By JOHN VAN KLAVEREN
A “pattern of deterioration” has increased financial risk at Gordon Institute of TAFE, according to a Victorian Auditor-General report.
Gordon is among 14 Victorian TAFEs whose risk rating has increased from low to medium in John Doyle’s report.
The report, released on Wednesday, revealed that Gordon’s surplus was slashed from more than $13.1 million in 2012 to $589,000 last year.
Mr Doyle said Gordon’s finances mirrored a “significant decline in the financial sustainability of the sector” over the past five years.
“Disappointingly, performance reporting across the sector remains poor,” he said.
“These results suggest that many TAFEs have yet to effectively adapt to changes to the funding model announced in May 2012, designed to make vocational and employment training funding arrangements more sustainable.
“The changes have increased the sector’s reliance on other revenue streams, such as student fee revenue, in the contestable environment.”
Mr Doyle said TAFEs were $239 million in debt, an increase of $16.4 million in 2013, from loans to five institutes including Gordon.
Gordon faced downward trends in three key areas including its underlying result, the capacity for self-financing and in capital replacement, he said.
State Government and the opposition blamed each other for the parlous financial state of the TAFE sector.
Higher Education Minister Nick Wakeling said the former Labor Government bungled its attempt to reform the vocational education and training sector.
The changes exposed TAFEs to an open market “without preparing them for, or supporting them through, the process of structural adjustment”, he said.
“The report shows Victoria’s TAFEs are still working through the reform process and some are struggling to adjust to the contestable environment introduced by Labor in 2008.”
Labor shadow higher education minister Steve Herbert said Napthine Government funding cuts “wreaked havoc” on the TAFE system.
“This report paints a bleak future for Victorian TAFE providers.
“Students have seen a drop of over $100 million in state government operational funding to TAFE, as well as massive fee hikes, large-scale staff sackings, and the outsourcing of teaching.”
Gordon chief Lisa Line said the report “should be considered in light of the significant changes” which “resulted in TAFEs reviewing their operations”.
Ms Line said the report “clearly illustrates that the Institute’s financial sustainability is strong and one of the strongest in the sector”.
“Over the last five years The Gordon’s underlying result and liquidity has been the highest of all TAFEs.”
She said Gordon’s cash reserves were $52.8m, one of the highest in the TAFE sector.
“This has placed us in a positive position as we invest in innovative strategies to assist the organisation moving forward.
“The institute has a comprehensive plan aimed at continuing to improve its financial sustainability through a number of avenues.
“Furthermore the Institute has no debt. A minor finance lease is considered debt for the purpose of the analysis.”
