Purpose of the Bills

The Jobs and Skills Australia Bill 2022 (JSA Bill) and Jobs and Skills Australia (National Skills Commissioner Repeal) Bill 2022 (NSC Repeal Bill) together propose to abolish the role of the National Skills Commissioner, and replace the office of the National Skills Commission (NSC) with a new body, Jobs and Skills Australia (JSA). The creation of JSA was one of the Government’s 2022 election commitments, having been originally announced in October 2019.[1]  

The JSA Bill sets out the functions and staffing arrangements for JSA. The Government expects to introduce further legislation following consultation on JSA’s scope, structure, and governance, informed by the outcomes of the Jobs and Skills Summit, which is scheduled for September 2022.[2]

The NSC Repeal Bill provides for the immediate repeal of the National Skills Commissioner Act 2020 (NSC Act), under which the NSC operates, if the Jobs and Skills Australia Act comes into force.

Background

Australia’s skill needs

Recruitment difficulties have recently gained considerable attention as employers in countries around the world report challenges in the wake of the global COVID-19 pandemic. According to a recent Organisation for Economic Cooperation and Development (OECD) working paper, Australia is experiencing some of the highest rates of labour shortages in the OECD.[3]

Australia’s experience reflects a combination of two distinct factors:

• short-term labour shortages, generally at lower skill levels, shaped by COVID-19 disruption, resulting in an inability to attract workers under prevailing pay and conditions
• persistent shortages of adequately qualified and skilled workers at higher skill levels, including in technical and trade-based occupations (that is, jobs requiring a Certificate III, Diploma, Advanced Diploma, Associate Degree, or Bachelor Degree, or equivalent experience).[4]

The NSC has found 19% of all assessed occupations, and 42% of Technician and Trade Occupations, are currently in national shortage.[5]

Employment projections suggest that job growth in high skill level and service-oriented occupations will continue to drive future demand to 2026, with almost two-thirds of projected employment growth concentrated in:

• health care and social assistance
• professional, scientific and technical services
• education and training
• accommodation and food services.[6]

Skill needs within occupations are also transforming, with skills related to caring, digital skills, non-routine cognitive skills, and communication and collaboration, increasingly required across a range of occupations.[7] The shift in digital skill requirements has been particularly pronounced in light of the COVID-19 driven acceleration of the digital transformation, with countries facing common challenges in the area of digital skills acquisition among workers and firms.[8]

The importance of education and training in meeting these needs has been reaffirmed during COVID-19, as the acceleration of existing trends towards higher-skill employment has combined with decreased access to skilled migration due to border closures.[9] As borders open, Australia continues to face challenges associated with international competition for skilled workers.[10] A range of initiatives have been introduced in both higher education and vocational education and training (VET) with the aim of better matching skill demand with the skills offered by workers.[11] However, efforts to enact wider-scale skills training reforms have largely stalled.

The National Skills Commission

Successive Australian Governments have sought to coordinate domestic responses to skill needs through statutory skills related bodies.[12] The NSC was announced in the 2019–20 Budget as part of the ‘Delivering Skills for Today and Tomorrow’ suite of measures that formed the response to the Strengthening Skills: Expert Review of Australia's Vocational Education and Training System (the Joyce Review), which had been commissioned in the lead-up to the 2019 election.[13]

The NSC commenced operating in an interim capacity in July 2020 and was formally established under the NSC Act from September 2020. It is currently responsible for providing advice and information about Australia’s labour market; current, emerging and future workforce skills needs; the performance of the VET system; VET pricing; and return on investment in VET.[14]

It is likely too early to judge the NSC’s impact in terms of responding to Australia’s skill needs. In 2020 and 2021, it focused on establishment and an initial body of work including:

• labour market analysis, which had previously been a departmental responsibility
• developing and consulting on an Australian Skills Classification
• producing its inaugural report, The State of Australia’s Skills 2021: Now and into the Future as required under the NSC Act
• reviewing the national skills needs of Australia and producing a Skills Priority List
• examining VET course prices, and publishing the VET Average Price Benchmark report
• producing a number of industry, occupation and skill-specific reports, such as on Emerging Occupations, the Care Workforce, Digital Skills, and the Health Care and Social Assistance industry.

Skills training reform during the 46th Parliament

Responsibility for VET is shared between the Australian Government and the states and territories. Each state and territory administers VET delivery within its jurisdiction, while the Australian Government supports these efforts via funding delivered under intergovernmental agreements, and supports VET students and apprentice employers directly via VET Student Loans, Trade Support Loans, and apprenticeship incentives. Significant influence is also exercised by agreement through the national VET regulator, the Australian Skills Quality Authority.

The major intergovernmental agreement for VET is the National Agreement for Skills and Workforce Development (NASWD). The NASWD sets out jurisdictions’ shared responsibilities and is the basis for approximately $1.6 billion of ongoing National Specific Purpose Payments from the Australian Government to states and territories each year.[15]

In 2020, the Productivity Commission released a review of the NASWD, concluding it is ‘overdue for replacement’, and recommending a new agreement implement a range of changes including (but not limited to):

• improving returns on investment by using NSC work on efficient costs as the basis for common course subsidies
• setting minimum fees for Certificate III
• applying more contestability to public funding of TAFE.[16] 

A Heads of Agreement for Skills Reform was subsequently finalised with the states and territories in July 2020.[17] However, jurisdictions did not reach agreement over the expected replacement for the NASWD during the 46th Parliament. This was reportedly related to elements of the draft agreement, including possible reductions in funding for TAFE, and the proposed role of the NSC in setting prices and subsidies (work that is currently undertaken by the states and territories based on each jurisdiction’s skill needs, with a different system operating in each jurisdiction).[18] The 2022–23 Budget allocated an additional $3.7 billion over 5 years from 2022–23 to work with states and territories on this issue, flagging skills reform as a significant issue to be addressed during the 47th Parliament.[19]

Committee consideration

Senate Education and Employment Legislation Committee

On 28 July 2022 the Senate referred the Bills to the Education and Employment Legislation Committee for inquiry and report by 23 September 2022.[20] Further information is available at the homepage to the inquiry.[21]

Senate Standing Committee for the Scrutiny of Bills

At the time of writing, the Senate Standing Committee for the Scrutiny of Bills had not considered the Bills.[22]

Policy position of non-government parties/independents

At the time of writing, no comments on the Bills from non-government parties/independents were located. However, when JSA was originally announced by Labor in 2019, the Coalition characterised the idea as a ‘renaming’ of the NSC.[23]

Position of major interest groups

The Bills are supported by a range of education and training, union, and employer stakeholders, as discussed in the key issues and provisions section of this Bills Digest.

Financial implications

The Explanatory Memorandum to the Bills states that they will have no financial impact, as the creation of JSA will be funded from savings from abolishing the NSC.[24]

Statement of Compatibility with Human Rights

As required under Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 (Cth), the Government has assessed the Bills’ compatibility with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of that Act. The Government considers that the Bills are compatible.[25]

Parliamentary Joint Committee on Human Rights

At the time of writing, the Parliamentary Joint Committee on Human Rights had not considered the Bills.[26]

Key issues and provisions

JSA establishment and functions

As summarised in Table 1 below, JSA’s proposed remit as set out in clause 9 of the JSA Bill is substantially similar to the NSC’s under section 7 of the NSC Act, with a focus on workforce skill needs and VET common to both. However:

• while the NSC’s current advisory functions include VET pricing and returns on investment, JSA will provide advice on a smaller number of less narrowly defined topics, and consider the ‘resourcing and funding requirements’ for accessible quality VET delivery as part of a new research function—this appears to signal a step back from the idea of national VET price setting
• while the NSC’s current advisory responsibilities are substantially VET-specific, JSA’s advisory functions have been drafted in broader terms, which would appear to allow the new body greater scope to consider skill needs in industries and occupations not served by the VET sector (for example, occupations requiring a higher education).

Additionally, the consultation requirements to be imposed on JSA under clause 10 of the JSA Bill are not paralleled anywhere in the current NSC Act.

It appears JSA’s proposed areas of inquiry are supported by stakeholders, with the Group of Eight universities and Australian Chamber of Commerce and Industry welcoming the inclusion of capacity studies and workforce forecasting in JSA’s functions.[27]

A number of key stakeholders, including Universities Australia, the Independent Tertiary Education Council Australia, the Australian Education Union, and the Business Council of Australia, have also welcomed the JSA Bill’s emphasis on working with and drawing on the expertise of education and training providers, state and territory governments, unions, and industry.[28]

However, while welcoming the Bills, others have pointed to the lack of detail in the current drafting. Most notably, the Bills include only limited provision for JSA’s independence, and do not specify the circumstances when consultation would be required, or how it would be undertaken. Ai Group has suggested that ‘[i]t is important that Jobs and Skills Australia be an independent agency with a strong industry board’, while TAFE Directors Australia has pointed to the need for JSA’s approach to allow for local leadership in response to skill needs.[29] The Government anticipates introducing further legislation fleshing out these governance issues following consultation.[30]

Table 1      Current NSC functions and proposed JSA functions and consultation requirements

Sources: NSC Act, section 7; JSA Bill, clauses 9 and 10.

The JSA Director and staff

The NSC Repeal Bill proposes to repeal the NSC Act if the Jobs and Skills Australia Act comes into force. No transitional arrangements for the NSC are included in the Bills. The NSC, along with the appointment of the inaugural National Skills Commissioner, would therefore be dissolved on commencement of the NSC Repeal Act.

The JSA Bill proposes that the JSA will be headed by a JSA Director, appointed by the Minister by written instrument for a period of up to 1 year.[31] The Director’s remuneration is to be determined by the Remuneration Tribunal, or in the absence of such a determination, prescribed by the rules made by the Minister (which would be disallowable).[32]

The Minister will have the power to direct the JSA Director regarding the performance of their role (with such direction not being a legislative instrument, and thus not open to scrutiny or disallowance by the Parliament).[33] However, this cannot relate to the content of advice given by the JSA Director, which affords JSA a degree of independence.[34]  

The JSA Director is to be supported by a staff made up of Australian Public Service employees of the department (currently the Department of Employment and Workplace Relations) or other departments.[35] The JSA Director may also engage consultants to assist with their functions.[36] 

Concluding comments

The creation of JSA appears to have two benefits over the current NSC, which may assist to resolve the current impasse in skills training reform: it includes consultation as one of the new agency’s responsibilities under its establishing legislation, and it does not include the VET pricing focus which appears to have been a barrier to agreement over the replacement for the NASWD. Further, its broader remit may provide more opportunities to consider skill needs beyond those occupations served by VET. 

However, as some stakeholders have identified, the success of the JSA model will largely depend on governance arrangements that are not included in the current Bills. The development of such arrangements, and the transition from the NSC to JSA will need to be carefully managed. Otherwise, there is a risk that the creation of JSA will repeat the tendency of past governments to lose money and corporate memory setting up and abolishing broadly similar bodies.[37]

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