Premier Peter Gutwein says the government intends to introduce legislation this year to dramatically transform TasTAFE into a government business enterprise.
Mr Gutwein on Tuesday announced TasTAFE would be completely overhauled to make it more responsive to industry needs.
The announcement was met with anger from Labor and the unions - the latter suggesting it was a move towards privatisation of the training institution.
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Australian Education Union state branch president Simon Bailey said the proposed model would shift the full cost of education onto students and employers.
He said nothing in the proposed arrangements would improve the ability of teachers to deliver the flexibility employers wanted.
"TAFE teachers bend over backwards to meet the needs of industry courses start onsite at 6am, we work night shifts," Mr Bailey said.
Mr Gutwein on Tuesday said TAFE struggled under an "archaic industrial relations system".
"We have the highest number of holidays in the country - 11 weeks," he said.
"What that means is that for every five teachers or trainers we have on there are 55 weeks of holidays. We lose one teacher."
Labor leader Rebecca White said waging a war against TAFE would waste money, delay economic recovery, and result in diminished training and education.
Tasmanian Chamber of Commerce and Industry chief executive Michael Bailey said more flexibility from TAFE was critical to get more Tasmanians into work.
"For too long TAFE has been a training provider of last resort rather than a training organisation of first choice," he said.
Tourism Industry Council Tasmania chief executive Luke Martin said anybody who argued TasTAFE didn't need serious, urgent and systematic reform has their head in the sand.
Greens leader Cassy O'Connor said having TasTAFE as a government business enterprise would lead to less ministerial oversight and accountability.
"What we need here is a minister who is more hands on with TasTAFE, invests in TasTAFE, make sure it has the staff that it needs so students are getting their excellent vocational education," she said.
Housing Industry Association executive director Stuart Collins growing an industry skills base was critical to avoiding supply constraints in the delivery of new housing.
He said a stand-alone and agile TAFE would enable the state to future proof its construction workforce and deliver the skills required by industry.
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