Bills Digest no. 63 2007–08
Skills Australia Bill 2008
WARNING:
This Digest was prepared for debate. It reflects the legislation as
introduced and does not canvass subsequent amendments. This Digest
does not have any official legal status. Other sources should be
consulted to determine the subsequent official status of the
Bill.
CONTENTS
Passage history
Purpose
Background
Financial implications
Main provisions
Contact officer & copyright details
Passage history
Skills Australia Bill
2008
Date
introduced: 13
February 2008
House: House of Representatives
Portfolio: Education, Employment and Workplace
Relations
Commencement:
On the day on which it
receives the Royal Assent
Links: The
relevant links to the Bill, Explanatory Memorandum and
second reading speech can be accessed via BillsNet, which is at
http://www.aph.gov.au/bills/.
When Bills have been passed they can be found at ComLaw, which is
at http://www.comlaw.gov.au/.
The Bill establishes Skills
Australia, a new statutory body that will provide independent
advice to the Government on current, emerging and future workforce
development and workforce skills needs.
The establishment of Skills Australia was part of the Australian
Labor Party s (ALP) 2007 election policy strategy to address skills
shortages.[1] Skills
Australia, a high level board of seven experts, comprising
economic, industry, academic and education expertise, is to provide
independent advice and recommendations to Government about
Australia s skills needs, based on research, analysis and
consultations.
The introduction of this legislation during the first
Parliamentary sitting week, and the establishment of a Skills
Australia Implementation Group, as an interim measure until the
legislation is passed, is indicative of the priority the new
Government is giving to implementing its strategy for addressing
skills shortages and curbing inflation.[2]
Skills Australia has a significant role in this overall
strategy. It will be on the basis of the advice received from
Skills Australia that the Government will allocate promised new
training places directly to industry sectors.[3] The Government has promised funding for
an additional 450,000 vocational education and training (VET)
places (over four years) as well as promising that existing places
will continue to be funded under existing arrangements .[4] More than a third of
these new places are to be allocated to people outside, or
marginally attached to the workforce, and the remainder to employed
people needing to upgrade their skills. Some 20,000 of these new
VET places for those outside the workforce are to be made available
from April 2008.[5]
The ALP has promoted the merits of its new strategy for the
allocation of new training places as demand driven i.e. driven by
industry sector needs. Allocation of places will be according to
industry demand, and based on the advice received from Skills
Australia. The
Skilling Australia for the future: Election 2007 policy
document outlines how this direct allocation of places to
industry sectors will be achieved. Funding for the places will be
provided to the strengthened and better resourced Industry Skills
Councils (ISCs). The ISCs are to allocate the places to employers
through a tender process, and then the ISCs will commission the
corresponding training packages from training providers. Funding of
the ISCs will be outcomes oriented in that the ISCs will only
receive part of the funding for each place upfront and the
remainder only on the successful completion of training.[6]
This new strategy will be partially funded
through the abolition of the former Coalition Government s
Australian Skills Vouchers programme which the ALP critiqued as
being supply driven.[7] Labor has estimated the net cost of its Skilling
Australia package at $539 million (i.e approximately $1,172 million
over four years, less $633 million in offsets).[8] The Australian Skills Vouchers
programme was a Commonwealth Government student centred funding
programme i.e. Commonwealth dollars followed the student to the
training provider through the voucher.[9] This arrangement effectively involved
the Commonwealth in direct purchasing/funding arrangements with
education and training providers. The vouchers, worth up to $3,000,
could be used with training organisations that had been approved by
the Department of Education, Science and Training (DEST) to provide
voucher eligible courses. During the 2007 election campaign the
former Coalition Government promised an additional $392.9 million
for this programme, adding to the $408 million that had already
been committed. This was based on estimates of 60,000 vouchers a
year.[10]
Introduced as part of a strategy to raise the
skills of the adult workforce, the Australian Skills Vouchers were
made available to, in order of priority: unskilled workers wanting
to obtain qualifications, income support recipients facing active
job search requirements, unemployed jobseekers receiving income
support and involved in active job search, and people not in the
labour force who intended looking for work after obtaining their
qualification. They were provided to people aged 25 and over,
without Year 12 or equivalent qualifications, to undertake
accredited literacy/numeracy and basic education courses and
Certificate II courses.
The target groups for both the former Coalition
Government s Australian Skills Vouchers and the ALP s new Skilling
Australia programme are therefore very similar. However, the
Australian Skills Vouchers were only provided for lower level
qualifications in the ALP s view another disadvantage of this
programme. The Skilling Australia programme therefore includes
higher level qualifications, thus expanding its potential
reach.
Press articles record support from the Business Council of
Australia, the Australian Industry Group (albeit cautious) and TAFE
Directors Australia for the establishment of Skills Australia when
it was announced in 2007.[11] Support was influenced by concern about the shortage of
skilled labour, interest in improving the forecasting of skills
shortages, and the expectation that a useful contribution could be
made by a well-resourced body focused on industry needs.
The former Coalition Government s Minister for Vocational and
Further Education, Mr Andrew Robb, was reported to have been
critical of the proposal on the grounds that it would add another
layer of bureaucracy and do nothing to solve the skills
shortage.[12]
Higher education policy analyst and columnist for The
Australian Gavin Moodie has expressed scepticism about the
overall strategy on a number of fronts. Insofar as Skills Australia
s advisory role he says, no country anywhere at any time has
successfully forecast work force demand over the period needed to
plan education places and there is nothing to suggest federal Labor
s work force forecasting would succeed where all others have failed
. With regard to the proposed strategy for allocating places based
on the advice of Skills Australia, Mr Moodie challenges the ALP s
claims that it moves from a supply driven system to a demand driven
one. He sees it more as a move away from being a supply system
driven by state training departments to one where supply is driven
by the Industry Skills Councils. Furthermore he believes that
whereas the former Coalition Government s funding policies had been
moving towards reducing the divisions between vocational and higher
education, this allocative mechanism would likely increase the
divisions.[13]
This Bill does not provide for appropriations not for Skills
Australia nor for the proposed new training places.
Skills Australia will be funded through appropriations to the
Department of Education, Employment and Workplace Relations (DEEWR)
and will be allocated $14.6 million for the 2007-08 to 2010-11
funding period.
As indicated earlier, the ALP s estimates of the total cost of
its Skilling Australia policy (including additional funding for the
ISCs) was $1,172 million over four years, and offset by some $633
million savings from the abolition of the Australian Skills
Vouchers programme, its net impact would be $539 million.
Skills Australia is part of the Government s new industry
focused VET funding programme which effectively replaces the
Australian Skills Vouchers programme of the former Coalition
Government. The programme involves a new process for the
identification of skills needs, and for the allocation and
purchasing of training. There may be debate about the relative
merits of the two programmes, and whether they are based on supply
or demand driven allocative mechanisms. However, as a programme
that involves the Commonwealth directly in the funding and
purchasing of services from training providers, it effectively
continues the former Coalition Government s interest in greater
Commonwealth control over the allocation of its funds than that
afforded by the system of grants provided to the States and
Territories under the Skilling Australia s Workforce Agreement (the
Commonwealth outlays approximately $1.3 billion on these grants
annually).
Amy Owen, a strategic analyst and former technical and further
education (TAFE) manager acknowledges the merits of this programme,
including the expertise of ISCs and the likelihood that it will
deliver very significant growth to Australia s vocational training
effort . However, she has this to say about its likely effect on
the Commonwealth s influence
these arrangements are predicated on an
unprecedented degree of centralised control over the distribution
of training effort. They bypass the states and territories, current
user choice mechanisms and other direct client-provider training
transactions, and institutionalise Commonwealth controlled entities
as the sole brokers of relations between employers and training
providers.[14]
Another feature of this policy is that the funding will be made
available to training providers on a contestable basis. A key issue
for the TAFE sector will therefore be its capacity to compete and
benefit from this area of funding growth, particularly important to
the sector if there were to be no change in levels of funding under
the Commonwealth/State funding arrangements.[15]
A key question therefore is with Skills Australia and the ISCs
promoted as having such a key role in the allocation of new and
future training places, what are the implications for the level and
distribution of the Commonwealth s grants to the States and
Territories to support them in the running of their VET systems,
and in particular their TAFE institutes?
The ALP has said it will maintain the existing arrangements for
grants to the States and Territories. However, the levels of
government funding under these arrangements have been in contention
for some years. They have remained relatively static, while the
sector has been expected to grow to meet the needs of a growing
economy. The sector is responding to funding pressures through
increased fees/charges levied on individuals for publicly supported
courses, and increased revenue seeking activities such as offering
fee-for-service and full fee courses. In support of increasing the
private sources of revenue available to the VET sector, the
Commonwealth Government has introduced income contingent loans to
assist some full-fee paying VET students. Some even advocate the
broader application of such loans to include assistance for
students doing publicly supported courses.[16] However, despite these efforts to
expand private funding options, the broad ranging needs and
clientele served by the VET system, and by TAFEs in particular, may
well mean that better targeting of government funding to support
clients with special needs may well be required, particularly if
there is no increase in government grants funding.[17]
The Coalition Government had flagged its intention to review the
Commonwealth/State funding arrangements as part of the negotiations
for the new Skilling Australia s Workforce Agreement that will take
place during 2008. It was proposing funding arrangements that were
more like those applied in the higher education sector, where there
would be funding of actual places (rather than the current
curriculum hours), therefore allowing for specific courses to be
funded, and for providers to operate as independent
businesses.[18] It
remains to be seen what a new funding agreement under the new ALP
Government will entail.
Another key question is what will be the full scope of Skills
Australia s role given the prominence it will have as an
independent, statutory authority?
At present, advice to Government on skills and labour market
needs is available from a number of sources, for example:
On account of its status as a statutory body, comparisons might
be made between Skills Australia and the Australian National
Training Authority (ANTA). ANTA was the statutory, advisory body
established in 1992 to set up a collaborative national training
system. To do this it had to operate independently of all levels of
government. It was abolished by the former Coalition Government in
2005 when its functions were taken over by DEST (now by DEEWR).
However, Skills Australia s role differs in that it is being
established to advise the Minister, not the Ministerial Council. It
can also be directed by the Minister and is therefore very much
within the control of the Commonwealth Government. To this extent
it would appear not to have a formal role within the National
Training System arrangements, nor a position that might be viewed
as independent of all levels of government. ANTA also had
responsibilities for the allocation of funds and the administration
of national programmes, as well as advisory responsibilities. While
the Bill establishing Skills Australia allows for functions others
than those specified to be conferred on Skills Australia, it is
unclear at this stage whether the Government has any plans to
extend its role beyond that of an advisory body, and beyond that of
providing advice to the Commonwealth Government through the
Minister.
The provisions of the Bill are relatively self-explanatory and
are outlined in the Explanatory Memorandum. A brief overview of the
structure of the Bill is presented here
The Bill is in five parts:
Part 1 of the Bill contains preliminary
matters. Clause 4 sets out the object of the
proposed Act which is to provide for expert and independent advice
relating to Australia s workforce skills and development needs.
Part 2 deals with the establishment and
functions of Skills Australia. Subclauses 6(1) and
(2) specify that the primary function is providing advice
to the Minister.[19] Additional functions are provided under
subclauses 6(3) and (4). They include a public
information role (paragraph 6(4)(a)) and any
functions directed by the Minister in writing
(paragraph 6(4)(b)).
Clause 7 provides for directions to be given by
the Minister to Skills Australia. According to subclause
7(2) the directions given by the Minister must be of a
general nature only. Under subclause 7(5) this
advice is not a legislative instrument under the Legislative
Instruments Act 2003.[20] Subclause 7(3) prevents the Minister
from giving directions to Skills Australia about the content of any
advice they might prepare.
Part 3 provides for the constitution and
membership of Skills Australia including appointment terms,
remuneration and other terms and conditions, disclosure of
interests, resignation and termination. Clause 8
provides for a Chair and six other members. Subclause
9(1) requires that the Chair and members be appointed by
the Minister; and subclause 9(2) that they have
experience in academia, the provision of education and training,
economics and industry. Under clause 18 the
Minister may terminate the appointment of a member if, amongst
other things, the Minister is satisfied that the performance of the
member has been unsatisfactory for a significant period. Neither
the Bill itself, nor the explanatory memorandum contains any
guidance as to what would constitute unsatisfactory performance .
There is, similarly no guidance as to the duration of a significant
period .
Part 4 deals with the conduct of meetings of
Skills Australia including convening, presiding over, the
requirement for a quorum of a majority of current members, voting
and decision making, and the establishment of committees.
Clause 24 does provide that Skills Australia may
make decisions without holding a meeting. Subclause
24(2) requires Skills Australia to first determine the
nature of the decisions that are to be made without a meeting and
the method by which members will vote in respect of those
decisions. Clause 25 provides for Skills Australia
to establish committees to assist in the performance of its
functions, the conditions under which they may be established, and
their operating requirements. Under subclause
25(9) decisions to establish a committee, the Minister s
approval of committee members and directions are not legislative
instruments.
Part 5 deals with miscellaneous issues
including clause 26 which deals with the
engagement of staff, and clause 27 which requires
Skills Australia to provide the Minister with an annual report on
its operations for presentation to Parliament. The report must
include details of any directions given to Skills Australia by the
Minister under paragraph 6(4)(b) or subsection 7(1) during the
year.
The author wishes to thank Paula Pyburne for her consideration
of the legal issues, and for her inclusions and enhancements to the
Main Provisions section of this Bills Digest.
Carol Kempner
20 February 2008
Bills Digest Service
Parliamentary Library
© Commonwealth of Australia
This work is copyright. Except to the extent of uses permitted
by the Copyright Act 1968, no person may reproduce or transmit any
part of this work by any process without the prior written consent
of the Parliamentary Librarian. This requirement does not apply to
members of the Parliament of Australia acting in the course of
their official duties.
This work has been prepared to support the work of the Australian
Parliament using information available at the time of production.
The views expressed do not reflect an official position of the
Parliamentary Library, nor do they constitute professional legal
opinion.
Feedback is welcome and may be provided to: web.library@aph.gov.au. Any
concerns or complaints should be directed to the Parliamentary
Librarian. Parliamentary Library staff are available to discuss the
contents of publications with Senators and Members and their staff.
To access this service, clients may contact the author or the
Library’s Central Entry Point for referral.
Back to top