Skills training

Budget Review 2022–23 Index

Dr Hazel Ferguson and Dr Matthew Thomas

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:

Vocational and other education, which is primarily made up of Commonwealth funding to the states and territories for skills and workforce development, as outlined in Federal financial relations: budget paper no. 3: 2022–23 (pp. 44–47), most notably Skills and Workforce Development National Specific Purpose Payments (SPP) to support the objectives of the National Agreement for Skills and Workforce Development (NASWD)
Vocational and industry training, which includes expenditure on the Australian Government’s own apprenticeship schemes, such as incentive payments for employers to hire apprentices and the Boosting Apprenticeship Commencements wage subsidy. A temporary VET funding peak in
2021–22 in response to the pandemic is confined to this expenditure, which is analysed in detail in the ‘Apprenticeship incentives’ article elsewhere in this Budget review.

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:

The National Partnership on the Skilling Australians Fund (SAF), which was announced in the 2017–18 Budget as a $1.5 billion fund to support apprenticeship projects, before ultimately failing to gain agreement from Victoria and Queensland, ends in June 2022.
The JobTrainer Fund, which provides funding for jobseekers and young people to access free and low-fee training places as part of the economic response to COVID-19, is due to end in August 2022. This Budget includes a small extension to JobTrainer of $49.5 million to provide an additional 15,000 training places in aged care courses by 31 December 2023 (Budget paper no. 3: 2022–23, p. 46 and Budget measures: budget paper no. 2: 2022–23, p. 74).
Smaller investments in TAFE campuses and training for the energy sector in Tasmania also end in 2022 and 2023 respectively.

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

For copyright reasons some linked items are only available to members of Parliament.

Creative Commons

With the exception of the Commonwealth Coat of Arms, and to the extent that copyright subsists in a third party, this publication, its logo and front page design are licensed under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Australia licence.

In essence, you are free to copy and communicate this work in its current form for all non-commercial purposes, as long as you attribute the work to the author and abide by the other licence terms. The work cannot be adapted or modified in any way. Content from this publication should be attributed in the following way: Author(s), Title of publication, Series Name and No, Publisher, Date.

To the extent that copyright subsists in third party quotes it remains with the original owner and permission may be required to reuse the material.

Inquiries regarding the licence and any use of the publication are welcome to webmanager@aph.gov.au.

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.

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 Enquiry Point for referral.