Outcome 2: Build skills and capability

Promote growth in economic productivity and social wellbeing through access to quality higher education, international education, and international quality research, skills and training.

Ensure that Australia’s workforce has the capability to respond to the needs of current and emerging industries, thus contributing to their global competitiveness.

Our performance highlights

The department plays a stewardship role in the national training system, through supporting improved access to high quality, industry-defined qualifications, supporting greater transparency and consumer information within the training system, and through effective quality frameworks and regulation for registered training organisations.

Performance highlights during 2015‑16 relate to growth in the number of Australians with vocational education training (VET) skills, the release of total VET activity data, efforts to enhance industry-led training through the new arrangements for training package development, and the establishment of the Australian Apprenticeship Support Network (AASN).

Growth in number and proportion of Australians with VET skills

Between May 2014 and May 2015, the number of Australians aged 15‑74 with VET skills increased by three per cent or 179 000 (from 5.9 million to 6.1 million), while the proportion of the Australian labour force with VET skills increased by 0.3 per cent.

Figure 2.17 Number of Australians aged 15‑74 with VET skills, 2014‑2015

Figure 2.17 illustrates statistics included in text
Figure 2.17: Number of Australians aged 15‑74 with VET skills, 2014‑2015

Source: ABS, 2015, Education and Work, cat. no. 6227.0

Notes: VET skills refers to people whose highest education attainment level is one of the following qualifications: Graduate Diploma, Graduate Certificate, Advanced Diploma, Diploma, Certificate I‑IV.

Figure 2.18: The proportion of the Australian labour force with VET skills, 2014‑2015

Figure 2.18 illustrates statistics included in text
Figure 2.18: The proportion of the Australian labour force with VET skills, 2014‑2015

Source: ABS, 2015, Education and Work, cat. no. 6227.0

Notes: VET skills refers to people whose highest education attainment level is one of the following qualifications: Graduate Diploma, Graduate Certificate, Advanced Diploma, Diploma, Certificate I‑IV.

National dataset of all VET activity

The first total VET activity data was released in November 2015 and included both government supported and fee for service training undertaken in 2014. Previously, training providers had only reported data on government-funded training activity. This was followed by the 2015 total VET activity data, published in July 2016. This new comprehensive data collection helps industry, VET stakeholders and governments understand what training is being delivered across the country, supporting workforce planning and policy development. In 2015 there were an estimated 4.5 million students enrolled in VET delivered by Australian training providers (see Figure 2.19).

Figure 2.19: Total VET students by training location, 2015

Figure 2.19 illustrates the total number of VET students by location - New South Wales 1,338,000, Victoria 1,118,000, Queensland 1,096,000, Western Australia 484,000, South Australia 245,000, Australian Capital Territory 84,000, Tasmania 75,000, Northern Territory 58,000, overseas 34,000, other Australian territories or unknown location 11,000, total VET students 4,542,000
Figure 2.19: Total VET students by training location, 2015

National Partnership on Skills Reform

In 2015 a review of the National Partnership Agreement on Skills Reform concluded there was strong evidence of growth in training, and that transparency initiatives had been successfully implemented.

The National Partnership set a target of an increase in qualification completions of 375,000 nationally between 2012 and 2016. This target was exceeded by over 300,000 completions by the end of 2015.

Figure 2.20: Cumulative qualifications completions above baseline

Figure 2.20 illustrates statistics included in text
Figure 2.20: Cumulative qualifications completions above baseline

Additionally states and territories exceeded their targets for Indigenous training outcomes under the National Partnership.4

Figure 2.21: Number of Indigenous training outcomes by state/territory5

Figure 2.21 illustrates that Indigenous training outcomes are above targets for all reported states and territories
Figure 2.21: Number of Indigenous training outcomes by state/territory5

4 The assessment of the Northern Territory’s performance against this training outcome has not yet been finalised.
5 Data for the Australian Capital Territory and Victoria relates to commencements. For all other states shown, data relates to completions.

Implementation of new arrangements for training package development

The new arrangements for developing training packages came into effect on 1 January 2016, led by the Australian Industry and Skills Committee, working with its network of Industry Reference Committees (IRCs). IRCs are supported by new independent service providers called Skills Service Organisations, the first of which were announced in January 2016.

Establishment of the Australian Apprenticeship Support Network

The new AASN commenced on 1 July 2015, replacing Australian Apprenticeships Centres nationally. The AASN delivers targeted advice and support at all points of the apprenticeship lifecycle, from pre commencement to completion, to assist employers and apprentices to make well-informed decisions and remain engaged in the apprenticeship relationship through to completion.

Strengthening the VET FEE-HELP scheme

In 2015‑16 the Government introduced reforms to the VET FEE-HELP loan scheme to better protect students taking out a VET FEE-HELP loan, the taxpayer and the broader reputation of Australia’s VET sector. These reforms included tightening marketing and recruitment practices, strengthening student protections, enhancements to VET FEE-HELP provider application arrangements, limiting providers’ total loan amounts and changes to payment arrangements.

The Government is undertaking a range of compliance activities such as audits, investigations and student surveys to address non-compliance concerns and complaints. This has been supported by strong action in the case of non-compliance, and the Government has joined with the Australian Competition and Consumer Commission to seek to recover payments made to providers found to have breached Australian Consumer Law.

Our analysis

Australia’s skills and training system provides opportunities for individuals to develop the skills they need for employment. Over the last two years significant reform of the VET sector has supported the capability of Australia’s workforce to meet the needs of current and emerging industries, and contributed to Australia’s economic growth and global competitiveness. Strong levels of stakeholder engagement, from industry, training providers, regulators, peak bodies and governments has been a key driver in implementing the reform agenda. 

As part of this reform agenda, attention has been given to creating a VET sector where students have the opportunity to access quality training. Significant steps have been taken to improve quality, including new training provider quality standards, and an enhanced, continually improving model for regulation by the Australian Skills Quality Authority (ASQA). Action also has been taken to encourage improved apprentice and trainee retention and completion rates through the new AASN.

Building on these reforms in 2015‑16, the Government is currently redesigning the VET FEE-HELP scheme to ensure it better targets high quality VET. The new VET FEE-HELP loan scheme will further protect students from unscrupulous behaviour by a small number of providers, support increased confidence, and improve the scheme for the future.

Another key priority has been improving data on the sector and enhancing consumer information. An enhanced MySkills website was released in July 2015, improving consumer access to information on VET courses and providers. MySkills is increasingly used by consumers, with 1.4 million visits in 2015‑16, representing a 33 per cent increase over the previous year.

The second release of total VET activity data in July 2016 showed that around 4.5 million students were engaged in VET in 2015. This highlights the critical role VET plays in providing skills and training to support individuals into employment—to ensure workforce demands are met, and to upskill employees to meet the demands of the economy for growth in future. While the National Partnership delivered growth in training, the Council of Australian Governments (COAG) Industry and Skills Council agreed that further work is needed to improve transparency, quality, government-to-government information sharing, and the ability of public providers to operate in an environment of increased contestability.

The last 12 months has seen a strengthening of the central role of industry in skills and training. The Australian Industry and Skills Committee focused on achieving four key outcomes: 

  • simplifying the VET system
  • demystifying the VET system
  • amplifying the voice of industry, building employers’ confidence in VET qualifications
  • improving the productivity of Australian businesses.

The new arrangements for reviewing and developing training packages were implemented. The first National Review Schedule, agreed by the committee in June 2016, sets out a rolling four-year plan for consolidated, transparent review and development of training packages.

Australia has a strong VET system but challenges remain. Ensuring VET keeps pace with the rapidly changing nature of work, maintaining strong industry and employer engagement, and strengthening the national apprenticeships system remain high priorities.

Our priorities

The department is focused on ensuring that Australia’s workforce has the capability to respond to the needs of current and emerging industries, and contributes to Australia’s economic growth. The key priorities for 2015‑16 to support the goal of building skills and capability were to:

  • ensure a highly skilled workforce, by providing students with opportunities for access, participation and success
  • support an effective and efficient skills and training system that is industry-led and delivers the skills Australian employers need
  • better link training to real jobs and support improved employment outcomes
  • ensure better consumer information leads to increased quality and maintaining the good reputation of the VET sector, both here and overseas.

Access, participation and success in VET

The department plays a stewardship role in the national VET system, particularly to support national quality frameworks and industry-defined qualifications, and to provide students with opportunities to access training, either through payments to states and territories, or through direct intervention.

Under the National Agreement for Skills and Workforce Development, states and territories receive specific purpose payments from the Government of around $1.5 billion each year to subsidise training. From 2012‑13 to 2016‑17, a total of $1.75 billion is also available to states and territories under the National Partnership Agreement on Skills Reform. In 2015‑16 Government payments to states and territories totalled $1.8 billion under these arrangements.

An additional $1.25 billion was delivered in Government programs through the department. These programs supported increased industry competitiveness, including through effective skills recognition, skills development through apprenticeships and improved access to training, as well as supporting the national training system.

The Government committed $18.2 million over four years from 2015‑16 (including $3.6 million in capital funding) to implement an enhanced compliance monitoring regime associated with the VET FEE-HELP reform measures. Building on these measures, an additional $2.3 million (including $0.2 million in capital) was committed to measures strengthening the scheme starting on 1 January 2016, including limiting growth ahead of a redesign of the scheme to better target high quality VET.

In 2015 approximately 1.2 million students in Australia received some form of Australian or state and territory government subsidised training, along with a large proportion of fee-for-service training undertaken in Australia, while drawing on national industry-defined qualifications and quality frameworks.

In July 2015 the department undertook community consultations in a number of states to discuss the findings of the Adult Migrant English Program (AMEP) evaluation undertaken by ACIL Allen Consulting. Stakeholder and community feedback was also sought on potential reforms to improve AMEP. This has led to the development of a new business model, announced as part of the 2016‑17 Budget, which aims to improve participation, English language proficiency and job readiness.

Industry-led training delivers the skills Australian employers need

Significant progress was achieved in 2015‑16 to support an effective and efficient skills and training system that is industry-led and delivers the skills Australian employers need.

The Australian Industry Skills Committee pursued an ambitious agenda, consulting extensively across industry and the VET sector, approving for implementation more than 50 training packages and agreeing the first National Review Schedule. This work will improve productivity for Australian businesses by focusing on the skills industry needs to capitalise on advances in technology, new ways of working and new jobs in the economy, and address emerging skills needs in key sectors.

The committee also began a review of the structure and membership of its supporting network of Industry Reference Committees to ensure they are broadly representative of their industries and can advise on current and future skills needs.

As well as this work strengthening industry leadership, the department continued to work closely with states and territories on the effective operation of the national VET system. Section 54 of the National Partnership Agreement required a review of progress on VET structural reforms and training outcomes to be completed by 31 December 2015. The review was completed by ACIL Allen Consulting, in conjunction with the Commonwealth, states and territories. It found strong evidence of growth in training, and that transparency initiatives had been successfully implemented. 

Better link training to real jobs and support improved employment outcomes

Strong links between training and real jobs are vital to support employment outcomes and deliver the skills required by industry. In 2015‑16 the department delivered key initiatives to support a strong link between training and employment. 

A total of 11 providers were engaged through an open market tender process, for a three-year period from 1 July 2015 to 30 June 2018, with the option to extend through to 30 June 2021.

The department manages 29 contracts with the 11 providers to deliver the new Australian Apprenticeship Support Network (AASN) in around 400 sites across Australia. The new AASN has redirected the focus of service delivery towards retention and completion support services, such as mentoring and job matching to better support both businesses and apprentices.

The department also supported Australian industry to access appropriately skilled labour through effective skills recognition by Trades Recognition Australia. Trades Recognition Australia operates programs that provide skills assessments for employment, migration and licensing purposes. This includes the Job Ready Program for international student graduates who hold a trade qualification issued by a registered training organisation based on studies in Australia.

The department maintained a focus on training pathways and options for workers wishing to enhance their skills, and employers wishing to develop the capabilities of their workforce.

In 2015‑16 the Industry Skills Fund continued to support industry to invest in training and support services to help businesses achieve growth by providing skills advice and training grants. From 1 July 2015, six organisations were contracted to deliver skills advice services to micro, small and medium businesses to help them achieve their growth opportunities. These are AiGroup, MAX Solutions, Navitas Professional, Chisholm Institute, CITT and QMI Solutions.

Ninety-five per cent of approved grants were for micro, small and medium businesses. Of all businesses that had a grant approved, 42 per cent were in regional Australia with one per cent in remote Australia. Forty-six per cent of business enquiries were sent for skills advice. Of all businesses that received skills advice and had a grant approved, almost 55 per cent and 67 per cent respectively were from a priority industry or from a business that delivers enabling technologies and services that support one or more of the priority industries.

Enquiries from businesses operating in or expanding into northern Australia resulted in 15 per cent receiving skills advice and 14 per cent having a training grant approved.

Information, quality and international reputation

The quality of training in the VET sector is key to ensuring industry has an appropriately skilled workforce. The department continued to work closely with ASQA to develop and implement strategies to improve the regulation of the VET sector.

In response to concerns about quality, the Training and Assessment Working Group was established in September 2015 to consider options to improve assessment in VET. Recommendations from this group will be considered by Government in 2016‑17.

Work was also undertaken to enhance the skills of trainers and assessors through the inclusion of new core units of competency in the Certificate IV in Training and Assessment and the Assessor Skill Set—the foundation training products for VET delivery.

The department supports the National Training Complaints Hotline, a joint state and territory initiative to provide a central point for complaints about the training sector. The hotline aims to facilitate stakeholder feedback and complaints resolution to contribute to quality improvements. An external review of the hotline by KPMG started in December 2015, with outcomes to be considered in 2016‑17.

Effective data collection, indicators and measurement are key tools to support quality improvement. The department leads a joint Commonwealth, state and territory working group to develop new indicators and measures of student course completions, following the introduction of the Unique Student Identifier and total VET activity. The working group is investigating employer and student satisfaction and outcome surveys to provide greater access to information on the quality of training in the Australian VET system. This work is continuing in 2016‑17.

In addition to supporting increased data linkages to drive quality, the department supports initiatives to improve consumer information and promote the VET sector. Key initiatives during 2015‑16 included the Australian Training Awards, held in Hobart on 19 November 2015, and enhancements to the MySkills website in July 2015, which received 1.4 million visits in 2015‑16.

The department also achieved diplomatic and economic outcomes through stronger skills policy relationships with ministries in other countries and multilateral fora. In 2015‑16 international engagement promoted our quality frameworks, which generated new opportunities for Australian VET providers to operate offshore and strengthened the international reputation of our VET system.

BUILD SKILLS AND CAPABILITY

Ensure that Australia’s workforce has the capability to respond to the needs of current and emerging industries, thus contributing to their global competitiveness


Program 2.8 Building Skills and Capability

Create an effective and efficient skills and training system that is industry-led and delivers the skills Australian employers needs


Program 2.8.1 Industry Competitiveness

Facilitates training that will enhance Australian businesses' competitiveness in domestic and global markets


Program 2.8.2 Skills Development

Increase completions of apprenticeships and develop the skills of the Australian workforce


Program 2.8.3 Access to Training

Provide clearer pathways and improved access to training which allows Australians to obtain jobs and progress to better career opportunities


Program 2.8.4 Support for the National Training System

Develop an effective and efficient national training system that meets the needs of Australia's current and emerging industries


Our program performance

Table 2.17: Program 2.8.1 Industry Competitiveness
DELIVERABLES ESTIMATE ACTUAL
Number of eligible young people assisted through the Training for Employment Scholarshipsa 5,000 29
Number of eligible young people assisted through the Youth Employment Pathwaysb 2,000 1,243
Number of participants supported to undertake training and/or support services through the Industry Skills Fund 14,000 25,771

a The program was a pilot designed to test a new funding model driven by business. The pilot was initially launched in selected regions of high unemployment but due to low take-up was expanded nationally in September 2015. The pilot has ceased as announced at the 2016‑17 Budget.
b The program was a pilot designed to test a new funding model driven by community organisations that funded individual instead of places. The pilot was initially launched in selected regions of high unemployment but due to low take-up was expanded nationally in September 2015. The pilot has ceased as announced at the 2016‑17 Budget.

Table 2.18: Program 2.8.2 Skills Development
KEY PERFORMANCE INDICATORS ESTIMATE ACTUAL
Number of organisations contracted to provide services as Australian Apprenticeships Centresa N/A N/A
Number of organisations contracted to provide services as Australian Apprenticeship Support Network providers 11 11
Total number of employers who have received a payment under the Australian Apprenticeships Incentives Program 78,000 51,854
Total number of Australian apprentices receiving a Personal Benefit through the Australian Apprenticeships Incentives Program 10,000 4,679
Total number of Australian Apprentices assisted through Trade Support Loan paymentsb 74,500 41,000

a No longer operating, replaced by the Australian Apprenticeship Support Network
b The difference between the estimate and the actual number of apprentices taking out Trade Support Loans may have been influenced by a range of factors including the Fair Work Commission’s decision to increase apprentices’ wages and conditions in many industries, and fewer new commencements than originally projected. As with all demand driven programs, this will be closely monitored as the program matures.

Table 2.19: Program 2.8.3 Access to National Training
DELIVERABLES ESTIMATE ACTUAL
Number of eligible job seekers assisted through the Skills for Education and Employment program 26,499 24,888
Number of eligible migrants and humanitarian entrants assisted through the Adult Migrant English Program 62,187 59,344

Change in reported employer satisfaction with vocationally-trained graduates

In 2015, 84 per cent of employers were satisfied that nationally recognised training (which was not part of an apprenticeship or traineeship) provided employees with the required skills. This result is lower than both the 2009 and 2011 surveys. There was a slight improvement (less than one percentage point) compared with the 2013 survey, but the difference is not statistically significant. 

Most (81.7 per cent) employers were satisfied that apprentices and trainees are obtaining the skills they require from training. Although a slight (2.9 percentage point) improvement on the 2013 survey, this result is lower than in 2007, 2009 and 2011.6

Change in reported student satisfaction, including proportion of students reporting improved employment status

In 2015, 86.7 per cent of graduates of public VET were satisfied with the overall quality of their training, down 0.9 percentage points from 2014.

For employment outcomes, 58.6 per cent of graduates reported an improved employment status after training (down 1.1 percentage points from 2014). Of those graduates who were not employed before training, 41.2 per cent were employed after training in 2015 (down 3.2 percentage points). Employment outcomes also improved slightly for students who were not employed before training and who completed a subject or skill set rather than a complete qualification.  Of those graduates employed before training, 16.3 per cent were employed at a higher skill level after training (up 1.5 percentage points from 2014). These outcomes were achieved in a job market where the ABS reports the average number of weeks an unemployed person had spent looking for work increased from 43.2 weeks in June 2014 to 48 weeks in June 2015.7


6 The data reported against this measure is from the National Centre for Vocational Education Research (NCVER) 2015, Australian vocational education statistics: Employers’ use and views of the VET system 2015, Adelaide.
7 The data reported against this measure is from NCVER 2015, Australian vocational education statistics: government-funded student outcomes 2015, Adelaide and ABS 2016, Labour Force, Australia, Detailed ‑ Electronic Delivery, cat no. 6291.0.55.001.