The History Of VET Funding: From Humble Beginnings to Economic Recovery
This blog has been updated for freshness and relevancy…
Vocational Education and Training allows students to gain skills that will be transferable to the world of work. In essence, VET is essential for the current and future workforce of Australia.
Funding for the VET sector and the alignment to the industry is what keeps the system ticking. An increase in productivity levels, economic value and development of community is directly influenced by funding. The history of VET officially started in 1991 with the Australian National Training Authority (ANTA) Agreement which provided funding for vocational education and training; however, the VET system unofficially took its first steps in the form of TAFE much earlier.
Here, we take a look at the history of Vocational Education and Training, from humble beginnings, all the way to the present day, assisting the recovery of the Australian economy after the impacts of COVID-19.
The beginnings of VET unofficially started in the early 1970s with the Kangan report. This report was created with visions of the modern TAFE system, which recognised the importance of work for the development of individuals and society at large. With TAFE, young workers could act powerfully as citizens in a community, as it has always been about working-class education.
In the 1980s, the high unemployment rate revealed the need for higher quality training for tradespeople. These hard times brought the need to implement competency-based training. After this, all curriculum documents and training had to align with clearly stated competencies as outcomes for students.
By the late 1980’s more and more private education providers were beginning to take advantage of opportunities presented by the rising interest in the training sector. After all, training was a lucrative business that serves the needs of industry and the individual. Very soon an expansion of apprenticeship training and the development of traineeships followed. During this time there were a record number of apprenticeships and traineeships.
A clear beginning of VET was emerging. The Australian National Training Authority (ANTA) was formed in 1991, creating and implementing VET policy. This new authority had the main focus of developing, promoting and managing the Vocational Education and Training sector. From that point on, funding initiatives were born.
Also in 1991, a landmark decision was made by all nine Australian governments to unite and create a National Training System. The goal of the national VET system has been to align with the industry, individual and community needs; achieving portability of VET skills across the nation and therefore, labour mobility. The end goals are to realise measurable improvements in the national skills pool and employment opportunities for individual VET graduates.
To incentivise training providers and ensure standards of quality, the government created avenues of funding. Funds were placed where there were needs of industry, individuals and community. These two main factors are what drives funding for VET today.
The first major government funding initiative, the Anta Agreement, took place between 1992 – 1996. Under this agreement, the states were given responsibility for managing and funding their own VET provisions. To secure ongoing growth, the Commonwealth agreed to fund VET with $70 million per year for 3 years, on top of the $100 million that was provided in 1992.
The ANTA Agreement was renewed in 1997 for another seven years until 2004. Annual funding was reduced to $50 million due to budget concerns and the government changed the length of the renewal. The target was an increase of 500,000 enrolments. Additional funding was provided with $50 million in 2001, $76 million in 2002 and $104 million in 2003.
Skilling Australia’s Workforce Act took effect in 2005. The Act required states to report financial expenditures on VET and to maintain outputs, but without strict financial input requirements. The funding this time had more of an industry focus than before. The government directly funded two new investments in the form of Work Skills Vouchers (these were used to assist people aged 25 or over to gain year 12 or equivalent qualifications) and vouchers for apprentices to obtain business-related skills. This initiative ended in 2007.
In the following years, there were National Agreements, and National Partnership Agreements made. The funding was focused on industry-based training on a co-contribution basis between the Commonwealth, making up 50%, the states with 40%, and employers with 10%. Altogether $1.7 billion of additional funding was scheduled to flow to the states and territories during 2012 – 2017. One of the biggest programs was the VET FEE-HELP, which provided equal treatment for students in a full-fee VET Diploma and Advanced Diploma programs with students in a full-fee higher education program. The following graphic shows the VET funding and enrolment trends from 1991 – 2014:
It is clear that there were four different stages since VET received continues funding:
- Beginning of VET and its funding under ANTA Agreement (1991-97)
- The phase of static funding (1997-2006)
- Continuous growth in funding (2007 -2012)
- A further period of stagnant funding where increases in Commonwealth outlays offset declines in state outlays (2012-2014)
In 2015, funding saw some slight decreases in VET models like the Industry Skills Fund and the Skills for Education and Employment plan. The total funding for 2015 still included a huge amount at $754.6 million and concentrated on programs like User Choice, Certificate 3 Guarantee and Higher Level Skills. User Choice is an important program, it is managed by only focusing on demand-driven funding arrangements. It is supposed to offer public funding for the cost of training and assessment. Currently, only eligible Queensland apprentices and trainees can receive funding via this program. Through this initiative, apprentices, trainees and employers receive more flexibility to select a suitable RTO for what they require. The investments cover the following fields:
Apprenticeship and Traineeship training
- Foundation skills training
- Industry pre-apprenticeship programs
- Registered trade skills pathway
- Trade skills assessment and gap training
User Choice continues to contribute funds toward the cost of training and assessment services for eligible Queensland apprentices and trainees.
Deciding which VET sectors (and which RTOs) will receive the most funding is still influenced by professional, regulatory or industrial requirements of the workforce market. The alignment between VET investment and the demand for labour in certain sectors is as big as in the previous years.
2020: The Year That Changed Everything
In March 2020 the WHO declared COVID-19 a worldwide pandemic. Businesses around the world were forced to close their doors due to physical distancing guidelines. Those that could adapt to working online had a better chance at survival. Many RTOs followed suit. Digital processes were implemented and learning, for the most part, went online.
As it became increasingly clear that skilled workers were going to be an integral part of the economic and social recovery, the Federal Government announced funding initiatives. Perhaps the most significant was the JobTrainer Skills Package, a $2 billion investment in skills and training.
But this announcement didn’t come without strings attached.
The funding would be made available only if the states and territories agreed to overhaul the VET sector so there is consistent funding and transparency. This included all of them signing up to a new Vocational Education agreement with the Federal Government.
The aim was to create a funding link that would ensure the skills being taught in Vocational Education match with what businesses are actually looking for, while also creating a simpler system.
As part of the Coronavirus Relief Package, heavily discounted short courses were also offered that targeted areas of national demand. It was aimed at helping the unemployed gain a new skill via distance learning while in isolation. “It will also provide a revenue stream for universities and private providers to assist their financial stability,” Federal Education Minister Mr Tehan said.
So far, overall plan is working. Recent reports indicate that Australia’s economy has bounced back, growing by a better than expected 1.1% over the last year.
2021 and Beyond
The support from different levels of government has continued into this year with new funding being made available as well as extensions on previous schemes.
Here are the funding options that are currently available:
The User Choice program provides a public funding contribution towards the cost of training and assessment services for eligible Queensland apprentices and trainees.
The program recognises that employment-based training aligned to skills shortages is a critical priority for the Queensland Government. It aims to provide funding aligned to the skills needs of industry and respond to changing government priorities.
The JobTrainer scheme, a $2 billion dollar investment in skills in and training was announced by the Federal Government in 2020. This included $1.5 billion for apprentices and trainees by covering 50% of their wages, up to $7,000 per quarter, as well as creating 340,700 training places to offer new qualifications for those that have lost their jobs, and school leavers who are unable to find work because of the economic downturn caused by the pandemic.
The remainder was split between federal and state funding and is aimed at assisting school leavers and the recently unemployed. It delivered up-skilling via free and low-cost training programs, also known as short courses or microcredentials, from public, private and not-for-profit providers.
This funding was originally planned to be made available until March 2021 but has been extended until September 2021.
Part of this plan included included 10,000 additional digital skills training places. It was announced last week that the Digital Skills Organisation (DSO), one of three Skills Organisations Pilots, will be undertaking a trial that will test new approaches to designing digital qualifications and training that meet the skills needed for a job in the digital sector.
‘The Morrison Government’s Economic Plan to secure Australia’s recovery from the COVID-19 Recession has digital skills at its centre. This pilot is doing the work to ensure those qualifications are fit-for-purpose so we can improve our skills pipeline and bring more Australians into our digital workforce,’ said Minister for Employment, Workforce, Skills, Small and Family Business, Stuart Robert.
The JobMaker Hiring Credit Scheme offers an incentive for businesses to employ additional young job seekers aged between 16-35 years. Eligible employers can access the JobMaker Hiring Credit for every eligible additional employee hired between 7th October 2020 and 6 October 2021.
In a nutshell, JobMaker is designed to boost the employment chances of young people while providing employers with an incentive of more than $10,000 over a year.
For those young people hit the hardest (ie. retail workers, restaurant, bar and hospitality staff, etc.) this comes as a welcome relief.
The Innovation Fund
Announced at the end of July this funding will be provided to 63 businesses that have been among the hardest hit by the lack of international students due to border closures.
English Australia CEO Brett Blacker said the fund had given many private English language and private higher education providers the chance to move into online and offshore delivery.
“With the global pandemic significantly affecting our markets, this will allow providers to adapt new business models that would have been impossible without the support of the fund,” Mr Blacker said.
While we’re not completely out of the woods yet, we’re trending in the right direction. The continuing lockdowns across Australia reinforce the need to be vigilant. But there is reason to be optimistic. As the vaccination rollout continues and we begin opening our borders to international travel, we’ll likely see the economy continue to improve.
In conclusion there is a steady process of the VET sector evolving with constant funding over the years. Australia’s workforce benefited from Vocational Education and Training more and more as it grew. In the near future funding will be essential to secure training for Australia.
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