National Agreement for Skills and Workforce Development Review: study report

The National Agreement for Skills and Workforce Development (NASWD) [available in VOCEDplus at TD/TNC 108.1569] - which commenced in 2009 and was updated in 2012 - defines the framework for intergovernmental collaboration in vocational education and training (VET). It sets out governments' roles, policy aspirations, performance measures, and reform directions for the formal VET system. The Australian Government has asked the Commission to review progress against the targets, outcomes and performance indicators in the NASWD and to assess whether it is still an effective long-term framework for intergovernmental cooperation on VET policy. Intertwined with that assessment, the Commission has also been asked to consider options: (1) to coordinate and streamline government support; (2) for national consistency in VET funding and pricing that maximise efficiency, transparency and the supply of trained workers; (3) to promote consistency in funding and loan arrangements between the VET and higher education sectors; and (4) to ensure government investment in VET encourages increased participation in training that is commensurate with the benefits. During this review there have been major skills policy developments. In November 2019, the COAG Skills Council released a Draft VET Reform Roadmap [available in VOCEDplus at TD/TNC 139.175] which set out three priority areas for improvement - the relevance, quality and accessibility of the VET system. In response to the 2019 Joyce Review [available in VOCEDplus at TD/TNC 136.59], the Australian Government established a National Skills Commission (NSC) and a National Careers Institute (NCI). And in August 2020, all governments signed a Heads of Agreement for Skills Reform [available in VOCEDplus at TD/TNC 141.854] setting out high-level directions for a new National Skills Agreement to replace the NASWD. The Commission has taken this evolving policy landscape into account in its assessment and recommendations. The review has also coincided with the [Coronavirus Disease 2019] COVID-19 pandemic. Beyond the immediate disruption for students, employers and VET providers, the pandemic may lead to substantial structural changes in the VET sector. VET policy announcements have been at the centre of government responses to the pandemic and, where possible, the Commission has incorporated these announcements in its assessments. The pandemic has highlighted the importance of VET and why 'getting the system right' is critical to meeting Australia's changing skills needs.

This report was sent to Government on 15 December 2020 and publicly released on 21 January 2021. Its key messages are that the NASWD should be replaced with a new principles based agreement, and there is manifest capacity for governments to get a better return from their investment in VET. The key points are: (1) This review has not found evidence of a VET system in crisis. Our recommendations address some of the system's acknowledged weaknesses and should build on its strengths to lift participation and improve the quality of training; (2) The NASWD is overdue for replacement: governments have stepped back from some of its policy aspirations. Targets have not been met and the performance framework has not held governments to account; (3) A new intergovernmental agreement should be principles-based, modular (to retain flexibility and currency) and reviewed every five years: Australian Government funding should remain largely untied for base funding but subject to much greater accountability and transparency; (4) Governments should continue to support the development of a more efficient and competitive VET market through informed user choice and a focus on quality: students need better curated information on career opportunities, the performance of training providers, course quality and prices; and efforts to improve quality should be ramped up through faster changes to training packages, developing an evidence-based VET workforce strategy, and a phased introduction of independent assessment; (5) There is a manifest capacity for governments to achieve a better return on the $6.4 billion spent on VET by: using the efficient costs and loadings currently being estimated by the NSC as a common basis for setting and simplifying course subsidies; introducing modest minimum student fees for Certificate III and above courses with exemptions for disadvantaged students; applying more contestability and transparency to public funding of TAFEs and enhancing the operational autonomy of public providers; and enabling State and Territory funding to follow students enrolled with an interstate provider; (6) To scale up workforce skills, governments should expand VET Student Loans (VSL) to more Diploma and above courses and to most Certificate IV courses: loan caps should better reflect course costs, and loan fees should be paid by all students; (7) Reforms to the trade apprenticeship system are best focused on: improving completion rates by better screening and matching of prospective apprentices; making pathways more flexible and providing the same subsidy for non-apprenticeship pathways as for traditional pathways; and adjusting the timing of employer incentives to provide more support when the risk of cancellation is greatest; (8) There should be a coordinated national strategy to improve school education, 'second-chance' learning in the VET sector and other adult education services to reduce the large number of Australians with low language, literacy, numeracy and digital literacy skills; and (9) To address some of the key obstacles to lifelong learning, this report proposes improvements in foundation skills, better credit pathways, an expansion of VSL and a trial of a new financing instrument for mature-age Australians reskilling and upskilling.

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