Bendigo TAFE’s capital replacement ‘high risk’

An investigation into the TAFE sector by Auditor-General Andrew Greaves also found the Bendigo institute had met its target for employment costs as a proportion of training revenue, but fell short of its $242,826 target for training revenue per full-time equivalent teaching position by $4305.

While Mr Greaves rated the TAFE as “low risk” in three out of four financial stability categories, finding it was consistently generating surpluses, had no immediate issues with repaying short‑term liabilities as they fell due and was generating enough cash from operations to fund new assets, it fell into the “high risk” category for capital replacement.

The report coincides with falling enrollments across Victoria, leading the state opposition to accuse the government of using grant funding to keep the sector afloat.

Mr Greaves noted the capital replacement results were an improvement on previous years, which he attributed to a $22.6 million state government grant, including $17.7 million for a new Health and Community Centre of Excellence.

“This funding on a limited number of projects masks much lower expenditure on self‑funded asset renewal and replacement in the 2016 year than our capital replacement ratio recommends,” he wrote.

Mr Greaves found a decline in revenue from income, as opposed to grants, reduced Victorian TAFEs’ financial flexibility and fiscal autonomy, but predicted revenue growth would be maintained this year.

“The improvement in revenue in 2015 and 2016 has been driven by additional government grant funding, rather than growth in revenue. Student numbers continued to fall, and all other sources of revenue such as student fees and contestable funding declined in 2015 and 2016,” he wrote.

“The new Skills First funding model will apply in 2017. This is expected to provide opportunities for TAFEs to receive further government financial support in targeted areas. As a result, we expect revenue growth to be maintained, and there are opportunities for the financial sustainability of the sector to further improve.”

Opposition training, skills and apprenticeships spokeswoman, Steph Ryan, said the sector now relied “more on state government bailouts than their own revenue to stay afloat”, but Training and Skills Minister Gayle Tierney said the government made no apologies for investing record amounts of money into TAFE, saying “you can’t grow enrolments without making sure TAFEs are financially viable”.

“Our record investment in TAFE is already having an impact on the lives of tens-of-thousands of Victorians who wouldn’t have been able to access training if it wasn’t for the Andrews government,” she said.

"We’re only five months into our game-changing Skills First reforms which are helping to grow TAFE market share and bring students back to our trusted public providers.”

Bendigo Kangan TAFE was contacted for comment.