Prime Minister Scott Morrison says an overhaul of vocational training is needed to underpin Australia’s economic recovery from the COVID-19 pandemic, and has outlined a series of reforms to shake up the system.
The changes will see the federal government take a more active role in addressing skill shortages across the economy, but Morrison has not committed any new funding to training programs under the ‘JobMaker’ package.
In a speech to the National Press Club on Tuesday, Morrison said the government’s JobMaker package, which will also include wide-ranging industrial relations reform, would enable small business owners to “earn Australia’s way out of the crisis”.
“It is true that in the short-term, demand stimulus by government can boost your economy,” the PM said.
“But it must only be temporary. At some point you’ve got to get your economy out of ICU.”
JobMaker: Another skills overhaul
Morrison argued Australia needs to do a better job of training Australians with the skills businesses need, saying it is widely known the federal government has not been fast enough in responding to skills shortages.
The federal government plan for skills is three-fold. It includes a move to simplify the vocational education system for students; use Single Touch Payroll data to inform labour market insights; and make room for the possibility of a new national skills funding agreement.
While the federal government already invests $1.5 billion in vocational training annually under the existing National Agreement for Skills and Workforce Development, Morrison believes this arrangement is not working and wants a better deal.
“The Commonwealth has no line of sight on how states use this funding,” Morrison said in his speech.
“The agreement has also been ineffective in maintaining state investment in these schemes; VET funding across all jurisdictions, with the exception of Tasmania, has fallen by 25 per cent on average over the past decade in real terms, on a working age per capita basis.”
Notably, the JobMaker reforms do not include any new funding for skills or training. Morrison said the government is remiss to ‘throw’ good money after bad.
“I’ve made very clear to premiers and chief ministers that my government would be prepared to invest more, but throwing more money into a bad system does not get you results,” Morrison said.
The existing national agreement, struck in 2012, is tracking behind three of its four main performance indicators, according to the Productivity Commission.
Morrison wants more control over the federal funding and intends to add new conditions, including by more closely linking money to the skills businesses need; increasing performance monitoring; and doing a better job of coordinating subsidies and loans.
As part of these changes, Morrison also wants the vocational training system to be easier to navigate for students, complaining the current patchwork of 1,400 qualifications and 17,000 units of competency is overly complex.
The federal government will seek to expand its Skills Organisation Pilots, which have been designed to give industries an opportunity to shape the training system to be more responsive to the skills they need.
Three pilots have been established so far in human services, digital technologies and mining.
The design of additional pilots will be informed my new labour market insights to be developed by the National Skills Commission, with the aim of getting a better and more real-time understanding of skills shortages as they arise.
Single Touch Payroll data will be used to inform some of this analysis, in the latest expansion of payroll data in the formulation of national policy.
Federal government has a track record to overcome
This is not the first attempt by the federal government to reform vocational training as apprenticeship rates continue to fall in many parts of the country.
Existing schemes include the $525 million committed to create 80,000 new apprenticeships in the pre-election 2019 budget, and the widely criticised youth jobs PaTH program introduced by the Turnbull government.
Business groups have long complained about skills gaps and failures within the vocational training sector, but it remains unclear whether the latest batch of reforms will achieve meaningful change, especially without new funding.
Australian Chamber of Commerce and Industry chief executive James Pearson, who has been a vocal critic of existing vocational training arrangements, welcomed the JobMaker program, but said the federal government needs to increase funding to the sector.
“We must spend more on vocational education and look for better models, including better integration between the VET sector and universities. We need a digital-ready workforce and greater cross-industry collaboration,” he said in a statement on Tuesday.
“By valuing vocational training, especially as part of a digital future, we can encourage the next generation into robotics, artificial intelligence and advanced manufacturing, and innovate in more traditional lines of work.”
Council of Small Businesses of Australia (COSBOA) chief executive Peter Strong says it remains to be seen whether the skills and training changes will deliver, and the government must also address perverse incentives among third-party training providers.
“The system is not working … the training sector has to react more quickly to the needs of businesses,” Strong says.
“Our role is making sure the reforms don’t head down the path of what’s best for training organisations and big businesses.”
This story was updated on May 27 at 9:20am.