Budget 2011–12: Vocational education and training
The 2011–12 Budget provides for expenditure on payments to the states and territories for vocational education and training (VET) to grow from $1.9 billion in 2010–11 to $2 billion in 2011–12 and on Commonwealth own VET programs from $1.8 billion in 2010–11 to almost $2 billion in 2011–12 However, as in last year’s Budget, fiscal constraints have seen many new initiatives and priority areas funded through the redirection of funds, to the extent that even some of the measures of the 2010–11 Budget are being abandoned. The proposed $129.8 million (over three years) Quality Skills Incentive for the 100 largest Registered Training Organisations, due to commence this year, has ceased before it started. Savings of $19.2 million will also be made from the cessation of the $19.9 million (over four years) Smarter Apprenticeships program which will be replaced with another program that also aims to fast track apprenticeships, but is being afforded a larger budget (see below) (?)). Redirected again in this Budget, as in the last, is some funding from the Productivity Places Program (PPP)—both from the PPP National Partnership (which is to cease anyway) and also from the Commonwealth component of the PPP. Funding for the Vocational Education Broadband Network has also been redirected, and there has been some restructuring of apprenticeship incentives as well. 
As VET Specific Purpose Payments (SPPs) to the states have been held constant in real terms under the current Commonwealth/State agreement, the slight growth in payments to the states will be in the area of National Partnership Payments (NPPs). There will be a new NPP to provide $80 million over four years for additional Certificate Level II places for single and teenage parents on income support to help them gain work skills. In addition, the Government’s ongoing objective to drive reform in state and territory VET systems will be progressed by the incentives afforded by the new $1.75 billion (over five years) NPP which will in part be funded by some redirected, residual PPP funds. The reform agenda which will require ‘improved quality, transparency and outcomes’ will also be driven through the Council of Australian Governments’ review and re-negotiation of the agreement with the states and territories that underpins the SPP funding.
Other priority areas to benefit from the redirection of funding include the Trade Apprentice Income Bonus and the New Enterprise Incentive Scheme. Also attracting additional funding are the fast tracking of apprenticeships (now $100 million over four years), apprentice mentoring (now $101.4 million over four years) and mature workers with $30 million being provided over three years for trade skills assessment. As in last year’s Budget, the Government also continues to prioritise expenditure on foundation skills with increased funding for language, literacy and numeracy training and pre-vocational training to assist with the transition to apprenticeships (the Australian Apprenticeship Access program).
Central to the Government’s broad ranging workforce initiatives, is the plan to ‘place industry at the heart of the training effort’ with the formation of the National Workforce and Productivity Agency and the National Workforce Development Fund. However, while some additional funding has been provided for these ‘new’ initiatives, the Agency and the Fund have their origins in pre-existing arrangements. Skills Australia, the statutorily independent advisory body will transition to the new National Workforce and Productivity Agency and the Critical Skills Investment Fund provided for in the last Budget, will be absorbed by the National Workforce Development Fund.
The new National Workforce and Productivity Agency will continue in Skills Australia’s role advising the Minister on workforce skills and development and in addition will administer the new National Workforce Development Fund. It will be provided with $25 million over three years as compared with the $19.6 million over five years provided to Skills Australia. Commencing in July 2012 the National Workforce and Productivity Agency’s estimated annual expenditure will be in the order of $8.5 million whereas the estimated allocation for Skills Australia for 2011–12 was only $5 million.
The proposed National Workforce Development Fund is based on a model of funding that engages industry as a co-contributor to enterprise based training in critical occupations. This was trialled in the successful Enterprise Based Productivity Program and was then incorporated into the proposed Critical Skills Investment Fund that was allocated $200.2 million of funding over 4 years in last year’s Budget. However, only $0.2 million of the estimated annual $49.2 million was spent in the first year and the residual $200 million now forms part of the $359.3 million over four years that has been provided for this new fund.
Public education initiatives such as the Productivity Education and Training Fund ($20 million over two years) to enhance employer and employee understanding of the benefits of productivity, and the $21.8 million (over three years) information campaign to promote workforce participation and training are interesting new measures. There is also $19.1 million over three years to engage 34 regional strategists to develop regional education, skills and jobs plans. This delivers on the Government’s agreement with two Independents.
The VET measures in this Budget were delivered under the broader banner of Building Australia’s Future Workforce which included a range of other measures relating to employment incentives and services covered in the ‘Workforce participation measures’ brief in this Budget Review. Funding of $9.5 million over five years has been provided to monitor and evaluate the suite of measures introduced under this banner.