The funding rates for the unified funding system (UFS) for vocational education incorporates over $240 million announced for VET in Budget 2021, and a 2.75 percent increase in tuition subsidy rates through Budget 2022. This provides for more than $850 million per year for VET provision on an ongoing basis from 2023. With the help of this additional investment, the new funding system will support the reformed VET system to deliver the skills that learners, employers and communities need to thrive.

The average funding rate to support people in work-based training will increase by approximately 50 per cent in 2023 from $4,700 per fulltime equivalent learner to $7,300 when compared to 2021 rates. Funding targeted to support learners will also increase.

In December 2021, Cabinet approved the high-level design of the UFS which brings together funding for provider-based study at levels 3 to 7 (non-degree) and for all industry training.

From January 2023, funding for VET will comprise three components: the delivery component (approximately 85 per cent of funding), the learner component (approximately 7 per cent) and a strategic component (approximately 8 per cent).

The UFS is the final structural element of the Reform of Vocational Education (RoVE), the largest transformational change in the VET sector in more than 30 years.

The UFS will incentivise VET delivery that is better focused on meeting learners’ diverse needs and their transition to the world of work, better supports employers, addresses national and regional skill priorities, and ensures a sustainable regional network of provision.

“The rates strike a good balance between recognising different costs of provision and encouraging change and are critical to achieving the improvements the Government is seeking for the VET system,” said Tertiary Education Commission Deputy Chief Executive – Delivery, Gillian Dudgeon

“The significant increases to rates for work-based learning will support education providers to better support learners to transition into work-based training as well as encourage more employers to participate in the VET system.”

There will be more support for groups of learners who traditionally have not been well served by the VET system, particularly learners with low prior achievement and disabled learners.”

The strategic component of the UFS will encourage providers to develop new approaches to deliver VET and other activities. This will be split between two elements: the national and regional skills priorities element, informed by advice from the Workforce Development Councils and the Regional Skills Leadership Groups, and the Programme Development and Maintenance Fund.

The new funding rates are expected to have differential impacts on the sector, with transition arrangements in place for private training establishments (PTEs) for 2023 and 2024. This will limit funding reductions for providers with high priority or niche areas of provision so that they have time to adapt.

“We expect that many PTEs will be well placed to quickly adapt to the new incentives of the UFS and focus on growing work-based delivery,” said Ms Dudgeon.

The TEC will inform tertiary education providers of their 2023 indicative funding allocations from 1 June 2022.

Read the Budget 22 announcement by Minister of Education, Hon Chris Hipkins.

Read the Budget21 announcement by Minister of Education, Hon Chris Hipkins

See tables below for the 2023 UFS funding rates and the unified funding system section (including definitions of the modes of delivery and subject categories) for further information.

Table 1: Delivery component rates for the five modes of delivery for 2023

Table 2: Learner component rates for 2023

Table 3: Final subsector splits for the strategic component

 * Officials are working with the wānanga through a separate workstream on funding to recognise their unique role and contribution, including where this relates to VET.