Will a new government undo knotted problems in the stalled reform of the VET National Agreement and the Australian Qualifications Framework? Opinion

Introduction, problem and purpose

Australia has a new national government. All participants in the higher education (HE) and research sectors and the vocational education and training (VET) sector will build fresh relations with the new government, including all state and territory (S&T) governments. 

The new Australian Government (AG) has proffered a largely blank HE policy sheet in its election platform, other than an extra 20,000 new university places and an as yet unspecified University Accord to drive lasting reform.

Closer reconsideration of the funding specifics of the Job Ready Graduates policy, better support of HE research funding and commercialisation including Australia’s Economic Accelerator with links to the new $15bn National Reconstruction Fund, and initiatives to rebuild a quality and diverse international student market, supporting skilled migration, may be headline initiatives the vice chancellors would look for in any new Accord.

The policy canvas for the VET sector is more explicit. It proposes 465,000 fee free TAFE places, including 45,000 new TAFE places, a $50m TAFE Technology Fund, $100m for New Energy Apprenticeships to train 10,000 apprentices in new energy jobs, ensuring at least 70 per cent of Commonwealth vocational education funding is for public TAFE, and, working closely with S&T Governments, industry and unions (to) allow workers to transfer and build on their accredited micro-credential training (the last item pertinent to this narrative).

Any new government has to deal with the incomplete or failed initiatives of the old. A legitimate option is to simply junk whatever went before, especially if it’s not relevant to policy commitments. But in this case two issues just won’t and should not go away.

The first issue is the long term failure to get jurisdictional sign off of a renewed National Agreement (NA) for Skills and Workforce Development between the AG and S&T Governments. This will need a new approach. The second is zero (public) progress on implementation of reforms proposed in the 2019 review of the AQF. Abandoning this thought leadership work and the report’s recommendations would be a major strategic mistake.

Why so? The failure to effectively resolve these two issues creates crippling and connected consequences. First, a blocked NA undermines jurisdictional cooperation and the flow of any additional AG funding for VET skills. 

Second, a revised contemporary AQF would provide practical modernisation of national qualifications and shorter credentials, thereby far better accommodating current and future realities of employee ‘life-long’ learning, so supporting ‘up-and-re skilling’ needs.

Third, and most crucially, the AQF de facto defines HE/VET sectoral boundaries. In our Federated system, this then also defines which government(s’) fund VET (alone or shared). So any revision of the AQF risks an ugly ‘who pays for what and has control’ debate.

It would also provoke debate on the policies and quantum of public funding of HE vs. VET and relativities (e.g. disparate costs to students and different access to loans). All speculative reasons for zero progress on AQF reform.

The ex-AG did not get its way on a revised NA, being resisted by the States in a ‘tug-a-war’ on old Federation rope. If the thesis above is correct, then the ex-AG also left AQF reform in the ‘too complex and hard basket’ because it risked being similarly tied up.

This article is an exhortation to all Governments to now collaboratively undo these ‘old-knots’ in the nation’s best interest. Find new constructive ways of working together, or risk ongoing competitive stagnation of Australian’s skilled workforce and labour productivity.

The ideal outcome should be an ‘all-jurisdictions’ agreed and revised AQF and a nationally operating tertiary funding framework and system that ensures funding and financing of both high quality full qualifications and shorter credentials. Inaction only stymies a better integrated tertiary education system and opportunity for improved university/industry collaboration, all of which is argued as being vital to lifting skills-related national productivity.

Knot 1: Failure to Negotiate and Sign Off a Renewed National Agreement for VET

As explained elsewhere, unlike the HE sector, the VET sector operates by ‘cooperative federalism’. This is reaffirmed by the latest VET Heads of Agreement for Skills Reform between jurisdictions where VET is stated as a ‘shared responsibility’ across all jurisdictions. 

It was last legally evidenced in the terms of the agreed referral of Constitutional Power (Vic and WA excepted) for the creation of the ASQA in 2011, the national VET regulator, where other VET activities were explicitly carved out to remain in State control.  

Australia’s Federation has a relatively high ‘vertical fiscal imbalance’ (compared with, say, Germany and Canada) requiring the AG to transfer funding under the Intergovernmental Agreement on Federal Financial Relations so S&T can deliver various services, including VET. 

Jurisdictional dispute is about any controls and conditions the AG places on this transfer, or whether it is ‘untied’ and without condition (other than the NA funding is used for VET training).

The AG commissioned and received a comprehensive review of the national VET sector in early 2019. The Strengthening Skills: Expert Review of Australia’s VET System (Joyce Review) made sweeping recommendations, some now implemented. It was underpinned by strong centralisation of VET policy and funding control in the AG. 

Detailed critique was made as to why some key aspects of the Review were flawed and needed a re-work. Not only did the Review’s ‘simpler funding’ proposal fail to recognise nor accommodate the basis of cooperative federalism in VET, it also failed to consider the adequacy of VET funding, nor offer solutions on how to increase investment in VET (public, private or employer), nor offer solutions to fund part qualifications and micro credentials/subjects, nor did it cover the merits for wider access to loans for VET students. 

The critique predicted that the ‘simpler funding’ recommendations represented a major and unacceptable repositioning for S&T Governments in their constitutional and Ministerial responsibilities, given their co-funding and control of their own S&T VET sectors.  

The ex-AG Treasurer then sought the Productivity Commission’s (PC) review of the NA. The jurisdictional submissions to the PC were uniform in politely (some obliquely) rejecting the basis of ‘simpler funding’, most plainly expressed by the Qld submission:

“It is critical that the role of the state, as the majority funder of VET, is not encroached upon, particularly in relation to pricing and subsidy setting… States and territories fundamentally require flexibility in their funding efforts and should not be exposed to onerous conditions and input controls that are contrary to the principles of the Intergovernmental Agreement on Federal Financial Relations” Ministerial letter as Qld. Government Submission Jan. 2020.

The final report of the Productivity Commission was an extensive tour de force of many of VET’s high priority “acknowledged weaknesses” with a headline being the PC recommended any transfer of NA funding should remain “largely untied for base funding but subject to much greater accountability and transparency” (pg.2) based on a revision of the NA’s principles and sharpened accountability under the Intergovernmental Agreement.

The PC’s proposals included that the National Skills Commission (NSC) estimate VET course prices, efficient costs and loadings for setting and simplifying course subsidies, having State and Territory governments adopt these as a “common basis for setting their subsidy rates” (p.2) (and) leaving jurisdictions the “flexibility to determine their subsidy rates according to their own priorities for courses and student cohorts” (p.21). 

This approach was a significant wind back of the Joyce Review’s proposals. The PC was advising all Governments to find a better balance – supporting subsidiarity but with sharper accountability – that best accommodated cooperative federalism and its inherent stresses. 

More recently, the NA for Skills was highly featured in the ex-AG 2022/23 Budget and later election commitments. It referred to the National Skills Agreement as follows.

“Government has committed up to $12 billion over five years from 2022–23 for a National Skills Agreement (NSA) with state and territory governments. In addition to the $8.3 billion National Skills and Workforce Development Specific Purpose Payment, the Budget includes provision for a further $3.7 billion to support the NSA. The NSA will transform the way the states and territories support vocational education and training (VET), ensuring investment decisions are evidence-based and linked to skills need, funding is transparent, and greater consistency applies across jurisdictions. The NSA has the capacity to deliver around 800,000 additional training places over five years. It will reduce the number of students facing unreasonably high fees and improve access to free and low-fee training for priority students…” pg 12 2022/23 Portfolio Budget Statement May 2022

It is history now that three futile years went by from the Joyce Review and two since the First Ministers’ signed off a VET Heads of Agreement, plus the slog of the PC – and still no renewed NA. The speculative conclusion is that S&T Governments, emboldened and scarred by relations during the COVID crisis, preferred the status quo NA without extra funding, than agree to the terms being offered.  

An inkling of what was on offer, if correct, is this recent scathing Ministerial Statement from the Queensland Minister including that “The States and territories are united in their condemnation of the draft agreement”. It seems they all just sat out time awaiting another AG.

The calculus for the “around 800,000 additional training places” (above) is not known, but speculatively seems to partly rest on what the ex-AG calculated as its desired mix of public and (increased) student fees, if examples raised by the Qld Minister are correct.

It would also seem that transfer of the entire NA funds, existing and extra, would be AG-conditional and not ‘untied’. The calculus for the new AG election policy of “465,000 Fee Free TAFE places, including 45,000 new TAFE places” is notably far less places than the now defunct alternate. 

How in detail ‘free-places’ fit, or add, to overall funding for VET per the released policy costings will emerge. It is probable S&T Government’s will be provided a redrafted NA more in accord with present arrangements.

Despite the failure to successfully negotiate terms on the NA, the ex-AG must be well lauded for the extra interim financial support for the national VET sector over the COVID-crisis, especially in employment support by Boosting and Completing Apprentices Commencements and also Job Trainer. The Australian Government provided for example some $3.8bn in 2020, an increase of $1.2 billion (up 45% from 2019). This extra support was needed and was exceptional.

‘National’ Reforms in VET have differing requirements in authorisation and agreement

Consider three further examples of graded control: full AG autonomy; AG decisions following S&T consultation; and genuine national reforms needing all of AG/S&T Governments agreement. 

Example 1: The AG can design, fund and operate the National Skills Commission and the National Careers Institute. It can without apparent public consultation majorly adjust the design and funding of apprentice/employer support as detailed in its 2022/23 Budget and decide what are priority apprenticeships and their funding. This is despite S&T Governments having powers to declare occupations undertaken as apprenticeships and traineeships.

Example 2: New VET skills industry advisory arrangements starting in 2023 see Industry Clusters (ICs) replacing Industry Reference Committees (IRCs) and Skills Service Organisations (SSOs). Change was widely consulted and agreed by the Skills National Cabinet Reform Committee. 

That said, the new ICs will be the fourth iteration of different national skills/industry advisory arrangements since 2003. Throughout this time the performance of all such bodies has been subject of confidential AG contract management without public performance metrics or account.

Example 3: This example includes the slowly evolving VET Qualifications Reform program where Skills Organisations Pilots have been pursuing new evidence-led approaches to qualifications development with  schematic alternate models considered. Given that the VET Training Package Standards were formally agreed in 2012 by all VET Ministers and the ‘carve out’ of retained State powers includes “the qualifications required for various occupations”, any comprehensive reforms to VET Training Products will certainly need full and formal agreement by all jurisdictions. 

And all such VET qualifications, like those of the HE sector, then connect across Levels 1-10 of the present AQF, or in future translate into the matrixed ‘bands’ as outlined in the AQF Review. This then defines the complex terrain of the second major knot bound up on ‘old Federation rope’.

Knot 2: No Progress (Publically) in Implementing the AQF Review

The Review of the AQF was completed back in 2019. Then Ministers Cash and Tehan headlined the release: “a New Future for VET and Higher Education” and stated it would ‘make it easier for Australians to move between vocational training and higher education and to earn micro-credential qualifications that will improve their productivity’.

The AG accepted all the ‘recommendations of the review in relation to HE and accepted the aims of recommendations in relation to VET contingent on further discussions with S&T Governments’ (NB caveat). The only break from ‘radio-silence’ since was the insertion of the Undergraduate Certificate into the AQF to legitimise Commonwealth expenditure as part of its COVID-driven response to support short courses. This is not AQF reform.

The speculative reasons why implementation of the AQF Review’s recommendations never proceeded are set out above. The reforms have stagnated in the ‘too complex and hard basket’ not only because it re-shapes the tertiary system and has flow on implications in rebuilding any consensus on a revised national tertiary funding/financing system; but also because reform has other far reaching, rumbling reverberations. This includes qualification/credential re-design, flow on quality and regulatory changes plus disturbing a multitude of legislative, industrial awards and professional standards all anchored to the AQF. How can such a huge reform job get done?

The AQF Review was a far reaching thought leadership proposal, being an imaginatively crafted modernisation of the AQF. It was not prescriptive but rather gave options for translation of the present AQF 10 levels to new composite ‘knowledge, skills and application’ bandings. 

It envisaged extensive consultation to technically stress test best options and to tease out details. Since 2019, the most valuable complementary policy contribution has been the national micro-credentials framework (2022) that sets out a lucid and practical statement, prepared by a 16 Member expert working group, without overt sign of government or ministerial endorsement.

There is no shortage in the stock of ideas for betterment of Australia’s tertiary education system.  Commissioned by the ex-AG, the most recent report focused on University/Industry collaboration. Its advice on the AQF was: “Implement AQF Reform – To assist in the design of qualifications that will meet the needs of industry, expedite reform of the AQF, in order to facilitate better collaboration between higher education providers, VET providers and industry and…enable the alignment of micro-credentials to the AQF”. The plain message was – get on with it.

While governments collectively dither, the post schooling education/training and skilling landscape, especially kicked on by COVID, accelerates away. It includes both accredited HE and VET short courses/micro-credentials. There is a growing non-accredited skills market available on education-as-a-service platforms. There are examples of VET registered providers, wanting to work with high-tech industry, offering their ‘own-branded’ micro-credentials, being unable to self-accredit courses (unlike universities) and impatient at the ‘snails-pace’ of training product reform.

All this may be innovative, or set up concerning reputation and quality risks. So for consumers it’s ‘buyer-beware’ at any ‘e-fast-learn outlets’ that are beyond the reach of regulators. And more employers and leaners are, and will be active, in accessing this non-accredited and non-regulated space.

The reason is that increasingly employers just want skilled staff – domestic or skilled migrants. They care less for any institutional brand or formal qualification. They want staff with contemporary job-task specific skills. For example, the Tech Council of Australia seeks by 2030 to grow its contribution to the economy to $250bn and increase employees in tech-related jobs by 340,000 to 1.2 million, a target endorsed by the new Prime Minister.  

The present graduate output of domestic ICT VET and HE graduates is insufficient. In any case, employers want foremost that all their new and current staff have the right ‘job task-related digital skills’, not necessarily formal credentials.

So we need to think differently. The AQF is not some arcane, academic ‘policy-wonk’ artefact – it could alternately be seen as a hot house zone of engagement between students, institutions and industry that supports existing conventional qualifications as well as new innovative shorter course constructs.  

This should be underpinned by an equitable public funding and private financing (loans) schema. Ideally VET would sit in such a schema better integrated with the HE sector, allowing students fair access and opportunity to move across sectors based on merit and equity, so eliminating funding as a major determinant of student choice (see also PC report  pg. 22).  

National reforms need trusted and effective political and bureaucratic leadership

Lest readers think VET is an aberrant example of a ‘knotted problem’, consider the insights of Robert French the ex-Chief Justice of the High Court of Australia in his 2008 essay "The future of federalism: The incredible shrinking federation voyage to a singular state?" 

“The recent history of cooperative federalism in Australia demonstrates a tendency to treat as national a whole range of issues which, not so long ago, would have been regarded as local. The concentration of central power to which this trend contributes began many years ago….Cooperative federalism today is in part extra-constitutional. Driven by political imperatives it yields results on a consensual basis which go well beyond those achievable by the exercise of Commonwealth legislative power and the separate exercise by the States of their powers...

"For every topic which is treated as national becomes potentially a matter which, somewhere along the line, it can be argued is best dealt with by a national government… there is a ratchet effect. Once a topic has been designated as one of national significance and requiring a cooperative approach, it is difficult to imagine circumstances in which it becomes politically acceptable to the parties to go backwards and fragment responsibility for it. The pressure seems to be in one direction only."

Cooperative Federalism is guided by three principles. The most critical is ‘subsidiarity’, that is proximity of government to the community it serves, or as Dr Ron Ben-David the ex-Chair Essential Services Commission (Vic) wrote in his essay “Federalism, Subsidiarity & Economics: In search of a unifying theory”. “Federalism is based upon the principle of subsidiarity whereby responsibility, in theory should be held at the most decentralised level that is competent to undertake the role.” 

He states his most illuminating career insight was a realisation that his Canberra colleagues saw subsidiarity as: “all authority and responsibility resides with the centre and policy only becomes the responsibility of another level of government if that level of government can administer its implementation more efficiently” (i.e. as decided by the centre).

If such reflections are valid, herein sits a crucial relationship issue that at worst provokes tug-a-war tactics, power-creep, posturing, and logjams. The needed alternate and positive approach is to tackle reforms (as above) with all players having national interest best outcomes, foremost in mind.

Conclusion

It is a galaxy-bridge way too far to expect Federal reform that limits ‘vertical fiscal imbalance’, eroding Canberra-centric authority and funding power. Short of an alternate ‘grand bargain’ of funding reforms, unless and until there is constitutional change, the VET sector is governed, funded and operates by cooperative federalism.

This frustrates many who want VET to operate like the HE sector. For now, State Skills Ministers on behalf of their Parliaments, economies and communities exercise operational control of their VET sector, seeking best effective relations with the AG. The model is for now balanced subsidiarity with rational and reasonable accountability.

Tellingly, the new Prime Minister has opened his term by saying at the outset “I want to have a cooperative relationship. I want to bring people together, including the states and territories….on how we work together”. 

A new cooperatively negotiated VET NA is now likely and a reframed and modernised AQF a next possibility (needing cooperation across new AG Ministerial, portfolio and departmental arrangements).

Now get going and untie the ‘knots of old Federation rope’.

Dr Craig Fowler is an analyst and observer of national policies impacting tertiary education, science and innovation after decades of experience in private, public and university sectors.

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