Australian Government Abandons Market Based Fees for Vocational Education

Senator Simon Birmingham, Minister for Education and Training, has announced changes to the VET FEE-HELP student loan scheme. Loans will only be available for courses for which there is a job demand. Loans will be capped at $5000, $10,000 and $15,000, depending on the course level. Also there will be "rigorous standards" applied to private training providers, but curiously, the same standards will not apply to TAFEs and other government institutions.

It will be interesting to see if the government moves to implement similar controls on the other part of Higher Education: universities. Currently there are few limits on what universities can offer and what they deliver, relative to what is charged, for both private for-profit universities and public ones. Currently the government effectively caps student university fees, but this has little relationship to the cost of providing a course. Also universities are not required to show a demand for graduates in order to offer a program. The government was intending to free up university fees, but was unable to get the changes through Parliament, which is fortunate, in the light of the blowout in VET fees.

A useful next step would be for the Government to introduce measures to encourage students to undertake lower cost, shorter VET courses, before university. Ideally, most students should do a VET qualification and get work experience in their intended field, before enrolling in university. This could be encouraged by providing incentives for universities to provide credit for VET studies. Unfortunately the new VET measures may have the opposite effect: institutions will be encouraged to enroll more university students as they can charge higher fees than for their VET students. The result may be a less well trained workforce, at a higher cost to the Government.