National skills agreement to be overhauled following Productivity Commission review

By Shannon Jenkins

Thursday January 21, 2021

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A new national skills agreement is needed to better hold governments to account while ensuring Australia’s Vocational Education and Training (VET) system can deliver a more productive workforce, the Productivity Commission has proposed.

In a review of the National Agreement for Skills and Workforce Development (NASWD), released on Thursday, the commission found that the NASWD’s targets are “unrealistic”, and highlighted areas where governments have fallen short.

“Governments have stepped back from some of the NASWD’s policy aspirations. Targets have not been met and the performance framework has not held governments to account,” commissioner Jonathan Coppel said in a statement.

The report has proposed a new intergovernmental agreement that is principles‑based, and modular. According to the commission, the agreement should be reviewed every five years, and should contain the following:

  • An updated objective that recognises VET as a major, but not the only, avenue for skills and workforce development,
  • Principles to guide a renewed national VET reform agenda centred on meeting the needs of students and employers,
  • A revised performance reporting framework, with a broader set of performance indicators that better capture the contribution of government activity in the VET system to skills and workforce development,
  • Governance arrangements to improve data sharing and collection, such as an intergovernmental data working group and a revised national VET data strategy,
  • Regular public reporting by all governments and monitoring by an independent body to improve accountability for outcomes,
  • Fundamental roles and responsibilities of governments in the VET system, with existing roles reaffirmed. Roles in areas of shared responsibility should be clarified, and the roles of recently created bodies, such as the National Skills Commission, should be included.

Read more: PM flags skills and industrial relations reform to rebuild post-pandemic economy


Among the dozens of recommendations outlined in the 532-page report, the PC has called for more courses to be made eligible for loans, and for governments to jointly develop a strategy to reduce the number of people with low language, literacy, numeracy and digital literacy skills.

One recommendation even suggested that the federal government “collect unpaid VET Student Loans debts from deceased estates, with exemptions for small estates and discretionary powers for the Australian Taxation Office to waive debts in cases of financial hardship”.

The Victorian and Western Australian governments should follow the lead of other states by referring regulation of registered training organisations to the Australian Skills and Quality Authority, the report said.

Meanwhile, New South Wales and WA should stop fixing prices and student fees for VET courses, and Queensland should cease fixing student fees for apprenticeship courses.

Skills minister Michaelia Cash said the federal government has begun negotiating with the states and territories on a new national skills agreement.

“This report shows that our world-class VET system can be improved with a more transparent and consistent funding model,” she said.

“It’s clear the NASWD is overdue for a replacement, but with a major overhaul we could achieve a better return on public investment.

“This agreement has to ensure investment is targeted at areas of skill needs for our economic recovery and into the future.”

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