Increasing investment under a new funding model

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Why is a new funding model needed?

The Australian Government and the states and territories share the funding of the vocational education and training (VET) system.

Currently VET prices, subsidies and fees vary considerably around Australia, with students paying different fees for the same course. The current system is difficult to understand and not as responsive as it needs to be to the skills needs of employers who rely on the VET system for a highly skilled workforce.

All governments have agreed to work together to adopt a new funding model that is simpler and more consistent for students. Efficient pricing and the skills needed by employers are also key to the new model.

Governments have also committed to increasing real investment in the VET system to ensure improved outcomes for students, employers and the economy.

What is efficient pricing?

The National Skills Commission is developing efficient prices for VET courses, in consultation with governments and VET sector stakeholders. An efficient price is not defined as the lowest price but the one that delivers positive outcomes for students and employers.

A more nationally consistent approach to pricing provides simpler and more transparent VET prices and fees that reflect the cost of delivering high-quality training.

Why is greater investment under a new funding model important?

A highly skilled workforce is critical to Australia’s economic prosperity. The Australian Government wants to make the VET system simpler for students, employers and Registered Training Organisations and improve the accessibility and quality of the VET system. This would see VET as an equal first choice for skilling.

What is being done?

The Australian Government’s investment in VET has increased to around $7 billion in 2020-21 in response to the COVID-19 pandemic.

The Australian Government is willing to invest more in a better system but is seeking reforms to ensure transparency, accountability and a better return on taxpayers’ dollars. As a first step, in July 2020 the Australian Government established the National Skills Commission to provide independent expert advice and national leadership on the Australian labour market, current and future skills needs and workforce development issues, as well as efficient prices for VET. The National Skills Commission’s advice has informed the Australian Government’s economic response to COVID-19, including the approach to rolling out the JobTrainer Fund.

The $1 billion JobTrainer Fund, funded by the Commonwealth and the states on a 50:50 basis, is providing around 300,000 extra training places that are free or low fee, in areas of identified skills need, for job seekers and young people, including school leavers. As at 31 July 2021, JobTrainer has supported over 230,000 enrolments.

This is an immediate, and important part of the JobMaker Plan, supporting Australians back to work and businesses to reopen.

These places are available now. They are evidence of all governments’ commitment to improving the quality, transparency and relevance of the VET system into the future.

As part of the 2021-22 Budget, the Australian Government will offer states and territories an additional $500 million over two years to extend the JobTrainer Fund from its current end date of 30 September 2021 to 31 December 2022, contingent on matched funding from states and territories. This will bring the total funding available for free and low-fee training under the Fund to $2 billion.

The JobTrainer extension will continue the strong collaboration across the Australian, state and territory governments that has been evident since all First Ministers signed the Heads of Agreement for Skills Reform in August 2020.

To support long-term reform, the Australian, state and territory governments are currently negotiating a new National Skills Agreement that will ensure Australians can access high quality and relevant training, that sets them up with the skills they need for the jobs that emerge through the next decade and beyond.