I rise to make a statement on the Victorian Auditor-General’s report of August 2014 entitled Technical and Further Education Institutes — Results of the 2013 Audits.
The Auditor-General’s report details findings of an audit into the financials of 14 TAFE institutes and 13 entities under their control.
My attention is drawn to significant concerns held by the Auditor-General, specifically in relation to the changed operating environment TAFEs have been confronted with under the Napthine government.
TAFEs have been working unremittingly to adapt to the government’s substantial funding cuts while continuing to offer education that is crucial to our communities. Labor holds grave concerns that if the current government is re-elected, we will see the unemployment rate skyrocket even further as Victorians are denied access to education and struggle to find employment.
A subsequent skills shortage will hit our manufacturing industry, an industry that knows the effects of this Napthine government all too well.
The changes to TAFE funding introduced by this government in 2012 were intended to increase competition between public and private vocational training providers.
However, the real impact of these changes is a decline in financial performance by TAFEs and what the Auditor-General describes as a decline in the financial sustainability of the sector.
The TAFEs experienced a net deficit of $16.2 million in 2013, a deterioration of $74.8 million from the $58.6 million surplus in 2012. The Auditor-General outlines that the main driver for this decline is a decrease in government funding to the tune of 15 per cent, or $116.3 million in operating and capital grants. Capital funding in itself declined by 36 per cent in 2013.
In order to adapt, TAFEs reduced their spending by increasing the courses provided through third parties, changed course offerings, made staff redundancies, reorganised campuses and reduced their operating costs.
Essentially TAFEs have had no choice but to adapt. Students are paying higher fees while being impacted by staff cuts, course changes and their access to campuses. Domestic student fees increased by 125.2 per cent between 2009 and 2013.
TAFE enrolments decreased from 208 400 in 2012 to 196 500 in 2013 — a 6 per cent decrease in enrolment. The cost reductions and increases in student fee revenue were nonetheless still insufficient to offset the cuts in government funding.
The decline in financial performance led the Auditor-General to identify the decline in financial sustainability for the sector. Of immense concern is that five TAFEs have been rated as high risk in financial sustainability.
A further eight TAFEs are at medium risk and it is expected that these TAFEs will follow a pattern of deterioration. In 2013 the government introduced flexible financing arrangements, which means the TAFEs are now able to incur borrowings with the Treasurer’s approval.
The Auditor-General warns that TAFEs currently have very low debt levels, and incurring debt through borrowing should be done with caution. In light of the funding cuts and subsequent lack of financial sustainability, their capacity to service and repay debt is questionable.
The significant decline in financial sustainability within the TAFE sector in 2013 is attributed to the funding cuts made by this government — a decrease of $116.3 million or 15 per cent.
TAFEs are struggling to maintain the services offered to students and communities, a role that is essential to employment and industry. Victoria’s future is bleak under this government, as is the sustainability of our TAFE system.
As I said, five TAFEs have already been identified as high risk in the context of financial sustainability and are expected to deteriorate in the current environment.
The Auditor-General’s report shows quite clearly that the Napthine government’s priority does not lie with education, employment or manufacturing.
The cuts are simply making it more and more difficult for people, especially our young people, to get skilled up enough to find employment. The Labor opposition has a firm focus on these issues and Victorians will have an opportunity to make their priorities known come November.