In a shocking announcement just weeks before Christmas, the Victorian Government revealed drastic skills funding cuts set to take effect in 2025.
The timing has left many independent Registered Training Organisations (RTOs) grappling with an uncertain future, with some facing the grim reality of closure and others preparing to break the devastating news of staff layoffs during the festive season.
With a 35% reduction in subsidies for training delivered in metropolitan Melbourne and 91 courses removed from the training needs list, the changes are poised to devastate independent Registered Training Organisations (RTOs). These high-quality institutions have long been instrumental in preparing workers for key industries, including aged care.
While the government claims the cuts are part of a strategy to align funding with future workforce needs, critics argue the policy favours public TAFEs, funnelling money from RTOs into a system that has been proven to have lower course completion rates.
Despite this move being criticised as short-sighted, public backlash against the Victorian Labor Party’s funding cuts has been muted, largely due to fear among those in the sector.
“People are scared to speak out,” one industry insider, who wished to remain anonymous for fear of career repercussions, said. “I know people who have been told explicitly that criticising the state Government could cost them their jobs or contracts”
Shifting the Balance
The Victorian Government has defended the cuts as necessary to align funding with the state’s current and future workforce needs.
Priority funding has been allocated to skill areas such as housing, construction, and clean energy, as well as foundation skills programs. In contrast, funding for many metropolitan programs has been slashed, with the government arguing that subsidies were too high relative to delivery costs.
But critics contend the changes reflect a broader bias against independent providers in favour of public TAFEs and dual-sector universities. “This is an attack on private entities,” the industry insider said..
“The government is reallocating what little money is left in Victoria to the public sector, despite its well-documented inability to meet demand or achieve high completion rates.”
The Role of RTOs in Victoria’s Skills Ecosystem
History shows that RTOs have been integral to Victoria’s economic development, equipping students with industry-focused, specialised training that addresses critical workforce shortages. They account for 87.6% of the 1,057,155 students in skills training across the state, demonstrating their dominance and effectiveness in meeting workforce demands.
This diverse sector includes 806 private RTOs, 55 community colleges, 13 independent enterprise providers, and 29 secondary schools. These institutions deliver the majority of Victoria’s skills training, while the 44 public providers, including TAFE, dual-sector universities, and government secondary schools, play a supporting role.
Independent RTOs consistently outperform public TAFEs in student outcomes, satisfaction, and job readiness. Data from the Victorian Government highlights their superiority:
Completion rates also tell a compelling story. While TAFEs provide broad-based training, independent RTOs excel in delivering targeted, high-quality programs that align closely with industry needs. For instance:
The reallocation of funds from RTOs to public TAFEs is a central aspect of the government’s reforms. While public TAFEs are essential to the state’s training ecosystem, data shows that they have lower completion rates, and also trail RTO’s in responsiveness to industry needs, and scalability.
“This is an intentional move to prop up TAFEs at the expense of independent providers,” the insider said. “The government is pouring money into a system that can’t handle the volume or deliver the outcomes that private RTOs consistently achieve.”
Evidence from other states supports these concerns. In South Australia, a similar reallocation of funding to public TAFEs led to a decline in training quality and accessibility. Faced with overwhelming demand, TAFEs were unable to keep pace, forcing the state to reverse course and reinvest in independent providers.
The aged care sector is already grappling with staffing shortages and increasing demand, a situation exacerbated by Australia’s ageing population.
Independent RTOs are instrumental in providing aged care training, often placing students in on-the-job training programs that allow facilities to recruit directly from their pool of trainees.
“Many aged care facilities rely on partnerships with independent providers to source new graduates,” the insider said. “Placement programs are a win-win: they give students valuable experience and allow employers to cherry-pick the best candidates without the cost of formal recruitment.”
Under the new funding regime, the pool of graduates entering the aged care workforce could shrink dramatically.
“The immediate impact won’t be felt, but in six to 12 months, aged care providers will see fewer graduates available for recruitment. This is the opposite of what the government claims to be prioritising—high-needs sectors like health and community services are being left out in the cold.”
Perhaps the most significant consequence of the funding cuts is their impact on students. Independent RTOs provide tailored support, smaller class sizes, and industry-aligned training that TAFEs often cannot match.
“Most students in aged care and community services courses come from low-income or migrant backgrounds,” the insider explained. “They rely on government-funded programs to access education. By pushing them into TAFEs, the government is limiting their options and setting them up for lower success rates.”
Moreover, the insider highlighted the contradiction in the government’s priorities. “They talk about needing workers in high-demand sectors like aged care, but their actions are cutting off the pipeline of graduates. It’s short-sighted and damaging.”
As Victoria’s VET sector grapples with these sweeping changes, the future remains uncertain. Many industry experts believe a balanced approach is needed—one that values both public and private providers and recognises their unique contributions to the state’s workforce development.
“There’s no doubt we need reforms,” the insider concluded. “But cutting funding for independent providers isn’t the answer. We need to work together to ensure students have access to the best possible training, regardless of where they study. If we lose our high-quality private RTOs, we’re not just hurting them—we’re hurting students, employers, and the broader economy.”
I am not in VIC however, in principle, the plan looks good to me. There are too many RTOs collapsing or not delivering what they promise students. If the RTO you have paid for your course, does not deliver as it becomes insolvent, too bad, you loose your money or maybe you’ll get a few cents back on the dollar. I am suspicious of the figures quoted in the article about people choosing RTOs over TAFE as it doesn’t show how many places were available at each form of institution.
I agree with the idea of funding TAFE so that the cost of education can be within the reach of more people. Back in the day, before the 1990’s when there was the establishment of the AQTFs which saw establishment of many RTOswe have now, TAFE was a financially viable option for a lot of people, not so now.
There’s a reason so many RTOs have popped up, they not altuistic… they make the owners a LOT of money, that’s the reason they have flourished. We might need ‘our high-quality private RTOs’, I just question how many are presenting courses that are high quality and how many are there just to rake in the money for their owners.
I’m not sure where you get these positive figures from re RTO,s. Naturally the students rate them highly because they do very little to gain their certificates and ultimately a passport. The standard is low, primarily set up to provide low rate education to foreign students. TAFE provided consistent high quality courses which took longer but funded was reduced. The standard of education has plummeted by the introduction shonky RTO,s. Do I have proof yes first hand. These is little effective compliance with a recent college having 6500 certificates revoked. That is the tip of the iceberg.
It is well known in the sector that Aged Care training from private providers is well below par, I have heard people gaining a Cert 3 in 6 weeks and doing it online without any face to face or quality skills training before students complete their 120 placement in industry. Good that more funding is going to TAFE where quality training and assessment is provided. I have witnessed first hand the results of poorly trained carers in industry, it has had many negative affects on the quality of care provided to our most vulnerable citizens.