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On Tuesday, Treasurer Jim Chalmers delivered Labor's first budget since the election victory in May.
Education was the cornerstone of the discussion, with businesses across the nation suffering from a lack of staff as a result of low unemployment rates and border closures. To address this growing issue, the Federal Government unveiled plans to significantly increase funding for vocational education.
The Government will contribute $550 million to the $1 billion 12-month National Skills Agreement that will support access to 180,000 fee-free TAFE and vocational education places from January 2023, jointly funded with states and territories. This contribution will form part of a commitment to 480,000 places over four years, focusing on upskilling and readying Australians for the workforce.
These spots will target priority groups, such as First Nations people, and industries with severe skill shortages.
"Providing 180,000 places next year — the first stage in our plan for nearly half a million fee-free TAFE courses for Australians — learning skills for jobs in priority areas, like the care sectors and the digital economy." noted Treasurer Jim Chalmers.
The announcement of 'fee-free TAFE' was nothing new, having previously been an election commitment and discussed in September's Job Summit.
Building on their support for TAFEs, there will also be a $50 million TAFE Technology Fund to improve IT facilities, workshops, laboratories and telehealth simulators across Australia.
Why is Fee-Free TAFE being implemented?
Chalmers has highlighted the stark and concerning comparison from where the nation's workforce was in 2012 to where it is now.
"In 2012, more than 57,000 Australians completed a trade apprenticeship. By 2021, that number had dropped by more than 20,000."
The main objective of the budget is to allocate more funding to the industries that have been hit hardest by skill shortages. A recent study by NAB found that these shortages seriously impacted four in ten small to medium enterprise businesses.
The hardest-hit industries include trades, hospitality and tourism, healthcare, manufacturing and technology (AFR, 2022).
In February 2022, the Australian Bureau of Statistics revealed that there were 1.8 million Australians who were not working but wanting to (potential workers). Of these 1.8 million people, 1.4 million were unemployed, while the remaining 400,000 were away from work and wanting to return or about to start a new job.
Additionally, it is now a reality that in the future, nine out of ten jobs will require a VET qualification or a university degree. Thus, the need for higher education has become abundantly clear (Albanese, 2022).
How will this impact my RTO?
If you're not a TAFE, hearing the words' fee-free TAFE' might cause some panic, but if we look at the facts, there is no need to worry.
Fee-free TAFE isn't new. If we look at 2019, when Victoria implemented fee-free TAFE, while there was an initial increase in Government-funded TAFE enrolments, the impact was moderate. In 2020, Government-funded enrolments declined despite the continuation of free TAFE.
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The truth is, if your RTO already provides a world-class training experience then it will still have a place in the market.
The Independent Tertiary Education Council Australia (ITECA), has welcomed the idea while also encouraging the Government to consider students and their choice of provider.
"The Australian Government's focus should be to put students at the centre of the skills training and higher education system. We want them empowered to make informed decisions about their choice of course and provider, then be backed by Government in that decision. If they want to study with an independent provider, that's great and Government should respect that – but if they want to study with a public provider, well that's okay too," said Troy Williams, ITECA Chief Executive.
Overall, the budget opens up a much needed conversation about the ongoing labour shortages suffocating small to medium enterprise businesses, and the necessity of higher education in the modern day workforce.
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Martin Powell is the CEO of the VET Development Centre, whose experience working with ACPET and on the National Advisory for Tertiary Education Skills and Employment has established him as a prominent leader in the VET industry. He sits down with Reay Mackay, founder and managing director of aXcelerate, to discuss his experiences in the industry.
