• No results found

3.1 In this Chapter the Committee follows on from the outline of TAFE funding in Chapter 2 (see paragraphs 2.32-2.39) and examines the various programs of

Commonwealth funding for TAFE. The programs include:

recurrent, equipment and capital grants provided under States Grants (Tertiary Education Assistance) Acts administered by the Commonwealth Tertiary Education Commission;

the Participation and Equity Program funded under the States Grants (Education Assistance - Participation and Equity) Act 1983, the TAFE component of which is administered by the Commonwealth Tertiary Education

Commission; -

purchase of services from TAFE systems as part of several Departmental programs aimed to assist specific target groups, funded from annual Departmental

appropriations; and

recurrent support for secretarial courses run by non-government business colleges provided under the States Grants (Tertiary Education Assistance) Act 1984 administered by the Department of Education.


3.2 As outlined in Chapter 2 (Table 2.9) funds for TAFE recurrent expenditure are provided by State and

Commonwealth governments. Broadly speaking, the States fund the normal operating costs of TAFE - about 80 per cent of recurrent expenditure - while the Commonwealth provides funds for:

(a) specifically identified recurrent purposes, such as management improvement, special course

developments, advanced English for migrants or participation and equity, which are provided via States Grants Acts; and

(b) special programs sponsored by Commonwealth agencies other than the Commonwealth Tertiary Education Conunission and funded on a negotiated

fee-for-service basis from the annual

appropriations of the sponsoring Department.

3.3 Although not usually regarded as Commonwealth support for TAFE, funds are provided by the Commonwealth, in the States Grants (Tertiary Education Assistance) Acts, to subsidise secretarial courses in non-government business

colleges. In effect those funds relieve pressure for secretarial studies -places in TAFE colleges.

3.4 The Commonwealth also assists TAFE students directly via programs such as the Tertiary Education Allowance Scheme (administered by the Department of Education) and the Formal Training Assistance for Youth Scheme (administered by the Department of Employment and

Industrial Relations).

Expenditure of Funds

3.5 Table 3.1 shows 1983/84 recurrent expenditure by category of expenditure.



$m %

Full-time Teachers' Salaries 440.4 49.2 Part-time Teachers' Salaries 98.6 11.0 Non-teaching Staff Salaries 184.4 20.6

Non-salary Costs 171.5 19.2

894.9 100.0

3.6 The high proportion - over 80 per cent - of expenditure required for salaries and the need to expand staff numbers as a consequence of enrolment growth makes it difficult for TAFE systems to divert recurrent funds to non-salary expenditure such as equipment or library stocks.

It is no coincidence that these are the areas which have attracted Commonwealth recurrent support because of the pressures of enrolment growth.

Recurrent Grants Provided Under States Grants Legislation Background

3.7 Prior to 1974 the Commonwealth operated a small program of capital grants for TAFE. For the first half of 1974 special provision was made to reimburse the States for the revenue forgone following the abolition of tuition fees. The first major contribution by the Commonwealth for the recurrent costs of TAFE commenced from 1 July 1974.

Since then the Commonwealth has relied on two basic categories of recurrent grants, (a) general purpose

recurrent grants to cover fee reimbursement and (b) quite detailed systems of earmarked grants targeted for specific purposes. Each of these categories is reviewed below.

Fee Reimbursement Grants

3.8 The TAFE Council's Volume 1 Advice to the

Commonweilth Tertiary Education Commission for the 1985-87 Triennium (paragraphs 4.15-4.19) includes the following background to the fee reimbursement grants.

4.15 As part of a Commonwealth initiative designed to increase access to tertiary education, tuition fees were abolished from the beginning of 1974 in universities, colleges of advanced education and in vocational and preparatory courses offered by government TAFE institutions. The terms and conditions associated with this initiative were negotiated between the Commonwealth and State Governments of the time and formalised in

correspondence between the (Acting) Prime Minister and State Premiers. In universities and CAEs fees were abolished simultaneously with the Commonwealth's

assumption of full financial responsibility for higher education, and compensation to institutions for the loss of fee revenue was effected by a 'one-off'

adjustment to the base level of Commonwealth recurrent funding. In this way an amount to cover Income from fees became fully absorbed into general recurrent grants, and 'fee reimbursement' as such was removed from the higher education policy agenda.

4.16 In TAFE, however, because of the supplementary nature of Commonwealth financial assistance, the

Commonwealth's undertaking to reimburse the States for the loss of revenue from fees has required the

continued provision of a separate category of grant earmarked specifically for this purpose. The level and distribution of this 'General Purpose (Fees

Reimbursement)' grant, have been the subject of annual recommendation by the TAFE Council and its predecessor bodies.

4.17 With the agreement of all State Governments the level of the Commonwealth fees reimbursement grant for calendar year 1974 was determined by adjusting for cost increases (a general allowance of 20 per cent), and for estimated growth in enrolments (an average increase of 10 per cent), the actual level of fee income received by TAFE authorities in 1973. The resultant grant ($13.lm in 1974) has since been adjusted on an annual basis in accordance with a prospective estimate of national growth in TAFE activity (Streams 1-5), and movements in the national index of TAFE recurrent costs.

4.18 In the period immediately following the abolition of fees the distribution of the total fee reimbursement grant among the States reflected the historical (1973) pattern of receipt of fee income by TAFE authorities. Fee policies had varied widely, however, from State to State - some States allowing free tuition for courses which incurred quite high

levels of fees in other States. The distrbutjon of the Commonwealth fee reimbursement grant therefore bore little relationship to the distribution of total TAFE activity across the States.

4.19 With the passage of time after the abolition of fees, pressure grew for a revised basis of

distribution of the Commonwealth grant to reflect the possibility, for example, that those States with

'low-fee' policies prior to 1974 might have sought in the interim to increase their incomes by raising their existing fees or by introducing new fee charges. In response to this argument the basis of distribution of the fee reimbursement grant was progressively changed during the period 1977-79 to reflect the overall distribution of TAFE activity in vocational and preparatory courses (i.e. teaching effort, Streams 1-5) rather than the historical pattern of fee receipts.

3.9 The pattern of growth in the fee reimbursement grants is shown in Table 2.10.

3.10 Fee reimbursement grants are now running at over

$80m per annum or 70 per cent of TAFE recurrent grants exclusive of Participation and Equity (PEP) funds. The only condition under which the grants are made is that they be spent on TAFE. However this condition is quite

perfunctory since the States spend over $800m per year on TAFE and it is possible therefore for a State to offset the

Commonwealth fee reimbursement grant by a reduction in its own contribution and still satisfy the condition. In fact the States do not operate in that way. From its

discussions with State representatives the Committee understands that, in all States, the fee reImbursement

grant is a factor in the determination of the overall TAFE budget. In some States the grant, or part thereof, is allocated directly to TAFE thereby ensuring that increases in the grant, which are due to national enrolment growth, flow on to TAFE.

3.11 It has to be recognised that the fee reimbursement grants are made in accordance with an agreement whereby the Commonwealth undertook to reimburse the States for revenue forgone in abolishing fees for TAFE courses. In the years immediately following the abolition of fees - 1974 onwards - there may have been some nexus between the fee

reimbursement grant and revenue forgone by the States.

However, after more than ten years, in which time the basis of distribution of the grant between States has moved well away from the original distribution of fee revenue, it is hard to argue that there is a link between the levels of grants and potential fee revenue. Furthermore, there is a basic illogicality in that the grant rises with enrolment growth even though that growth would have been slower if fees had continued.

3.12 In the circumstances described above, and

acknowledging that fee-free tuition in tertiary education is now firmly established Australia-wide policy, the

existing arrangement and rationale for Commonwealth general recurrent grants for TAFE warrant serious examination. The Committee returns to these matters in Chapter 6, paragraphs 6.37-6.61.

Earmarked Grants

3.13 The system of recurrent grants for TAFE

recommended by the Kangan Committee in 1974 was somewhat complicated and was not implemented by the Government in the form recommended. The Kangan Committee recommended:

What were described as general purpose grants but in practice only 55 per cent of which were intended to be applied at the discretion of the States with the balance being spread in specified amounts across eight broad expenditure headings.

What were styled specific purpose grants covering eleven expenditure headings, including fee

reimbursement. Some of these were of an on-going nature (e.g. in-service teacher education) and others of obviously short-term duration (e.g.

feasibility studies for the establishment of bibliographic centres).

3.14 In the event, the Government of the day elected to legislate for three basic categories of recurrent grants:

general purpose grants and two different types of earmarked grants - particular purpose grants, and special purpose grants.

3.15 The initial general purpose grants, for the period 1 July 1974-31 December 1976, included general purpose funds as well as the cost of fee reimbursement. In 1977 the general purpose component was dropped and the grant continued as the fee reimbursement grant.

3.16 The particular purpose grants were provided for expenditure under ten separate headings and were intended to cover activities for which there was seen to be

underprovision (e.g. curriculum development; the provision of library materials). The States were not committed to expenditure under each separate heading but were invited to develop programs of expenditure, choosing those headings which accorded with perceived needs and priorities within each State. All of the headings covered under the

particular purpose category were of a kind that implied sustained action over some years to remedy deficiencies;

the employment of permanent staff to work in these program areas; and therefore some continuity of funding through succeeding years.

3.17 In contrast with the arrangements for particular purpose grants - where there was an element of choice

available to States on the pattern of expenditure - special purpose grants were provided against fixed headings. Of the seven headings identified initially, four had the same characteristics as those covered under the particular purpose program (i.e. essential activities requiring sustained remedial action, e.g. in-service teacher

training). The remaining three were of a discrete rather than continuing nature, and involved planning/feasibility


3.18 A new category of grant - assistance for voluntary adult education providers -was added in 1977.

3.19 Between 1974 and 1984, minor variations were made to the sub-categories embraced by particular and special purpose grants but the only change of significance was the

inclusion of advanced English language instruction for migrants. In response to the Evaluation of Post-Arrival

Programs and Services by the Institute of Multicultural Affairs (1982), the Government decided that priority should

be given to the use of particular purpose TAFE funds for that purpose and that financial support should be provided at a level of 15 per cent of particular purpose grants, i.e. $2.8m (see paragraphs 3.85-3.91). This program had previously been sponsored and funded by the Department of

Immigration and Ethnic Affairs; the transfer to the

Commonwealth Tertiary Education Commission was accompanied by a transfer of $l.2m from that Department to TAFE

particular purpose funds. However, in order to meet the 15 per cent requirements a further $l.6m had to be found from CTEC programs for TAFE.

3.20 In 1984 the Government accepted a recommendation of the TAFE Council, endorsed by the Commission, to

discontinue the distinction between special and particular purpose grants and, commencing in 1985, to replace these with a system of designated grants. In terms of grants

administered by the CTEC for TAFE the only other major change since 1974 has been the introduction of the PEP program in 1984 (see paragraphs 3.41-3.80).

3.21 The Commonwealth recurrent grants for TAFE for 1985 and 1986, administered by the Commonwealth Tertiary Education Commission, are set out in Table 3.2.



Excludes ACT.

Participation and equity funds are provided under the States Grants (Education Assistance - Participation and Equity) Act 1983; all other recurrent grants are provided under the States Grants (Tertiary Education Assistance) Act 1984.

Designated Grants

3.22 Designated grants are provided under four major headings: special course provision; college services;

quality improvement; and management. In each case there is BY CATEGORY, 1985 AND



1985 1986

Designated grants

special course provision college services

quality improvement management

Non-government adult education

Sub-total Participation and equity(b)


7.3 4.0 13.4 11.5 1.3


7.4 4.0 13.4 11.4 1.3 37.5


37.5 17.75 73.0 55.25

flexibility in the way States are able to assemble a program of expenditure, reflecting needs and priorities within individual States, by selecting combinations of activities designated as eligible for support. Details of each category of designated grants are set out in the following paragraphs.

3.23 Special Course Provision. Funds are intended to cover actual course costs and development activities

(including curriculum, materials development and

acquisition, and staff development) for courses designed to meet the needs of:

those who lack functional literacy

advanced English instruction to migrants

the unemployed (especially those aged 25 years and over who do not qualify for the Participation and Equity Program)

women and girls (especially access to vocational opportunities in non-traditional occupations) Aborigines

residents in rural areas the aged

the physically disabled

the intellectually handicapped

the socially isolated, such as prisoners.

Courses in small business management may also be mounted from this category of grant.

3.24 The designation of this category of grant indicates a subtle but important change in attitude.

Hitherto, through formal policy and by administrative process, support had been refused for the allocation of Commonwealth grants to meet the direct costs of course provision. The rationale was that the States were

responsible for the normal operating costs of TAFE, and the costs of course provision constituted a normal operating cost. However the Commonwealth Government's objective of

increased participation by groups underrepresented in TAFE led to the allocation of recurrent funds for courses

designed to meet the needs of those groups.

3.25 College services. There are four major types of college services identified for recurrent funding under this category:

student residences which assist isolated students obtain access to centrally located TAFE programs;

child care to enable those with responsibility for children to participate more readily in TAFE


counselling services for the general student body and to assist students completing special courses to enter mainstream courses more easily;

health and welfare services especially for full-time and disadvantaged students.

3.26 Quality Improvement. These grants may be applied to any or all of the activities which relate to:

curriculum development involving updating of courses, developing courses for new vocations or for new client groups, and new techniques of program delivery;

development of learning materials, especially those of a self-paced nature and involving new

educational technologies;

improvement of the delivery of external studies;


effective operation and development of Learning Resource Centres.

3.27 Management. Funds under this category of grant are available to support:

staff development of TAFE teachers and

administrators encompassing occupational and professional competence, management skills,

part-time teacher development, the capacity to meet the demands of special TAFE programs, and the

special needs of female staff;

developing and operating management information systems on students, staff, facilities and finance;


information programs concerning TAFE's services, especially for disadvantaged groups.

3.28 Grants for Non-government Adult Education. Funds under this category are designed to assist community groups to plan and conduct their own programs; the intention is to promote access to education for those whose needs may not be met readily by the formal TAFE system.


3.29 The programs of Commonwealth support for TAFE, introduced in 1974 in response to the Kangan

recommendations, have continued virtually unchanged to the present time. There has been some repackaging of the grants as mentioned in the previous section but the array

of activities funded under the programs has not changed to

any great extent. -

3.30 At the time of the Kangan Inquiry and subsequent funding deàisions - 1973 and 1974 - TAFE had suffered from years of low public interest and support relative to needs,

and the systems in most States were in parlous

circumstances. Kangan quite wisely took the view that the only route to vitality for the sector was to build up the basics over time, i.e. areas such as curriculum

development, teaching and non-teaching staff training,.

library services and the recruitment of planning staf-f.

The Commonwealth's earmarked grants programs concentrated on those areas. It could have been argued that such activities were normal operating functions to be funded from State sources. However, they are functions which suffer disproportionately from the pressures on resources imposed during periods of rapid growth; the States were faced with the need to finance rapidly growing TAFE systems, growth which was generated in large part by

significant injections of Commonwealth capital funds. The Commonweali-h pted


view that State expenditure

needed to be supplemented in a way which specifically built up basic elements of the TAFE operation. Thus the

Commonwealth's initial objectives in TAFE could be

summarised as facilitating growth and improving the quality of TAFE. More recently, with the designation of grants for special course provision,, those objectives have been

widened to include direct assistance for the improvement of access by the disadvantaged.

3.31 Although the programs of grants have been running for over twelve years, with one or two exceptions, there has been no substantial evaluation of the effectiveness of those programs. Exceptions include an evaluation of the program of special initiatives in TAFE teacher education, undertaken in 1984 under the Commonwealth Tertiary

Education Commission's evaluation program and a review of.

the TAFE data base undertaken in 1983 by the TAFE National Centre for Research'- and Development.

3.32 ' The Committee is not suggesting that the Commonwealth grants have not been utilised effectively.

They obviously have, as a comparison of current TAFE data' collections, professionalism and outlook of staff,

curriculum development or college management, with those' of twelve years ago would- quickly demonstrate. What is

missing is some assessment of how much remains to be done,

the extent to which objectives have been achieved, whether any particular grant should be varied in amount, and the possibility for redirection of resources.

3.33 Any evaluation that might have been contemplated would not have been assisted by the fact that goals and

intermediat targets were not set for any of the programs of earmarked grants. Objectives were consistently cast in the most general of terms; e.g. to apply funds to

curriculum research and development, the provision of library materials and equipment, the provision of

in-service training to non-teaching staff, the publicising of TAFE. Moreover, Commonwealth programs were not

determined in the knowledge of State commitments to

particular activities. Accordingly, the Commonwealth TAFE authority could never be sure whether, in providing funds

for (say) curriculum development, it was actually adding to the volume of this activity or allowing State authorities to substitute Commonwealth funds in lieu of State outlays, thus freeing State funds for use elsewhere.

3.34 Two other sets of problems have always confronted the Commonwealth authorities responsible for developing special purpose grants programs; one set concerns the life of any of the programs; the other concerns the notion of

"balanced development!'.

3.35 As a natural consequence of the nature of the Commonwealth's specific purpose recurrent grants for TAFE -

i.e. effectively subsidising the normal operating costs of TAFE - the large bulk of expenditure has found its way into the salary costs of permanent staff. The rigidities this

imposes are immediately obvious. The early intention behind the Commonwealth's intervention in funding specific

activities was that it would shift resources into other areas of deficiency after a "critical mass" of effort was established; the assumption was that the States would then take over the funding of on-going essential activities.

3.36 Not surprisingly this approach attracted stern opposition from State authorities who pointed out that any redirection of Commonwealth resources would lead

immediately to staff retrenchment as State resources were fully committed to meeting enrolment growth. In fact, TAFE enrolments were increasing rapidly, not least because of a new-found popularity for TAFE created in large measure by the Commonwealth's own rhetoric at the time. The net

effect was to produce,a situation where Commonwealth grants for specific purposes became entrenched - new purposes were added, but old purposes persisted. Not until 1985, when earmarked funds were repackaged as "designated grants" did some of the former highly specific expenditure headings disappear. It may be observed however that most of these have disappeared only in the sense that they no longer constitute line items; it is still open to the States to