PPP: employers and Victoria the winners, as costs shift to students

The federal, state and territory governments have changed the rules on who pays for training funded under the Productivity Places Program (PPP), with students now liable for a 10 per cent component that was originally supposed to be paid by employers.
While the federal government foots the whole bill for unemployed people trained under the program, 56 per cent of the 701,000 places over the next five years have been earmarked for people who already have jobs. When the government announced the PPP in April last year it said it would fund half the costs of these “existing worker places”, with states or territories providing 40 per cent and employers contributing the remaining 10 per cent.
The Commonwealth has since reiterated that employers or industry would be expected to pay the 10 per cent. But when governments finally signed off on the program at the COAG meeting on 29 November last year, they said the 10 per cent component would now be funded by “private contributions”.
The Department of Education, Employment and Workplace Relations (DEEWR) confirmed last week that this change in wording meant the cost could now be shifted to individuals. “Private contributions could include employer, industry and student contributions,” a spokesperson told **Campus Review**.
The change worries VET figures who believe the real agenda behind national and state skills reforms is to squeeze training place funding to untenable levels, and to shift as much as possible of the remaining cost onto individuals. While 10 per cent could be regarded as a modest impost on people whose earning power is likely to benefit from the training, the Australian Education Union (AEU) says there’s a stronger argument for employers to pay it.
“A 10 per cent contribution from industry would be seen as a small price to pay for the influence they have over the training that occurs in the sector, and for the enormous benefits employers accrue from education and training,” federal TAFE secretary Pat Forward told a national meeting last month.
“This calculated shift of costs onto individual students is a huge concern.”
Australian Industry Group chief executive Heather Ridout told **CR** the adjustment to the PPP was “entirely appropriate” and necessitated by the economic downturn. “AiGroup welcomes the removal of the mandatory stipulation that employers must contribute 10 per cent of the cost of the program. The most important consideration during the downturn is to maintain training levels and to keep skilling happening in the context of employment. The government has recognised this.”
Meanwhile, it has emerged that Victoria – a key supporter of VET market reforms – won’t be signing up to the PPP deal on offer to the rest of the country. While the November COAG meeting signed off on a multilateral PPP National Partnership covering administration of the program until 2012, DEEWR’s spokesperson said Victoria had negotiated a separate arrangement “in return for reforms that will improve the performance of their VET sector”.
The spokesperson said the Commonwealth wanted to support the Victorian reform process, which includes a voucher-style entitlement system, and had recognised that the standard agreement with other states was inappropriate for a reformed Victorian VET sector.
The separate deal gives Victoria access to a HECS-style income contingent loan scheme for higher-level VET students. It also enables Victoria to treat Commonwealth funds allocated under the PPP “in the same way” as specific purpose payment (SPP) base funding. DEEWR’s spokesperson said special conditions would apply to this.
“Victoria will acknowledge the PPP as a major contributor to the Victorian Government’s activity. It will also report progress of the agreed Victorian reforms through DEEWR, including overall growth delivery and overall growth in delivery of higher level qualifications. This is in addition to reporting against the outputs agreed for the SPP base funding under the National Skills and Workforce Development Agreement.”
It’s not clear exactly how Victoria benefits from this arrangement, or whether it will be able to use PPP funding to help pay for an anticipated spike in demand for training. Victoria expects to be required to provide up to 172,000 extra training places under its new ‘uncapped’ system, which is being phased in from July and guarantees a training place to most Victorians who want one.
The special deal raises further question marks over Labor’s pre-election commitments not to disturb the previous funding arrangements for apprenticeships and TAFE. “The new industry-led system for the allocation of training will only be used for new training places,” the ALP said in its November 2007 policy document ‘Skilling Australia for the Future’. But an intermingling of PPP and base funding would make it harder than ever to tell which training places were ‘new’ and which weren’t.
Nevertheless, the November COAG communiqué said the Commonwealth had offered a similar deal to any other states which moved to “an entitlement-based student demand-driven training system”.
NSW, seen as the most resistant state, is yet to sign the new standard PPP partnership. While it’s not yet clear whether any other states or territories have signed either, Queensland, WA, SA, Tasmania and the NT all signed up to interim agreements last year.
Meanwhile, the education union’s umbrella group was last week singing the PPP’s praises after revelations that the skilled job vacancies index had fallen more than 40 per cent over the last 12 months. Australian Council of Trade Unions president Sharan Burrow told ABC Radio that while the figures indicated unemployment was starting to bite, they also suggested the PPP was making inroads into skill shortages.
“There’s no doubt that the government can take some credit for its investment in training, particularly in those productivity places,” Burrow said.
Education minister Julia Gillard’s spokesperson told the ABC the government would not cut back on any of its skills training commitments.