THE Rudd Government is looking to use a voucher-style scheme to pay for the 20,000 extra skills training places it will offer from next month.

Private companies will be encouraged to compete against publicly run TAFE colleges for the funding.

Special tenders for the places were released last week and the Government said it wanted the Industry Skills Councils to highlight where the shortages were the keenest.

As the funding is on top of existing programs, Labor is looking at using the funding infrastructure of the Howard government's Work Skills Vouchers to pay for the training. The old voucher system, much in demand by business, expires next month.

The TAFE sector has urged caution in the use of vouchers - whereby students choose a course and use the voucher to pay for it - saying the price set by the previous government did not cover all costs and encouraged cheaper, shorter courses that did not deliver a lasting lift in the skills base.

Deputy Prime Minister Julia Gillard's office said the Howard government's vouchers did not provide the higher level training places, known as CertificateIII qualifications, that industry needed.

TAFE Directors Australia chief executive Martin Riordan said a mix of public and private was welcome but the value of the vouchers had to be right. "The price signals in the vouchers took no account of the cost of our infrastructure," he said.

Announcing the tenders last week, Prime Minister Kevin Rudd said the places would be for certificate levels II and III, and would focus on four areas of acute skills shortage: mining and construction, health and community services, the motor industry, and service industries such as travel and tourism.

Group Training Australia chief executive Jim Barron said a mix of public and private providers would be needed to meet the skills needs. "It gets down to one word: capacity," he said. "And given the paucity of the funding that has flowed through to the public sector for many years, there is a lack of capacity and (so the) private sector will be needed."

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