CAPPING the money given to private training providers and passing it on to Victorian TAFE could save the financially-stricken institutes, the Australian Education Union says.
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Bendigo Kangan Institute recorded more than a $10 million operating deficit in the 2013/14 financial year, as revealed in its annual report released to the public earlier this month.
The institute blamed diminishing market share to private providers for the poor result, as enrolment levels continued to dwindle.
To reverse the funding crisis, the AEU has called on the state government to cap the amount of funding given to private providers at 30 per cent of the total $1.2 billion given to training providers, including TAFE.
AEU Victoria president Meredith Peace said the current funding model was not good for employment or the Victorian economy.
"Uncapped funding for poorly regulated private training providers has not been used to address skills shortages or employment demand and poses a real threat to Victoria's future economic autonomy," she said.
"TAFEs deliver educated and skilled people for the industries that need workers."
The AEU made the suggestion in its submission to the Victorian Vocational Education and Training Funding Inquiry.
The union claimed $300 million had been cut from TAFE funding in Victoria over four years.
Ms Peace said opening up TAFE to a competitive marketplace had been a mistake.
"The AEU's submission highlights that the market-based vocational training model is broken and has failed to deliver on what was promised," she said.
"We have seen a massive handover of public funds to for-profit training providers, but we have also seen a rapid deterioration of the quality of training provided across the board.
"Students are paying exorbitant fees only to complete their training and discover they are not job-ready."
The state government provided Bendigo Kangan Institute a $2.2 million funding advance in February to avoid immediate job losses.
The government will also roll out $320 million of funding to all TAFEs as part of its TAFE Rescue Fund.