The 2022–23 Budget contains several
key measures in vocational education and training (VET), with
significant funding allocated to apprenticeship incentives and skills reform.
However, the new spending measures will not significantly
offset a rapid decline in Australian Government expenditure on VET over the
forward estimates, driven by the cessation of temporary measures in response to
COVID-19, as well as several funding agreements with states and territories.
Funding trends
Australian Government VET expenditure consists of:
Budget strategy
and outlook: budget paper no. 1: 2022–23 (pp.
150 and 168) shows total VET funding is estimated to peak at approximately $7.1
billion in 2021–22 and fall to $4.2 billion by 2025–26.
Parliamentary Library analysis (Figure 1 below), based
on Budget paper no. 1: 2022–23 (pp. 150 and 168) and Final
budget outcome papers over 20 years, indicates that in 2025–26, VET funding
will be approximately $3.6 billion in real terms. This is above the level of
investment that was in place immediately before the pandemic, when real funding
was $2.9 billion per year from 2017–18 to 2019–20. However, it is still below the
level of the last substantial increase in Australian Government VET investment
between 2008–09 and 2012–13.
Figure 1 Australian Government estimated expenditure on vocational education and training, 2006–07 to 2025–26 ($ million)
Source: Parliamentary Library,
based on Australian Government, Budget Strategy and Outlook: Budget Paper No. 1:
2022–23; Australian Government, Final
budget outcome, various years.
Note: real funding has been
calculated by the Parliamentary Library by deflating the nominal expenditure
figure by the June quarter CPI and CPI forecasts from the 2022–23 Budget. This
methodology may differ to that presented in the Budget papers. ‘(e)’ means that
figures are budget estimates.
Skills reform
Consistent with previous years, approximately $1.6 billion per
year has been provided over the forward estimates for the National Skills and
Workforce Development SPP (Budget paper no. 3: 2022–23, p. 45).
All other funding to the states and territories for skills
and workforce development is scheduled to conclude between 2022 and 2024:
Rather than funding a large-scale extension of JobTrainer,
or a new National Partnership Agreement to replace the SAF, in this Budget the
Government has allocated an additional $3.7 billion over 5 years from 2022–23
(and $284.6 million per year thereafter) to work with states and territories on
a new National Skills Agreement to replace the NASWD (Budget
paper no. 2: 2022–23, pp. 78–79). The additional funding is only available if the states and
territories can reach agreement.
The NASWD was reviewed
in 2020 by the Productivity Commission (PC). The final
report, released in January 2021, found that the NASWD is overdue for
replacement. The PC made many far-reaching recommendations, including more
focus on competition, and using the National
Skills Commission’s work on efficient costs and loadings as
a basis for common course subsidies (which are currently set by state and
territory governments and can vary considerably).
All governments agreed to a new Heads
of Agreement for Skills Reform in August 2020, under which JobTrainer funding
was provided. However, although at the time of the 2021–22
Budget a new National Skills Agreement was expected
to follow the Heads of Agreement by August 2021 (Federal
financial relations: budget paper no. 3: 2021–22, p. 43), negotiations
have been a source of contention. Skills ministers from 6 states and
territories have reportedly
written to Stuart Robert, Minister for Employment, Workforce, Skills, Small and
Family Business, ‘expressing “strong concern” and “dismay” over the
government’s insistence on pushing a draft agreement that was rejected by all
states and territories last year’. Among the concerns reportedly expressed were
potential reductions in funding to TAFEs, increased course fees, and the
proposed role of the National Skills Commission in setting prices and
subsidies.
Although the new Agreement is now expected to be ‘finalised
in the first half of 2022’, the experience of the SAF (which saw plans
progress without Victoria and Queensland) suggests such agreements will not
necessarily be accepted, despite the associated funding.
The national VET regulator
The national VET regulator, the Australian Skills Quality Authority (ASQA) has
also been allocated an additional $28.5 million over 5 years from 2021–22 as
part of the VET reform package (Budget
paper no. 2: 2022–23, pp. 78–79), to establish
assurance functions. On 22
March, the Government announced that ASQA would
take on responsibility for quality assurance of training
packages from 1 January 2023 to 31 December
2024. A post-implementation review of new industry engagement arrangements will
be undertaken ‘to assess whether the system is working as intended’, with
ASQA’s continued responsibilities subject to the outcomes of this review.
This change is part of broader
changes to industry engagement in the VET system,
which build on the 2019 Strengthening skills
expert review of Australia’s vocational education and training system
(the Joyce Review). While the Joyce Review did not envisage ASQA taking on
training package assurance, it did find (pp. 57–58) that the existing process, which
is complex and ‘overly-centralised’, can take several years, meaning ‘training
packages can be out of date before they even start to be taught’.
This function has already been conferred on ASQA by
a legislative instrument.
Employment services
The Budget includes a relatively small amount of funding for
employment services-related measures. The most substantive of these is a new
pre-employment program entitled ReBoot, which is targeted at young people who
are not engaged in education, employment or training (NEET) (Budget paper no.
2: 2022–23, p. 74).
Under the initiative, which was announced
on 19 March, an estimated 5,000 disadvantaged people aged 15 to 24 will
participate in ‘tailored, community-focused early interventions’ of up to 12
weeks. The interventions will involve things such as hands-on learning
activities, mentoring and work experience, and ideally provide a pathway to
employment and training. The interventions are to be delivered by ‘expert
not-for-profit organisations’ selected through a competitive procurement
process. Funding of $52.8 million over 5 years from 2021–22 has been
allocated towards the ReBoot initiative, and it is expected to be rolled out
‘in early 2023’.
While the initiative is small, it is intended to complement
other youth employment programs, with the most relevant of these being the Transition to Work program,
which is also targeted at young people who are at high risk of long-term
unemployment and welfare dependency.
The ReBoot initiative will, along with the Transition to
Work program, form part of the new employment
services model, entitled Workforce Australia, that is to
replace the jobactive program. Workforce Australia will commence
from 1 July 2022.
Stakeholder response and concluding
comments
In contrast to employer subsidies for apprentices, which
have seen substantial growth as part of the Government’s response to the
COVID-19 pandemic, as discussed
elsewhere in this Budget review, broader support for learners in the
VET system and through employment services programs is relatively modest.
Training sector stakeholders including TAFE
Directors Australia and the Independent
Tertiary Education Council Australia, as well as employer groups such as
the Australian
Chamber of Commerce and Industry, Ai
Group, and the Business
Council of Australia have welcomed additional funding for skills, pointing
to the potential for a new National Skills Agreement to further support skills
development.
However, although Commonwealth funding to the states and
territories for skills and workforce development is projected to remain stable
over the forward estimates, while apprenticeship funding will fall sharply, the
bulk of new funding for VET reform in this Budget depends on finalising an
intergovernmental agreement that is already delayed and highly contested.
All online articles accessed April 2022