The National Agreement for Skills and Workforce Development (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”.

The intention of this agreement is to recognise the “interest of all governments” in guaranteeing the development and implementation of skills within the Australian workforce.

NASWD’s ‘Skills and Workforce Development Review’ brings to light the “the need for reform of the national training system”, along with the call for more structure to the vocational education and training (VET) system that will, in turn, encompass high quality and efficient training and outcomes to deliver a highly skilled workforce.

The review unpacks the following concepts that directly impact the VET system.

The NASWD has identified that the National Agreement for Skills and Workforce Development is in need of a refresh.

There is the acknowledgement that some of the NASWD targets were not met, with Australian, State and Territory government suggested actions towards boosting participation in training via “creating a national training entitlement, promoting ‘user choice’ led competition, and expanding access to income contingent loans” falling by the wayside, as some governments have stepped back from these policy aspirations.

The NASWD has also stated that there is room to better allocate the $6.1 billion in governments’ spending on improving VET outcomes.

According to the report, governments should allow the informed choice of students and employers to positively influence a VET system that “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”.

This will, in turn, prompt the flexibility to deliver a broad suite of training options.

To achieve this, the establishment of a new, principles-based agreement has been proposed.

To clarify reform direction, the NASWD has suggested that a principles-based approach to influence the foundation of the VET system would introduce consistency, while also allowing governments the flexibility around policy choices – a win-win.

As the Interim Report describes, the demise of the ill-implemented VET FEE-HELP scheme and formation of the Australian Skills Quality Authority (ASQA) have done little to salvage the reputation of the VET sector.

The structural and financial inequities between TAFE and private training providers still remain, and the new VET Student Loans (VSL) program is restrictive in its nature. Many have noted that VSL has done little to address the core funding issues within the VET sector.

While regulation around quality training has been the focus over the past decade, students still lack ‘accessible information’ to make choices around training providers and course options.

Governments and the NASWD have not been able to identify the scope or nature of State and Territory obligations around providing training and funding obligations in a competitive market of providing training.

The most recent Joyce review was quick to highlight regulatory concerns in the VET sector, and ASQA is moving towards reform to improve its effectiveness as a regulator. The Joyce Review also suggested many changes to lead the transformation of the VET system, with course subsidies and updates to training packages in focus.

These recommendations have been met with the announcement of a National Skills Commission and a National Careers Institute by the Australian Government, to help kick off these changes.

The COAG Skills Council is also in talks of creating a new intergovernmental agreement that will take the NASWD’s place.

The most recent COAG VET Reform Roadmap has presented a way forward for the sector, with some major themes encompassing the simplification of training packages.

The NASWD also acknowledges the fact that the university sector is still favoured above the VET sector, and pathways between VET and higher education are still very unclear.

With the recent ‘JobMaker’ announcement and the government’s recent remarks around the need to simplify VET, the NASWD Interim Report comes at an interesting time.

There are wide calls for better a funding model, forward-thinking around skills needs, as well as more consistency across VET and higher education.

The NASWD was intended to significantly lift the skills of the workforce and improve participation in training.

Complementary statistical measures suggest mixed results from the VET sector. Employer satisfaction with nationally recognised training has decreased steadily over the past 10 years, from about 86% in 2009 to 79% in 2019.

The proportion of government-funded VET graduates who have “improved their employment status” after graduating – by becoming employed, becoming employed at a higher skill level, or receiving a job-related benefit – fell from 65% in 2009 to 58.6% in 2018.

The proportion of people without qualifications at Certificate III level or above decreased from 47.1%in 2009 to 37.5% in 2019; this will not be enough to meet the 2020 target of 23.6%.

Moreover, most of the increase is due to more graduates from higher education rather than VET.

The Report acknowledges that contemporary learning can occur outside the formal VET system for students, such as workplace learning, training through unaccredited providers and on-the-job upskilling.

It is said that 85% of this learning is funded by employers, and that most lifelong learning is non-formal.

Interestingly, the Report notes that traditionally, higher education and VET have been focused on training for obtaining jobs, whereas current upskilling needs and training are geared towards how people can retain jobs.

While the Report doesn’t address the immediate implications of this shift, it will be interesting to see how future policy is directed towards addressing this type of training in the coming years.

The Report also acknowledges that there is increasing overlap between VET and higher education, with both sectors offering training across the same fields.

There is limited policy to address this, as VET can be both “an alternative to higher education and a pathway to it”.

Importantly, the review also touches on the effect of COVID-19, and how longer term changes across industry, VET and students will most likely lead to far reaching changes, particularly in the delivery of training and impacts to the economy and skills needs.

This disruption has brought to the surface the potential for new platforms for learning, raising the questions around the need for a new agreement that supports these emerging delivery models.

With this also comes the associated need for tailored quality assurance and arrangements for funding.

The Report’s interim recommendations are as follows:

Information on VET System Performance

Australian, State and Territory governments should develop improved performance measures to provide a more comprehensive understanding of system performance.

A New Principles-Based Agreement

Common Methods for Costing

State and Territory governments should use common methods to measure costs.

Price Controls Should be Removed

Governments should not cap the prices of VET courses.

Training Package Update and Approval Processes

Further streamlining of development and updating of training content.

Quality Regulation

The Victorian and Western Australian Governments should ultimately follow other State and Territory governments in referring regulation of training organisations to the Australian Skills Quality Authority (ASQA).

Improving the Provision of VET Information

Improve the provision of information to students.

Improving Investment in Public Provision

State and Territory governments should work towards transparency, neutrality compliance and investment efficiency.

There is still a long way to go when it comes to producing skills that Australian industries need in the long-term.

This Interim Report makes it clear that the private sector will continue to be an important part of the VET training system, despite the obvious flaws and quality concerns that occurred during the VET FEE HELP scheme.

There are numerous recommendations on the direction of the VET Student Loans scheme, and how the sector could improve funding and accessibility on a more consistent, national scale.

With the role of the Report to help with the government’s objectives of increasing participation in VET, there have been clear measures identified that are effectively geared towards making training more accessible and affordable.

There are various options for reforms to VET funding, which will require further consultation and assessment.