Bills Digest No. 35  1998-99 Australian National Training Authority Amendment Bill 1998


Numerical Index | Alphabetical Index

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
Main Provisions
Endnotes
Contact Officer and Copyright Details

Passage History

Australian National Training Authority Amendment Bill 1998

Date Introduced: 12 November 1998

House: House of Representatives

Portfolio: Education, Training and Youth Affairs

Commencement: Royal Assent, except for the provision that ANTA is not liable to pay State taxes which is to apply retrospectively from 21 December 1992.

Purpose

The purpose of this Bill is

  • to amend the Australian National Training Authority Act 1992 in order to
  • reflect the terms of the revised ANTA Agreement, and
  • provide that the Australian National Training Authority (ANTA) is not liable for State and Territory taxes; and
  • to amend the Vocational Education and Training Funding Act 1992 to provide Commonwealth funds to ANTA for allocation to States and Territories in 1998 and 1999.

Background

Background to this legislation

This Bill replaces the Australian National Training Authority Amendment Bill 1998 which was introduced into the House of Representatives on 24 June 1998 and which lapsed when the election was called on 31 August 1998.

Background to Australia's vocational education and training system

The Australian National Training Authority (ANTA) was made possible by an agreement between Commonwealth, State and Territory heads of government announced on 21 July 1992. The ANTA Agreement(1) was a compact shaped, on the one hand, by an offer made in 1991 by the Commonwealth government to assume full financial responsibility for vocational education and training, and, on the other hand, by the determination of the States and Territories to preserve their control of the system, despite their inability to fund it adequately because of budgetary constraints.(2)

Prior to the 1970s, the Commonwealth played a limited role in technical and further education in Australia. In 1973 the Commonwealth Government established the Australian Committee on Technical and Further Education, chaired by Myer Kangan,(3) which led to the creation on 1 July 1975 of the first Commonwealth Technical and Further Education Commission. As a result, a funding partnership developed between Commonwealth, State and subsequently Territory governments. In the 1980s, Commonwealth grants to the States for TAFE were provided for both capital and recurrent purposes, although recurrent funding remained principally a State responsibility.

Surveys of Australia's vocational education and training (VET) system which were carried out in the 1980s, revealed that Australia compared poorly with other OECD countries.(4) They showed that the system was largely confined to apprenticeships in traditional trades with some full-time courses in business studies. The system was ill-equipped to respond to the needs of industry and the demands of the modern workplace which required the broadening and deepening of skills, and broader personal and social competence to deal with changes in work organisation, workplace relations and technology. The Commonwealth government was concerned at the large gap between the skills available in the labour market, and those needed to drive the economy, especially in a newly deregulated economy exposed to international competition.

In partnership with the States and Territories, the Commonwealth's aims were:

  • to encourage expansion and participation in vocational education and training
  • to improve the relevance of TAFE and the use of Commonwealth funds to meet the Commonwealth's objectives
  • to improve productivity and efficiency
  • to increase industry involvement and the diversity and flexibility of the sector, and
  • to enhance the employment prospects of the unemployed, the young and disadvantaged groups.

A reform agenda was developed within a co-operative framework, and was informed by a number of government commissioned reports.(5) It was in this context that the Commonwealth offered in 1991 to take over the funding of the TAFE system. However, reluctance by the States to lose responsibility for the vocational education and training sector, which they regarded as integral to their economic interests, led in July 1992 to a compromise agreement on a national co-operative system for training management.

The ANTA Agreement

The Agreement was given effect by the Australian National Training Authority Act 1992 and subsequent supporting State and Territory legislation. The Act established the Australian National Training Authority (ANTA) to be responsible for the joint resources of the Commonwealth, State and Territory governments in the VET sector. States continue to manage vocational education and training but within a national framework determined by the Ministerial Council (MINCO) which directs the system. MINCO consists of one Minister from each State, Territory and the Commonwealth. In deciding matters where a vote is necessary, each State and Territory has one vote and the Commonwealth has two votes and a casting vote. The functions of ANTA include allocating and remitting funding to State and Territory training agencies on the basis of guidelines determined by the Ministerial Council, and administering any programs agreed by the Ministerial Council as requiring national delivery, within the guidelines approved by the Ministerial Council.

Under the terms of the initial Agreement which came into force on 1 January 1994, the Commonwealth agreed to provide growth funds, provided that the States and Territories maintained their own levels of funding. Eighty per cent of growth funds were to be distributed on the basis of population and 20% on performance 'against agreed objectives and other relevant factors'.(6)

From 1 January 1995, the funding arrangements under the States Grants (TAFE Assistance) Act 1989 were replaced by funding arrangements under the Vocational Education and Training Funding Act 1992. Under these arrangements, a single pool of funds comprising the previously separate recurrent expenditure grants and capital expenditure grants is passed to the Australian National Training Authority (ANTA) for allocation among the States and Territories. Funding decisions are made consistent with a national strategic plan for vocational education and training based on agreed national objectives and priorities. Commonwealth funds make up approximately 30% of monies spent on the vocational education and training system in Australia.

Since coming to power, the Coalition Government has continued to work within the ANTA framework. Some areas of priority to the Government are:

  • ensuring that business, including small and medium enterprises, is given a leadership role in the VET system and that there is broader business participation on the ANTA Board
  • giving schools an increased role in vocational education as providers of accredited training, particularly for students seeking to begin apprenticeships and traineeships while they are at school, and
  • funding off-the-job training for new apprenticeships, allowing employers and their trainees to choose the provider to deliver their training. Under the new 'user choice' arrangements, public funding will be allocated to the training provider selected by the client (in this case, the employer acting together with their apprentice or trainee). Clients will be able to select any registered provider, either a TAFE institute or a private provider, and negotiate aspects of the content, mode of delivery, location and timing of training, within a framework of endorsed competency standards and costs established by government.

Reviews of the ANTA Agreement

The operation of the first ANTA Agreement has been reviewed both by the Senate Employment, Education and Training References Committee (Report of the inquiry into the Australian National Training Authority, November 1995) and by a special committee chaired by Mr Rae Taylor AO (Review of the ANTA Agreement, February 1996). Both reviews have supported the general direction of the reforms. They have been critical of the slow pace of change resulting largely from the need to integrate, through agreement, eight State and Territory systems, and of the overly bureaucratic and complex training structures which seem to have little relevance to the needs of industry.

Many achievements have been acknowledged including a significant increase in the number of students gaining access to vocational education and training; the development of competency based standards and training in a number of industries; the availability of accredited training in new areas; national curriculum development; improvements in links between schools, TAFE and industry; the training wage; and innovative partnerships between schools, industries and training institutes.

Issues identified as potentially the focus of further policy development include increasing industry involvement; increasing competition in the training market; the effectiveness of competency based approaches to learning; the development of assessment and quality control procedures; the performance of TAFE; and improving links between the education sectors. In particular, the Senate Employment, Education and Training References Committee recommended that:

  • the ANTA Agreement specify what is meant by the term 'industry', and make more explicit the Agreement's expectations of industry with respect to its responsibilities for shaping, and contribution to the maintenance of, the national training effort (Recommendation 10)(7)
  • ANTA adopt a triennial approach to the development of State Training Profiles and to the funding of the VET sector (Recommendation 13)(8)
  • an independent education and training specialist be appointed to the Board of ANTA (Recommendation 19)(9)
  • membership of the ANTA Board be extended to seven, comprising three members from industry, one from the small business sector, one from the trade union movement, one education and training specialist and one member with a rural/regional background (Recommendation 20).(10)

In 1997 the Government issued its response to the Senate's inquiry into the Australian National Training Authority. The Government indicated that it would be seeking to address a number of the Committee's recommendations, together with the recommendations of the Review of the ANTA Agreement, in its negotiations with the States and Territories for a new ANTA Agreement in 1997. In particular the Government said that 'it is envisaged that, under a revised ANTA Agreement, there will be streamlined planning and improved accountability arrangements to replace the current State Training Profiles'.(11)

The revised ANTA Agreement

Negotiations for the revised ANTA Agreement took place in 1997. The Commonwealth offered to enter a new agreement on the basis of a funding guarantee for five years at the level of 1998 funding, while the States would be expected to provide additional student places through efficiencies. The States and Territories did not accept the Commonwealth's offer of a five-year agreement on the terms proposed.

In April 1998 Commonwealth, State and Territory vocational education and training Ministers reached consensus on a revised three-year funding agreement. Under the revised ANTA Agreement, the Commonwealth will maintain funding in real terms ($904.144 million in 1998) for the three years 1998 to 2000 and the States and Territories have agreed to the principle of growth through efficiencies. The revised Agreement also locks in a reduction in annual funding announced in the 1997-98 Budget. From 1 January 1998 the Commonwealth has reduced annual funding to the States and Territories to provide an incentive for them to achieve efficiency gains through, for example, benchmarking their VET activities against the most cost-effective States.(12) This reduction is equivalent to $20 million in the 1998 calendar year.

The text of the revised ANTA Agreement is in Schedule 1 of this Bill. The purpose of the Agreement is to provide the basis for a partnership between the Commonwealth, State and Territory governments and industry to develop and refine a national vocational education and training system (paragraph 2). The revised Agreement stresses the leadership role of industry in decisions to be made about the system (paragraph 2(i)). One key objective is to increase the investment in training made by industry (paragraph 4(v)). The previous Agreement talked of a 'close interaction between industry and vocational education and training providers' to ensure a system which reflected industry's need and priorities.

The revised Agreement also has the purpose of enhancing national recognition of VET courses and awards (paragraph 2(ii)) and the objective of improving mobility in the labour market (paragraph 4(ii)). Another purpose is to improve the efficiency of the provision of vocational education and training. The previous Agreement expressed a similar objective in terms of promoting 'an efficient and productive network of publicly funded providers that compete effectively in the training market'.

The Agreement sets out in detail the roles and responsibilities of the Ministerial Council, ANTA, the State Training Agencies, and the Commonwealth. Unlike the previous Agreement, it does not detail industry's roles and responsibilities in this section. Under the revised Agreement the Ministerial Council continues to be the peak body in the system and retains its role in relation to the allocation of Commonwealth funds.

The revised ANTA Agreement includes some new planning and accountability arrangements. These are:

  • a medium term 'National Strategy' for vocational education and training that will identify key performance measures which are to be agreed (paragraph 19)
  • an annual statement of agreed national priorities based on the National Strategy (paragraph 21)
  • State and Territory planning documents. Each State and Territory is required to provide the Ministerial Council with an annual VET Plan that will include its response to the national priorities document and report on progress measured against the National Strategy (paragraphs 23-26). Paragraph 32 provides that States and Territories will not receive any Commonwealth funding, except for national programs and projects, unless their annual VET Plans for that year have been considered and agreed by the Ministerial Council
  • an annual national report which will be tabled in Parliament (paragraphs 27 and 28).

The Commonwealth has agreed to maintain its current level of funding in real terms for the life of the Agreement, and the States and Territories have agreed to maintain their level of activities (paragraph 29 and 30). In addition, within guidelines to be agreed by the Ministerial Council, each State and Territory will negotiate bilaterally with ANTA on the development of mechanisms to identify efficiencies, measure outcomes and plan for future growth requirements (paragraph 31). In the context of these negotiations at the Ministerial Council Meeting in November 1998, the States have revised their initial estimates of delivering 44,000 additional places to 55,000.

Main Provisions

Amendments to the Australian National Training Authority Act 1992 (the Principal Act)

Item 2 defines the Agreement as the Australian National Training Authority Agreement, the text of which is set out in Schedule 1 of this Bill.

The effect of items 6 and 7 is to substitute a definition of 'national strategy' as used in the Agreement for the previously preferred term 'national strategic plan'.

Item 3 refers to the 'annual VET plan'. This replaces the 'State training profile' as the planning document required to be prepared by each State and Territory for agreement by the Ministerial Council. Item 9 repeals the definition of a 'State training profile'.

Item 16 repeals the subsections of the Principal Act which deal with the allocation of funds under the initial Agreement. This reflects the fact that under the revised Agreement the Commonwealth will not be providing growth funding. It substitutes a provision that States will not receive funding for programs, other than national programs or projects, unless their annual VET plans for that year have been approved by the Ministerial Council.

Item 17 concerns the payment of tax by ANTA. The original intention when ANTA was created was that it would not be subject to State or Territory taxes but this has not been the effect of the current provisions. Item 17 provides that State taxes will not be payable retrospectively from 21 December 1992, the day on which the Australian National Training Authority Act 1992 commenced (subsection 2(2) refers).

The effect of item 19 is to replace the initial ANTA Agreement with the revised Agreement in Schedule 1 of the Principal Act.

Amendments to the Vocational Education and Training Funding Act 1992

General funding to the Australian National Training Authority for dispersal to States and Territories is provided by the Vocational Education and Training Funding Act 1992 (the Principal Act). The amendments to this Act deal with the Commonwealth's contribution to ANTA for 1998 and 1999.

The effect of item 1 is to increase the amounts appropriated for 1998 and 1999 by:

  • incorporating into the general allocation funding previously allocated specifically to support off-the-job training for new apprenticeships. This amount is $21 546 000 in each of 1998 and 1999, and
  • increasing the total amount of funding from $890 545 000 to $904 144 000 in line with normal price adjustments based on Treasury indices.

Item 2 omits the special appropriations for off-the-job training to reflect the fact that these have been incorporated into the general funding.

Endnotes

  1. The Agreement was first known as the National Vocational Education and Training System Agreement (NVETS) but soon came to be known as the ANTA Agreement after the Australian National Training Authority which it established.

  2. Senate Employment, Education and Training References Committee, Report of an inquiry into the Australian National Training Authority, November 1995, 1.

  3. Kangan, Myer, Technical and further education in Australia, Australian Council on Technical and Further Education, April 1974, Govt. Printer, Canberra, 1975. (Parliamentary paper no. 203 of 1974)

  4. For example, the Committee of Inquiry into Labour Market Programs (Kirby Report) commissioned in 1984, and Review of TAFE Funding (Deveson Report) 1986.

  5. The National Training Reform Agenda (NTRA) is the term used to describe a loose collection of policy initiatives agreed by Commonwealth, State and Territory Government which commenced in the late 1980s directed at improving the quality, flexibility and responsiveness of the VET system to meet the needs of the modern workplace. Some of the reports commissioned at this time include The Training Cost Review (Deveson Committee) 1990, the Finn Committee (1990), the Mayer Committee (1991) and the Carmichael Report (1992)

  6. Section 33 of the Schedule to the Australian National Training Authority Act 1992.

  7. Senate Employment, Education and Training References Committee, op cit, 34.

  8. Ibid., 44.

  9. Ibid., 61.

  10. Ibid., 61.

  11. Government Response, Senate Employment, Education and Training References Committee Report of the Inquiry into the Australian National Training Authority, Canberra, 1997, 2. The Senate Committee recommendations that the Government said it would be addressing in the context of the development of a revised ANTA Agreement are numbers 1, 2, 4, 9, 10, 12, 13 and 14.

  12. Budget Measures 1997-98, (Budget Paper No. 2, 40). For a critical discussion of VET funding see the Senate Employment, Education and Training Legislation Committee, Consideration of Legislation Referred to the Committee: Vocational Education and Training Funding Amendment Bill 1997, September 1997.

Contact Officer and Copyright Details

Rosemary Bell and Carol Kempner
25 November 1998
Bills Digest Service
Information and Research Services

This paper has been prepared for general distribution to Senators and Members of the Australian Parliament. While great care is taken to ensure that the paper is accurate and balanced, the paper is written using information publicly available at the time of production. The views expressed are those of the author and should not be attributed to the Information and Research Services (IRS). Advice on legislation or legal policy issues contained in this paper is provided for use in parliamentary debate and for related parliamentary purposes. This paper is not professional legal opinion. Readers are reminded that the paper is not an official parliamentary or Australian government document.

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ISSN 1328-8091
© Commonwealth of Australia 1998

Except to the extent of the uses permitted under the Copyright Act 1968, no part of this publication may be reproduced or transmitted in any form or by any means, including information storage and retrieval systems, without the prior written consent of the Parliamentary Library, other than by Members of the Australian Parliament in the course of their official duties.

Published by the Department of the Parliamentary Library, 1998.

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