2.1
Skills and labour shortages have become increasingly critical in many sectors of the economy and have been exacerbated by both the COVID-19 pandemic and the lack of a coordinated national response to skills and workforce planning. The Jobs and Skills Australia Bill 2022 and Jobs and Skills Australia (National Skills Commissioner Repeal) Bill 2022 (bills) respond to this crisis by establishing an independent agency to provide advice on the immediate and future skills and training needs of Australian workers and employers.
2.2
This chapter explores the considerable support for the bills and canvasses stakeholder views on the structure and functions of the permanent Jobs and Skills Australia (JSA) agency.
General views on the bills
2.3
There was overwhelming stakeholder support for the bills, which would abolish the current National Skills Commission (NSC) and establish an interim JSA agency. For example, the Australian Council of Trade Unions (ACTU) described JSA as 'a critical centre piece … in rebuilding Australia's skills system'. Similarly, the Centre for New Industry at Per Capita (CNI Per Capita) called the measures 'crucial and necessary legislative reforms', while Ai Group and the Health Services Union (HSU) referred to the creation of the new agency as a 'significant step forward' and 'long overdue'.
2.4
While welcoming the establishment of JSA, a small number of stakeholders proposed changes for consideration prior to passage of the bills. These changes related primarily to including specific references to universities, First Nations people, and gender equity within JSA's establishing legislation. For example, the Group of Eight recommended that universities be formally recognised and included in JSA's functions, while the National Indigenous Australians Agency proposed that First Nations job seekers be recognised as a priority cohort for JSA and included in the bill as a key stakeholder group. Among other recommendations, Gender Equity Victoria suggested modifying JSA's functions to include an explicit focus on gender equity.
2.5
However, the majority of stakeholders supported the proposed structure and functions of the interim JSA—particularly in the context of ongoing consultations on a permanent model for the agency. For example, Mr Kevin Bates, Federal Secretary of the Australian Education Union (AEU) described the process as 'best practice' and observed that it showed a 'genuine commitment by the government to engage with the people who are actually delivering on the ground'. Likewise, Mr Michael Pope, Director of Skills and Education, Research and Migration at the Business Council of Australia (BCA) called it 'a commonsense approach' and explained the benefit of the two-stage process:
It means that JSA can be stood up quickly and start performing its functions, and that allows time for those further consultations to be undertaken and to be genuine, and to ensure that we're achieving some level of consensus on what JSA's final form turns into without having to rush that process.
2.6
In light of the two-stage approach to establishing JSA, a number of stakeholders called on the Parliament to pass the bill. Some, including the National Employment Services Association, the National Electrical and Communications Association (NECA) and the Australian Chamber of Commerce and Industry (ACCI) advocated for this to occur as soon as possible:
ACCI fully supports this legislation and encourages Parliament to pass it as soon as possible so as to not impede the agenda of providing a more holistic approach to workforce planning and valuable collaboration between governments and industry.
The need for reform
2.7
While a range of participants recognised the role COVID-19 has played in exacerbating labour market pressures, others reflected that the underlying problems in Australia's training system predated the pandemic. For example, CNI Per Capita noted that 'the skills mismatch and underutilisation within our labour markets has been apparent for a decade'. Likewise, the AEU pointed to the impact of marketisation on the quality of training in the vocational education sector. Marketisation, it argued, had 'flooded the market with inferior private providers' and shifted public funds from the TAFE sector to private for-profit providers. According to the ACTU, funding contestability added to the difficulty of aligning vocational education and training (VET) spending with industry and worker needs:
The problem of coordinating a decentralised network of VET suppliers toward broader macroeconomic aims has not been well resolved. VET has splintered into a plethora of independent profit centres, rather than a system of interdependent components pushing in the same direction.
2.8
The committee heard that the VET system has suffered funding cuts, with real term government expenditure in 2020 of $346 per person down from $461 per person in 2012, while an increasing proportion of government funding has also been directed towards training and often non-accredited courses offered by private Registered Training Organisations (RTOs). TAFE student numbers have also fallen by 27 per cent over the last decade, while the number of students enrolled in subjects not delivered as part of a nationally-recognised AQF accredited program, often delivered by private RTOs, increased by 120 per cent.
2.9
Submitters added that the emphasis on a market driven approach to the provision of VET services has resulted in problems ranging from deteriorating quality standards, aggressive marketing behaviour by some private training companies, and practices which have left students demoralised, in debt, and with inadequate training.
2.10
Given the long-standing nature of these issues, some participants expressed doubts about the ability of the current system to produce an adequate response. CNI Per Capita noted that many existing labour market institutions are 'no longer fit for purpose', while the ACTU described the system as 'fragmented and siloed' and its existing approaches as 'particularly weak in the face of the changing jobs landscape'. A similar sentiment was expressed by the Motor Trades Association of Australia, which called the training system 'broken' and argued that it was 'complex and slow moving when it needs to be agile and quick to respond to changing workplaces, jobs, technology and society'.
2.11
Stakeholder doubts about the current skills architecture also extended to the NSC. While multiple stakeholders commended the NSC's work to date and urged JSA to build on its solid foundations, some viewed its impact as constrained by a limited role in workforce analysis and planning and an absence of genuine stakeholder partnerships—particularly with states and territories. The inability of the NSC to drive solutions to workforce issues was noted by the Independent Tertiary Education Council Australia (ITECA):
… the National Skills Commission has done some excellent work … but … it hasn't had the ability to take that a step further. It can produce the reports and present them to the Commonwealth government, and it can present them to the states and territories. But it can't develop the workforce plans to deal with it ....
2.12
The ACTU submitted that the current system has also left Australia without the ability to produce a holistic view of skills needs and, therefore, poorly positioned to respond to economy-wide challenges such as decarbonisation, an ageing population and the under-participation of women and First Nations communities. Overall, it concluded that:
… there is simply no effective mechanism to connect the needs of the economy directly to the allocation of VET funding and ensuring its overall integration with our overall national investment on education, training and labour market development. What is needed is a construct that can produce skills assessments that reflect the occupational demands of the economy as-a-whole across the nation.
Support for the proposed JSA
2.13
Against this backdrop, numerous stakeholders saw the potential for JSA to renew Australia's skills architecture and provide a holistic view of its workforce and training needs. For example, the HSU argued that 'JSA has the potential to address the gap that currently exists between our skills and training framework and authorities, and actual economic trends and opportunities'. Similarly, TAFE Directors Australia (TDA) welcomed the creation of JSA as 'a single and authoritative body' able to advise on 'Australia’s current, emerging, and future skills and training needs and priorities, including apprenticeships'. ITECA concurred and described JSA as 'a critical piece of Australia's skills training infrastructure' that could coordinate and drive the productivity improvements needed 'to address skills shortages and also achieve a sustainable increase in wages'.
2.14
In a similar vein, Ms Nadine Williams, Deputy Secretary of the Department of Employment and Workplace Relations (the department) spoke to the transformational potential of the agency:
… I like to think of Jobs and Skills Australia as the engine room of the evidence, research and analysis that will help inform government policy and government funding decisions. If we get this right, which we will, this is going to be a really fundamentally transformational in how we direct our investment and resources going forward.
2.15
In addition to welcoming JSA's focus on research, data and analytics, there was also significant support for its proposed tripartite model of operation—which includes governments, employers and unions. Ms Megan Lilly, Head of Education and Training at the Ai Group reflected that, historically, the training system was most effective 'when there was strong collaboration and that collaboration was tripartite'. To this end, the ACTU saw JSA as an opportunity to restore these tripartite relationships and address the disconnect between the training system and the needs of industry and workers:
Without the fundamental connection with workplaces, workers and industry at these tables, we're in the situation we are today, with significant gaps across our labour market …
… JSA is an opportunity to fix that, and to bring back the voices of industry—representative of business and workers—to these tables to collaborate, design, co-design, innovate and deliver with each other and providers in the market.
2.16
While support for the tripartite model was strong, some stakeholders raised concerns that it might not adequately reflect other stakeholder voices such as those of First Nations people, universities, peak bodies, and regional and community organisations.
2.17
However, in response, the department emphasised that JSA would be required to 'genuinely consult' and that this included consultation with stakeholders outside the tripartite arrangement such as training providers, universities, regional organisations and others.
Views on the permanent model for Jobs and Skills Australia
2.18
In parallel with their support for the bills, many stakeholders provided feedback in relation to JSA's structure, governance and functions. Much of this commentary was provided with a view to informing the permanent model for the agency.
2.19
The committee heard from a number of submitters who outlined the role and functions of previous skills agencies and suggested that, in establishing JSA, the Australian Government should consider the lessons arising from these past attempts.
2.20
While not exhaustive, a summary of the key feedback received by the committee is provided below.
JSA structure and governance arrangements
Governance arrangements
2.21
While there was agreement about the importance of JSA's independence and a tripartite approach to its governance and operations, there were a range of views on how this should be operationalised.
2.22
Some stakeholders, such as the AEU, suggested that JSA be governed by a form of representative board, while others, such as ITECA, advocated for a board comprising experts appointed on merit that would be able to bring in relevant expertise as needed. A similar approach appeared to be supported by the ACTU, which suggested that JSA be governed by 'a multi-disciplinary independently chaired Board whose composition would be determined in consultation with National Skills Ministers'.
2.23
In addition, both the South Australian Premier and the ACT Government underlined the need for shared governance arrangements between the Australian Government and state and territory governments.
2.24
Other stakeholders proposed the creation of subordinate or ancillary structures and positions to prioritise key issues or voices. This included proposals for an Aboriginal and Torres Strait Islander Peoples Training Advisory Council, a National Apprenticeship Advisory Board, an apprenticeship division, and a small business commissioner with a 'roving brief' across JSA's activities.
In contrast to this approach, the ACTU advocated for flexibility in the approach to facilitating diverse voices and expressed caution about 'trying to overburden the process with a determinative approach'.
Relationships with other skills sector agencies
2.25
The committee heard mixed views about the interaction between JSA and other agencies within the skills sector. For example, some participants expressed the view that JSA could potentially incorporate the functions of agencies within the sector, including the National Careers Institute, the Australian Industry and Skills Committee and the proposed Industry Clusters.
2.26
However, other submitters, such as the ACT Government, suggested instead that careful design and clear articulation of roles and responsibilities would be needed to avoid overlap between agencies. Similarly, the National Australian Apprenticeship Association suggested that JSA's governance arrangement should facilitate close collaboration with these agencies.
JSA role and functions
A national skills plan and workforce development strategy
2.27
There was evident support for JSA to play a strong role in workforce planning. Some stakeholders, such as the ACCI and NECA highlighted the potential for JSA to play a role in developing and maintaining national skills plans and workforce development strategies. More specifically, the ACTU argued that this should involve the development of a five-year national skills plan supplemented by a biennial workforce development strategy.
2.28
In addition to a broad workforce planning role, there were also calls for JSA to include a focus on particular professions such as social workers and health care workers, including allied health professionals and podiatrists.
Promoting access, equity and diversity
2.29
A range of stakeholders saw a role for JSA in promoting access, equity and diversity within the training system and the broader workforce—particularly given the significant unemployment and underutilisation affecting women, First Nations people, and other vulnerable or disadvantaged groups such as migrants and those with disability.
2.30
Life Without Barriers saw this role extending to the establishment of JSA itself and argued for inclusion of people with disability in 'all aspects of its implementation and ongoing activity'.
2.31
In addition, the AEU called for JSA to focus on the needs of particular geographical locations—including regional, rural and remote areas and states with small populations—where there may be thin VET markets and unique employment requirements. The need for JSA to apply a local lens in relation to its advisory role was highlighted by a number of stakeholders.
For example, ITECA identified the NSC's inability to assess regional and local workforce needs as a particular shortcoming and suggested that JSA could build on the 'sophisticated and nuanced way' this was done by states and territories.
Improving quality and agility
2.32
A number of stakeholders suggested that JSA should play a central role in improving the quality of the training system, including through the provision of better data and evidence to support the delivery of quality VET courses, as well as its collaborative model of operation.
2.33
For some participants, such as the AEU, this was also linked to restoring TAFE as the centre of the VET system and providing JSA with a role in relation to 'monitoring the relationship between funding, regulation and the quality of RTO service provision'.
2.34
The AEU also advocated for JSA to have a strategic focus on 'addressing the decline in quality apprenticeships and traineeships, and the rapid decline in completions'. A focus on apprenticeships was also welcomed by the
National Australian Apprenticeship Association, the Australian Services Union, ACCI, BCA, and Ai Group, among others.
2.35
In addition, stakeholders also saw the potential for JSA to play a role in speeding up the translation of labour market advice into new or updated training products and qualifications.
The role of higher education in meeting workforce needs
2.36
Given predictions about the proportion of jobs that will require a higher education qualification, some stakeholders, including dual university-VET sector providers, argued for the explicit inclusion of higher education within JSA's remit.
2.37
Other submitters, such as the Australian Technology Network of Universities, suggested that JSA's remit should cover all education, training and skills needs, including pathways from school into tertiary education. This view was shared by RMIT University, which highlighted the need to integrate, rather than isolate, VET within the broader education sector.
2.38
While the ACTU supported JSA's immediate focus on VET, it also supported the idea that, in the longer term, JSA could play a role in better integrating investment in skills and training across the education system. For some stakeholders, this also included a focus on career development information and support as an important addition to JSA's functions.
The role of migration
2.39
Multiple stakeholders called for JSA to play a role in determining the role of migration in meeting Australia's workforce needs. For example, while there was general support for migration as a complement to training, the ACTU observed that without good integration, migration can end up competing with, rather than complementing, the VET system.
2.40
However, the Australian Workers' Union raised concerns about relying on temporary skilled migration to solve workforce shortages, particularly given the potential for exploitation of migrant workers. Similar concerns were raised by CNI Per Capita, which also noted that ‘while employers complain that they can't find workers, there are currently almost a million Australians receiving some form of income support, primarily either JobSeeker or Youth Allowance'. To this end, TDA suggested that JSA should have a role in oversighting industries that have a high reliance on migration and incentivising the training of Australian employees.
Committee view
2.41
The committee would like to thank stakeholders for engaging in this inquiry process, as well as participating in the consultations that underpinned development of the interim model for Jobs and Skills Australia (JSA).
The committee is also encouraged by the ongoing commitment, goodwill and enthusiasm that inquiry participants have shown in relation to consultations for the permanent JSA model.
2.42
The committee notes the tripartite approach outlined in the bills is consistent with the new government’s approach to governance which, as evidenced at the recent Jobs and Skills Summit, is intended to bring people together, find common ground, and develop consensus solutions to pressing economic challenges.
2.43
It is important to state at the outset that this inquiry has necessarily focused on the provisions of the Jobs and Skills Australia Bill 2022 and Jobs and Skills Australia (National Skills Commissioner Repeal) Bill 2022 (bills). However, the committee also values the time, thought and energy that submitters and witnesses have devoted to providing feedback on the future role and functions of JSA.
2.44
Based on the evidence presented to the committee, the overwhelming stakeholder support for the bills is underpinned by a clear need for change. Multiple participants spoke about the inability of the current training system to meet workforce needs and respond to economy-wide challenges.
While stakeholders attributed this to a range of causes, the committee heard that a significant factor has been the disconnect that has developed between the national training system and the needs of industry and workers.
2.45
The committee also accepts evidence by a range of submitters that the previous government's decision to direct more resources to private Registered Training Organisations at the expense of TAFE colleges has been detrimental to the quality of vocational education and training (VET) services. The committee agrees with submitters that TAFE must play a central role in the VET system.
2.46
While stakeholders praised the work of the National Skills Commission (NSC), the committee understands that its effectiveness in the current environment is constrained by a limited workforce planning function and the absence of a tripartite approach to its work—both of which will be key features of the new JSA agency.
2.47
Against this backdrop, the committee is aware that stakeholder expectations for JSA are high. To this end, the committee believes it will be important for JSA to have clear and measurable objectives to guide its activities. However, it will also need to retain enough flexibility to respond quickly to changing conditions. For this reason, the committee is reassured by the two-stage approach to establishing JSA, which will allow JSA to hit the ground running but will also ensure that a broad range of stakeholder views are considered in its final design.
2.48
On this point, the committee acknowledges the feedback provided by stakeholders as part of this inquiry. This includes the desire for JSA to play a strong role in workforce planning, with a focus on improving equity within the training system and broader workforce—particularly for women and First Nations people. The committee urges the Department of Employment and Workplace Relations to consider this feedback as it progresses its consultations on the final JSA model.
2.49
In relation to the tripartite approach, the committee agrees with the assessment of the ACTU that the formulaic modes of engagement traditionally relied upon by government departments will not deliver the outcomes the country requires. Therefore, the way the tripartite arrangement is operationalised by the department will be critical to the success of JSA. The aim must be to create an environment where all parties are equally invested as active contributors to the success of the agency.
2.50
Overall, by establishing the interim JSA agency (and abolishing the NSC), the committee believes the bills represent an important first step in re-building a strategic, agile and cohesive national training system—one that can respond quickly to changing workforce needs and position Australia to make the most of its economic opportunities. Accordingly, the committee recommends that the bills be passed.
2.51
The committee recommends the bills be passed.
Senator Tony Sheldon
Chair