IPART:
Pricing VET under Smart and Skilled Final Report
Government response
Smart and Skilled is a major reform of the NSW
vocational education and training system. The
reform is being staged with an entitlement for
training commencing on 1 January 2015.
In 2013, the Government asked the NSW
Independent Pricing and Regulatory Tribunal
(IPART) for advice on an approach to determine
prices, fees and subsidies for Smart and Skilled.
IPART consulted widely on an issues paper and its
draft report before preparing its final report.
In its final report, Pricing VET under Smart and
Skilled, IPART made 44 recommendations covering
the price of training and the contribution to be made
by students (fees) and by government (subsidies).
IPARTs recommendations were considered by the
independent NSW Skills Board, which advised the
Government to support most of the IPART
recommendations. The Skills Board also made
recommendations to manage the impact of price
changes on students and other stakeholders.
The Government accepts IPARTs advice that the
price for training should reflect the efficient cost of
delivery, and that loadings for higher cost
disadvantaged students should be paid on top of
that price.
It also accepts that the contribution made to the cost
of training by students and government should be
based on the benefits derived from that training.
IPART recommended that student fee contributions
for an initial qualification should on average range
from 35 per cent for Certificate II-III qualifications to
50 per cent for Diploma and Advanced Diploma
qualifications.
NSW DEPARTMENT OF EDUCATION AND COMMUNITIES MAY 2014
2014
The Government recognises the need to balance
affordability for students while maximising the funds
available to support as many training places as
possible.
To ease the impact on students and following advice
from the Skills Board, student fees in 2015 will be
lower than recommended by IPART.
From 1 January 2015, the student fee contribution
for an initial qualification will on average range from
25 per cent for Certificate II-III qualifications to 40
per cent for Diploma and Advanced Diploma
qualifications.
The Government will retain fee exemptions for
Aboriginal students and students with a disability.
Concession fees will be retained for students in
Foundation Skills courses and qualifications up to
and including Certificate IV.
There will be no concessions for Diploma and
Advanced Diploma students as they will have
access to VET FEE-HELP.
Transition arrangements will apply for existing
eligible students who continue their training under
Smart and Skilled in 2015. These arrangements can
be found at www.training.nsw.gov.au
The Governments response to each of the IPART
recommendations is detailed in this report. More
information on Smart and Skilled, including the 2015
schedule of prices, fees and subsidies can be found
at www.training.nsw.gov.au
The full IPART Final Report can be found at
www.ipart.nsw.gov.au
WWW.TRAINING.NSW.GOV.AU 1
 IPART Final Recommendations
1. Base prices should reflect the efficient costs a Registered
Training Organisation (RTO) will incur for a standard student.
2. Each base price should comprise a total variable cost component
and a fixed cost component.
3. Establish variable costs by:
estimating the cost of standard and high cost units of
competency (UoCs) across 25 different industry groups
applying the estimated variable costs from 2014/15
the Department of Education and Communities determining
the typical combination of UoCs that make up the course or
qualification.
4. To establish fixed costs:
courses and qualifications should be categorised into 5
qualification levels based on the typical amount of time taken
to complete them.
apply the estimated fixed costs from 2014/15.
5. Base prices should not vary with the mode of delivery.
6. Monitor combinations of UoCs delivered to assess whether
differences warrant changes to the approach for establishing
variable costs.
7. Loadings applied to base prices to reflect the additional costs of
training high cost students include:
Location: 10% for regional students and 20% for remote
students.
Needs: 10% for long-term unemployed students, 15% for
Aboriginal and Torres Strait Islander (ATSI) students and
15% for students with a disability.
8. Use the Australian Bureau of Statistics Remoteness Area Classes
to define regional and remote. Eligibility for these loadings
should be determined by the students postcode.
NSW DEPARTMENT OF EDUCATION AND COMMUNITIES MAY 2014
Government response
Supported.
Supported.
Supported.
UoCs were priced by Field of Education
in line with national standards.
New pricing arrangements will
commence from 2015.
DEC used the requirements of the
specific occupation and Training
Packaging rules to determine the typical
combination of UoCs that make up a
qualification and whether any UoCs
need to be classified as high-cost.
Supported.
New pricing arrangements will
commence from 2015.
Supported.
Supported.
Typical pathways for each qualification
on the NSW Skills List have been
mapped to determine a base price.
Pathways for brand new qualifications
will be mapped to determine the base
price.
Supported.
Supported.
The Government will not pay location
loadings for online students as this
mode of delivery will not incur additional
costs due to the students location.
WWW.TRAINING.NSW.GOV.AU 2
 IPART Final Recommendations Government response

9. For the needs loadings:

Eligibility for the ATSI loading will be established by DEC. Supported.

Eligibility for the disability loadings should be based on receipt
of a disability support pension.
Support in principle. In line with the
current policy, disability loadings will
also be available for students who can
demonstrate that they have been
assessed for their support needs by an
appropriate professional specialist.

Eligibility for the long-term unemployed loading should be Not supported. Eligibility for loadings for
based on receipt of unemployment benefits for longer than 12 the long-term unemployed will be
months. determined by evidence from Job
Services Australia (JSA) that a student
has been registered as unemployed for
52 weeks or longer.
10. Maximum of one location loading and one needs loading per Supported.
student.

11. Community Service Obligations (CSOs) for TAFE NSW and Adult Support in principle.
Community Education (ACE) support services is government
policy. TAFE and ACE will make these services available to TAFE NSW and ACE will be encouraged
students enrolled with other RTOs. Over time, these services to provide specified services to VET
should be made contestable. students generally.

12. Language, literacy and numeracy needs should be provided Supported.

through co-enrolling in Foundation Skills courses.
Foundation Skills students who have not completed Year 12 or
equivalent should be charged 50% of the relevant Foundation Skills
course fee.
Not supported.
Students co-enrolling in Foundation
Skills courses who have not completed
Year 12 or equivalent will pay the full
Foundation Skills course fee which will
on average be 10 per cent of the base
price.

13. The Government should determine where thin markets are Supported.
warranted and it can negotiate an additional cost per student it is
willing to pay.
14. Thin market CSOs should reflect the additional costs to provide Supported.
training taking account of budget and net benefits the training will
provide.

15. Thin markets should be defined as one where at least one RTO The Government will define a market by
has the capacity to deliver the training but no RTO is willing to do qualifications on the NSW Skills List
so for the available funding. delivered in specific locations. The
Government will undertake market
testing through the Smart and Skilled
Provider Application and establish
criteria to determine which of these
qualifications and locations are social
obligations that warrant a CSO.

NSW DEPARTMENT OF EDUCATION AND COMMUNITIES MAY 2014 WWW.TRAINING.NSW.GOV.AU 3

 IPART Final Recommendations Government response

16. The Government should undertake annual market testing to identify Supported.
thin and robust markets.
Market testing to identify thin markets
will occur through the Smart and Skilled
application process and be reviewed
annually.

17. CSO funding for thin markets should be contestable within 3 years. Supported.

18. Agreed thin market payments should be available for 3 years Supported.
(regardless of whether the market remains thin for this period).

19. In thin markets where no CSO is provided, an accredited RTO
should be able to receive the base price and other applicable
funding and charge more than the regulated student fee.
Not supported.
Where the Government deems that a
qualification is not a priority for CSO
funding, the RTO delivering the training
will not attract any government subsidy.

20. Industry should work with RTOs to increase capacity in thin Supported.
markets and Government to allow accreditation at any time during
the year.

21. Thin market budget should be reviewed each year to ensure it is Supported.
cost effective

22. Students undertaking their first qualification should pay, on Methodology supported.
average, 40% of base prices in fees.
In 2015 the Government will set fees
23. Student contributions should vary by qualification level: below the IPART averages.
Certificate I, II and III fees should be, on average, 35%.
Certificate IV fees should be, on average, 40%. Average student fee as a
Diploma/Advanced Diploma fees should be, on average, 50%. percentage of base price

2015
Cert II - III 25%
Cert IV 30%
Dip & Adv 40%
Dip

Fee and subsidy methodology will

include lower subsidy for lower priority
qualifications. This will be part of the
NSW Skills Boards annual review of the
NSW Skills List.

24. Eleven industry areas based on NSW Industry Training Advisory Supported.
Bodies (ITAB) industry classifications used to calculate each
qualification level.

25. For first post-school qualifications a separate average fee per Supported.
industry area be calculated for each qualification level for
qualifications with low nominal hours.

NSW DEPARTMENT OF EDUCATION AND COMMUNITIES MAY 2014 WWW.TRAINING.NSW.GOV.AU 4

 IPART Final Recommendations Government response

26. Fees for subsequent VET qualifications average 45% of base Methodology supported.
prices.

27. Student fees for subsequent qualifications should vary according to Lower average student fees will apply.
the level of the qualification:
Fees for Certificates I, II and III should be, on average, 40%. Average student fee as a
Fees for Certificate IV should be, on average, 45%. percentage of base price
Fees for Diplomas and Advanced Diplomas should be, on
average, 55%. Jan 2015
Cert II - III 30%
Cert IV 35%
Dip & Adv 45%
Dip

28. Average fees for subsequent qualifications should be calculated for Supported.
11 industry areas at each qualification level.

29. For subsequent qualifications, a separate average fee per industry Supported.
area be calculated for each qualification level for qualifications with
low nominal hours.

30. Sharing costs of part qualifications and skill sets between fees and Supported.
subsidies should be the same approach as for full qualifications.
31. Foundation Skills students should pay on average, 10%. Supported.
Foundation Skills students co-enrolling that have not completed Not supported. Such students will pay
Year 12 or equivalent should be charged 50% of the relevant fee. on average 10 per cent of the base
price.

32. Group Foundation Skills courses across qualification levels where Supported.
the time to complete is similar and calculate a 10% average fee for
each on the base price of all courses in the group.

33. Define fees as a maximum and allow RTOs to charge up to 50% Not supported.
less.

Decide on deregulating fees after the first major reset of The Government will consider the option
base prices and fees in 2017. of fee deregulation in the future.

34. In principle, the fee arrangements for apprentices and new entrant Partially supported.
trainees should be consistent with those for other students.
Apprentice fees will be capped in 2015.

NSW DEPARTMENT OF EDUCATION AND COMMUNITIES MAY 2014 WWW.TRAINING.NSW.GOV.AU 5

 IPART Final Recommendations Government response

35. In practice, apprentice fees should transition towards levels Partially supported.
consistent with other students.
New-entrant traineeship fees should be treated the same as Supported.
other first post-school qualifications.
Cap apprentice fees at $2,500 in year one; and increase by Not supported.
$1,000 per year until fees reach the target level.
The NSW Government will apply a lower
capped fee for apprentices of $2000 in
2015.

36. Concession fees should vary by qualification level. Supported.

37. Concession fees from 2014/15: Partially supported.

Foundation courses at Statement of Attainment or Certificate I
level - $100. Diploma and Advanced Diploma
Other Certificate I $150. students will not receive concessions as
Certificate II $200. these students will have access to VET
Certificates III and IV $300. FEE-HELP loans.
Diploma/Advanced Diploma $400.
The NSW Government will apply lower
concession fees for Foundation Skills
and Certificate I-IV than those
recommended by IPART. A higher
proportion of disadvantaged students
undertake these courses.

The following concession fees will apply

from 1 January 2015:

Concession Fees Jan 2015

Foundation $80
Cert I $120
Cert II $160
Cert III & IV $240
Dip & Adv Dip -

There will be specific fee arrangements

for eligible transition students who
commenced training before 31
December 2014, to continue in
government subsidised training in 2015.
See www.training.nsw.gov.au

38. Publish RTO performance information to help students and Supported.

employers assess potential providers quality.
Smart and Skilled providers will have
reporting requirements included in the
contract arrangements.

NSW DEPARTMENT OF EDUCATION AND COMMUNITIES MAY 2014 WWW.TRAINING.NSW.GOV.AU 6

 IPART Final Recommendations Government response

39. RTOs should publish information on any personal costs a student Supported.
will incur.
40. Timing of payments to RTOs should match its incurrence of costs. Supported.

41. RTOs should have discretion over the timing of student fee Supported.
payments.
Training providers will need to comply
with fee protection mechanisms
determined by the National Skills
Standards Council.

42. Recognition of Prior Learning (RPL) subsidy and fee payments Supported.
should be set at 50%.

43. Ensure base prices and student fees continue to reflect efficient Supported.
costs and an appropriate sharing of costs between students and
the Government by:
Adjusting prices and fees by the Consumer Price Index.
Adjusting base prices to reflect changes in training packages,
where necessary.
Advise providers of adjusted base prices and fees in November
of the previous year. New prices and fees should apply only to
new enrolments.
Review prices and fees in time for the price change on 1
January 2017 and then review every 3 years.

44. Regulation of student fees should be relaxed progressively: Partially supported.

Provide information to training providers to improve
contestability, including enrolments by qualification by region, DEC will publish information on the
number of loadings and concessions by region. NSW VET market.
Following the first major review of prices, conduct a further
review determine if and how fee regulation should be further Fee deregulation will be considered as
relaxed or removed, and apply any changes from 1 January an option in the future (see
2018. Recommendation 33).

NSW DEPARTMENT OF EDUCATION AND COMMUNITIES MAY 2014 WWW.TRAINING.NSW.GOV.AU 7