Budget Review 2021–22 Index
Dr Hazel Ferguson
This Budget includes a number of targeted
investments in areas of skills training that have come under increased
pressure and scrutiny during COVID-19, including apprenticeships, digital
skills, aged care, and foundation skills. Most investments are provided
through temporary extensions and revisions to existing programs, including
the JobTrainer
Fund for free and low-fee training, introduced as part of the COVID-19
Response Package in the July 2020 Economic and
Fiscal Update (the July Update, pp. 117–118), and the Boosting
Apprenticeship Commencements (BAC) measure, a wage subsidy for new
apprentices or trainees, which was in the October
2020 Budget.
While the short-term impact of this Budget provides
opportunities to expand VET delivery, questions remain about the longer-term
impacts of temporary measures, the level of VET funding after 2021–22, and the
larger structural changes that may come as part of a new National Skills
Agreement, anticipated
by August 2021.
Funding trends
Parliamentary Library analysis (Figure 1 below) based on Budget
Strategy and Outlook Budget Paper No. 1: 2021–22 (pp. 169–170 and
188) shows total Australian Government expenditure on vocational education and
training (VET) is estimated to peak in 2021–22, before declining rapidly. The
announcements in this Budget delay the decline for an additional year compared
with estimates at the October
2020 Budget, but the longer-term future of Commonwealth VET funding remains
unclear.
Expenditure on vocational and other education programs is
expected to decrease 10.8% in real terms from 2020–21 to 2021–22, and 24.2% in
real terms between 2021–22 and 2024–25. The initial decline largely reflects a
lower level of JobTrainer Fund expenditure per year in 2021–22 and 2022–23
compared with 2020–21. The larger decline from 2021–22 is due to the conclusion
of the National
Partnership on the Skilling Australians Fund on 30 June 2022, and
the JobTrainer Fund on 31 December 2022. New or extended funding agreements
would usually be negotiated with the states and territories before the
conclusion of such agreements, and if this occurs funding from 2022–23 will be higher
that the projections shown here.
Vocational and industry training expenses, which primarily
comprise Australian Government apprenticeship funding, are expected to increase
by 19.8% in real terms from 2020–21 to 2021–22 and decrease by 66.2% in real
terms from 2021–22 to 2024–25. The initial increase largely reflects the
extension of the BAC wage subsidy, while the decline is driven by the cessation
of this and other temporary COVID-19 measures.
Figure 1: Australian Government
estimated expenditure on vocational education and training, 2005–06 to 2024–25
($ million)
(e) figures are budget
estimates.
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 2021–22 Budget; this
methodology may differ to that presented in the Budget papers.
Sources: Parliamentary Library
based on Australian Government, Budget strategy and outlook: budget paper no. 1:
2021–22; Australian Government, Final
budget outcome, various years.
Building Apprenticeship
Commencements wage subsidy
This Budget continues the Government’s investment in
apprentice and trainee wage subsidies, with $2.7 billion provided to extend the
BAC wage subsidy to cover commencements up to 31 March 2022, extend the subsidy
period to 12 months from commencement, and uncap the number of places available
(Budget
Measures Budget Paper No. 2: 2021–22, pp. 88–89).
The BAC funds 50% of an apprentice or trainee’s wage, up to
$7,000 per quarter. The October
2020 Budget introduced the BAC wage subsidy for up to 100,000 commencements
between
5 October 2020 and 30 September 2021. In
March 2021, the Government reported that these places were fully taken up
within five months, and BAC funding had been provided to up to 40,000
businesses, supporting ‘more than 8,000 bricklayers, 6,000 electricians, and
almost 11,000 people in retail and hospitality work’. It
estimated that changing the BAC to a demand-driven program will ‘generate
around 70,000 new apprentice and trainee places’. The Department
of Education, Skills and Employment (DESE) states that 3,000 ‘digital
apprenticeships’ will be supported through the BAC as part of the
cross-portfolio Digital Economy
Strategy.
The Supporting
Apprentices and Trainees (SAT) wage subsidy, introduced in the July
Update (pp. 119–120) for apprentices and trainees already employed in
small and medium businesses, concluded on 31 March 2021, and has not been
continued. The Regional
Ministerial Budget Statement 2021–22: Supporting Regional Recovery and Growth
(p. 110) states that at 29 April 2021, the SAT had supported the retention of
129,502 apprentices and trainees.
However, as identified
at the time of the original BAC announcement, it is unclear what
contribution the wage subsidies will ultimately make, compared with the level
of training activity that might otherwise have been expected, since more than
100,000 apprentices and trainees typically commence each year, with many in
sectors that suffered comparatively little effect from COVID-19. Additionally,
the commencement focus of the remaining wage subsidy may see an increase in
apprentices exiting the system after 12 months, especially as a relatively
large number of apprentices already cancel or withdraw each year (73,205 in the
12
months to 30 September 2020, compared with 126,665 commencements).
Data about the final quarter of 2020, when both the BAC and
the SAT were in place, is not yet available. The
most recently-available apprenticeship data shows that in the year to 30
September 2020 (just before BAC funding was introduced) there were 126,665
apprenticeship commencements, down 18.8% from 2019. Declines were seen in both
trade (15.7% decline) and non-trade (21.4% decline) occupations. Although there
were already widespread concerns about declining apprenticeship numbers before
COVID-19, the declines in 2020 were more pronounced than would have ordinarily been
expected from recent year commencement numbers. Prior to the pandemic, apprenticeship
commencements had started to stabilise after a
longer-term downward trend in apprenticeship numbers from 2012, which was
largely driven by sharp decreases
in non-trade (traineeship) commencements after employer incentives were
reformed from 2012.
Another key concern raised in the context of the October
2020 Budget announcements was that apprenticeships are predominantly taken
up by young men, while women and older workers have been more impacted by
COVID-19 related job losses. The most
recent apprenticeship data shows women accounted for 64,205 apprentices in
training at September 2020 (24.3%), compared with 200,220 men (75.7%). This
disparity is more significant in trade apprenticeships, where there were 17,735
women (9.9%) compared with 161,865 men (90.1%). This Budget (the Regional
Ministerial Budget Statement, p. 98) allocates $2.6 million in
2021–22 to the Australian
Apprenticeship Support Network to deliver 5,000 additional Gateway Services
to women to match them with the right apprenticeship or other training option,
and to provide in-training support services for women commencing in
non-traditional trade occupations. While this is a relatively modest
investment, an additional 5,000 women entering trade apprenticeships in one
year would be a substantial increase in percentage terms (28.2%).
JobTrainer Fund
Many of the targeted announcements in non-apprenticeship
skills in the Budget are delivered through an extension and revision of the JobTrainer Fund.
Australian Government funding of $500.0 million was
initially provided in the July Update for 2020–21 (p. 117), and an additional
$500.0 million is allocated in this Budget, to be split between 2021–22 and
2022–23. An additional $6.3 million has also been allocated in 2021–22 for a
campaign to encourage take-up of training opportunities (Budget
Paper No. 2, p. 88).
The current estimated distribution of the JobTrainer funding
is provided in Table 1 below. Australian Government funding is generally
allocated between states and territories based on population, although it
appears in this case $39.1 million funding for Victoria has been reallocated
from 2020–21 to 2021–22. This does not affect the overall funding to Victoria
over the three-year period.
Table 1: JobTrainer Fund, estimated
Australian Government funding at 2021–22 Budget ($ million)
|
NSW
|
VIC
|
QLD
|
WA
|
SA
|
TAS
|
ACT
|
NT
|
Total
|
2020–21
|
159.3
|
91.2
|
100.5
|
51.7
|
34.5
|
10.5
|
8.4
|
4.8
|
460.9
|
2021–22
|
95.5
|
117.3
|
60.3
|
31.1
|
20.7
|
6.3
|
5.0
|
2.9
|
339.1
|
2022–23
|
63.7
|
52.1
|
40.2
|
20.7
|
13.8
|
4.2
|
3.4
|
1.9
|
200.0
|
Source: Federal
Financial Relations Budget Paper No. 3: 2021–22, p. 44.
Under the current
JobTrainer agreement, which covers the first year of operation and
subsequent reporting, the Fund provides free and low-fee training for school
leavers and job seekers, and states and territories determine their mix of subsidised courses
based on their skill needs.
The Budget papers estimate that the extension of the Fund
will provide around 163,000 additional free or low-fee training places in areas
of skills need, with around 33,800 of these reserved for aged care, and around
10,000 for digital skills. Eligibility will be expanded to include people who
are employed in sectors that continue to be affected by COVID-19. Continuation
of the Fund, and the implementation of targeted investments in aged care and
digital skills, will depend on the further agreement of the states and
territories, as well as their willingness to provide matched funding.
According to the Health
Portfolio 2021–22 Budget Stakeholder Pack (p. 135), the additional
33,800 subsidised places will be for personal care workers to attain a Certificate III in
Individual Support (Ageing) or a higher qualification. The Certificate III
is already widely used (76,930
enrolments and 28,250
completions in 2019, although this includes those taking the qualification
for occupations in disability support and other similar areas). The Certificate
III is also already
subsidised in most jurisdictions through JobTrainer. A large
body of work is currently in progress to ensure the Certificate meets the
needs of students and people in care. The aged care training places form part
of the Government’s response to the Final Report of the Royal Commission into Aged Care
Quality and Safety, discussed elsewhere in this Budget Review. Contrary to
the recommendations of the Royal Commission, these arrangements would not
mandate the Certificate III as the minimum mandatory qualification for a
personal care worker.
Digital skills training places are less straightforward, as
digital skills are broadly required across different occupations. Places could
be allocated to specialised Certificate or Diploma level qualifications, such as those in digital
technologies or information technology, or sub-qualification skill sets, made
up of one or more nationally recognised units of competency (or subjects)
intended to meet a defined industry need. Nine new internet communication
technology skill sets were endorsed
in July 2020, and two in
September, the Digital
Skills for Small Business Skill Set and the Entry
into Technology Skill Set, designed to support small businesses to adapt to
operating in an online environment, and assist displaced workers to secure
employment in areas of labour market growth.
Additional training scholarships have also been provided for
young people through the Schools and Youth package, discussed elsewhere in this
Budget Review.
Foundation skills
Although investments in higher-level skills to address
specific workforce needs form the centrepiece of this year’s budget for VET,
improving foundation skills is also crucial to ensure equitable access to, and
increase the uptake of, training opportunities. Foundation
skills are adult language, literacy and numeracy (LLN) skills, as well as
employment skills such as problem solving. The most
recent OECD survey of adult skills, undertaken in 2012 (pp. 13–16) estimated
that one in five Australians aged 16 to 65 have low literacy and/or numeracy
skills, and that successfully investing in these skills is needed to prevent
Australia being left behind in terms of innovation and economic growth.
The Budget includes $23.6 million over four years from
2021–22 (Budget
Paper No. 2, p. 94) for foundation skills:
- The Skills for
Education and Employment (SEE) program, which is designed to improve
LLN among job seekers, will be expanded. Currently, job seekers must meet certain
eligibility criteria in order to be referred to the program by Services Australia or an
Employment Service Provider, and access is limited to 650 hours at a time, with
a waiting period of three months between referrals. The expansion will uncap
the number of hours available through SEE and expand eligibility to all job
seekers. A 2015
evaluation (p. xiii), undertaken when the program was limited to 800 hours,
found the time available was generally sufficient, but recommended the limits
be reviewed for people with very low levels of LLN, who often needed more
support. According
to DESE, $4.0 million of this funding will go to 40 projects to incorporate
digital literacy training.
- The outreach role of the Reading Writing Hotline
will also be expanded. The Hotline is a nationally available telephone service,
providing advice and referrals to adult literacy and numeracy courses. Unlike
SEE, access to the Hotline is not restricted.
- Funding has also been provided for foundation skills policy
development, which may aid in the formulation of a replacement for the National
Foundation Skills Strategy for Adults 2012–22, which is due to
conclude next year.
The Budget also includes a number of employment services
measures, some of which may facilitate greater access to training for some job
seekers, discussed in the Employment
Services Measures section of this Budget Review.
Digital cadetships
Although the digital sills training investments in the
Budget are delivered largely through the existing mechanisms discussed above, an
additional investment of $10.7 million (over three years from 2021–22, Budget
Paper No. 2, pp. 7–75) has been allocated as part of the Digital Economy Strategy for up
to four industry-led Digital Skills
Cadetships to develop innovative training pathways.
Cadetships combine formal training with an employment
relationship in a similar way to an apprenticeship, but are not subject to the
same state and territory regulatory
frameworks which require, for example, that a training contract be
registered with the relevant training authority. According to DESE,
each Cadetship is expected to take four to six months, with the training
component comprising nationally recognised units of competency, VET and higher
education units packaged into new forms of micro-credentials and/or formal
training augmented with industry accredited training, such as that offered by
global technology companies.
Skills reform
In response to findings from recent reviews such as
the Review
of the National Vocational Education and Training Regulator Act 2011 (Braithwaite
Review), the Expert
review of Australia’s vocational education and training system (Joyce
Review), and the Rapid
review of the Australian Skills Quality Authority’s regulatory practices and
processes (ASQA Rapid Review), the Government is currently
undertaking a VET reform process
focusing on quality, industry engagement, and qualifications.
The Budget (Budget
Paper No. 2, pp. 93–94) contains additional funding for some of this
work:
- To improve collaboration with industry, $149.2 million over four
years from 2021–22 will be provided to establish up to 15 industry-owned Skills
Enterprises. DESE states
that the new Skills Enterprises will constitute ‘new industry engagement
arrangements for the VET system… to ensure a strong, strategic industry voice,
drive collaboration across sectors, address workforce challenges, and improve
the speed to market of qualifications to meet evolving industry needs’. It is
unclear how these will relate to existing intergovernmental governance
structures, including the Australian
Industry and Skills Committee, and the Skills Organisation pilots
implemented in response to the Joyce Review.
- $69.1 million over five years from 2020–21 will be allocated to
the Australian Bureau of Statistics to establish a new VET National Data Asset
to provide information about VET outcomes at provider and course levels to
improve the information available to prospective students about VET
qualifications. Currently, VET
student outcomes data is managed by the National Centre for
Vocational Education Research (which also manages other key VET data
collections). The current collection does not include course or provider level
detail, while in higher education, Quality
Indicators for Learning and Teaching provides information by study area and
institution.
- To support work with the states and territories on qualifications
design, $30.9 million over four years from 2021–22 will be allocated to deliver
a new National Training Register—the
current version is at training.gov.au.
- $12.1 million over four years from 2021–22 will be allocated to
simplify information about apprenticeship pathways, and develop a single
National Digital Australian Apprenticeships Portal. According
to DESE, the Portal will be a ‘one-stop-shop to help employers manage their
apprentice workforces and for apprentices to understand their entitlements’.
Larger-scale skills reform announcements are anticipated
by August 2021, when a replacement for the National
Agreement for Skills and Workforce Development (NASWD) is expected to be
finalised. The NASWD is the agreement which sets out jurisdictions’ shared
responsibilities for VET, and under which Australian Government National
Specific Purpose Payments for skills and workforce development are currently
provided, at approximately $1.5 billion per year over the forward estimates (Budget
Paper No. 3, p. 43).
The replacement of the NASWD is in response to a review of
the Agreement, undertaken
by the Productivity Commission from November 2019, which reported
in December 2020. A Heads
of Agreement for Skills Reform was signed by all jurisdictions in 2020, as a
condition of state and territory access to JobTrainer Funding.