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providers in Australia

Budget musings and our future

Monday, May 15 2017

Well, in case you missed it on 9 May 2017 the Treasurer announced the 2017 federal Budget.

That’s fine but what is in it for education?

I will leave schools to someone else but let’s touch on the rest.

Before I start though, the context is that the key economic indicators include GDP growth of 2.75% in 2017-18, increasing to 3.5% in 2018-19 and the Budget is projected to return a surplus of $7.6B in 2019-20.

There were no surprises in Higher Education. The Budget confirmed the Higher Education Reform Package detailed by the Minister for Education and Training on 1 May 2017. As I have previously touched on, the package includes the extension of Commonwealth Supported Places (CSPs) to universities to deliver sub-bachelor courses, university efficiency dividends, increased student fees and a lowering of the HELP repayment income thresholds.

Take a breath.

I won’t repeat my statements from a week ago about the package. However, we do now have the situation where students who want to attend the very best higher education institutions are punished financially for doing so and they incur a 25% extra levy for their trouble. Combined with the lower income threshold – the double whammy.

The Legislation has now been referred to a Senate Committee. I suggest this scrutiny is important. For me the key issue is equity – or the lack of it. Certainly, expect this to be a key continuing argument.

The surprise of the night was the announcement of the Government’s ‘permanent’ Skilling Australians fund, as a replacement to the National Partnership Agreement on Skills Reform (NPA). The Fund will provide $1.5B over 4 years to support up to 300,000 apprenticeships and traineeships.

A real surprise I must say and in that sense a positive one. I am not used to dealing with positive news but I do applaud the investment. There remains much detail to learn about the package and I look forward to working with the Government on the further development of the program. The only kicker is that $1.2B of the fund will be raised through the employer fees for persons employed on visas. As this represents a significant increase in fees and the visa arrangements have been tightened significantly, the reliance on the revenue is yet another risk to the VET sector.


Given the concerns with the ‘soft’ outcomes achieved under the existing NPA and the failure of some jurisdictions to maintain training effort, the Budget papers indicate states and territories will need to match federal funding and meet other performance, outcome and reporting requirements.

No problem here – just some further detail needed.

It is worth noting the Fund will have a strong focus on apprenticeships and traineeships, pre-apprenticeships, retention strategies and higher level apprenticeship initiatives.

This is also worth touching on. All sides of politics like apprenticeships and traineeships.

Hard to argue with as if a person can complete they are well positioned in the labour market.

The challenge, as important as they are, apprenticeships and traineeships only make up 18.0%% of government funded students and 7.5% of total students.

Now there is a reason for this – employment based pathways do not suit all occupations.

I do hope we have the opportunity to work with the Commonwealth and State and Territory Governments and industry to develop high quality proposals to support a range of innovative skills pathways, including high level ‘traineeships’ at the para-professional level, other flexible arrangements and yes even internship models. 

The focus needs to be on the economy, not tradition. As Bill Clinton’s infamous campaign said ‘It’s the Economy Stupid’.

The Budget also contains $60M over 2 year for a new Industry Specialist Mentoring Program to support around 47,000 apprentices – no doubt mentoring is a very successful element in apprenticeship completion. It does though need to be at the workplace.

So, what of the Budget reply?

Perhaps limited surprises here also.

Apart from not supporting most of the Higher Education Package, Labor committed to continuing a National Partnership.. A commitment to sustained funding and ensuring States and Territories don’t reverse funding is very important. However, the other element is Labor will guarantee at least two thirds of public vocational education funding goes to TAFE.

Again, more details are needed but this commitment does not appear to link to productivity or delivery improvement. I have written previously that Australia does need a vibrant TAFE system. Putting up the tariff barriers though seems a return to the 1980s. The Hawke/Keating Labor Governments fought the hard fight to remove tariffs and this seems to be the start of a shift away from that thinking. It is an interesting approach to Commonwealth funding, when TAFEs are actually owned by the States/Territories.

If you are an employer (who overwhelmingly prefer private providers) or a student, to amend a common phrase – No choice (or not much) for you.
The other element is a new $100 million Building TAFE for the Future Fund to re-establish TAFE facilities in regional communities, meet local industry needs and support teaching for the digital economy.

This presumably will not be attached to additional training places? Facilities are a particular challenge for TAFE. Not building more, but being able to dispose of them when they are under utilised or even empty.

There were also some pleasing commitments to ensuring apprenticeships are a key component on all Commonwealth priority projects, in pre-apprentice programs and establishing an Advanced Entry Adult Apprenticeships program.

Is there a missed opportunity?

I would have thought so. Peter Noonan recently called for the development of a new ‘integrated’ Tertiary Funding model. This challenge has not been taken up by either side – so the inconsistencies and perverse incentives towards public higher education remain.

The Senate debate should be interesting.

On a final note, if you have interest in networks, engagement, policy debate and learning off your peers, have I got a deal for you - the program for our 2017 National Conference is now available.

Delegates will hear from a range of experienced and knowledgeable speakers including, Jack Perlinski, Managing Director DAIS on building an industry brand, renowned economist Professor Ian Harper will talk about contestability in tertiary education and training. Two topics that could not be more relevant to our industry at present time.

Register and come along.

Rod Camm
CEO
ACPET


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