Technical & Vocational Education and Training in Australia
Industry Report
Technical & Vocational Education and Training in Australia
The restrictions on travel imposed by the federal government in response to Covid-19 is expected to result in a sharp drop in international students in the current year, and adversely affect revenue growth. The industry consists of registered training organisations that offer technical and vocational education and training, including TAFE institutes, dual-sector institutions and other private and community providers.
OVERVIEW
Major players in the industry are: Department of Education and Training (19%), TAFE NSW (16%), TAFE Queensland (6%), Other 59%). There is medium level of concentration.
The increase in government funding reduced financial barriers for students seeking to access vocational education and increased the number of private vocational education providers entering the market. The depreciation of the Australian dollar increased international student enrolments, and the increasing casualisation of the Australian workforce encouraged many students to enrol in VET courses to boost employment prospects. However, course quality concerns and budgetary constraints led to changes to industry funding, which significantly constrained student demand.
The number of students accessing VET FEE-HELP rose from about 55k ($323M in loans outstanding) in 2012 to more than 272k ($2.9B in loans outstanding). This dramatic increase in loans raised concerns about the conduct of some industry operators. In 2015, the Government implemented new reforms to reduce unethical marketing and limit the amount of revenue received by each provider. The government took further action in January 2017, cancelling the VET FEE-HELP scheme entirely. The replacement scheme, VET Student Loans, aims to protect students from taking unnecessary loans and to ensure educational services are of a high quality by introducing stricter eligibility conditions. The scheme has significantly reduced the number of courses eligible for loans, and requires current private and community VET FEE-HELP providers to apply for provisional approval to maintain registered training organisation status.
Many VET providers have reduced expenses by steadily increasing online course delivery, which has reduced operational expenses. Overall, industry profit margins have increased over the past five years. Industry employment has contracted over the period, as larger VET providers have reduced their workforce to control costs in an increasingly competitive market.
OUTLOOK 2020 - 2025
Changes to the regulation and funding of vocational education are anticipated to influence the Technical and Vocational Education and Training industry's performance over the next five years. The introduction of the VET Student Loans scheme has reduced the number of government-funded courses and is likely to limit increases in the number of student enrolments. While the Australian dollar is projected to appreciate over the next five years, it will likely remain weak, and is expected to boost demand from international students.
Government funding regulation is projected to intensify over the next five years. Continued concern about the conduct of private providers in the industry has led to various inquiries and changes to industry legislation. The VET Student Loans scheme is forecast to continue to affecting industry revenue by reducing the funding available for industry operators.
Regulatory requirements regarding loans will likely affect the industry's structure. The percentage of industry revenue generated by large public institutions is anticipated to increase over the period. More students are forecast to enrol in industry courses as the industry adapts to the new funding model and regulations and offers higher quality courses. New regulations that require more trade and technical workers to have formal VET qualifications are also anticipated to boost industry enrolments.
Tighter regulations in the construction and healthcare sectors are forecast to make practical work experience through apprenticeships and other placements more important for employment in these sectors over the next five years. The need for experience will likely increase the popularity of vocational qualifications, supporting enrolment numbers and industry revenue over the period.
The new User Choice program, under which the state and territory governments provide funding to registered training organisations to reduce the cost of placements and apprenticeships to students and employers, is anticipated to further this trend over the next five years.
Industry employment is anticipated to decline as operators seek to reduce operating costs, and further their focus on online methods of course delivery. Industry profitability is anticipated to fall slightly over the next five years, as some private for-profit providers exit due to more difficult operating conditions.
Source: IBISWorld | Technical & Vocational Education & Training in Australia, April 2020
