CHAPTER 6 PROPOSED FUTURE FUNDING ARRANGEMENTS Introduction
6.1 In the preceding Chapter the Committee set out what it sees as the Commonwealth's objectives for TAFE and
principles that should apply to programs established to pursue these objectives. Against this background the
Committee now proceeds to develop proposals for the
arrangements to apply to future CTEC programs of financial assistance. The proposed framework of Commonwealth TAFE grants to be administered by the CTEC is set out in Chart 6.1. Grants for capital purposes, equipment, and recurrent purposes are addressed separately in the sections that follow.
6.2 Between 1974 and 1984 Commonwealth funds of the order of $llOOm (at constant 1984 prices) have been
directed to the construction of capital facilities in TAFE.
In addition, some $627m of State funds have also been applied to TAFE buildings and facilities. While there are differences among States and between years, the
Commonwealth has been contributing on average at the rate of $2 for each $1 spent by the States on TAFE capital.
6.3 The emphasis within the Commonwealth's building program has been on the construction of additional places required to cater for enrolment growth. In supporting
individual projects, priority has been given to centres of population and industrial development with few or no TAFE
facilities. State funded programs, especially in recent years, have been directed to the refurbishment of existing buildings as well as some provision for growth.
6.4 For several years the Commonwealth's capital
program for TAFE has been running at about $137m; the first reduction in this program occurs in respect of 1986 with a fall of $12m to $125xn. In announcing this reduction, the Government indicated that the decision was based on
budgetary considerations, rather than being a reflection of a reduced need for capital, and the 1987 program will be restored in real terms to the 1985 level.
PROPOSED FRAMEWORK OF COMMONWEALTH SPECIAL PURPOSE PROGRAMS FOR TAFE
SPECIAL COURSE PROVISION
NON-GOVERNMENT BUSINESS COLLEGES
CROSS-SECTORAL DEVELOPMENT Higher level courses
Assistance for TAFE resource centres Joint schools/TAFE
co-operative projects DISADVANTAGED GROUPS Aboriginal education Migrant Education
New Start Education Program
Non-government adult education
QUALITY IMPROVEMENT College services Course content, delivery and materials
6.5 Several things are clear:
the stock of capital facilities in TAFE is now larger and immeasurably better than when the Commonwealth first entered the field in a substantial way in 1974;
further expansion of facilities is essential to meet the required growth in TAFE enrolments (of the order of 7 per cent for at least the remainder of this decade);
those States which currently have low rates of
participation in TAFE will be constrained in efforts to increase participation by a shortage of capital facilities;
continued attention needs to be directed to the
provision of facilities in regions that currently have no facilities or are underserviced;
unsafe and obsolete accommodation is still a common feature of older colleges and substantial upgrading or replacement remains to be completed;
most of the older colleges do not have the
infrastructure (library, student services, staff accommodation and administration) which is now standard provision within the newer colleges; and some existing teaching space needs to be converted to accommodate new patterns of course provision to meet changing community demands.
6.6 It should be noted that beyond 1990 Australia will experience absolute reductions in the numbers in the age cohort 15-24, thus leading to a probable moderation of growth rates. The impact of this on capital requirements is hard to predict accurately bepause of the backlog of need still to be met in a number of States. The Committee considers that the Commonwealth's capital program for TAFE should be maintained at not less than the 1985 level
through to 1990 at least.
6.7 In addition there is the requirement for major buildings, which is yet to be assessed accurately, arising from the introduction of the Australian Traineeship System.
The Committee understands that the CTEC will complete an assessment of these requirements within the coming months.
The Committee suggests that the CTEC should also undertake an assessment of current building stocks in TAFE with a view to determining the level of capital needs beyond 1990 having regard to desirable participation rates across States.
6.8 The Committee considers that the current emphasis of the Commonwealth's program should be retained - that is, a concentration on additional facilities associated with enrolment growth. However the Committee believes there
should be a move to a flexibly-managed system of matched grants on a formula basis. The major bënef its from this change include:
improved articulation between the Commonwealth and State capital programs through a clearer .definition of the responsibilities for each of the partners and of the objectives of each program;
a Commonwealth capital program that is clearly tied to the major Commonwealth objective of enrolment growth;
increased flexibility in terms. of future capital outlays, providing the opportunity to scale back the rate of expenditure in line with any reduction in projected enrolment growth; and
improved accountability in terms of monitoring State financial effort in relation to capital expenditure.
6.9 The Committee suggests that the new arrangements be implemented for 1987 embodying the following principles:
Ftture Coiinonweaith capital programs for TAFE should
be confined primarily to projects
additionalspace to accommodate enrolment growth. It
shouldbe recognised explicitly however that some projects
whichare designed to provide expanded
facilities may, also include replacement and upgrading components or improved college infrastructure.
The Commonwealth grants program for each State
fundedon the basis of $2 Commonwealth for each $1 State contribution, subject to an upper limit of Commonwealth contribution,
basedon a program of projects approved by the CTEC. This ratio represents the approximate current shares of Commonwealth and State capital expenditure on TAFE.
The maximum Commonwealth contribution
determinedby the Government each year for the three succeeding years on the advice of the CTEC.
State contributions for matching purposes
shouldbe assessed for the program year on the basis of the simple average of expenditure over the preceding three years.
Where an appropriate agreement can be
between the Commonwealth and an
maintain State capital expenditure at an average rate of not less than one-half of Commonwealth outlays, the Commonwealth
shouldbe prepared to legislate a capital program for that State for up to a full triennium.
State contributions for matching purposes
assessed to include all capital expenditure on major
buildings,minor works and refurbishing - but not maintenance - land acquisition involving cash
andequipment expenditure on items of any value associated with new or replacement
Consistent with the objective of fostering
cross-sectoral developments, it
shouldbe open to the CTEC to foster and fund
individual TAFEprojects which include elements of space intended for multi-sectoral purposes.
6.10 The Committee wishes to conclude this section on capital funding by responding to two issues raised in submissions: the first deals with the standard of
Commonwealth-funded TAFE buildings and the second relates to the utilisation of facilities.
6.11 One submission received by the Committee claimed that the existing capital program is biased "in favour of building new 'Taj Mahals". The Committee regards this comment to be inaccurate, ill-informed and bordering on the mischievous. The Committee noted in the course of its consultations in relation to this submission that no evidence could be provided to support the claim. Nor was any evidence provided by others who quoted the statement.
6.12 The industry-related scale of facilities
distinguishes the design of TAFE colleges from the design of schools and much of higher education; those core
facilities related to imparting an understanding of the theoretical and conceptual base for the app]ication of occupational skills, for the students' own learning
activities and for the development and wideningof
horizons, distinguish the college from the skills training centre. The objective of the TAFE college is to promote a sufficiently broad educational base to enable those trained to be not only immediately productive in their occupation but also to adapt to technological and structural changes which they might face.
6.13 Commonwealth supported buildings can be best described as "modern functional". Building projects are assessed by the CTEC under a set of building procedures approved by the Commonwealth Minister - they involve a tight control over costs and rigorous assessment of the
justification and design of proposed buildings. These controls extend through the concept, design and
construction stages of each project.
6.14 To take but one example: air-conditioning is
typically provided as a matter of course throughout all new office accommodation, government or private; in the case of buildings funded by the Commonwealth for tertiary education air-conditioning is provided only in some specialised areas such as library and computer space. This example is quoted simply to demonstrate the fact that the pressure on
Commonwealth building funds for tertiary eduction is such that even conventional standards of provision cannot always be met. Furthermore, in the consideration of building proposals, account is taken of appropriate costs per square metre of space and appropriate ratios of usable to total space. In these ways CTEC provides a backup to State TAFE authorities in the context of project design within
specified cost limits.
6.15 Another factor often overlooked is the
"life-cycle" costs associated with buildings - this term covers initial capital outlays, annual maintenance costs, and the costs ofconverting space to meet emerging
requirements. It is often the case that some additional investment in initial outlays pays considerable dividends over the life of a building by minimising maintenance and conversion costs.
6.16 The second matter relates to the suggestion made in the submissions from the Commonwealth Departments of Finance and Employment and Industrial Relations that TAFE capital facilities are not fully utilised. In part this involves the length of the teaching day, week and year.
6.17 The Committee has consulted with State TAFE authorities on this matter who advise that there is in general, little scope for extending the usage of existing facilities either within or beyond the normal teaching day, week and year.
6.18 Growth in numbers of full-time students, block release arrangements for apprentices, short course programs and the like continue to improve the utilisation of TAFE facilities. However the scope for extending utilisation beyond existing levels is limited by:
industrial awards under which TAFE teachers and support staff work and the costs of, for example,
difficulties in planning for the wide variety of programs offered by the TAFE system - for example apprentices are seldom released for TAFE training on Fridays, many students in such fields as hospitality
are required to work at weekends, and part-time teaching staff are bound by work commitments; and the need to effect periodic maintenance during "quiet"
6.19 It is inevitable that some "spare capacity" will be generated by a continuing capital program which is designed to respond to the needs of a growing system.
Planned enrolment growth cannot occur unless buildings are provided ahead of growth to house the additional students.
While buildings take the form of discrete additions to existing stocks, they are not filled to capacity
immediately they are commissioned, particularly where the project is a new college in a new location. The lowering of the proportion of capacity that is spare at any one time, in a system which is growing rapidly, may well
produce significant "bottlenecks" resulting in a series of temporary solutions (such as temporary buildings and rental of unsuitable premises). Advice provided to the Committee
indicates that all TAFE systems are making extensive use of leased premises and other educational facilities (e.g. high school buildings outside normal hours).
6.20 The Committee is aware of suggestions that all existing "spare capacity" in TAFE can be made available to
students under the Australian Traineeship System. Such suggestions are not considered feasible because:
as outlined above, existing space will be quickly absorbed by natural growth in existing courses;
trainees will not necessarily be employed in the same locality as that in which "spare capacity" exists; and such "spare capacity" that may exist is not
necessarily suitable for courses to be offered under ATS.
6.21 Since 1974, initial equipment stocks associated with a new TAFE building constructed with Commonwealth
funds have been included in the project cost and funded through the capital program. This general provision was
extended in 1980 to include basic library stocks where the building project embraced a library resource centre.
6.22 Between 1974 and 1980 Commonwealth funds were also provided for new and replacement items of equipment under a combined minor works and equipment grant. This was not continued beyond 1980, mainly because State TAFE
authorities accorded a higher priority to the use of these funds for the construction of major new buildings.
6.23 Commencing in 1982 a new category of grant was established to assist TAFE to acquire special equipment to keep pace with technological change. For 1985 and 1986 these grants are running at a level of- $15m a year.
6.24 The claim is made constantly by industry, training authorities and others that much. of the teaching equipment in TAFE is outdated and in poor condition. For example, the most recent report by DEIR on the Occupational Share System for Skilled Migration (June 1985) noted "the datedness of much of the equipment available to TAFE institutions" as "a major barrier" to the provision of education and training in line with current industry practice.
6.25 TAFE is a highly equipment-intensive enterprise and resource constraints do not permit every college to have the most modern equipment in all teaching areas. It
is also a fact that many industrial concerns are not employing "state-of-the-art" equipment and there is
therefore a need to relate off-the-job training to what is current practice in industry. Even so, a well-rounded training will require access to basic equipment for training purposes and some exposure to equipment of the kind to be found in use in modern industrial settings.
6.26 Equipment purchase in tertiary education is typically one of the first areas to suffer in periods of overall resource constraints, the response being a
combination of deferring replacement, cut-backs on
maintenance or purchase of less-expensive but less-suitable items. The very rapid enrolment growth in TAFE over the last decade has produced great pressure on resources and equipment stocks are not as up-to-date as they should be.
Some relief has been provided via the Commonwealth's capital program but this has served to assist only that part of enrolment growth that is accommodated in new buildings funded by the Commonwealth.
6.27 Adequate equipment stocks are absolutely critical to the quality of education and training provision in TAFE.
With this in mind, the Committee proposes a modification of the Commonwealth's equipment program, with effect from 1987, as follows:
Equipment, including library resources, which
constitutes basic stocks for new buildings funded by the Commonwealth should continue to be met as part of the project cost under the capital program.
Grants should continue to be provided for equipment necessary to keep pace with technological change.
(c) A new category of grant should be established to
provide for new and replacement equipment thquisitions associated with enrolment growth (other than that covered-by the capital program) conditional upon:
Agreement by the States to maintain a level of expenditure on equipment from State resources that is acceptable to the Commonwealth
Establishment of the program on the basis that it will terminate at the end of 1990, subject to a review of planned growth in enrolments beyond 1990and the continued need for-the program.
(d) Triennial funding arrangements should be extended to cover the Commonwealth's special equipment programs for TAFE. This implies special arrangements for the single year 1987 with the new arrangement to apply fully in the triennium 1988-90.
6.28 The level of the proposed new equipment grant should be determined by the Government on the advice of the CTEC. However, the Committee estimates that funds of the order of $5m annually over four years would be necessary to achieve worthwhile results; this compares with total
current outlays on TAFE equipment of a little over $40m a year.
6.29 With regard to paragraph 6.27(b) above, the Committee is not intending that the Commonwealth should accept a long-term commitment to funding new technology equipment. Equipment purchases are part of the on-going operating costs of TAFE and as such are properly a
responsibility of the States. The justification for the Commonwealth's involvement is to relieve pressure on State resources resulting from high and sustained enrolment growth so as to ensure that the quality of training is maintained; the program should be revieed and adjusted accordingly in the light of future rates, of enrolment
6.30 The Committee has noted recent statements by the Government about education/industry co-operation. The Government has observed that all sectors of the economy are
interdependent: that industry expects Government-funded education institutions tà turn out' the skilled employees they require and that institutions expect funds to enable access to the latest materials and equipment. The point is made that both groups - education and industry - typically look to the Government, but it is suggested that they might also look to each oth'èr. The Committee believes that there is probably no area with greater potential for co-operation
between education and industry than in the area of access to equipment for TAFE teaching purposes.
6.31 Over a long period there has been a substantial and sustained shift in responsibility for training away
from industry to publicly-funded institution-based training in TAFE. One effect of this has been to reduce access to existing equipment for training purposes and increase the requirement on TAFE to provide the necessary facilities.
6.32 The Committee is aware of examples of donations by industry of equipment that is no longer required, or even new equipment. Arrangements also exist between TAFE
institutions and some local industry which allows TAFE students access to equipment. However, in the time
available to it, the Committee has not had the opportunity to examine either the extent of current practice or the
scope for extending co-operative arrangements.
6.33 The Committee commends to the CTEC the proposition that it should undertake a thorough review of means
appropriate to improving TAFE's access to equipment for training purposes. Without limiting the ambit of such a
review, the Committee believes it should include an investigation of circumstances where simulation is
educationally effective and cost-effective, the scope for education/industry co-operation, and measures necessary to promote co-operation. While it may emerge that there is
little scope for savings in government outlays on equipment, there is a range of benefits that accrue to students from measures that encourage closer links between education and industry.
Recurrent Grants Introduction
6.34 The area of recurrent grants for TAFE is one of considerable complexity because of the number of categories of grants involved, the multiple objectives associated with these programs, and because administrative responsibility is shared among a number of separate Commonwealth agencies.
6.35 In order to provide structure to a consideration of future arrangements, the Committee has chosen to
classify recurrent grants into three major categories;
grants associated with enrolment growth;
grants covering special course provision, mainly to meet the needs of disadvantaged groups; and
grants designed to achieve quality improvements.