VET fees, subsidies and prices across Australia

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Dark blue image that reads staff blog

Written by Nicky Wonder. Nicky has a Master of Economics from the Australian National University and has worked as an economist for several years in the private sector, and more recently in the public sector. Nicky joined the National Skills Commission in 2020, with a focus on VET sector pricing and funding.

The opinions expressed in the staff authored blog are those of the author/s and do not necessarily represent the position or policy of the National Skills Commission or the Australian Government.

Our new analysis (available here) confirms the substantial variation in fees and subsidies for government funded vocational education and training (VET) qualifications across Australia. This is observed even for a government-funded student studying the same qualification.

These findings have been gathered through the first national collection of information on VET qualification government subsidies, student fees and prices (the sum of the government subsidy and student fee) across Australia. This collection was undertaken in 2020 with input from states and territories and assistance from Deloitte Access Economics.

What are the key findings of the collection?

Overall, the project identified the different amounts paid for VET courses by students and governments across the country. This is driven by the varying extents to which:

  • government contributions to VET (i.e. via government subsidies) are available for qualifications and to students across jurisdictions;
  • government subsidies contribute to the full price paid to a provider for a qualification, with students paying the balance in fees;
  • funding differentials between private and public providers are attached to qualification price, and the visibility of these differentials; and
  • states and territories collect fee data for qualifications eligible for government subsidies.

These differences exist despite all jurisdictions basing their subsidies predominantly on the cost of delivery, and at a high level, similarities in approaches to calculating cost. Different jurisdictional assumptions around cost per hour, the number of hours delivered, and the proportion of the price that receives a government subsidy lead to substantial differences in what governments and students pay providers for a given course.

Further, different fee structures around the country result in more substantial variation in the total amount paid to providers for delivering VET in some jurisdictions when compared to others. While some states have fixed fees for government funded qualifications, others allow providers to set fees (with, in some cases, guidelines around fee setting) leading to variability in prices within jurisdictions as well as between them.

The database reveals:

  • The average VET student can expect to pay a fee of about $1,100. Fees increase with qualification level (the overall average is about equal to the expected Certificate IV fee). Certificate I fees are as low as $100 on average, while the average fee for an Advanced Diploma is $3,400. Many students have access to fee-free training through concession arrangements or fully subsidised courses.
  • On average, 87% of the price is covered by government subsidies for apprenticeship/traineeship delivery, compared to 76% for non-apprenticeship/traineeship training, with students paying the remainder as a fee. The relative shares paid by governments and students ranges substantially across qualifications, jurisdictions and qualification levels.
  • The average price observed across the full scope of data collected as part of this study is $7,700. However, prices vary for students accessing the same qualification in different jurisdictions, with ranges averaging over $3,000 (and in many cases exceeding $10,000) where more than one jurisdiction price is observed.
  • Substantial price variation (in some cases exceeding $10,000) exists within the same field of education or qualification level.
  • However, when considering the most popular qualifications, there is less variation in the average and total cost than the above more granular findings might indicate.

The chart below shows the variation in total price paid for a group of popular qualifications. This is observed at the provider level, rather than the state or territory level, which shows the further variation in pricing across the country.

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Demonstrates price ranges up to $40,000 by the type of certification

 

Even at the state level, however, for popular qualifications such as the Certificate III in Individual Support or the Certificate III in Plumbing, the average price in the most expensive state or territory can be more than twice the state or territory with the lowest average price. The range of jurisdictional prices for some high volume qualifications are shown in the table below.

Qualification

Subsidy
(%)

Fee

(%)

National average price (weighted)

Minimum jurisdiction price

Maximum jurisdiction  price

Certificate III in Individual Support (non A/T)

86%

14%

$5,700

$3,500

$11,100

Certificate III in Early Childhood Education and Care (non A/T)

83%

17%

$6,600

$3,600

$13,600

Certificate III in Electrotechnology Electrician (A/T)

93%

7%

$16,000

$12,900

$27,700

Certificate III in Plumbing (A/T)

95%

5%

$21,700

$13,200

$29,700

Certificate III in Business Administration (non A/T)

75%

25%

$4,100

$2,200

$8,100

Certificate III in Commercial Cookery (A/T)

94%

6%

$12,300

$10,600

$15,900

What are the impacts of price variation?

The observed variations raise questions relating to the potential impacts of this variation and whether impacts are limited to provider revenue, or if they extend to students and differing opportunities based on where they live. Some potential implications of the varying funding and price arrangements observed as part of this collection are proposed below:

  • Visibility of the fees government funded students pay varies across the country, but overall, is low. Jurisdiction approaches to collecting fee data from government contracted training providers, and qualifications eligible for subsidies, vary. In some jurisdictions, fees are set by the government. In others, actual fee payments are reported to the state or territory agency (and hence used in our database) while in some the data are not collected (and hence not readily available). Our collection included a website-based data collection to collect fee data directly from provider websites where there was otherwise low availability. We found limited transparency of fees, even for government subsidised courses and providers, from provider websites. This means that across Australia, students can currently have limited visibility on what fees they can expect to pay to enrol in a given course.
  • The price paid to a provider differs substantially across markets for the same qualification. This data collection has shown that the total price paid to a provider bears a close resemblance to the government subsidy level within that jurisdiction. This has implications for how providers charge students across states (both in their full-fee and government funded markets), what courses they offer, how they deliver them, and the extent to which they generate profits and continue to innovate and invest in future quality of delivery.
  • Different access to government funding for providers and students. There are two aspects to this, both from a qualification funding lens and a student eligibility criteria lens:
    • State and territory governments determine the list of qualifications eligible for a government subsidy within their jurisdiction. As a result, student access to government funded courses differs across the nation. To the extent that this also impacts provider decision-making relating to their scope of delivery and further investment in qualification delivery, it may also impact the availability and quality of training to students (whether on a subsidised or fee for service basis).
    • States and territories also have differing student eligibility rules, which determine if an individual is able to receive a subsidy. While the implications of these criteria have not been considered in detail as part of this study, course and student eligibility criteria could combine to present students with different education opportunities across the country.

What are the contributing factors?

There are two driving forces behind the observed variation:

  1. Differences in state and territory pricing approaches and funding models; and
  2. Variation in the cost of delivering training across Australia.

First, however, it is noted that some variation arises because of differences between jurisdictions in how data was collected. The aim of the data collection was to collect the most readily available, or the most standard subsidy and fee, that would apply to a given qualification. That is, a subsidy or fee that would apply to a typical pathway through the course with no additional funding applied due to location (regional and remote delivery locations) or student characteristics (e.g. additional funding for students with disabilities).

The extent to which data were available in this ‘standard’ form differed by state and territory. As a result, in some cases, different underlying data sources were used. Some jurisdictions provided standard publicly available data while others provided past RTO payment data or reported fee payments. Where past payment data were used, the intent was to only capture standard enrolments, however this was not always possible.

Relatedly, the way in which providers receive government contributions to training delivery may impact reporting and hence the data collected. For example, in some jurisdictions a provider is paid based on the total qualification price (and the government’s share of that contribution). In others, payments are based on the units of competency delivered (where unit prices themselves may differ). Where past payment data was used, the results may be impacted by these payment and recording approaches.

Differences in state and territory pricing approaches and funding models

As highlighted earlier, policy differences around subsidy rates and fee setting (as well as differences in how the data was collected) likely account for most of the variation we have observed. However, as discussed below, we are also interested in testing whether there are underlying differences in the cost of delivering VET across Australia, once these are taken into account.

Variation in the cost of delivering training across Australia

Some variation may be driven by differences in the cost of delivering training in different locations across the country. While the cost collection aimed to collect subsidies, fees and prices for standard students only, there may be some practical differences between jurisdictions that are not captured. For instance, the differing levels of remoteness across states may mean that a ‘standard’ student in one state would be classified as regional in another.

There may be very real variation in the cost of delivering training across these locations that is captured in this data collection. This has implications for any future, nationally coordinated, approach to VET pricing. A more thorough understanding of the extent to which this differentiation is based on cost is required to understand how well this differentiation is operating and is serving providers and students in an appropriate way.

In a national market with consistent definitions and settings around these locational and student loadings, these would ideally be captured through other means (i.e. loadings, other funding measures, concessional fees, etc.).

Where to next?

The National Skills Commission is developing a framework for pricing VET courses. This will be based on a survey of RTO information and cost data, which is being used to determine the efficient cost of training delivery and develop efficient prices for VET. Engagement with RTOs to collect cost data and more thoroughly understand the costs to training delivery has already begun. Efficient prices will be developed over the remainder of 2021 and into early 2022.

The goal of this work is to develop and implement a framework that will benefit all users and stakeholders with more consistent and transparent prices. An efficient price is not the lowest price observed in the market. It is the price that delivers quality outcomes for that qualification.