TAFE has been drained of funds for poorly performing and dodgy private providers

Aug 21, 2020

What a  difference there is between the public vocational education and training provider, TAFE, and private for-profit training providers.

Credit – Unsplash

The Centre for Future Work has released a study outlining the benefits of TAFE to the economy of Australia, and calling for governments to invest in TAFE to train Australians for a post-Covid-19 economic recovery. TAFE returns annual benefits to the economy of $92.5 billion.

On National TAFE Day 2020, the Australian Institute’s Centre for Future Work released a study into TAFE’s role in our economic recovery. Recognition of the importance of education and training to a post-Covid-19 Australia is not new. Even the Prime Minister eventually acknowledged the need to invest in vocational education and training (VET) as part of JobTrainer. What is new here is that according to this latest study, TAFE is central to a recovery plan.

According to the study, TAFE creates more than $16 million in value for every dollar it costs to run. The annual costs to run TAFE Institutes are around $5.7 billion which returns economic benefits worth $92.5 billion. How do TAFE Institutes do this?

According to the New Daily, more than $6 billion in economic activity is generated by TAFE per year. This includes direct activities (education), purchases made across its supply chain and flow-on effects to consumer spending. The real value in TAFE’s impact on productivity adds $49.3 billion a year to workers’ wages and $35.6 billion a year to business profits by boosting productivity of the workforce. On top of that the report outlines the benefits to individuals of training which reduces the Government’s welfare bill by $1.5 billion a year. This is set out in the table below:

TAFE Annual Economic Impact Results
TAFE Economic Footprint $6.1 billion
Higher Earnings and Productivity

(Includes Higher Tax Revenues)

$84.9 billion

($25 billion)

Fiscal Savings (Social Benefits) $1.5 billion
Total Benefit $92.5 billion
Total Annual Costs $5.7 billion

Even if you wanted to quibble with the actual numbers, what this study does is recognise the multiple benefits to the economy and individuals of quality vocational education and training programs delivered through TAFE. Too often the benefits of training are measured by governments and even organisations such as the Productivity Commission, in employment outputs, without acknowledging flow-on effects to individuals and businesses, and the confidence and mental health of individuals able to gain sought-for jobs and satisfying careers.

Recommendations resulting from the study include:

· Re-establishing an adequately funded and stable TAFE system

· Allowing TAFE to fulfil its critical role as the major provider of VET with a minimum 70% of total VET public funding for TAFE Institutes

· A new model of VET funding, so that TAFEs and universities are on equal footing, leading to a coordinated post-school education system

· A free TAFE program in priority industry areas

· A 50% wage subsidy for employed apprentices

The study also recognises the importance of including TAFE personnel in policy development at this critical time, and emphasises that “the TAFE system is the most experienced, reliable and high-quality national-level vocational training infrastructure, and it is therefore best positioned to lead the VET sector response to skills system reconstruction”.

While putting numbers to the argument, this study also echoes the calls by many in the business world for the need to invest in a strong TAFE system at this time, yet neither JobTrainer nor the draft Productivity Commission report looking at a new National Skills Agreement, recognise the importance of TAFE to the sector.

The ACTU in its National Reconstruction Plan also puts the focus back on TAFE, as a critical part of its five proposals. The ACTU calls on the Government to develop a plan to lead Australia out of this economic crisis, not to depend on an uncoordinated set of policy decisions. This plan makes the point that: “Due to the deep damage that has been done to Australia’s VET system by a decade of misplaced market experimentation and privatisation, a national education and training strategy must begin with a concerted effort to rebuild the VET system – so it can play its proper role in reconstructing the national economy.” It also proposes a nation-wide FREE TAFE program, a minimum of 70% of all government VET funding directed to TAFE, a $3 billion fund over three years to support capital improvements in TAFE and a 50% subsidy of wages of apprentices and trainees over the life of the apprenticeship/traineeship.

And what about the competitive training market and private providers? According to the ACTU, “private provision of nationally important skills development is inherently conflicted. Public money going to private providers has not improved outcomes or lead to better employment outcomes.” This argument appears so self- evident, yet despite a decade of a failed training market, governments continue to pursue this ideological path. These arguments have also been reinforced by many concerned by the impact of for-profit providers in the aged care sector, with many questioning their effectiveness in protecting elderly people in residential care. Lack of qualified staff, lack of primary concern for the residents, profits taken out of aged care facilities by large corporations focused on their bottom-lines. This is a story familiar in the VET sector.

Federal Governments established a VET FEE-HELP scheme costing taxpayers $7.5 billion in government funds between 2009 and 2016 (according to the National Centre for Vocational Education Research) and most of this funding went to private providers. Unfortunately for many students, unscrupulous for-profit providers, including some of the largest in the business, made their focus their profit margin and how much government funding they could take out of the system.

Evocca and Careers Australia were two of the largest private colleges, taking in more than $440 million of government funds in just three years. VET FEE-HELP data for 2015 revealed that only 1600 of Evocca’s 13,000 students completed their courses between 2013 and 2015, despite the company being paid $110,000 per graduate. In other words, the private company was able to access significant amounts of taxpayer funds without delivering the product.

In 2017, Careers Australia went into voluntary administration, leaving students and staff stranded. At its height, Careers Australia was raking in hundreds of millions of dollars in taxpayer funding for expensive training courses, using tactics such as door-to-door sales targeting vulnerable groups and offering free iPads for sign-ups. When the Government finally caught up with them and refused them access to the new student loans scheme, they opted out. To say that unscrupulous for-profit private providers have cost taxpayers $7.5 billion vastly under-estimates what went on in this policy catastrophe. However what it does illustrate is the difference between the public vocational education and training provider, TAFE, and private for-profit training providers. As the Australian Institute’s study highlights – now is the time to invest in TAFE, both tried and successful.

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