The Federal Government could face a few challenges in its attempt to take over TAFE funding from the states.

The New South Wales and Victorian Governments have signalled a lack of support for the move, which would see vocational education and training (VET) fees deregulated.

Under the proposed changes, state government-owned colleges would be funded at the same level as private training providers.

The Federal Government’s draft plan says states will be allowed to provide extra funds to government-owned providers, “but only to the extent necessary to achieve competitive neutrality with non-government providers”.

The plans for the reform have been released ahead of the next COAG meeting between the Prime Minister and state and territory leaders in March.

The Federal Government says everything is in draft form for now, set to go through a “process of refinement” before being taken to COAG in March.

Victoria and NSW want to help guide that refinement, and hope to learn from recent VET FEE-HELP funding scandals.

“I'm not confident to be looking at a national VET sector or skills sector until such time they can clean up the mess,” NSW Skills Minister John Barilaro told reporters this week.

“[It] has impacted on students being burdened with very large debts, with providers who are now falling over and not being able to complete students' training.”

“We need a system that puts students first but most importantly completion rates first, and at this stage I have no confidence that we can get that at a national level.”

“How can the Turnbull Government be trusted to run TAFE when they can't even control VET FEE HELP?” Victorian Training and Skills Minister Steve Herbert said.