News that Victoria's TAFE sector is in financial strife has underlined the catastrophic impact of the government's market reforms in further education and training.

Only two TAFE institutes recorded an operating surplus last year, according to Skills Victoria data reported today. Operating losses across the system totalled $30.5 million, with Swinburne University TAFE alone recording a $6.1m loss.

It is a further blow to students in training and vocational education and to Victoria's economic future, coming on top of $48m cuts to the state's applied learning certificate, VCAL.

And it sends an urgent warning to the Federal Government which is attempting to spread Victoria's market experiment to the rest of Australia.

Growth in the skills sector has come almost entirely from the private sector after the State Government opened up TAFE funding to the market. But the growth comes with a serious health warning about course quality.

AEU TAFE members have reported some dodgy providers offering cut-price courses — including a six-month advanced diploma completed in just five days, students left to find their own placements and even a diploma in counselling offered by correspondence course.

AEU TAFE deputy VP Greg Barclay said: "We are gambling with the futures of our students and the state — the skills training that TAFEs provide has driven the Victorian economy and if courses are cancelled due to lack of funding, private providers will not be able to pick up the pieces."