Valuing skills: why vocational training matters

28 November 2012

In light of sweeping changes to vocational education and training (VET) provision in Victoria, and dramatic proposed cuts in Queensland, this new CPD paper studies the sector’s social and economic significance and asks what lessons can be gleaned for NSW.

The paper presents definitive evidence that:

  • Substantial benefits from VET accrue to individuals, the economy and society;
  • Individual benefits include are financial benefits (such as over $324k increase in lifetime earnings), and personal development (94% of those in VET for this reason reported positive benefits);
  • By providing skills to the economy VET has been estimated to provide a strong return on investment.

An important social benefit of VET is that it builds the capacity of some of our society’s most disadvantaged people, with over 7% of VET students identifying as disabled or having a long-term health condition. All socioeconomic backgrounds are well represented in VET students, with a slight bias towards less advantaged backgrounds, and a disproportionate number of students from remote regions.

VET’s largest provider, TAFE tends to provide a greater share of the benefits:

  • TAFE serves a disproportionate share of students with disabilities;
  • TAFE is the main training provider outside metropolitan areas;
  • TAFE provides more training towards skills in shortage;
  • TAFE provides costly training such as mining and construction skills, while private providers can ‘skim off’ cheaper and more profitable courses, at the expense of the taxpayer.

NSW should learn from the Victorian experience how not to undertake reform:

  • The mismatch between deregulation and need to target training towards skill shortages was exemplified by an upsurge in fitness instructor enrolments in Victoria, despite a surfeit of the qualification
  • The assumption that increasing the role of private providers will deliver better outcomes is not justified, given that TAFE appears to be responding more effectively to industry needs by directing a greater proportion of its training towards areas of skill shortage than private registered training organisations.
  • Had the $500 million spent mostly on growing private provider enrolments, been invested in growing TAFE at a similar rate, would it have reaped greater long-term benefits for Victoria?

An overall reduction in government funding of the VET sector in the past decade has coincided with rising concern over skills shortages.  These seemingly disparate concerns underlie the national conversation we should be having over the level of funding required to ensure that the significant social and economic benefits delivered by the VET sector continue.

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