Government funding cuts will only make the skills shortage worse

By Ron Maxwell - CEO

The value of education in a rapidly changing world is widely recognised in Australia, and expenditure at all levels of our education system has increased – with the exception of Vocational Education and Training (VET). Funding for the sector has been on the decline over the past 15 years, at both a state and federal level. In New South Wales alone, funding has been cut by a startling 25 per cent.

The VET sector has always been impacted by electoral cycles and typically isn’t one that garners a lot of public interest. It’s been said that there are ‘no votes in VET’ and this has only been exacerbated by media interest in the small number of unscrupulous providers who misused funds in the VET FEE HELP scandal.

There is no denying that governments needed to respond, but, in my opinion, funding cuts aren’t the answer. In fact, they could prove to be the opposite – with the potential to significantly impact our regional communities, industries and economy.

A resilient economy needs a healthy VET sector

A healthy VET sector plays a key role in economic development. In fact, at last year’s G20 Summit, this was acknowledged on an international level, with the summit recognising the VET sector’s role in building resilient economies and encouraging young people into the labour market.

I’ve talked many times about the skills shortage and this will only continue to grow. Recent research suggests that the next five years will see the creation of around a million new jobs that Australia won’t have the skills to fill and around half of these will require a VET qualification. In fact, a majority of jobs in our key growth sectors, such as childcare, healthcare and construction, depend on VET qualifications.

The needs of our workforce are rapidly evolving as we hurtle towards a technology-driven future and VET is well-positioned to not only develop the skills of future generations, but also upskill and reskill today’s workforce. The sector needs to innovate more than ever before to meet these demands, and while funding cuts can, in theory, play a role in driving innovation, the reality is often the opposite. Funding cuts can drive organisations to find creative ways to reduce costs, and this can often lead to stagnation or a decline in quality.

Australia’s rapidly declining apprenticeship numbers are already a huge concern, and these funding cuts hit at the heart of this. Cuts have been made to the employer incentives scheme,which encourages businesses to take on apprentices, and this has the potential to see numbers spiral further downward.

Barriers have been raised

Funding has been stripped from student loans, but has not been redistributed, essentially creating a user pays system. While, theoretically, this system may seem like an effective response to misuse of funds, what it is actually doing is creating barriers for those who stand to lose the most.

VET qualifications have long offered a pathway for disadvantaged youth to enter the workforce, but a recent report has detailed how the Smart and Skilled reforms in New South Wales have raised the barriers so high that many no longer have access.

This challenge is only heightened in our regional communities. A lack of jobs is already leading to rising youth unemployment and the exodus of many young people to metropolitan areas in search of work. Our regional communities are dying, and, in my opinion, putting up further financial barriers to vocational education is only going to accelerate this decline.

Planning and implementation are key

There is no denying the VET sector needs to change in the wake of the VET FEE HELP scandal, and a user pays system is not necessarily the wrong move.   But, in my opinion, the way it has been implemented has created significant challenges for everyone involved.

The VET sector has long been heavily subsidised, and this, coupled with the widely held misconception that a VET qualification is not worth as much as a university degree, means society has placed a much lower value on these courses. Pulling the funding so sharply and quickly is not aligned with community expectations, and will only see a further decline in enrolment numbers, leading to a lack of skilled workers.

The solution, in my opinion, lies in governments and policy-makers having the fortitude to take a long-term view of the sector, implement funding changes over a longer period, and really consider the needs of regional Australia (which is where the impacts will be felt the most).

If we can get this right today, then there is an enormous opportunity for VET to lead Australia into a stronger future.