The education union is warning against privatising the vocational education sector and is imploring the federal government to give TAFE more funding.
The Australian Education Union has made a submission to the Productivity Commission's review of the vocational education and training sector, which is due to be finalised by November.
The Productivity Commission's interim review said the 2012 agreement between governments on funding was long overdue for replacement.
It also said the skills system was underperforming and excessively complicated.
The interim review says government should consider reforms to make the VET system a more efficient and competitive market.
But the union says attempts to make the sector more competitive have been catastrophic.
"Competition and contestable funding has flooded the market with inferior private providers," the submission says.
"There are now over 4600 active registered training providers, but only 96 of these providers have more than 100 full-time students."
AEU federal president Correna Haythorpe says governments should consider TAFE the anchor institution of vocational education, and boost its funding to help the economy rebuild.
"A strong, fully-funded TAFE sector must be at the centre of the Commonwealth's response post COVID-19 so that Australia emerges in the best-possible social and economic condition," she said.
Australian Associated Press