Sweeping overhaul of our vocational education and training (VET) system

Australia's independent skills and workforce advisory body, Skills Australia has recommended a sweeping overhaul of our vocational education and training (VET) system in order to help raise productivity, and address skills challenges that threaten future economic growth and prosperity.

Skills Australia has released one of the most comprehensive, national reviews of the Australian VET system to take place over the last two decades. In the landmark report, Skills Australia has recommended a series of reforms designed to produce a more flexible and market-oriented education and training system, capable of addressing projected skills shortages arising from demographic and structural changes in the economy.

Mr Philip Bullock, Chair of Skills Australia said the report examines how the sector can be best developed, organised and financed to support higher level skills and improved workforce participation.

“Australia's VET system has served the nation well but we now need to take some large strides along a path of reform that will help position the sector to meet the needs of individuals and enterprises in the future.

“The simple fact is that we need more people with higher level skills. Without significant reform, we risk missing out on many of the opportunities presented by the resources boom, and face the prospect of becoming less competitive in the global economy,” he said.

Key recommendations include:

·  Full public subsidy for those undertaking vocational courses up to and including Certificate III, and all foundation skills courses. For Certificate IV and above, a partial public subsidy, with co-funding between individuals and governments, supported through an income contingent loan.

·  Extension of Student Start-Up Scholarships to VET students on Youth Allowance, Austudy and Abstudy.

·  The creation of an industry-led „Enterprise Skills Investment Fund‟ that would consolidate a number of existing funding streams and be available to enterprises on a shared cost basis for skills and workforce development.

·  Better targeting and prioritisation of financial incentives for employers, apprentices and trainees so funds are linked to sustainable careers, or equity or priority economic objectives, and linked to workforce development outcomes.

·  A workforce development program to lift the professionalism and skills of the VET workforce.

·  Improved transparency and availability of user-friendly information on the critical performance measures of RTOs, and publication on the MySkills website.

·  A shift from input-based to output-and outcomes-based funding of training providers, including a funding model which rewards course completions.

·  Support for a National Foundation Skills Strategy through additional funding of language literacy and numeracy programs.

·  Regulation of apprenticeships and traineeships by the Commonwealth, and the establishment of a high level apprenticeship advisory body to provide independent leadership and expertise.

The report says that the reform agenda outlined will require additional funding of 3 per cent per year, or an average of $310 million each year from 2012–13 accumulating to an estimated $12 billion in 2020. This funding will be necessary to meet the cost of the expansion of VET qualifications by 3 per cent per year – the rate necessary to secure sufficient skilled workers to support projected economic activity.

It's estimated that Australia will need an additional 2.4 million people in the workforce with qualifications at Certificate III level and higher by 2015. This is required to meet projected industry demand and to address the effects of an ageing workforce and the replacement of skilled workers. Presently, the projected supply of qualified workers is well short of this.

“The VET sector has an "enabling" role in Australian society due to its reach and diversity, and its strong linkages to industry and the labour market. It is in a pivotal position to both raise the country's productive capacity, and to open up social and economic opportunity,” Philip Bullock said.

“We have the chance to deliver a more agile and responsive VET sector and one that can play a transformational role in helping to ensure future growth and prosperity for all Australians.”