1 Refocusing VET in Victoria 2012 VISTA Residential Conference Sunday 20 May 2012

Budget: Refocusing VET in Victoria Action is needed now to refocus VET to ensure the system remains: high quality industry-driven sustainable for Victorian taxpayers * Note: and figures are estimates only. No definitive level of expenditure can be given due to the demand driven nature of the system BudgetActual spending Original projections Pre skills-reform ~ $800m a year Original provision ~ $900m Expected expenditure $1.3bn Future provision $1.2 bn

3 Examples of growth in Government subsidised training Qualification2008 enrolments2011 enrolments Certificate II in Customer Contact Certificate IV in Fitness Certificate IV in Mental Health Certificate III in Aged Care Certificate III in Plumbing Overall: 44% growth in enrolments since 2008,

4 TAFE and non-TAFE RTOs deliver different types of training Public - TAFE Institutes A wider range of trainingA wider range of training Strong focus on trades – 15% of TAFE enrolments are apprenticesStrong focus on trades – 15% of TAFE enrolments are apprentices Strong focus on foundation skills – 15% of TAFE enrolments are in Foundation coursesStrong focus on foundation skills – 15% of TAFE enrolments are in Foundation courses 66% market share in courses identified as specialist or in shortage66% market share in courses identified as specialist or in shortage Community and private providers A narrower range of coursesA narrower range of courses Most are classroom based – areas like management, retail, businessMost are classroom based – areas like management, retail, business Small focus on trades training – 4% of private enrolments are by apprenticesSmall focus on trades training – 4% of private enrolments are by apprentices 34% market share in specialised or in shortage occupations34% market share in specialised or in shortage occupations ~12% of government subsidised training by community providers and 40% by private providers

5 The challenges of managing this growing market Ensuring the quality of training providers Ensuring the relevance of training – maximising public benefit

6 Ensuring the quality of industry driven VET Better consumer information A stronger, direct Industry voice One-stop-shop website Electronic Marketplace, and New quality metrics, including industry ratings and industry-moderated assessment will be trialled Regional Market Facilitation Managers Additional support for critical and niche skills needs Industry ITABs will no longer receive government funding. Instead, Government will work with each industry from June 2012 to identify preferred consultation arrangements. New arrangements include an Industry Skills Consultative Committee and Annual Industry Skills Conference New $6 million a year Industry Transition and Specialist Training Initiative to address critical skills needs and respond to large-scale company closures. No new eligibility exemptions past 2012 Stronger monitoring and compliance checks More rigorous and independent financial assessment and demonstrated capability to deliver quality courses Upfront course fee disclosure and performance against quality measures VET market monitoring unit, rapid response team and peer review mechanism

7 Ensuring the relevance of training – maximising public benefit via better targeted subsidies Changes Five subsidy bands based on assessment of public value of courses e.g. value to the economy and cost of training deliveryFive subsidy bands based on assessment of public value of courses e.g. value to the economy and cost of training delivery Separate payments to TAFEs redirected into high value coursesSeparate payments to TAFEs redirected into high value courses Subsidies range from below $2 per hour to $12.50 per hourSubsidies range from below $2 per hour to $12.50 per hour Removal of controls on feesRemoval of controls on fees New market monitoring unit will monitor and advise Government on subsidiesNew market monitoring unit will monitor and advise Government on subsidies Impacts All apprenticeship subsidies increasedAll apprenticeship subsidies increased Over half of all courses fall into top two funding bands, attracting subsidies at $7.50 per hour or greaterOver half of all courses fall into top two funding bands, attracting subsidies at $7.50 per hour or greater 21 per cent of courses (> 220 courses) have a higher subsidy than the current small TAFE rate21 per cent of courses (> 220 courses) have a higher subsidy than the current small TAFE rate 150 courses largely unchanged, with subsidy rates within 5% of current levels150 courses largely unchanged, with subsidy rates within 5% of current levels In 2011, TAFEs accounted for 82% of delivery in the highest funding bandIn 2011, TAFEs accounted for 82% of delivery in the highest funding band Victoria’s training entitlement continues to exceed the minimum national entitlement agreed by COAG on 13 April 2012

8 Refocusing VET – Eligibility, subsidies and fees Refocusing VET introduces changes to …..Implementation timing, generally … Eligibility for government subsidised training under the Victorian Training Guarantee Levels of government subsidy for accredited training courses Student fees and concessions The changes apply for new commencements from 1 July 2012 The changes apply for all students from 1 January 2013

9 Weighting (based on public value) Refocusing VET – Subsidies Scheduled Hours (Maximum number of hours that can be scheduled for each qualification) x = x Qualification level Public value based on: value to the economy (jobs or productivity) extent to which government investment is required to stimulate delivery of, and participation in, training to meet industry needs Higher hourly rates for Foundation courses and Apprenticeships Lower hourly rates for Diploma and above courses and for lower level Certificates where direct vocational benefit is lower Government subsidyStudent fee (set by provider) Total price charged by RTO += Cohort loading (low SES youth, Indigenous, regional students) x

10 Refocusing VET – Subsidies (cont.) Course subsidy levels to apply equally to TAFEs and non-TAFE providers Subsidy Band (selected examples) Subsidy range per hour of training delivery $ Distribution of coursesEnrolment shares, 2011 Number (Total = 1056) %Cumulative % % Non- TAFE % TAFE Band A (e.g. apprenticeships) >$ Band B (e.g. foundation skills, Cert III Aged Care) $7.50-$ Band C (e.g. Diploma of Children’s Services) $ Band D (e.g. Diploma of Graphic Design, Diploma of Events ) $ Band E (e.g.Diploma of Fitness, Cert II in Process Manufacturing) <$ All apprenticeship subsidy levels have increased Over half of all courses fall into Bands A and B, attracting a subsidy at $7.50 per hour or greater 21 per cent of courses (> 220 courses) have a higher subsidy than the current small TAFE rate In 2011, TAFEs accounted for 82% of Band A enrolments

11 Maintaining of opportunity Continued and expanded access to subsidised training under the Victorian Training Guarantee: Additional assistance through subsidy loadings for: Low socio-economic status young people Indigenous VictoriansRegional students Low-income students studying up to Certificate IV will continue to access concession fees VET FEE HELP loans will continue to be available (with a trial of Certificate IV loans in 2013) Strengthening pathways into training: Expanded entitlement for those whose highest qualification is VCE / VCAL Continuation of funding for pre-accredited training “Zero fee” training for recent care leavers

12 What does the future look like for the TAFE sector? A strong public training provider network will continue to be a vital feature of this system. Our TAFEs and dual-sector universities are highly valued by Victorian learners and businesses. They will continue to play a critical role in delivering training that meets the needs of their communities. In particular, government will continue to support the TAFEs to: lead the development of high-quality and innovative curriculum, teaching practices and assessment, including for learners with complex learning needs build on their strengths in exporting education services interstate and overseas foster participation in higher level qualifications and in higher education through clear pathways, strong partnerships with universities and other higher education providers and through higher education delivery within the TAFE be efficient and able to effectively compete in a demand- driven, contestable training system, including by applying technology to improve access to and the efficiency of education and training delivery.” Source: Refocusing Vocational Training in Victoria (released in Budget) Strong reputation and brand 3.3 billion asset base Strong industry relationships Trusted providers of high quality courses in areas of high public value

13 What does the future look like for Learn Local providers? Revised subsidy arrangements 68% of ACE hours of delivery reported at Q are in courses which are receiving increased funding Significant reductions in around 20% of ACE hours of delivery 7 providers that reported almost a third (29%) of all in-scope ACE training by hours of delivery, have at least 20% of their delivery in Bands D and E – in some cases far higher. Funding is available to maintain the level of subsidy paid by government for pre- accredited training with the same volume of training to be supported for the next four years Concession fee reimbursements will continue from a fixed pool, which is likely to be sufficient to meet all foregone revenue Arrangements are the same as announced late last year Pre-accredited training Pre-accredited Training Students PayUp to $1.08 per hourFee concessions up to $50 maximum Provider Subsidy$7.19 per hourReimbursement from fixed pool, up to the maximum

14 VET is being refocused on investment in areas of greatest value Significant adjustment will be needed to maintain choice, opportunity and access Significant reform has been required to ensure a sustainable, high quality VET system Summary