The Baird government will ramp up the privatisation of vocational training in schools, encouraging private training colleges to deliver Higher School Certificate subjects from next year.
A third of HSC students study a vocational training (VET) subject.
Until now, TAFE has dominated vocational teaching, with 24,000 school students undertaking a TAFE course that led to a HSC credential in 2014, according to the TAFE NSW annual report.
But the NSW Department of Education will put out a tender in April inviting private training colleges to bid for school courses in 10 areas, including business services, construction, environmental management, health services, tourism and hospitality and recreation services.
The organisations need to prove they own or lease premises to conduct the training externally to schools and have a lease for equipment, plus experience with 15- to 17-year-olds, the tender notice says.
Although private training organisations have been used by schools in limited circumstances, such as when there is no TAFE nearby, the NSW Secondary Principals Council says the new process will bring private colleges "to the fore".
"There will be many more private providers," said council president Lila Mularczyk.
"We need to make sure they are robust and credible providers and they have longevity and aren't a pop-up provider."
The move comes as the federal government sharpens its scrutiny of the scandal-plagued vocational college sector. The Turnbull government is conducting a public consultation into whether qualifications from private providers are "too easy" to obtain, amid complaints students are graduating without necessary skills.
NSW Teachers Federation president Maurie Mulheron said it was "too risky" to allow private VET providers into schools, describing them as "shoddy with poorly trained teachers".
"This is not something driven by educators, or in the best interests of children. It is driven by the obsession that market forces should apply to education," he said.
"Vocational training should be delivered by qualified teachers. We do not accept that private providers should be involved. The evidence is overwhelming that they are poorly regulated, they cost-cut and they have very poor completion rates."
School principals had been told the education department would work with the private providers through the process "to ensure robust delivery of the program and to ensure students obtain HSC quality", said Ms Mularczyk.
Schools had also been told there would be no additional cost, she said.
Companies selected by the department need to be registered with the Australian Skills Quality Authority, have undergone an initial audit and not have any sanctions.
A Board of Studies spokesman said schools would retain overall responsibility for monitoring HSC course delivery, and for the duty of care of students participating in external courses.
Education Minister Adrian Piccoli's office declined to comment.
A department spokesman said: "TAFE NSW already competes with other providers to deliver VET, and this will continue under the new terms of procurement."
According to the Board of Studies, private providers delivered vocational training to 2482 school students in 2015.
This compares with 18,090 school students taking a TAFE course, and 43,970 students studying vocational subjects such as hospitality at the school itself.
The Teachers Federation said privatising VET subjects would ultimately cost schools more.
"The practice has been that you shield schools from the initial outlay, then at the stroke of a pen, say it can come out of the school budget," said Mr Mulheron.
Premier Mike Baird told 702 ABC this week that he was "not ideological" about the market reforms that are forcing TAFE to compete with private colleges for government funding.
"If there is a capacity for a private provider to provide a course in a way that is attractive to students, that delivers great outcomes in terms of employment – well why not?" he told radio host Wendy Harmer.
The NSW reforms come as multiple private training colleges have been deregistered and taken to court, after pocketing hundreds of millions of dollars in Commonwealth subsidies despite student completion rates as low as 5 per cent.
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