Government funded vocational education and training (VET) in Australia is funded by the Commonwealth and state and territory governments. State and territory governments are responsible for the delivery of VET services and provide recurrent appropriations for VET through annual budget cycles. The Commonwealth government supports states and territories with VET services by providing ongoing specific purpose payments made through the Intergovernmental Agreement on Federal Financial Relations. The objectives and outcomes tied to the payments are defined in the National Agreement for Skills and Workforce Development (NASWD).

Commonwealth funding is also provided through time limited National Partnerships and Project Agreements such as the 2012 National Partnership Agreement on Skills Reform. The Commonwealth also administer their own VET programs and VET loan support programs. Report on government services 2018 provides an overview of the major funding flows within the VET system.

Skilling Australians Fund

The Skilling Australians Fund was announced in May 2017 as part of the Commonwealth 2017-18 budget and commenced on 1 July 2017. It supersedes funding provided under the National Partnership Agreement on Skills Reform. From 2017-18 to 2020-21, an estimated $1.5 billion will be available, with matched funding from states and territories. Subject to the passing of legislation, the Skilling Australians Fund will be financed by the Government's skilled migration reforms that require employers who sponsor a foreign worker to pay a Nomination Training Contribution Charge (known as a levy) under certain visa types.

National Partnership Agreement on Skills Reform (NPASR)

The 2012 National Partnership Agreement on Skills Reform (NPASR) between the Commonwealth and state and territory governments formalised objectives, outcomes and outputs comprised of national structural reform and jurisdictional flexibility reform including: strategies to enable government training providers to operate effectively in an environment of greater competition; increased training accessibility through a national entitlement to government subsidised training; and increased availability of the income contingent loan scheme which is administered and funded by the Australian Government. Funding under the NPASR was from 2012-13 through to 2016-17.

VET Student Loans

VET Student Loans commenced on 1 January 2017, replacing the VET FEE-HELP scheme which ceased on 31 December 2016. The program offers income contingent loan support to eligible students studying certain diploma level and above VET qualifications. Eligible students are entitled for loans up to a capped amount.

Student Training Entitlement

A national entitlement to training was introduced under the National Partnership Agreement on Skills Reform whereby all jurisdictions agreed to implement a student training entitlement within the national training system by 30 March 2015. The initiative provided all working-age Australians with access to government-subsidised training places to their first Certificate III level, as a minimum, with their choice of training provider, and jurisdictions having the flexibility to go beyond the minimum. Entitlement models adopted by jurisdictions:

Subsidies and incentives

A range of subsidies and incentives offered by the Commonwealth and state and territory governments, are available to employers and VET students, including: commencement and completions incentives, Rural and Regional Skills Shortage incentive, Mature Aged Workers Incentives, payroll tax rebates/exemptions, Workers Compensation premium reduction/exceptions/levies; and living away from home allowance.

Trade Support Loans

The Trade Support Loans program is part of the Australian Government’s Better Support of Australian Apprentices policy. It replaced the ‘Tools For Your Trade’ payments which ceased from 1 July 2014. Under the Trade Support Loans program, income-contingent loans of up to $20 420 over four years are provided to apprentices in priority trades where there are growing skill shortages.  

User Choice

User Choice, introduced in 1998, is a national funding policy for apprenticeships and traineeships whereby State and Territory governments fund registered training organisations (RTOs) to provide structured training to apprentices and trainees. These funds reduce the cost of the training that apprentices and trainees or their employers will have to pay, and give employers the choice to select any approved RTO to deliver the off-the-job training components of apprenticeships and traineeships. The amount of funding available under User Choice is different in each state and territory, as each state and territory has different priority areas to direct their User Choice funds.

Other sources of funding

While VET is largely publicly, companies and individuals also contribute to the cost of training, for example, companies purchase training for their employees and pay certain levies, while students contribute through the payment of courses, including student loan repayments, and administrative fees. Other non-government sources of revenue include contracted overseas training, overseas student fees and adult and community education.

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How to cite this overview

NCVER (National Centre for Vocational Education Research) 2018, Getting to know VET overview: Apprenticeships and traineeship, VET Knowledge Bank, NCVER, Adelaide, <http://www.voced.edu.au/vet-knowledge-bank-getting-know-vet-overviews-vet-funding>.

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