With all the focus being on tax, it might have seemed that last week’s Federal Budget some important issues slipped through with limited attention. One of these was the Victorian Auditor-General’s 2026 Report on Free TAFE.
The Auditor-General’s Report delivered a clear and uncomfortable conclusion for policymakers that will have national ramifications. It found that in essence, while Free TAFE has increased participation in selected TAFE courses, there is little evidence the model is delivering outcomes commensurate with its enormous cost to the taxpayer, where Free TAFE has cost more than $718 million in fee-waivers alone since 2019.
This is exacerbated by the significant likelihood that it is the subsidy-based initiative as opposed to labour market demand and student preference that is driving enrolment behaviour.
The Report did confirm some success in the Free TAFE program in terms of driving enrolments into government-prioritised courses and that those students have saved money in terms of tuition fees (but not ancillary costs).
But the Auditor-General’s analysis raises a much larger question: at what cost has this come to students, taxpayers, and the broader training market?
Most strikingly, Auditor-General found that Free TAFE “costs the government more per enrolment than comparable government-subsidised training” while students in Free TAFE courses achieved “similar outcomes to students in other TAFE courses and students who studied the same courses at private providers.”
That finding alone should trigger serious policy reconsideration.
The Auditor-General found the Victorian Government was paying between 33.4 per cent and 94.2 per cent more per Free TAFE enrolment than comparable subsidised training elsewhere in the system. Yet despite this level of expenditure that is up to almost double that in other subsidised programs, the Auditor-General found no significant improvement in participation by most priority or disadvantaged cohorts.
In fact, “the proportion of students from priority cohorts in Free TAFE courses has not significantly changed.” But that is not what the training sector and the public have been told. To other RTOs and business this will feel like they have been caught up in a pretty unsophisticated phishing scam.
The implementation of Free TAFE has severely distorted the training system in Victoria and that distortion is now embedded to the detriment of Victorian students and business. This matters greatly because it has national implications. The Auditor-General also found that independent providers delivering equivalent courses delivered often stronger outcomes than TAFE.
The consequence, in Victoria and now at a national level, is a structurally uneven skills training system and an economy in which public institutions receive more than 74.3% of government subsidies but support less than 16% of student enrolments with than huge investment. This kind of investment intervention while not using available evidence is starting to feel like government-led market failure.
The model in Victoria and nationally, forces the market sector of the economy to compete and be recognised on price and not quality because taxpayer subsidies are being directed to prop up public entities.
We shouldn’t abandon public investment in our skills system. Instead, we should refocus and redirect it towards a genuinely student-centred model where funding follows learners, where high-quality providers compete fairly, with taxpayer investment tied to measurable outcomes.
There are growing pressures on all providers including TAFEs in terms workforce shortages and support services, as well as operational capacity. These capacity issues are being exacerbated by Free TAFE, not being solved by it.
Felix Pirie
ITECA Chief Executive Officer
Further Information —
If you have any questions regarding the above, please contact the ITECA team at [email protected].