Increasing investment under a new funding model

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Why is a new funding model needed?

All governments recognise the critical role the vocational education and training (VET) system plays in supporting Australia’s future growth and prosperity including our economic recovery from COVID. Governments and industry are working together to ensure Australians have a responsive, world-class VET system that can deliver the skills needed for the jobs of today and tomorrow.

Funding for the VET system is a shared responsibility between the Australian Government and state and territory governments.

Currently VET prices, subsidies and fees vary considerably around Australia, with students paying significantly 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.

To support long-term reform and a modern and responsive VET system, the Australian, state and territory governments are currently negotiating a new National Skills Agreement. All governments have committed to increasing real investment in the VET system and agreed to work together to adopt a new funding model that improves national consistency for students, integrates subsidies and loans and is linked with efficient pricing and the skills needed by employers.

What is efficient pricing?

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

A more nationally consistent approach to pricing will help to ensure simpler and more transparent VET pricing arrangements that better reflect the cost of delivering high-quality training to all Australians.

Why is greater investment under a new funding model important?

A highly skilled workforce is critical to Australia’s economic prosperity and recovery from COVID. 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.

What is being done?

The Australian Government has committed up to $12 billion over five years from 2022-23 for a National Skills Agreement with states and territories. Under this measure, the Government has provisioned an additional $3.7 billion as part of the 2022-23 Budget to support the National Skills Agreement, on top of the $8.3 billion National Skills and Workforce Development Specific Purpose Payment.

The National Skills Agreement, once agreed, has the capacity to deliver around 800,000 additional training places over five years and improve access to free and low-fee training for priority students, including people with disability and Aboriginal and Torres Strait Islander peoples, and for select priority courses.

For information on JobTrainer measures, please go to the JobTrainer Fund page.