The NSW government will spend up to $2 million recruiting new executives to oversee TAFE as it prepares to cut up to half the vocational education provider's guaranteed funding.

The restructure will see eight new "executive leadership team positions" created to take charge of the state's vocational education and training sector, taking home salary packages of up to $243,000 each according to pay guidelines published by the NSW Public Service Commission

The hiring spree comes as the guaranteed TAFE NSW budget looks set to be slashed in half, according to a document seen by Fairfax Media based on estimates prepared by the NSW Department of Industry and Skills. Under the state government's Smart and Skilled reforms the public provider has been forced to compete for funding with up to 400 private colleges.