The impacts of chronic Victorian government underfunding on vocational education and training and the sustainability of public TAFE provision.
Victoria’s vocational education system sits at the heart of Victoria’s economic and social infrastructure. It trains the workers in critical sectors – the care economy, construction and housing, the energy transition – that are core to the state’s productivity. Yet the TAFE system in Victoria is not resourced or structured to perform this role effectively, now or into the future, as presented in this report.
Our evidence suggests that the gap between what TAFE is expected to deliver and what they are funded to deliver is widening, which places structural constraint on workforce development, service delivery, and long-term economic capacity.
This report examines that gap across four analyses. It draws on the Productivity Commission’s Report on Government Services, Victorian Auditor-General’s Office (VAGO) audits, three waves of the AEU State of Our TAFEs survey (2013, 2023, 2025), an independent audit of 2026 TAFE timetables, NCVER data, and the Victorian Government’s Skills First subsidy schedule. Across every strand, one picture emerges: Victoria’s funding model prioritises enrolment over delivery quality, and the cost is being absorbed by students, teachers, and the industries that depend on them.
Victoria funds the lowest per-hour VET delivery of any state in the country, sitting $1.92 below the national average for every hour of training delivered. That shortfall works its way through the whole system. In 2025, 54.4 per cent of teachers reported having hours cut from courses they teach, meaning they are absorbing the difference by putting in close to seven unpaid hours a week. This results in 47.6 per cent of teachers intending to leave the sector in five years. On an adjusted basis, only one of the twelve standalone TAFEs recorded an operating surplus in 2025.
This matter impacts beyond education. Roughly 43 per cent of Australian workers are employed in TAFE-aligned sectors, and those sectors are among the least exposed to displacement by artificial intelligence, around 23 times lower on exposure than university-aligned occupations. This means that the state is underfunding the institutions that train the future workforce necessary for the state.
Our report covers:
- Part 1: Funding structures
- Part 2: Course delivery, contact hours, and student outcomes
- Part 3: Course Hour Reductions: prevalence, persistence, and structural drivers
- Part 4: The public good and economic contribution of TAFE
- Pillars of structural reform