Adopt voucher system to address skills shortage: Report

The Government should use a voucher system to fund vocational education instead of funding individual institutions, according to a new Labor-commissioned report.

In a bid to address the escalating skills shortage, the Skills Australia report contains 26 recommendations, the most significant of which is the call for an additional $310 million each year for skills reforms.

Another major recommendation would see students in low-level vocational courses up to Certificate III fully funded by the Government system “without restriction on the overall number of places available”.

Higher courses would be co-funded between the students and the Government, and restrictions on some of those courses would be allowed in order to align funding with employer demand and projections for certain industries.

The system will essentially allow more competition by enabling students to choose their own education providers, rather than have the Government deliver the funding directly to training institutions.

Heather Ridout, chief executive of Australian Industry Group, supports the notion of a voucher system, arguing the Government needs to provide more funding for training.

“The adoption of the recommended entitlement model, which provides fully subsidised training in literacy and numeracy and also in vocational skills up to Certificate III, will help to underpin our economy, provided it is complemented by enterprise-stream funding which links skills development with the needs of companies,” Ridout says.

Gavin Moodie, a tertiary education policy expert, also supports the idea, saying the introduction of a voucher-like system would ensure more competition.

“The way the system operates now is not very responsive to student demand. It’s so-called industry-led, which means places are allotted to providers based on predictions of what the demand in certain industries will be,” he says.

“The problem is that these projections are never very accurate and, in any case, the distance between those projections and the implementation by providers needs quite a bit of change.”

Moodie says by tying funding to students and not institutions, the system will be able to move more freely and respond to the overall workforce rather than academic projects.

“Some employers fear that students will take courses that are easy or popular, and not the courses that are needed for the economy. But our limited experience so far is that students enrol in courses where there is strong employment demand.”

Other major recommendations in the report call for the establishment of an Enterprise Skills Investment Fund, which would provide more funding for workplace development.

Such a scheme would incorporate a number of different funding streams and include the apprenticeship support program. Financial assistance would be prioritised to achieve “workforce development outcomes”.

According to the report, the Government will take some of the recommendations and use them in next week’s budget.