Commonwealth Funding for vocational training will be redirected from institutions to individual students under a voucher like system wthat will force training providers to compete with each other to fill their classes.

 The Australian reports these radical changes from teh Rudd Government are expected to increase the number of private providers and foce consolidation among organisations such as TAFE's.

Under the plans, eligible students would be given entitlements to a course that could be used at either public or private organisations. It is likely to be supported by a students loan system similar to HECS used in many universities.

The scheme is being developed as one of the incentive payments to states under the reforms to state funding agreed by the COAG (Council of Australian Governments) in March this year. It is COAG's belief that organisations should be responisive to consumers, providing choice and flexiblity and that markets are the way in which it can be delivered.

The exact formula has not yet been finalised, however it is believed the process will reward states that direct funding to students, giving them choice of where they complete their courses.

Victoria is likely to be the only state claiming the incentive payment next year, although the commonwealth is confident the other states will follow suit, with general support in the working group for funding reform.

The Government believes that vocational training is fragmented into separate state markets, each dominated by government-provided TAFE colleges.

It argues that business wants national training institutions, and that market competition would encourage the development of private-sector providers and some consolidation.

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