VET funding – past trends and future issues

Peter NoonanGerald Burke Centre for the Economics of Education and Training

CEET 9th National Conference

Ascot House Melbourne October 28 2005

Purpose

Inform public debate on VET funding issues and options:Outline trends in VET funding since the ANTA

Agreement of 1992Comparisons with higher education sectorRaise future policy issues and options

Recognise problems with data series and limits on collection

Background

ANTA Agreement (1992) had two principal objectives:Support growth in VET participationAgreed resourcing framework and roles

between Commonwealth and the States

Growth in participation Pre 1995 data not strictly comparable but

NCVER (2002) reported that: between 1991 and 2000 publicly funded VET students

grew by 77 percent from around 1 million to 1.75 million

that participation rates of 15-64 year increased by 5 percent to 13 percent over that period

Publicly funded VET enrolments continued to grow till 2002 but have started to decline

VET Students 1995-2004

1,000

1,100

1,200

1,300

1,400

1,500

1,600

1,700

1,800

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

VET Annual Hours 1995 - 2004(NCVER)

100,000

110,000

120,000

130,000

140,000

150,000

160,000

170,000

180,000

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

Funding

VET revenue grew (in real terms) from the early to mid nineteen nineties as a result of increased Commonwealth funding but declined in the late nineties and has been virtually static since then

The Commonwealth share grew from 22% in 1992 to 28% in 1997, but has fallen to 24%. State share of expenditure has fallen from 62% to 54%, however the pattern varies between the states

VET Revenue 1992-2004 in real terms (ANTA scope and boundary)

3000

3500

4000

4500

5000

5500

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

Total Revenue Government Revenue

End of growth funding

Funding Government funding as a proportion of total VET funding

has declined slightly since 1992 Funding outside of the NCVER collection not included

and is likely to have risen over this period eg fee based VET programs in private providers

Significant and increasing Commonwealth VET funding outside of Commonwealth\State agreement, particularly for apprenticeship related initiatives, ATCs and employer incentives

If Commonwealth expenditure outside of the agreement is included Commonwealth share increases

Some state expenditure (eg payroll and workcover concessions for apprentices) also outside of agreement and also will have increased

Funding

Decline in real terms funding also coincides with:difficulty in renewal of agreement absorption of VET agencies within broader

education and training portfolios in most states

Commonwealth and State funding priority to schools (see addendum)

State and Commonwealth % Expenditure on VET 1992 - 2004 (ANTA scope and boundary)

0%

20%

40%

60%

80%

100%

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

State % TOTAL Gov % TOTAL Comm % TOTAL

Non Government VET Revenue as a Proportion of Total Revenue 1992 -2004

0

5

10

15

20

25

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

Fee for Service Anciliary trading Student Fees Total

DEST VET budget 2004-05 -2005-06

Funding

Also a change in the composition of funding Significant increase in incentives funding relative

to recurrent funding Major increase in funding to stimulate demand

but not for delivery and infrastructure.

New Apprenticeship Incentives Funding as a Proportion of Commonwealth Recurrent VET

funding

0

200

400

600

800

1000

1999 2004

Recurrent funding Incentives

VET and Higher Education Funding

Government funding as a proportion of total higher

education funding has fallen much lower than VET

However higher education revenue has increased

significantly through primarily through student fees for

international students and HECS\full fees.

Higher education revenue has increased significantly

relative to VET and this gap is likely to widen

Government funding as a percentage of total revenue 1995 - 2004

0

20

40

60

80

100

1995 2004Higher Education VET

VET and higher education revenue

1995-2004

0

5000

10000

15000

1995 2004

VET Higher Education

Conclusions

ANTA funding agreement worked well in early years but ultimately failed to resolve Commonwealth/State VET funding roles and probably limited investment in VET

High levels of growth through efficiency not sustainable in longer term

Alternative funding models canvassed (eg Commonwealth to assume responsibility for apprenticeship funding) but are unlikely to be taken up.

Conclusions States must make independent assessments of

future VET resourcing needs independent of agreement. VET remains their core responsibility

Commonwealth must: consider system infrastructure needs and delivery

costs as well as incentives and apprenticeship support

More effectively target incentives and broaden policy and funding focus eg higher level qualifications

Conclusions

If VET is to continue to be heavily reliant on government funding then it should be resourced accordingly

If not then providers must be freed up and given capacity to generate additional income from non government sources

Conclusions

TAFE Institutes must be positioned to operate

far more effectively in commercial training

markets to increase non government revenue

Industry co-contributions, HECS and Fees Help

options must be considered

Public funding must be more effectively targetted

Addendum: Changes in student numbers and spending per student: Australia 1997 to 2003

  StudentsPublic and private

expenditure per student

  % increase % increase

Government schools 1 16

Non-government schools 13 25

VET 19 -18

Universities - total 26 -4

Universities—Australian publicly supported students * 0 -7

Income in constant prices    *Australian students supported by government funding (excluding international students and full-fee paying Australian students).