March 2009

Funding overviewGovernments provide about three quarters of VET revenue.

In 2007, the Australian government provided:

• 26.2% of NSW operating funds

• 73.5% of capital funds.

State governments still provide the bulk of VET funds.

GOVERNMENT SOURCED REVENUE BY CATEGORY, NSW, 2007 (per cent)

State recurrent65.0%

State capital1.5%

Comm recurrent

24.5%

Comm Specific Purpose

0.2%

Comm capital4.2%

Other state contributions

4.5%

Source: NCVER Financial Information 2007

Sources of revenue

With downward pressure on government funds, other sources of revenue have become more important.

In 2007, fee for service activities, student fees and charges and ancillary trading activities provided over 20% of total VET revenues.

PROPORTION OF OPERATING REVENUE BY SOURCE, AUSTRALIA & NSW, 2007

52.0

24.9

14.3

4.4

4.4

57.7

20.5

13.8

4.0

4.0

0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0

State Govt

Aust. Govt

Fee for Service

Student Fees & Charges

Ancillary Trading & Other

AUSTRALIA NSW

Source: NCVER Financial Information 2007

Role of the Australian Government

• The Federal government provides the smaller share of government funds but has a big influence on policy and directions.

• The Aust. government has played a major role on the pressure on TAFE funding over the last decade, although the states and territories have also played their part.

• The Rudd Government is providing extra funds to VET. Policies support greater competition.

A brief history of federal funding

• An initial $100 million and $70m per year to fund enrolment growth.

• Budget cuts reduce funding base.

• Federal funding freeze: “Growth through Efficiencies”.

Limited growth funding restored, states required to match.

1993-97

1996-97

1998-00

2001-03

Federal funding history cont.• No indexation of growth funds. 7500 priority

places put to direct tender by Federal Govt.

• Funding rolled over. ANTA abolished. Australian Technical Colleges established. States forced to offer AWAs in TAFE.

• 2004 funding rolled over plus indexation. $215m for national programs and priority places.

• Rudd government elected. 630,000 additional places over 5 years, no AWAs, competitive tendering to continue. Further 56,000 places announced in September.

• New Agreement/s for 2009-12 providing additional funding and places over four years.

2004

2005

2005-08

2007-08

2009-12

Change in funding by revenue sourceAverage state govt. funding increased by three times the level of state govt. increase in NSW.

Revenue from student fees in NSW increased by 65% more than across Australia.

Fee for service activity grew more in NSW.

Total revenue (unadjusted for price movements) has increased by 29.1% in NSW and 52.3% across Australia since 2007.

PER CENT CHANGE IN FUNDING BY REVENUE SOURCE, AUSTRALIA & NSW, 1997- 2007

13.6

31.7

140.5

95.5

20.5

29.1

41.0

51.9

134.9

61.7

23.0

52.3

0 20 40 60 80 100 120 140 160

State Govt

Aust. Govt

Fee for Service

Student Fees & Charges

Ancillary Trading & Other

Total

AUST

NSWSource: NCVER Financial Information 2007 and earlier

Series break in national Aust. Govt. funding data in 2002

VET growth, 1997-2007• VET enrolments in Australia increased by

14.7%, to 1.67 million.

• Annual student hours increased by approximately 33.7%, to 390.1 million hours.

• NSW enrolments grew by 12.8% in 1997-01 and fell by 0.8% since 2002. Aust. enrolments fell by 1.8% since 2002.

• NSW annual delivery hours increased by 8.6% since 2002.

Real change in total VET revenue, NSW

Real (CPI adjusted) change in NSW 97-07:

State Govt -13.3%

Aust. Govt +0.5%

Other +49.9%

Total -1.5%

State and territory government funding for VET across Australia increased by 7.6% in real terms.

Total Aust. funding grew by an estimated real 16.2%.

REAL CHANGE IN TOTAL VET REVENUE, NSW, 1997-07 (1997 = 100)

70.080.090.0

100.0110.0120.0130.0140.0150.0160.0

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

State Govt Aust. GovtOther Total

Source: NCVER Financial Information 2007 & earlier, ABS 6401.0

Federal funding - AustraliaFunding data changed in 2002 with inclusion of DEST/ DEEWR programs for first time.

Funding fell again fallen from 2003 but increased in 2007.

Real Commonwealth funding in 2007 was probably around 4.5% above 1997 levels. (a 14.6% increase on 2006)

COMMONWEALTH FUNDING, AUSTRALIA - INDEXED (1997 = 100)

100.090.8

85.584.0

86.6

93.592.0

101.6105.5

103.8100.3101.1

89.1

115.9

0 10 20 30 40 50 60 70 80 90 100 110 120

19971998199920002001200220032004200520062007

ANTA figures DEEWR figuresSource: NCVER Financial Information 2007 & earlier, ABS 6401.0

GRAPH REFLECTS INCLUSION OF DEST/DEEWR PROGRAMS FROM 2002

Real change in $ per studentReal per capita cuts in government funding but increased other revenue (fees, fee for service etc).

1.1% increase in total per capita funding across Australia but government funding down $114.80.

Real cut per student of $319.66 (9.2%) in NSW.

For NSW, an additional $175.5m would be required to bring total funding per student back to the 1997 level.

Governments would be required to provide an additional $279.6m – of which $251.5m would come from the NSW government – in order to bring government per capita funding in NSW back to the real 1997 level.

REAL CHANGE IN $ PER STUDENT, AUSTRALIA & NSW, 97-07

0.9

38.2

1.1

-6.4

23.9

-20.1

-9.2

-7.3

-30.0 -20.0 -10.0 0.0 10.0 20.0 30.0 40.0 50.0

State Govt

Aust. Govt

Other

Total

NSW

AUSTRALIA

NCVER Financial Information 2007 & earlier,

NVCER Students and Courses, ABS 6401.0

Estimated real change in $ per NSW student hour Estimated total cut of 21.2% in $ per student hour in NSW.

Estimated total cut of 13.1% in $ per delivery hour across Australia.

An estimated extra $466.2m needed to restore total funding per hour in NSW.

In order to restore government funding per NSW delivery hour to real 1997 levels, governments would need to provide an estimated extra $528.3m.

Across Australia, governments would need to provide an estimated extra $946.8m.

$11.22

$3.43

$2.45

$7.77

$2.76 $2.93

0.01.02.03.04.05.06.07.08.0

1997 2007

REAL CONTRIBUTION TO VET COSTS PER DELIVERY HOUR, NSW (June 07 prices)

NSW Govt

Aust. Govt

Other

Approx. Change (%):NSW Govt -30.7%Aust Govt - 19.6%Other +19.9%Total -21.2%

NCVER Financial Information 2007 & earlier, NVCER

Students and Courses, ABS 6401.0

There w as a series break in 2002.

Government funding per weighted nominal hour

• NSW funding per hour is second lowest in Australia.

• Funding per weighted hour fell 11.3% in NSW and 8.4% across Australia between 2003-2007.

GOVT EXPENDITURE PER PUBLICLY FUNDED WEIGHTED NOMINAL HOUR, 03-07

0.00

5.00

10.00

15.00

20.00

25.00

30.00

2003 14.24 12.16 15.26 15.46 16.02 14.24 26.00 15.02 14.23

2004 14.51 12.05 15.22 14.69 15.96 14.25 23.89 14.64 14.17

2005 13.40 12.51 14.30 15.10 14.93 14.49 25.49 16.03 13.80

2006 13.43 12.33 13.20 14.19 15.56 14.28 21.20 14.95 13.46

2007 12.63 11.61 14.24 13.73 14.80 13.74 20.98 14.73 13.03

NSW VIC QLD WA SA TAS NT ACT AUST

Source: DEEWR 2008, Annual National Report of the Australian vocational and technical education system 2007

Change in activity expenditure

76.1

17.2

2.24.4

62.9

25.8

9.91.4

0%

20%

40%

60%

80%

100%

1997 2007

ACTIVITY EXPENDITURE NSW, 1997 & 2007 (%)

Student and otherservices

Property, plantand equipmentServicesAdmin. & GeneralServices

Delivery Provisionand Support

Source: NCVER Financial

Information 2007 & earlier

In NSW:• Delivery provision

and support has fallen from 76.1% to 62.9% since 97;

• Admin and General Services have increased from 17.2% to 25.8%.

Real change in delivery provision & support

Real cut in delivery provision and support per student 97-07:

-10.9% across Australia

-23% in NSW.

In 2007 NSW spent $2131.10 per student, compared to an Australian average of $2120.00.

REAL CHANGE IN DELIVERY PROVISION & SUPPORT PER STUDENT, AUST & NSW,

(June 07 prices)

$0

$1,000

$2,000

$3,000

AUSTRALIA 2379.4 2252.3 2130.0 2040.8 2031.5 2081.3 2032.8 2111.1 2100.5 2086.4 2120.0

NSW 2769.3 2608.4 2559.1 2089.9 2199.5 2296.3 2135.3 2269.6 2282.2 2213.2 2131.1

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Source: NCVER Financial Information 2007 & earlier, NCVER Students

and Courses, ABS 6401.0,

Worsened student-staff ratio in NSW

An increase from 23.6 students to 31.0 students per staff member since 1997 – includes teachers and non-teaching staff.

A small improvement in 2007.0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

TOTAL STUDENTS PER EFT EMPLOYEE, NSW TAFE, 97-07

NSW Budget Paper 3, various years; DET Annual Report, various years

Total students per FTE TAFE teacher in NSW improved from 50.2:1 in 2003 to 47.5:1 in 2007.

Funding of non-TAFE providers

Increase of 135.6% across Australia (97-07).

Increase of 126.1% in NSW – total $106.7m in 2007.

6.9% of total Australian funding

5.7% of total NSW funding.

PROPORTION OF VET FUNDING PAID TO NON-TAFE PROVIDERS

0.02.04.06.08.0

10.012.0

per c

ent

1997 3.4 3.8 8.1 4.2 6.2 2.7 5.2 4.3 4.4

2000 4.4 7.7 9.1 5.7 7.8 4.7 6.9 8.3 6.4

2003 3.7 7.9 9.9 7.3 6.8 5.1 7.3 11.0 6.5

2006 5.2 9.4 6.3 10.1 4.6 5.5 3.3 7.5 6.7

2007 5.7 8.9 8.9 8.6 4.4 5.3 7.0 8.4 6.9

NSW VIC QLD WA SA TAS NT ACT AUST

Source: NCVER Financial Information 2007 & earlier

Capital works funding

In real terms, capital funding in NSW fell by 46.1% between 1997 and 2007.

Between 06-07 and 07-08, Australian government funding fell by 2.2% while NSW government funding fell by 55.8% in real terms.

Across Australia, capital funding between 1997 and 2007 fell by 33.3% in real terms.

TOTAL CAPITAL FUNDING, NSW (CPI Adjusted - June 07 prices)

88.4 84.9 86.3 79.2 73.8 71.4 72.7 65.3 65.4 62.2 60.8

64.951.5 50.6

44.4 47.1 39.812.3 27.7

49.521.9

3.8

0.0

20.0

40.0

60.0

80.0

100.0

120.0

140.0

160.0

180.0

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

$ m

illio

ns

NSW Govt

Aust. Govt

Source: NCVER Financial Information 2007 & earlier, ABS 6401.0

The impact on TAFE systems• High levels of casualisation of the TAFE workforce.• Increased workloads and stress.• Downward pressure on teacher qualifications.• Increased student fees and charges.• More full fee-paying students and

commercialisation.• Larger class sizes.• Threats to the viability of ‘non-profitable’ courses

(eg literacy and numeracy courses).• Increased student withdrawal and failure rates.• Continued reorganisations, mergers and

amalgamations.• An undermining of TAFE as the public provider of

VET.

The new (?) agenda• Promised an additional 630,000 places over

five years (since increased).• strengthened Industry Skills Councils, Skills

Australia, and skills & training information centres.

• infrastructure funding via Education Investment Fund.

• Strong focus on competitive tendering and commercialisation.

• Changes now occurring in context of Global Financial Crisis.

New funding arrangements

National Skills and Workforce Development Agreement for 2009 - June 2013 agreed by COAG November 2008.

• Commonwealth to provide an estimated $6.7 billion including capital funds and $37m in skills and workforce development funding.

• States to deliver up to 1.15m course completions.

• Targets: to halve proportion of 15-64 yos without Cert III and to double higher level qualifications by 2020.

• Further work to be done on market design principles – contestability and competitive neutrality.

Productivity Places Partnership Agreement

• An additional 506,750 qualifications ommencements over 2009-2012.

• The Commonwealth to fund 100% of places for job seekers and 50% of places for existing workers. ($1.2 billion over 4 years)

• The States to fund 40% places for existing workers. • The remaining 10% to be funded by private

contributions.

Also agreed:

States funded to waive fees for Dip/ Ad Dip courses in Children’s Services.

$400m for TAFE infrastructure in July 2009.

Victoria – leading the way…??• Government funded places on demand - if go for a

higher qualification. • Fully contestable funding (increased base funds for

TAFE).• Qualification based fee structure. Diploma+ max. of

$1500 in 2009 & $2500 in 2012. Providers able to determine price.

• No fee concessions for Diploma+. Income contingent loans.

• New teachers from industry – Cert. IV.

(National market design principles deferred but on the agenda – Vic. type reforms may spread.)

What you can do• Inform your community, students and local

industry about the importance of funding the public TAFE system adequately.

• Establish local campaign committees to support adequate funding for TAFE.

• Highlight with local media and stakeholder groups the impact of funding pressures on courses and students.

• Lobby your state and federal Members of Parliament for support for the publicTAFE system.

• Participate in Federation and AEU funding/public education campaigns.