Productivity Commission

Skills and Workforce Development Agreement

Study report

This report was sent to Government on 15 December 2020 and publicly released on 21 January 2021.

The report sets out the Commission's Review of the National Agreement for Skills and Workforce Development (NASWD). Its key messages are that the NAWSD should be replaced with a new principles based agreement, and there is manifest capacity for governments to get a better return from their investment in vocational education and training (VET).

Download the overview

Download the report

Revisions

Following release of the final report, the Commission received information that has led it to revise some statements in the report. These changes were incorporated into the online and print-on-demand versions of the report on 18 February 2021.

Key Points

  • This review has not found evidence of a vocational education and training (VET) system in crisis. Our recommendations address some of the system’s acknowledged weaknesses and should build on its strengths to lift participation and improve the quality of training.
  • The National Agreement for Skills and Workforce Development is overdue for replacement.
    • Governments have stepped back from some of its policy aspirations. Targets have not been met and the performance framework has not held governments to account.
  • A new intergovernmental agreement should be principles‑based, modular (to retain flexibility and currency) and reviewed every five years.
    • Australian Government funding should remain largely untied for base funding but subject to much greater accountability and transparency.
  • Governments should continue to support the development of a more efficient and competitive VET market through informed user choice and a focus on quality.
    • Students need better curated information on career opportunities, the performance of training providers, course quality and prices.
    • Efforts to improve quality should be ramped up through faster changes to training packages, developing an evidence‑based VET workforce strategy, and a phased introduction of independent assessment.
  • There is a manifest capacity for governments to achieve a better return on the $6.4billion spent on VET by:
    • using the efficient costs and loadings currently being estimated by the National Skills Commission as a common basis for setting and simplifying course subsidies
    • introducing modest minimum student fees for Certificate III and above courses with exemptions for disadvantaged students
    • applying more contestability and transparency to public funding of TAFEs and enhancing the operational autonomy of public providers
    • enabling State and Territory funding to follow students enrolled with an interstate provider.
  • To scale up workforce skills, governments should expand VET Student Loans (VSL) to more Diploma and above courses and to most Certificate IV courses.
    • Loan caps should better reflect course costs, and loan fees should be paid by all students.
  • Reforms to the trade apprenticeship system are best focused on:
    • improving completion rates by better screening and matching of prospective apprentices
    • making pathways more flexible and providing the same subsidy for non‑apprenticeship pathways as for traditional pathways
    • adjusting the timing of employer incentives to provide more support when the risk of cancellation is greatest.
  • There should be a coordinated national strategy to improve school education, ‘second-chance’ learning in the VET sector and other adult education services to reduce the large number of Australians with low language, literacy, numeracy and digital literacy skills.
  • To address some of the key obstacles to lifelong learning, this report proposes improvements in foundation skills, better credit pathways, an expansion of VSL and a trial of a new financing instrument for mature‑age Australians reskilling and upskilling.

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Productivity Commission acknowledges the Traditional Custodians of the land on which we live and work, and we pay our respects to Elders past and present.

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