This study has been commissioned as one of a series of reviews of national agreements established under the auspices of the Intergovernmental Agreement on Federal Financial Relations (COAG 2009). The National Agreement for Skills and Workforce Development (NASWD) [available in VOCEDplus at TD/TNC 108.1569] was agreed by the Australian, State and Territory governments in 2009 and updated in 2012. The NASWD is a high-level agreement that identifies the 'long term objectives of the Commonwealth and State and Territory Governments in the areas of skills and workforce development, and recognises the interest of all governments in ensuring the skills of the Australian people are developed and utilised in the economy'. Parties to the NASWD have agreed to 'the need for reform of the national training system to ensure it delivers the high quality, responsive, equitable and efficient training and training outcomes needed'. The NASWD's objectives are to ensure the vocational education and training (VET) system delivers a productive and highly skilled workforce; enables all working age Australians to develop the skills and qualifications needed to participate effectively in the labour market and contribute to Australia's economic future; and supports increased rates of workforce participation. This study will assess progress made by governments against the NASWD, and whether the agreement is still an effective long-term framework for government policy and cooperation.
In the context of the VET system, the review will consider specifically: (1) achievement of the objectives, outcomes, performance indicators, targets, reform directions and roles and responsibilities set out in the NASWD and their ongoing suitability; (2) options for governments to coordinate and streamline their support for vocational education in the future; (3) options for nationally consistent government funding and pricing arrangements that maximise efficiency, transparency and the supply of trained workers for the economy and promote consistency of incentives; (4) options to promote consistency in funding and loan arrangements between the VET and higher education sectors, and on any cross sector impacts that there might be; (5) options to ensure government investment in VET encourages increased participation in training by all Australians and is commensurate with the outcomes and benefits derived by individuals, business, industry, the local and national economy and society more generally; (6) potential for future funding arrangements to achieve further targeted reforms, including extending Language, Literacy, Numeracy and Digital Literacy (LLND) programs to all Australians and other relevant recommendations from the Expert Review of Australia's Vocational Educational and Training System (the Joyce review) [available in VOCEDplus at TD/TNC 136.59]; and (7) options for improved performance indicators, data and information sharing arrangements to enable all governments to assess the effectiveness of VET investment and delivery.
This interim report has been prepared for further public consultation and input. It differs from the Productivity Commission's usual draft reports in that it focuses on options rather than on draft recommendations. Key points from the report are as follows: (1) the Agreement is overdue for replacement: (a) it reflects the consensus in 2012 about how Australian, State and Territory governments should boost participation in training - including creating a national training entitlement, promoting 'user choice' led competition, and expanding access to income contingent loans; and (b) however, governments have stepped back from some of its policy aspirations; targets have not been met and the performance indicators have proved to be deficient; (2) there is a manifest capacity to better allocate the $6.1 billion in governments' spending on VET to improve outcomes; (3) governments should consider reforms to make the VET system a more efficient, competitive market, driven by the informed choices of students and employers, with the flexibility to deliver a broad suite of training options; (4) this goal should be pursued through a new principles-based agreement; this study proposes a set of principles for such an agreement; (5) based on these principles, some reform directions are clear, including: (a) supporting effective competition in service delivery by establishing clear, contestable community service obligations; (b) better data collection and transparent, comprehensive reporting of the allocation of public funds to support regular assessment of governments' policies; (c) better curated information for students and employers about career opportunities, the performance of registered training organisations (RTOs), course quality and prices; (d) reform of course pricing; and (e) a single national regulator; (6) there are various options for reforms to VET funding, which will require further consultation and assessment; reform options include: (a) expanding access to VET Student Loans by relaxing loan caps and course and qualification restrictions, underpinned by strong risk management; this may be a preferred option to any additional subsidies; (b) simpler subsidy arrangements, such as: (i) binding arrangements on all governments to apply a nationally-consistent set of course subsidies, based on the efficient cost of delivery, with loadings to address higher delivery costs in some locations and to some student groups; or (ii) replacing the proliferation of granular subsidy rates for courses with a limited range of subsidy rates, but otherwise leaving jurisdictions to set their own subsidy levels and allocation; (c) using student vouchers instead of subsidy payments to RTOs to facilitate user choice; and (d) moving away from, or complementing, incentives to employers to train apprentices by using other approaches to support apprentices, including mentoring and pastoral care; and (7) regardless of the extent to which State and Territory governments adopt a common national approach to subsidies, there are strong grounds for them to use common methods to measure costs and determine loadings.
The Productivity Commission also acknowledges that this review is being undertaken while [Coronavirus Disease 2019] COVID-19 has forced short-term lockdowns and is probably driving longer-term changes to the economy. Beyond the immediate disruption for students, employers and VET providers, the pandemic may lead to structural changes in the VET sector and encourage innovative delivery of training. Interested parties are invited to examine the interim report and to make written submissions by Friday 17 July 2020. The Productivity Commission will finalise its report after these processes have taken place and expects to report to the Australian Government by November 2020.
Edited excerpts from publication.
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