Government told to pump an extra $310 million into skills training, adopt voucher system

A new voucher system for vocation education and an overhaul of employment subsidies are just two of the recommendations contained in the newly released Skills Australia report, in which it lays out a plan for the Government to address the upcoming skills shortage.

According to reports, the Government has taken some of the recommendations and used them for next week’s Budget.

The report itself projects there will be 9.3 million job openings over the coming years, increasing demand for 12 million additional qualifications. It identifies “unacceptably low” levels of language, literacy and numeracy, along with unsatisfactory workforce participation skills and productivity.

There are 26 recommendations contained in the report, but perhaps the most significant is the call for an extra $310 million each year for skills reforms. By doing so, Skills Australia argues the Government could reap $24 billion a year by 2012 to official coffers.

One of the major recommendations would see students in low-level vocational courses up to Certificate III fully funded by the Government system, “without restriction on the overall number of places available”.

Higher courses would be co-funded between the students and the Government, and restrictions on some of those courses would be allowed in order to align funding with employer demand and projections for certain industries.

The system will essentially allow more competition by allowing students to choose their own education providers, rather than having the Government directly provide the funding to training institutions.

Gavin Moodie, an RMIT tertiary education policy expert, says the introduction of a voucher-like system would ensure more competition and increase the responsiveness of the education industry.

“I think it’s a good recommendation. The way the system operates now is not very responsive to student demand, it’s so-called industry-led which means places are allotted to providers based on predictions of what the demand in certain industries will be.”

“The problem is that these projects are never very accurate, and in any case, the distance between those projections and the implementation by providers needs quite a bit of change.”

Moodie argues that by tying funding to students and not institutions, the system will be able to move more freely and respond to the overall workforce rather than academic projects.

“Some employers fear that students will take courses that are easy or popular, and not the courses that are needed for the economy. But our limited experience so far is that students enrol in courses where there is strong employment demand.”

Response to the report has been positive. Australia Industry Group chief executive Heather Ridout – who said in the group’s pre-budget submission the Government needs to provide more funding for training – supported the voucher system.

“The adoption of the recommended entitlement model which provides fully subsidised training in literacy and numeracy and also in vocational skills up to Certificate III will help to underpin our economy, provided it is complemented by enterprise-stream funding which links skills development with the needs of companies,” she said.

Employment minister Chris Evans also told the Australian Financial Review the report would provide a “strong building block”, along with other documents to reform skills policy.

The Skills Australia report comes as a number of employment institutions fear the Government is cracking down too hard on immigration, arguing a higher number of overseas workers will be needed to solve the skills crisis.

The Australian Industry Group wants immigration to return to 190,000 from the 2010-11 target of 168,000. Reports indicate immigration figures will increase in next week’s budget.

Other major recommendations in the report call for the establishment of an “Enterprise Skills Investment Fund” that would provide more funding for workplace development. Such a scheme would incorporate a number of different funding streams, and include the apprenticeship support program.

Financial assistance would be prioritised to achieve “workforce development outcomes”.

While Moodie says he has not reviewed Skills Australia’s specific recommendation, he argues that employment training subsidies do need some improvement.

“There have been problems with workforce subsidies, they haven’t been as well-directed and targeted as they should have been. There are problems that have to be fixed there.”

Other recommendations in the report include:

• Establish an industry-led advisory group to advise on guidelines for the new enterprise investment fund.
• Provide more funding for the Skills Quality Authority.
• Change the quality training framework to include mandatory validation of assessments.
• Invest in the development of a National VET Workforce Development Strategy.
• Undertake a national review of the VET in Schools program.