VET funding in Australia: background, trends and future directions

Overview The vocational education and training (VET) system in Australia plays a central role in the development of skills for the Australian workforce and through that role makes a critical contribution to workforce participation, productivity levels, individual’s life chances and economic and social development. The level of public and private investment in VET is therefore an important public policy issues. The Mitchell Institute has pointed to declining levels of public investment in VET. This paper has been specifically prepared to help inform consideration and debate about the future VET of funding in Australia. VET is currently funded under a shared funding model between the Commonwealth and the states, while higher education is funded by the Commonwealth. A draft paper prepared by the Commonwealth Government for the Council of Australian Governments proposes that the Commonwealth now also assume responsibility for funding VET – a proposal that has attracted both support and opposition. The significant increases in outlays to VET providers under the Commonwealth’s VET FEE-­‐HELP scheme and the settings for VET FEE-­‐HELP are another important consideration in VET funding policy. The paper summarises the evolution of the VET shared funding model and assesses its effectiveness over time in terms of funding, participation and enrolments and the changing shares of Commonwealth and state funding particularly through VET FEE-­‐HELP. It concludes by outlining, in broad terms, options for future funding responsibility for VET. More detailed design options will be included in the Institute’s forthcoming paper on tertiary education funding