Industry Engagement Reforms

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What is Industry Engagement in the VET system?

Industry, including employers, peak bodies and unions, interacts with the Vocational Education and Training (VET) system in diverse and complex ways. These include:

  • hiring VET graduates
  • engaging and supporting structured training for apprentices and trainees
  • training their own employees
  • in some cases, working with Registered Training Organisations (RTOs) to develop organisation-specific training, including tailored training to meet workforce development needs.

Industry also provides input to the development of qualifications through the following channels:

  • The Australian Industry and Skills Committee (AISC) was established by Skills Ministers in May 2015 to give industry a formal role in commissioning training package development work and approving training packages for implementation.
  • Industry Reference Committees (IRCs) were established to advise the AISC about the skills needs of their industry sector, including what national training products are required to support these skills needs.

Why is Industry Engagement in the VET system important?

Australia's VET sector has long been internationally recognised for its industry leadership, quality, and capacity to deliver qualifications aligned to jobs.

Industry plays a critical role in identifying the skills needed today and into the future.

Why is reform needed?

The impacts of COVID-19 and a rapidly changing economy are affecting the way we work. While the strength of Australia’s VET system is internationally recognised, we need to ensure it continues to respond to the needs of employers, now and into the future.

However, employers have indicated that the VET system is not currently working for them, with National Centre for Vocational Education Research data showing:

  • employer satisfaction with VET has fallen from 86.3 per cent in 2009 to 78.8 per cent in 2019
  • 42 per cent of employers report recruitment difficulty, primarily because of applicants’ lack of skills, qualifications or experience
  • only 41 per cent of employers said that the VET system is currently meeting the needs of their business.

What is being done?

As set out in the Heads of Agreement for Skills Reform, the Australian, state and territory governments have agreed to reform the way industry engages with the VET system to ensure it is delivering for both learners and employers.

This will equip Australians with the skills they need to upskill in current roles or apply to new and emerging jobs, and be part of the responsive and resilient workforce that delivers for businesses and employers.

Skills Ministers have listened to feedback from the sector received through comprehensive consultations and have now agreed to the arrangements to implement industry engagement reforms. Industry Clusters will be established to provide industry with a stronger, more strategic voice and a broader role in ensuring Australia’s VET system can respond rapidly to changes in Australia’s economy and build a resilient workforce that delivers on industry’s needs.

Training packages developed by Industry Clusters will be independently assured by the Australian Skills Quality Authority (ASQA) before final endorsement by Skills Ministers.

Establishing new Industry Clusters

As part of the 2021-22 Budget, the Australian Government provided an additional $149.2 million over four years, bringing the total investment to $292.5 million, to enhance the role of industry in the VET system and embed improved governance. To achieve this, Industry Clusters will be established and supported to:

  • Identify, forecast and respond to the current and emerging skills needs and workforce challenges of their industries. 
  • Develop training products that improve the quality, speed to market and responsiveness of training products, including piloting emerging products and testing new approaches to meet industry needs.
  • Work with training providers to ensure training delivery meets employer needs, career pathways are mapped and promoted and the impact of delivery is monitored.
  • Provide strategic advice on skills and workforce needs and the effectiveness of VET system policies and standards.

The new Industry Clusters will replace the current industry engagement arrangements which includes 67 IRCs and six Skills Service Organisations (SSOs) and are expected to be fully operational by 1 January 2023. IRCs and SSOs will retain responsibility for training packages and training product development until the end of 2022. The AISC will continue to review proposed changes to national training products until the end of 2022.

More information on the industry engagement arrangements is available on the Skills Reform website. 

Stage One of the Industry Clusters Grant Opportunity has now closed.

To view the media release visit: Industry invited to help shape landmark skills reforms | Ministers' Media Centre

Setting clear expectations for system performance

Australian Commonwealth, state and territory governments have also agreed to new system performance arrangements, with skills and training ministers setting standards and frameworks to drive quality outcomes. New mechanisms will be established, including through an annual health check, to evaluate impact and drive continuous improvement to ensure the system is responding to the needs of industry. 

Quality assurance for training products that meet employer and learner needs

To support the reforms, the Australian Government will establish an independent assurance function within ASQA, initially from 1 January 2023 to 31 December 2024, to ensure training products meet national standards.  As the VET sector’s national independent statutory authority, ASQA will deliver increased transparency, accountability, and confidence in training products for employers, learners and training providers. ASQA will bring invaluable expertise in the regulatory and VET systems, ensuring high quality compliance assessments of training packages against the standards set by Skills Ministers.

ASQA will replace the AISC, which will remain in place until 31 December 2022 to ensure continuity and stability of the VET system during transition to the new arrangements.  

Ensuring the new industry engagement arrangements deliver for employers and learners

Skills and training ministers have agreed to undertake a review of the new industry engagement arrangements 12 months after commencement to assess whether the system is working as intended, and to make improvements where needed.

To keep up to date of the progress, visit Skills Reform website.

For more on implementing industry engagement reforms read the Ministerial Statement.

Submissions - Skills Reform: Improving industry engagement and reforming qualifications in Vocational Education and Training discussion paper

As part of public consultations on industry engagement reforms, VET stakeholders were invited via the Skills Reform website to provide submissions in response to the Improving industry engagement and reforming qualifications in Vocational Education and Training discussion paper. The submissions are now available to be viewed.