Mitchell Institute’s ‘Australian Investment in Education’ Report – Top Key Takeaways

8319d14fdf895c07e6a243c5c23179c5?s=50&d=mm&r=g Olivia Blazevic
Content Marketing Manager

The Mitchell Institute’s recent ‘Australian Investment in Education: Vocational Education and Training’ report shows that funding for VET is at its lowest point in over a decade.

The paper introduced important context to ongoing conversations around VET funding, and how Australian institutions will be able to deliver the high-quality training needed for the 45% of new jobs that will require VET qualifications over the next five years.

Nation-Wide Trend

The report finds that every state and territory Government has cut VET funding over the past 10 years, with overall funding now being 15% less than the figures seen in 2006.

One of the largest declines has been seen in New South Wales (with funding dropping by 21% in real terms since 2006), while Victoria has seen its funding almost halve since 2012.

Federal government funding into VET peaked during VET FEE-HELP, and while VET FEE-HELP has come and gone, government investment into VET has actually increased as a percentage since 2008. The Australian Government is actually investing more in real terms in the VET sector than it did in 2008.

Its share of investment has gone from 26.5% in 2006 to 38.2% in 2018.
At a national level ‘Australia’s total reported investment in the VET sector is at its lowest level in real terms since at least 2008’.

Access to student loans has been restricted

Traditionally, VET has been seen as a more accessible higher education pathway than university. However, access to income contingent loans has been restricted in recent years, meaning students end up facing higher upfront fees.

This makes the Australian vocational education sector less cost-effective than university, which negates much of its appeal. In order to attract and retain students and ensure the ongoing skilling of our nation’s workforce, VET students should have the same ability to defer education costs as university students do.

The VET FEE-HELP system was in place between 2012-16 to do just this. A series of National Agreements between the Australian Government and state and territory governments were established to increase VET student numbers through a VET student entitlement.

The Australian Government committed to offering VET FEE-HELP, an income-contingent student loan scheme which covered diplomas, advanced diplomas and some certificate IV level courses, using a similar model as the tertiary education sector.

However, the scheme was met with concerns about financial sustainability and quality of provision, resulting in it being permanently replaced by VET Student Loans (VSL). Today, student loans remain restricted to courses that meet skills shortages only.

This means that only


of vocational education courses are eligible for student loans

Funding reforms have affected VET sector

The Mitchell Institute has also identified the impact of government funding reform on VET providers and the sector as a whole. Rapid funding changes throughout Australian states and territories have been described as a “bubble” in overall funding levels by the Mitchell Institute.

The first of these reforms was conducted by Victoria, which made more public funds available to private Registered Training Organisations (RTOs) in 2009. South Australia did the same in 2012, opening up state and territory training markets to more private providers.

On a nation-wide scale, we saw each state and territory tailor their VET reforms in different ways to manage the involvement of private providers into government-funded training markets. Various governments introduced stricter criteria for access to government funding and greater oversight, resulting in an overall drop in funding.

Previous policy failures mean a new approach to VET funding is needed

The Mitchell Institute report labels the past 10 years of reform as an overall failure.

Key recommendations made in the report include:

  • Greater coherence is needed in government investment. VET funding is notorious for its fluctuations. To achieve sustainability, stability and quality in the VET sector, the Mitchell Institute recommends replacing the current set of National Agreements with a new agreement to spark a new VET financing system.
  • Remove the imagined divide between tertiary and VET education, allowing students to study at both without penalty and receive the training and skills they need.
  • Enact reforms that allow VET students to have the same access to support as university students (such as through income-contingent student loans).
  • Establish a benchmark price for VET qualifications to reduce the number of low-cost, low-quality courses on the market.
  • Limit contestability so that poor quality operators cannot enter the market. If VET funding markets were established that involved few sunk costs, firms with little experience could start-up without sufficient investment in teacher expertise, classrooms or other essential components of quality. The VET sector, therefore, needs to strike a balance between agility and maintaining quality.

Ensuring a quality education for VET students, and meeting the growing demand for skilled workers is only possible when governments increase funding for VET courses.

Registered Training Organisations (RTOs) and TAFEs will only continue to grow in importance as Australia’s skill needs continue to change, with 45% of new jobs requiring VET qualifications in the near future.

The vocational and education training system, therefore, needs the appropriate funding to attract and retain students, and create a skilled workforce.

Continued support and funding from state and federal levels are needed, meaning this worrying trend of lower funding needs to be addressed promptly.

8319d14fdf895c07e6a243c5c23179c5?s=100&d=mm&r=g Olivia Blazevic
Content Marketing Manager

Olivia is a dedicated and creative content marketing professional with expertise in digital content, strategy development and data analysis — all within the education marketing scope. She is also a devoted over-user of em dashes — seriously, someone needs to stop her.

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