As knowledge and skills grow in importance, we must consider how much our community should invest in education generally (and in VET in particular) and what the mechanisms for investment should be. ( VLESC Priorities) Hon Lynne Kosky, 2002, Knowledge and Skills for the Innovation Economy p.4

14. Cost Shifting Anomalies exist in relation to the level and nature of student contributions to their study. A student who undertakes a TAFE diploma-level qualification and pays TAFE course fees and then articulates into a degree course would pay significantly less for their qualification than a student who studies solely at university and pays HECS for the duration of their course. However, the student, whilst at TAFE, has no access to an income-contingent loan to pay fees. DEST, 2003, Varieties of Learning, in Backing Australia’s Ability

15. Breakdown of the ANTA Agreement ‘I am disappointed that the States and Territories rejected the Australian Government’s offer for a new ANTA Agreement. However, the decision to directly purchase additional places will ensure that priority clients do not miss out on training as a result of the decision of the States and Territories’ Dr. Brendan Nelson, Minister for Education, Science and Training, April 2004

16. Some Themes Summarised (1) The Role of Government • Balance between State and Commonwealth • Differences in investment between States • Capped provision or growth • Cost shifting between jurisdictions • Relativities between education sectors • Policy differences and political imperatives Payment/ Contribution ‘Devices’ • Employers: Training levy schemes • Individuals: deferred payment schemes

17. Some Themes Summarised (2) Training Market Issues • public and private sector competition • income generation by providers as subsidy • User Choice, Vouchers Restating priorities • Public vs private benefit • Funding sources - P and L • Industry sectors • Age Educational Ideals • Lifelong learning • Knowledge Society Dr. Brendan Nelson, Minister for Education, Science and Training, April 2004

18. The Future • No clear accountability for TAFE • No clear national policy • Different views between states • Debates between commonwealth and states/territories • Policy complexity • Funding decisions driven by: • politics • limited budgets • competing priorities • limited ‘clout’ of TAFE

19. Thank You