Chapter 3. Feasibility of policy options to promote adult learning in Australia

This chapter identifies strengths and weaknesses in Australia’s current set of financial incentives to support participation in adult learning. It compares policy options based on their capacity to support transitions to new occupations, to expand participation in adult learning, to steer training to in-demand skills, as well as cost and governance considerations. The chapter concludes by suggesting actions Australia could take to improve participation in adult learning with a focus on financial incentives.

    

3.1. Analysis of existing financial incentives

As outlined in Chapter 1, Australia has several financial incentives in place to encourage participation in or provision of adult learning, including subsidies, income-contingent loans and a tax deduction for self-education expenses (see Table 1.6 for a list of existing financial incentives). Together this support amounts to about AUS 7.5 billion in public funding allocated to adult learning annually (Table 1.4). Australia’s states and territories and employment services also subsidise training. This section assesses the capacity of Australia’s current set of financial incentives to promote broad and inclusive engagement in adult learning, identifying strengths and weaknesses.

3.1.1. Strengths

The combination of subsidies and income-contingent loans available in HE and VET strikes the right balance between recognising the private return to education – by making individuals contribute to the costs of training – and inclusiveness – by subsidising training for those facing financial constraints. Adults can pursue a full qualification, the cost of which may be subsidised by the Australian Government or through shared funding arrangements between the Australian Government and state governments. An income-contingent loan may be used to pay the remainder of the tuition fee in both HE and VET, though this depends on different eligibility requirements. Evaluations revealed that the introduction of income-contingent loans for HE in 1989 (prior to which students did not pay any tuition fees) did not have the expected negative impact on participation, including for disadvantaged groups (Chapman, 1996[1]). These loans are thus viewed to be more inclusive than upfront fees, which restrict access for those with lower income. At the same time, requiring graduates to repay the loan recognises the high private lifetime economic returns associated with pursuing HE and VET (Leigh, 2008[2]; Oreopoulos and Petronijevic, 2013[3]).

Another key advantage of this system of subsidies and income-contingent loans is that they do not discriminate based on age or employment status. Eligibility is extended to the employed, unemployed, inactive workers, and the self-employed, including own account workers who sometimes fall through the cracks in receiving public support for training. The tax deduction for self-education expenses can also be claimed by all employees and the self-employed, though it excludes the unemployed and inactive adults. This is both because eligible self-education must relate to one’s current work activities and also because adults who are unemployed or inactive generally have little or no taxable income. Job seekers are, however, eligible for a variety of other subsidised training programmes through jobactive and other employment services.

Many of the existing financial incentives also do a good job of steering training content towards labour market needs, as described in more detail in OECD (2018[4]). For instance, the current methodology for setting eligible courses for VET Student Loans looks at those which have a high national priority, meet industry needs, contribute to addressing skills shortages and align with strong employment outcomes. Similarly, while HE grants are usually payable only to a restricted set of providers, they are payable to a broader group of providers for courses of study deemed to have a high national priority (e.g. teaching and nursing). Trade Support Loans are also limited to qualifications related to trade occupations on the National Skill Needs List (as well as a set of agriculture and horticulture qualifications) (OECD, 2018[4]). State subsidies offered for accredited adult learning are generally restricted to training in qualifications deemed to be priority areas for the state or territory. Subsidised training through employment services (e.g. Skills for Education and Employment, the Employment Fund, New Enterprise Incentive Scheme, ParentsNext, etc.), the Australian Migrant English Programme, the Skills and Training Incentive, and Career Transition Assistance are all well targeted on either portable skills for general employability (e.g. digital skills, basic skills, employment preparation) or skills and training required by employers.

3.1.2. Weaknesses

Existing financial incentives do not support workers transitioning to new occupations

One important drawback with many of the existing financial incentives is that they do not support retraining to new occupations. Australia’s structural adjustment initiatives have proven highly successful at facilitating transitions to new occupations and industries for workers displaced by large-scale industry-specific closures, as in the automotive manufacturing, mining and forestry sectors (OECD, 2018[4]). Following a similar model, the Stronger Transitions package, introduced in July 2018, provides skills training and other transition support to displaced workers in five regions affected by large-scale displacement (Adelaide, Mandurah, North Queensland, North/North-West Tasmania, and North/West Melbourne). However, this sectoral or regional approach may not be sufficient to equip the Australian workforce to meet changing skills needs in the context of technological change. Evidence suggests that the impact of technological change cuts across sectors and occupations, even as it may affect some sectors and occupations more than others (Edmonds and Bradley, 2015[5]). Currently, only 26% of workers in occupations with a high risk of automation participate in job-related training, making many of these workers vulnerable to poorer employment prospects and lower wages in the future.

The tax deduction for self-education expenses may only be applied to expenses for training related to one’s current employment. Expenses for retraining in a new career or occupation are not eligible for the tax deduction. This restriction limits the ability of workers in occupations with a high risk of automation to transition to new occupations with better employment prospects. While the loans and subsidies available for full qualifications in HE and VET can be used to retrain for new occupations, their use requires a considerable time investment as well as an employer’s permission to take time off from work. The requirement to obtain an employers’ permission to have time off from work to pursue a full qualification in HE or VET may implicitly limit adults to training which is related to their current employment.

The new Skills and Training Incentive (in force from January 2019) allows eligible participants to access up to AUS 2 200 for upskilling or reskilling purposes. The government contribution must be matched by either the participant or their current employer—something the employer is more likely to do if the training relates to the employee’s current employment. One could argue that employers have sufficient incentives to train their employees in job-specific skills, but lower incentives to invest in portable skills that may help adults to adapt to changing skills demand. According to the HILDA, only 21% of adults report that they expect to use the skills they acquired in job-related training in their next job, suggesting that the majority of job-related training that adults receive is firm-specific.

Job seekers can access subsidised training through jobactive to help them to transition to new occupations. However, spending on training for the unemployed, as well as the incidence of such training, is low in Australia compared to other OECD countries (OECD, 2018[4]). One of the limitations is that employment services providers are rewarded for getting job seekers into jobs quickly. While this has the goal of assisting job seekers to avoid prolonged periods out of employment, there is the risk that it reduces providers’ incentives to connect job seekers to longer-term training that addresses their skills needs (OECD, 2018[4]). The fee structure for jobactive rewards providers when participants stay in work for longer periods. However, with outcome payments ending after 26 weeks and only 12 months of performance data taken into account, incentives to provide training which supports longer-term employability are low (OECD, 2018[4]). By reallocating resources to job seekers with higher needs, recently-announced reforms to the employment services model have the potential to lead to more intensive training support for job seekers with higher needs while giving those with lower needs access to lower-cost online support. However, without extending outcome payments beyond the current 26 weeks, these reforms may not sufficiently incentivise employment services providers to assign training which supports longer-term employability.

Existing financial incentives do not address time-related barriers to adult learning

Another drawback of the existing system of financial incentives is that no financial incentive addresses the barrier of time constraints. Lack of time, either due to work or childcare/family responsibilities, was the main reason adults cited for not training (48% of adults who did not participate in training but wanted to). Own-account workers were even more likely than the average adult to report time constraints to be a barrier (55%). Unlike in many OECD countries, Australia does not have a system of training leave which would give workers the right to undertake training during working hours. Similarly, the existing set of financial incentives do not address the cost that employers face to release workers to train.

Most of Australia’s financial incentives may only be used towards full formal qualifications, which means that learners must pursue long duration training in order to benefit from existing financial incentives. Subsidies and income-contingent loans for qualifications in HE or VET are primarily focused on full formal qualifications, rather than modules, units of competence, skill sets or non-formal training. The tax deduction for self-education expenses can also only be applied when adults pursue a full formal qualification. For state-level subsidies, New South Wales is the only state to fund shorter form credentials. Tying financial incentives to full formal qualifications may be a deterrent to participation in adult learning as full qualifications require a greater time commitment and higher associated costs in terms of foregone earnings, childcare, and difficulty managing workloads. Limiting the use of financial incentives to full qualifications in formal learning may also be problematic in terms of meeting the needs of the labour market, given that over-qualification is high in Australia relative to the OECD average and labour market outcomes of recent graduates from HE and VET have softened.

Declines in participation have been concentrated in job-related non-formal training. Broadly speaking, the current set of financial incentives favour formal training over non-formal training. Non-formal training has a number of advantages over formal training for adult learners: it can be a faster, cheaper, and more flexible way to acquire knowledge and skills. OECD evidence also suggests that adult wage returns tend to be higher for non-formal training than for formal training, at least in the short run (Fialho, Quintini and Vandeweyer, 2019[6]). While non-formal training will not lead to a qualification recognised by the Australian Qualification Framework (AQF), it may provide knowledge and skills more in line with changing skills demands since training content does not require a lengthy vetting process as with training package development in VET.

Existing financial incentives generate deadweight losses and could do a better job of targeting vulnerable groups

Most public policy interventions have some degree of deadweight loss (Box 1.3). The policy maker must assess whether the economic benefits of the intervention warrant the incurred losses, and take steps to mitigate them when possible.

To mitigate deadweight losses, financial incentives should be targeted at adults with the greatest need for training who may under-invest due to cost, uncertainty, short-sightedness, or lack of information. In Australia, several financial incentives are targeted at under-represented groups, such as the low-skilled, migrants, or the unemployed. Such targeting mitigates deadweight losses and improves the distribution of training provision.

The loan support available to adults to participate in formal learning through tertiary education is well-targeted in that one must repay the income-contingent loan portion of the financial support immediately upon earning the threshold income (AUS 51 957 in 2018-19). This mitigates deadweight losses by ensuring that those who have the capacity to cover their education expenses, do. However, participation data suggests that low-income students are underrepresented in accessing financial support for courses in HE (The Senate, 2018[7]; KPMG, 2018[8]), implying that subsidies in HE go disproportionately towards high-income adults. The fact that high-income adults could likely afford to pay for training without the government intervention is suggestive of deadweight losses, although whether they would participate without the incentive or not is an empirical question. Implied deadweight losses appear lower in VET.

The self-education tax deduction is also associated with deadweight losses. It is used by only 5% of 25 to 64-year-old tax filers each year, but disproportionately by those earning AUS 50 000 to 150 000. With median average earnings in Australia at AUS 57 2001, adults in this income band are middle-to-high income.

An argument can be made for subsidising the education of young people who come from high-income households, since choices about whether to allocate household income to education may be out of the young person’s control. However, adult learners make their own decisions about how to spend their income, and subsidising high-income adults who would have trained without the subsidy may represent an inefficient use of public funds. That said, the positive externalities generated by the additional learning may justify the deadweight losses. Governments may also have a role in alerting high-income workers in occupations at high risk of automation that they are vulnerable and need to retrain (more discussion about the role of good information, advice and guidance in Section 3.4.1).

3.2. Assessment of policy options

Well-designed financial incentives can be useful tools for improving the engagement of workers and firms in training. Currently, 31% of Australian adults participate in adult learning. This is well below the OECD average based on the latest Australian data available and lower than the participation rate in Australia ten years ago, suggesting substantial margins to improve coverage.

Chapter 2 discussed advantages and disadvantages of six different financial incentives to support adult learning (individual learning accounts, training leave, training vouchers, subsidised training programmes, training levies, and tax incentives). Each has its strengths and weaknesses and addresses different barriers to participation. As such, the optimal policy response is not necessarily one incentive over all others, but rather a package of incentives which together best address Australia’s specific challenges. Equally important to the decision of which financial incentives to use is how financial incentives are designed. With these considerations in mind, this section assesses three possible courses of action for reforming Australia’s current set of financial incentives:

  1. 1. Tweak the design of the current set of financial incentives (subsidies, loans, and tax incentive) to address weaknesses.

  2. 2. Introduce an individual learning account, possibly funded by an employer levy.

  3. 3. Introduce paid training leave.

For each option, this section will discuss its potential to support transitions to new occupations, to expand participation in adult learning by reducing existing barriers and engaging under-represented groups, to steer training towards in-demand skills, costs (including potential for deadweight losses), and governance requirements specific to Australia.

3.2.1. Tweak the design of the existing set of financial incentives to address weaknesses

One option could be to keep the existing set of financial incentives, but adjust their design to address weaknesses. The main weaknesses with the status quo set of financial incentives are that they do not easily support transitions to new occupations, they do not address the important barrier of time constraints and they generate deadweight losses. Australia could make three changes to the design of the current set of financial incentives to address these weaknesses.

First, Australia could broaden the type of training that is eligible for the self-education tax deduction to training that is not related to one’s current employment. This would allow it to be used by workers in high risk occupations who want to retrain. To ensure that the tax incentive is used towards training that is considered an investment rather than purely consumption, countries generally exclude eligibility of training that is entirely leisure-related (OECD, 2017[9]), though this can present administrative challenges. A compromise between efficiency and simplicity lies in setting easy-to-follow but perhaps arbitrary rules for determining the criteria under which training costs are eligible for tax relief (Torres, 2012[10]). For instance, some countries establish lists of eligible qualifications or courses which exclude leisure-related courses and promote in-demand skills. Flanders, for example, is developing a database to clarify which courses are eligible for public support and eligible courses fall under one of three categories: basic skills, job-specific skills, and general labour market skills. In Austria, one of the few countries which offer tax incentives for training unrelated to one’s current employment, expenses for retraining are only tax deductible when the training is sufficiently comprehensive as to enable an individual to start working in a new occupation. Tax filers may be asked to provide evidence that they are pursuing retraining in order to take up a new occupation. Broadening the type of training that is eligible for the self-education tax deduction could lead to deadweight losses, though these may be justified by the economic benefits of more retraining.

Second, to make formal learning in HE and VET a more viable option for adults with time constraints, Australia could also extend the application of subsidies and income-contingent loans to shorter form credentials. France is an example of a country that has taken steps to subsidise training in a modular format. Upon completing the process of splitting all formal qualifications into “blocs de compétences”, France will allow existing financial incentives to be used towards the cost of training in modules.

Similarly, and in view of the fact that there is currently very little financial support for non-formal learning, Australia could also extend the use of the tax deduction to courses in non-formal learning. Courses in non-formal learning are generally of short duration and therefore less time-consuming for the adult learner.

Third, Australia could better target existing financial incentives at under-represented groups to mitigate deadweight losses. The tax deduction for self-education expenses could be limited to adults earning below a given income threshold. Similarly, the subsidies for adult learners in HE and VET (i.e. Commonwealth-supported and state-supported spaces, respectively) could also be limited to adults earning below a given income threshold.

Potential to support transitions to new occupations

Broadening use of the self-education tax deduction to training that is not related to one’s current employment would facilitate transitions to occupations with a low risk of automation.

Potential to expand coverage

Reforms to the design of the current set of incentives could improve coverage by addressing the main barriers to participation in adult learning. Among those who were willing to train, the main barrier cited was being too busy at work (27%), followed by lack of time due to child care or family responsibilities (21%), and then cost (18%). Time constraints were particularly important for own account workers (57%), as well as those outside of the labour force, 40% of whom reported not having time due to childcare or family responsibilities. Pursuing shorter form credentials, whether in formal or non-formal learning, may be an easier way for adults to fit time for adult learning into their busy lives. Broadening access of existing financial incentives to shorter form credentials could expand coverage by addressing both time and cost constraints, particularly for under-represented groups like own account workers and those outside of the labour force.

Tax deductions are unlikely to encourage training among lower-income adults since they generally provide a larger benefit as taxable incomes increase and individuals move into higher income tax brackets. While limiting the use of the tax deduction to adults with incomes below a particular threshold would reduce deadweight losses, it would not fully remove this problem.

To successfully expand coverage, efforts to raise awareness about the changes to the existing financial incentives and to reach out to under-represented groups (Section 3.4.1) would be needed.

Potential to steer training towards in-demand skills

While existing financial incentives already steer learning towards in-demand skills, Australia could take further actions in this area to ensure that public funds are used optimally, to promote employability and to address productivity-limiting skills shortages. For example, VET Student Loans and the HE loan programme (HELP) could be restricted to courses linked to occupations in shortage for learners over the age of 25, while maintaining the current system for learners up to age 25. Another option could be to grant remission or forgiveness of income-contingent loans to graduates who work in selected occupations that are in high demand. Tax incentives like the tax deduction for self-education expenses can be harder to target towards in-demand skills because they are administered by tax authorities which do not have the remit to evaluate the labour market relevance of courses and qualifications (OECD, 2017[9]).

Cost

As these financial incentives are already in place, administrative costs would be low. Additional funding would likely be needed to pay for the new training that would be undertaken as a result of broadening the eligibility requirements. These costs could potentially be offset by better targeting existing financial incentives at under-represented groups to mitigate deadweight losses.

Governance requirements

No new governance arrangements would be needed. Recognition of shorter form credentials by the AQF (currently under review, see Section 3.4.3) would support this option. Quality assurance is the main challenge to recognising shorter form credentials in the AQF, particularly with courses that are not nationally accredited.

3.2.2. Introduce an individual learning account, possibly funded by an employer levy

A second option Australia could consider is an ILA, for which several stakeholder groups have recently put forward proposals.

The Business Council of Australia (BCA, 2018[11]) is calling for a “Lifelong Skills Account” which would provide all Australians with a government subsidy and income-contingent loan for accredited training, subject to a lifetime cap. Their proposal introduces several innovations which are particularly relevant for adult learners. First, to remove existing distortions between VET and HE, funding would no longer be separated by VET or HE and all funding would be subject to the same lifetime cap. BCA proposes a costing exercise to establish course fees which are reflective of actual costs, and then using estimates of the ratio of public and private benefit to determine subsidy rates for each course. Courses with a larger relative public benefit would be eligible for a larger subsidy. Second, if the training is relevant to the individual’s employment, the employer is expected to provide the worker with time off to attend training. Third, adults who have already attained a full qualification would be eligible to use the Lifelong Skills Account to pursue partial qualifications. Finally, BCA recommends the creation of a new and independent institution that would manage the Lifelong Skills Account.

The Australia Technology Network (ATN) recommends a national lifelong learning account which would provide each adult with access to an amount of money each year to use towards adult learning in approved courses (ATN, 2018[12]). ATN proposes a targeted approach, by allocating more money to workers in at-risk industries or demographic groups. Blockchain technology, they propose, could facilitate the administration of these new learning accounts. It is not clear whether employers would be required to give workers paid leave to undertake training funded by the learning account.

Per Capita proposes an “Economic Security Account,” funded by an employer levy (Per Capita, 2018[13]), similar to the way in which France’s CPF is funded. This funding approach is different from the previous two proposals: the ATN proposal was silent on how a learning account should be funded, and the BCA proposal suggested reallocating the existing money already spent on subsidies and loans in HE and VET. Similar to ATN, Per Capita recommends providing a greater amount of money to vulnerable groups (they cite those in low pay or precarious work). It is not clear whether unemployed or inactive adults would also have access to money through Per Capita’s proposal. In France, where the CPF is funded by an employer levy as well, levy funds are distributed to accounts of all adults, including the unemployed and inactive. The public employment service also tops up the accounts for these adults. Similar to BCA, Per Capita recommends limiting use of the account to accredited courses. Per Capita is silent about whether employers would be required to give workers paid leave to undertake training funded by the Economic Security Account.

The Monash Commission calls for a “lifetime learning account” and a “universal learning entitlement.” What Monash Commission refers to as a “lifetime learning account” is not an ILA in the sense described in this report. Instead, it is a tracking system. They propose introducing universal student numbers that monitor acquisition of all publicly-subsidised education and training over an individual’s lifetime. These accounts would be managed by a new single authority responsible for post-compulsory education and training. Under the universal learning entitlement, current income contingent loans and government subsidies would not be restricted to “first-job qualifications” (i.e. adults who already have a qualification can use the financial support to retrain in new qualifications for new occupations). Government subsidies and income-contingent loans can already be used for multiple qualifications in the current system, provided individuals meet eligibility requirements and have not yet hit the lifetime limit on the amount that can be borrowed. They also propose that the government give both the loaned component of the student contribution as well as the government subsidy directly to the institution, which would mean that no student would pay an upfront fee.

Potential to support transitions to new occupations

The allure of an ILA is its portability feature, which extends access to casual, part-time and own-account workers and supports transitions to new occupations for workers in occupations at high risk of automation. The fact that the ILA is tied to the individual, and not to the employer, enables individuals to upskill or retrain in skills that would help them to transition to new occupations.

Potential to expand coverage

An ILA has the potential to expand coverage in adult learning by addressing cost constraints cited by under-represented groups, especially the low-educated and the unemployed for whom cost is an important barrier. The portability feature of ILAs means that workers can accumulate money towards training while employed, and still be able to access this money for training if they became unemployed. They would not lose their accumulated training money with loss of attachment to an employer.

Another advantage of this policy option is that by targeting adults who have finished their front-ended education, the introduction of an ILA could help to challenge the common mindset that education is for the young (Productivity Commission, 2017[14]). Changing this perception and “normalising” learning for adults could help to expand coverage.

Despite the portability feature and the potential to expand coverage by normalising adult learning, there is little evidence that ILAs incite wide participation in practice (OECD, 2019[15]). In France and Singapore, the two most recently-implemented ILA schemes with large potential coverage, about 1.7% and 4.2% of the labour force respectively participated in the scheme in 2016 and 2017, partly reflecting their very recent implementation (OECD, 2019[15]). As in other types of training schemes, low-educated workers tend to participate less in ILAs than the highly-educated where access is not restricted to them (OECD, 2019[15]).

On their own, ILAs do not address the important barrier of time constraints which means that participants would still pay the opportunity cost of training. With the exception of the BCA proposal, none of the ILA proposals put forward by stakeholder groups discuss how time constraints could be overcome with an ILA in Australia. BCA proposes that employers be required to provide their employees with paid leave to pursue training subsidised by the ILA if training is related to their current employment. As noted in Chapter 2, ILAs are often offered in combination with paid training leave (e.g. in France, Flanders, and Singapore). BCA would also allow adults who already hold a full qualification to use the ILA to fund partial qualifications, which are less time-consuming than full qualifications. However, BCA and Per Capita only allow the ILA to be used towards accredited training (BCA, 2018[11]; Per Capita, 2018[13]). This restriction helps to ensure that public funding goes to training of high quality; the downside is that it fails to support non-formal training which is not accredited but, like partial qualifications, is less time-consuming and thus more compatible with an adult’s family and work commitments.

Potential to steer training towards in-demand skills

The demand-driven nature of ILAs mean that it is the responsibility of adults to decide what training to take and where. Good information, advice and guidance is therefore highly important to helping adults make the best use of the ILA. There is room to steer the use of voucher-based ILAs towards training which is in high demand in the labour market, as is the practice in many countries (e.g. Korea, Flanders, Estonia, Latvia, Austria and Greece; see Section 2.3.3. for more details).

Cost

Risk of deadweight loss is a key concern with ILAs, as extending training rights universally implies allocating public funding to cover training that would have taken place anyway. Both the ATN and Per Capita proposals suggest modulating the amount of support provided such that priority groups (e.g. those in at-risk industries or demographic groups, those earning low pay or in precarious work) receive more training rights, thus mitigating deadweight loss.

There are different ways to fund ILAs, with varying degrees of co-funding between government, workers and employers. The BCA proposal is in a sense cost neutral, as rather than increasing the investment in training, it proposes use of the existing pot of money from VET and HE subsidies and loans. Under the BCA proposal, co-funding is achieved by requiring individuals to pay back income-contingent loans, and by setting the expectation that employers will offer paid time off work, effectively bearing the opportunity cost of training.

Per Capita proposes funding the account using an employer levy. The discussion in Chapter 2 noted several advantages with training levies: they help to overcome the free-riding problem that deters many employers from investing in training, and can promote higher levels of employer-sponsored training. However, as Australia’s experience with the Training Guarantee Scheme in the 1990s attests, there is a risk that employers view the levy as an additional tax. Employer-led levy schemes could result in an under-supply of more general or portable skills training and carry a risk of losing sight over national skills priorities, including support for vulnerable groups and supporting workers’ transitions from one sector to another. These limitations would be overcome if, as Per Capita proposes, the money went towards funding an ILA, since the individual would be responsible for making their own training decisions. Still, achieving employer buy-in may be difficult under this approach since employers would not be able to influence the type of training the levy funds are used for.

Employer tolerance for a new levy may be low given that Australia already has several training levies. Any new national training levy would come on top of several existing state-level training levies in Western Australia, South Australia, Tasmania and the Australian Capital Territory (HIA, 2001[16]). Furthermore, some sectors have their own training levies managed by industry training boards. At the national level, employers who sponsor overseas workers through the temporary or permanent employer-sponsored migration programmes are also required to pay the Skilling Australians Fund levy (OECD, 2018[4]). Unless a new national levy replaced these existing levies, there may not be appetite to introduce another employer levy. The administrative costs associated with setting up and managing a new levy can also be substantial.

Since ILAs frequently involve only a small amount of money, it is difficult to get commercial banks to provide them. Countries often require a separate bureaucracy or governance structure to manage them which can make administrative costs high. For instance, France has budgeted EUR 90 million to set up their new system of money accounts2. Building public awareness of a new ILA scheme in Australia would also have to be factored into set-up costs.

Governance requirements

In Australia, where responsibility and funding for education and training is split between the Commonwealth and state and territory governments (particularly in VET), management of a new learning account would not be straightforward. The BCA and the Monash Commission suggest introducing a new institution – independent from either the Commonwealth or state and territory governments – to manage the ILAs. ATN suggested using blockchain technology to manage virtual ILA accounts, which would eliminate the need for a central agency responsible for managing the new accounts. As defined by one website (https://applicature.com/blog/blockchain-startups/), “blockchain is a software product that allows storage and conversion of data via the Internet, in a secure and transparent way without a central governing body.” Using blockchain for ILA management would be an innovative application of this new technology, though not without its risks (e.g. lack of a central authority prevents identify verification). If using the blockchain method, Australia would still need to assign responsibility of the accounts, including verification that training meets eligibility requirements, to somebody.

Quality control deserves careful consideration under any ILA scheme, and particularly in Australia, given recent experiences with fraud in the VET-FEE HELP programme (see Section 2.3.1). In the United Kingdom, the cost of fraudulent activity under their ILA programme which ran from 2000 to 2001 amounted to an estimated GBP 97 million. Lessons learned from both the Australian and UK experiences suggest safeguards to minimize the risk of fraudulent use of public funds with an ILA: a gradual phase-in period to catch and fix pitfalls related to fraud, a more rigorous approval and quality assurance process for providers (see discussion on quality assurance in Section 3.4.3), and easy access to information, advice and guidance to assist adults in making the best use of the ILA. To prevent unnecessarily high fees associated with fraudulent behaviour, as was observed under the VET-FEE HELP programme, the Joyce review (2019[17]) recommends that Australia set up a National Skills Commission with the responsibility to consult on and agree to national course prices in VET (these are already regulated in HE).

3.2.3. Introduce paid training leave on top of existing incentives

A third option could be to introduce a right to paid training leave, giving adults paid time away from work to participate in learning. Australia does not currently grant education and training leave by national legislation, though evidence from the HILDA survey suggests that 22% of workers have access to paid training leave, presumably through firm-level enterprise agreements. Paid training leave would directly address the barrier of time constraints that non-participants report, and would also complement the use of existing financial incentives that address cost and liquidity barriers (i.e. subsidies, loans, tax incentives).

In cases where training is job-specific, employers would be expected to continue paying the wages of employees while they train. However, if the training is in portable skills or to retrain in a new and high-demand occupation, the Australian Government could repay the lost wages to employers, either by making payments to the employer (who would then pay the employee) or directly to the employee. Under Australia’s paid paternity leave, for example, eligible employees get up to 18 weeks of leave paid at the national minimum wage and these payments are sometimes made to the employer first, who then pays them to the employee, and sometimes the payments are made directly to the employee. Under the proposed Canada Training Benefit, the government directly pays the employee 55% of their wages over the maximum 4-week training leave period (Box 2.3). Alternatively (or in addition) to reimbursing lost wages to employers, the Australian Government could provide replacement workers through job rotation schemes, as is practiced in Denmark (Box 2.4).

Assessing whether training is portable or job-specific is not always straightforward, and some countries develop databases or lists of eligible training for clarity. In Singapore, employers only receive compensation for lost wages if training is undertaken in courses on a pre-defined list of Workforce Skills Qualifications (WSQ). There are two categories of WSQ training: technical skills in occupations in high demand, and portable skills like employability, leadership, and customer service.

Potential to support transitions to new occupations

The employer is more likely to grant permission for training which is sector-specific or job-specific, which reduces the potential of paid training leave to support transitions to new occupations. One option is to follow the approach taken in France and Flanders (Belgium), where workers must request their employer’s permission to use training leave, but the employer can only deny or postpone the leave under limited circumstances (see Section 2.3.2).

Alternatively, to support the development of portable skills, the Australian Government could compensate employers for lost wage costs in cases where the training is in portable skills or to retrain for a new in-demand occupation, as is the case in Singapore (Section 2.3.2).

Some countries limit eligibility of paid training leave to employees who are at risk of redundancy. For instance, under the part-time unemployment act, the Netherlands offered paid training leave only to employees facing redundancy due to economic hardship (Cedefop, 2012[18]). In Hungary, low-qualified and ageing employees are entitled to longer periods of training leave.

Potential to expand coverage

Introducing a right to paid training leave would in principle help to address the barrier of time constraints that non-participants report, and would complement the use of existing financial incentives which address cost barriers. Data on take-up of training leave is scarce but tend to suggest that fewer than 2% of employees use training leave per year (Cedefop, 2012[18]). Take-up is judged to be higher when paid training leave has fewer employment-related criteria, is targeted at disadvantaged employees, is offered in combination with personalised guidance services, and in an environment where the social partners play at least some role in the management of the training leave (Cedefop, 2012[18]).

Whether paid training leave improves coverage of under-represented groups depends on a number of factors. The decision as to who goes on training leave generally depends on the employer (except in France and Belgium, where employers can only deny requests for training leave under limited circumstances). Employers are more likely to approve cases when the training investment would bring a high return which often leads to a preference for high-skilled and younger workers and for training content that is company-specific rather than portable. Paid training leave may therefore do little to bridge the gap in participation observed between highly-educated and low-educated workers. In countries where social partners are involved in managing paid training leave, they can help to reduce cases of discrimination or disagreements between employers and employees regarding the content of training.

Some countries extend paid training leave to own account workers, which could help to expand coverage for this under-represented group who report time constraints to be important barriers to their participation in adult learning. In Luxembourg, wage compensation for education and training leave is available not only to employees but also to own account workers and those in the liberal professions3 (provided they have been registered with social security for at least two years). It covers training leave up to a maximum length of 20 days over a period of 2 years or a maximum of 80 days over an individual’s professional career. The amount of wage compensation is based on the individual’s income in the previous year and is capped at four times the social minimum wage for unskilled workers (OECD, 2019[15]).

Small businesses, which make up 70% of employment in Australia, may not be able to afford the opportunity costs that come from employee absences while they train. As mentioned above, the Australian Government could compensate employers for lost wages when the training is in portable skills or to retrain in high-demand occupations. Australia could also explore the use of job rotation schemes to provide replacement workers during training (as practiced in Denmark, see Box 2.4). This solution not only reduces opportunity costs for the employer, but it also provides work experience and training opportunities for job seekers.

Potential to steer training towards in-demand skills

Some countries offer longer periods of paid training leave for adults pursuing training in high-demand areas. For instance, in Belgium, the maximum number of days of training leave is higher when learners participate in training in shortage occupations.

Cost

Administrative costs of paid training leave depend on how it is regulated, with regulation by national law thought to have lower administrative costs than sectoral or company-level collective bargaining agreements (Cedefop, 2012[18]). Wages are paid by the employer during training leave, but the employer may be partly or fully compensated in the form of subsidies or tax incentives if public funds are involved (Cedefop, 2012[18]). Deadweight losses could arise if public funds were used to compensate employers for wages lost during job-specific training. To mitigate, public funds should compensate employers only for lost wages in cases where training is portable and not job-specific, as proposed above.

One way to fund paid training leave could be to allow workers to access superannuation for retraining purposes. As part of its proposed Canada Training Benefit, Canada recently proposed to give workers up to four weeks of income support while training paid for by Employment Insurance (EI). EI is a system of mandatory employer and employee contributions that covers living expenses while a worker is unemployed in Canada. Using existing administrative infrastructure keeps costs low. Since both employers and employees must contribute to EI, it ensures a degree of co-funding which recognises that there are private as well as public benefits to training. A limitation, however, is that it excludes those with insufficient attachment to the labour market who do not qualify for EI. Similarly, while it could be advantageous to use the existing infrastructure of superannuation (which operates by mandatory employer contributions and voluntary tax-deductible employee contributions) to fund retraining in Australia, doing so would exclude casual workers and own-account workers who are not eligible for superannuation. Furthermore, using superannuation funds for retraining purposes may not be financially sustainable. Drawing down EI funds for training in Canada is arguably financially sustainable because training (ideally) reduces the likelihood that workers will become unemployed in the future and need to draw upon EI funds for an even longer period. Superannuation funds, on the other hand, are not an insurance system but individual accounts. Drawing down superannuation accounts for retraining would leave individuals with less money to retire on, potentially generating negative welfare effects for the individual and the economy. Since superannuation is not currently used for training leave, this option would also require new and potentially complex administrative infrastructure.

Governance requirements

As noted in Chapter 2, Australia is one of very few OECD countries that do not offer training leave. In most countries, training leave is regulated through legislation at the national level, though collective agreements at sectoral or company levels are also a significant means of regulation (Cedefop, 2012[18]). In most cases, employees are protected from dismissal or a deterioration in employment conditions and retain their entitlement to both health care insurance and pension entitlements. They are usually obliged to notify the employer in advance about their intention to take training leave (Cedefop, 2012[18]).

One Australian stakeholder suggested that introducing paid training leave at the industry level might be effective in Australia given the success of sectoral level structural adjustment programmes (e.g. automotive industry). However, training leave regulated by national law (and not by collective agreements) would entail lower administrative burden and could be less expensive (Cedefop, 2012[18]). To support the wider implementation of collective agreements at sectoral or company levels, the national government would need to guarantee a favourable legal environment for paid training leave by providing a well-defined legal framework.

Permitting flexible working arrangements to accommodate training could be another way to address time constraints. Australia’s National Employment Standards already grant workers the right to request flexible working arrangements (e.g. changes to start and finish times, use of split shifts or job sharing, or working from home) under certain circumstances (for caring responsibilities, if a worker has a disability or is 55 years of age or older). Requests can only be refused by the employer on reasonable business grounds and the employers must provide a written response if they refuse the request. Australia could extend the right to request flexible working arrangements to adults pursuing learning opportunities. This may help adults to fit training into their schedules in some cases.

3.3. Recommendations

There is unfortunately no “magic bullet” policy option which will generate broad and inclusive participation in adult learning. The policy discussion in Chapters 2 and 3 highlighted the advantages and disadvantages of several financial incentives based on international experience and given the Australian context. While the portability feature of ILAs seems to promise broader and more inclusive coverage and the potential to support transitions of high-risk workers to new occupations, there is little international evidence to suggest that ILAs incite wide participation nor that they successfully bridge the training gap between high-skilled and low-skilled workers. Introducing a new ILA could be quite costly in terms of set-up and administrative costs, as well as potentially high deadweight losses. It also would not directly address the main barrier of time constraints. Paid training leave would address time constraints. Take-up of paid training leave tends to be low, but increases with social partner involvement, access to career guidance and information, targeting on disadvantaged groups and accessibility by all employment groups.

A low-cost but potentially effective approach to addressing barriers to participation in adult learning would be to tweak the design of the existing set of financial instruments to address weaknesses. Fitting adult learning into already busy schedules that include work and family commitments can be a challenge. Australia could expand eligibility rules around the current income-contingent loans and subsidies in HE and VET for adults (age 25+) as well as the self-education tax deduction to include shorter form credentials (e.g. skills sets, modules, units of competency) and online or distance training. This would support flexible modes of training delivery that accommodate adults’ work and family commitments. Furthermore, allowing adults to use the self-education tax deduction for training not directly related to one’s current employment would facilitate transitions from occupations at high risk of automation to occupations at low risk of automation.

Table 3.1. Policy recommendations

Main findings

Key recommendations

Financial incentives

The current set of financial incentives do not encourage retraining in new occupations, which impedes transitions from high-risk occupations to low-risk occupations.

Allow the tax deduction for self-education expenses to be used towards training that is not directly related to the individual’s current employment, while excluding training for leisure or personal interest purposes.

The current set of financial incentives do not adequately address the barrier of time constraints, which is the most commonly-reported barrier to participation in adult learning.

Allow a broader use of existing subsidies and loans (e.g. VET student Loan, Higher Education Loan programme) to cover more flexible modes of training delivery, e.g. modular learning, distance or online learning, and learning that takes place on a part-time basis or on evenings and weekends. Extend the use of the self-education expenses tax deduction to non-formal learning.

Consider introducing a right to paid training leave, either at the national level or on an industry basis. To encourage firms to release workers for training leave, explore the use of job rotation schemes to provide replacement workers for employers while their employee trains. For training that is not job-specific or sector-specific, and for own account workers, the Australian Government could compensate the employer for lost wages. Alternatively, permitting flexible working arrangements to accommodate training could be another way to address time constraints.

The self-education expenses tax deduction and subsidies in HE and VET (i.e. Commonwealth-supported places and state-supported spaces, respectively) generate deadweight losses by subsidising training for adults who earn high incomes and would likely have undertaken the training without the financial incentive.

Mitigate deadweight losses by targeting use of the self-education expenses tax deduction at adults with incomes below a given threshold. Similarly, Commonwealth-supported and state-supported places in HE and VET for adults (age 25+) could be targeted at those with incomes below a given threshold. Adults with incomes above this threshold may access income-contingent loans.

3.4. Framework conditions

Financial incentives do not operate in a vacuum and their effectiveness depends on a range of framework conditions being in place, including a system for producing and disseminating up-to-date and user-friendly information about the labour market, a high-quality and responsive training system, and a strong validation and qualification framework.

3.4.1. Good information, advice and guidance

Financial incentives to encourage participation in training may result in sub-optimal spending of public resources unless a robust and user-friendly information, advice and guidance (IAG) system exists to help individuals make informed education and training decisions. This is particularly important in the context of demand-led financial incentives. The failure of the ILA programme in England, for instance, was not only due to widespread fraud, but also due to a lack of IAG: 85% of participants did not receive any IAG to assist with their choice of training, and 73% had not considered more than one provider before starting their course (OECD, 2017[9]). Some older experiments in the United States with the Individual Training Accounts showed that take-up was higher where counselling was offered, but not when such counselling was mandatory or too directive.

A recent study (OECD, 2018[4]) provides an analysis of Australia’s system for assessing and anticipating skill needs and how this information is disseminated and used in policy making. Australia is a leader in the production and use of high-quality information about labour market needs. This information is disseminated via various online portals, including MySkills (national directory of training opportunities in the VET sector); Quality Indicators for Learning and Teaching (QILT); Job Outlook; the Labour Market Information Portal; and myfuture (national career and labour market intelligence). Online provision of such information is likely to help adults make more informed choices, and to put pressure on training providers and education institutions to be concerned about labour market outcomes.

One challenge identified in both OECD (2018[4]) and a recent expert review of the VET system (Joyce, 2019[17]) is developing and maintaining a respected national picture of the current and future skills needs of the Australian labour market. Doing so is challenging in a country as large and diverse as Australia, and given the variety of exercises to assess and anticipate skills needs across policy areas and levels of government. OECD (2018[4]) recommended that Australia take steps to set a national assessment or “vision” of skills policy, underpinned by strong stakeholder engagement and political leadership. Recent proposals made in the Joyce review (Joyce, 2019[17]) go a long way towards achieving this objective. The review proposes making a new National Skills Commission responsible for developing and regularly updating clearly linked national, state and territory level and regional skills demand forecasts. Such forecast exercises would rely on wide stakeholder engagement and would be used to advise on all skills-related policy areas, including VET, higher education, employment services and skilled migration. Having a respected and regularly-updated national picture of skills needs would help adult learners to make informed investment decisions, and could inform use of financial incentives to steer training towards in-demand skills.

Accessing the wealth of available information about skill needs can be overwhelming for users, and especially for those with low information and communication technology skills who may have difficulty finding information tailored to their needs. This is why online provision of IAG cannot be a complete substitute for face-to-face careers advice and guidance. Several countries offer subsidised career guidance for adults to help guide their education and training decisions. France, for instance, launched the Advice for Professional Evolution (Conseil en Évolution Professionnelle, CEP) in 2014, which offers free and personalised career advice for adults considering a career change. The CEP is available for all employed and unemployed individuals, and employees can participate without having to inform their employer. In Flanders, workers can purchase vouchers for up to eight hours’ worth of subsidised career guidance with a registered provider every six years. Australia does not currently offer subsidised career guidance for adults (other than for the unemployed as part of jobactive and other employment services programmes).

Given the high share of adults in Australia who are not willing, or perhaps not able, to participate in adult learning (80% of non-participants), improving access to career and education guidance for adults may be needed to raise participation. Offering subsidised career and education guidance for adults could help guide them towards training investments that align with labour market needs. Adults (other than job seekers) could purchase vouchers to access subsidised career and education guidance services offered by jobactive providers, similar to the practice in Flanders.

A key challenge is how to reach adults who would benefit from adult learning but might not be aware that they would benefit. An OECD survey (https://oecd-futureofjobs.org/) asked respondents “What do you think is the chance that your job will substantially change because of automation in the next five years?” About 46% of respondents who were working in occupations with a high risk of automation (greater than 60% risk) answered “very low” or “low” to this question, suggesting that they were not aware that their occupation was at high risk of automation.

Active outreach may be needed to engage workers who would benefit from adult learning. International experience shows that meeting adults in their day-to-day environment (e.g. workplaces, community institutions and public spaces) and leveraging their existing community relationships can help them to connect with adult learning opportunities. This is particularly important for low-skilled adults who may be less likely to proactively look for information and support, but is also important for high-skilled adults. Australia already intervenes with early support services at the sectoral and regional levels through both the Skills and Training Initiative and the Stronger Transitions package. The Skills and Training Initiative set up transition centres onsite at Holden, a major car manufacturing plant that closed in 2017. The transition centres offered workers onsite access to career counsellors, skill assessments, recognition of prior learning and training. This support was made available to workers well before the plant closed, enabling 84% them to transition into new employment by the time the plant closed (OECD, 2018[4]). Expanding this and other types of outreach activities may help to improve participation in learning for adults in occupations at high risk of automation. It might also be worth exploring use of soft “nudging” techniques (Box 3.1) to alert workers in occupations at high risk of automation about training opportunities.

The success of financial incentives aimed at firms (training levies, subsidies, tax incentives) also depends on strong systems of IAG. Firms, and especially SMEs, often struggle to identify their current and future skill needs and which adult learning opportunities would help to fill those skills gaps. OECD (2018[4]) notes for Australia that “a key challenge in giving SMEs a stronger voice in skills policy is lack of advocacy and a means through which SMEs in the same sector can communicate their skill needs to education providers”. Good quality information and guidance support to SMEs in assessing their own skill needs and in finding suitable and affordable training options could help to boost their provision of adult learning. In Korea, the SME Training Consortium was instrumental in improving the use of the levy scheme by providing SMEs with support in identifying their skill needs as well as contracting collective training by sector (Box 3.2).

Box 3.1. Nudging high-risk adults to train

Behavioural insights, i.e. insights derived from behavioural and social sciences, are increasingly being applied by governments with the aim of making public policies work better. OECD (2017) collected applications of the use of behavioural insights from around the world and in a variety of policy sectors including consumer protection, education, energy, environment, finance, health and safety, labour market, policies, public service delivery, taxes and telecommunications. Based on their experiences helping governments to implement behavioural insights, the Behavioural Insights Team in the United Kingdom recommends four ways to encourage a behaviour: make it easy by harnessing the power of defaults and simplifying messages; make it attractive by using images, colour or personalisation; make it social by indicating how common the desired behaviour is; and make it timely by prompting people when they are most likely to be receptive.

In one example, the Behavioural Insights Team in the United Kingdom worked with the energy regulator, Ofgem, to design and test communications to improve customer engagement and increase rates of switching to lower-cost energy providers. They launched a trial involving 150 000 customers, where the intervention was a personalised letter showing households how much they could save by switching energy provider and including the top three deals in the market for them. The letters tripled switching rates from a baseline of one per cent. They also found that customers who switched after receiving a letter saved GBP 50 (British pounds) more than those who switched of their own accord, suggesting that the information provided in the letter helped them to make better provider choices.

A similar approach could be trialled in the area of adult learning. In cooperation with the Australian Taxation Office, for instance, personalised letters could be sent to tax filers in occupations with a high risk of automation. These letters could notify adults that their occupation is at high risk of being automated, and indicate the percentage of workers in the same occupation who have already participated in retraining or upskilling in the past year (the social dimension). The letters could also inform the tax filer about the self-education tax deduction and other available financial incentives or guidance that could support their training, possibly even suggesting training courses which would allow them to retrain to a higher-demand occupation and which would make use of the transferable skills and knowledge they have acquired in their current occupation.

Source: OECD (2017[19]), “Behavioural Insights and Public Policy.” www.oecd-ilibrary.org/governance/behavioural-insights-and-public-policy_9789264270480-en; The Behavioural Insights Team, “EAST: Four simple ways to apply behavioural insights.” www.behaviouralinsights.co.uk/wp-content/uploads/2015/07/BIT-Publication-EAST_FA_WEB.pdf.

Box 3.2. Korea’s SME Training Consortium

The Korean government piloted the Training Consortium Pilot Program for SMEs in 2001 with the specific objective of removing barriers (financial, organisational, or technical) to SME’s use of the training levy. The training levy had been in place since the mid-1990s, but very few SMEs offered levy-supported training to their workers.

The pilot organised SMEs within the same sectors or industries into a Training Consortium (TC). Each TC set up an Operational Committee which was composed of member SMEs, local chambers of commerce and industry, and the Ministry of Labour field office. The TC was managed and run by two training specialists who were responsible for:

  • Conducting skills and training needs assessments of each member SME (e.g. through interviews with SME managers and workers);

  • Planning training programme activities of member SMEs;

  • Contracting with training providers and SMEs to train workers collectively;

  • Carrying out networking activities with TC members, via a web page, emails and periodic meetings;

  • Carrying out evaluation studies upon completion of training courses.

The pilot considerably improved the use of the levy by SMEs: the proportion of member SMEs that offered training for their workers increased from 11% to 50% within a year of the pilot’s implementation. The pilot also helped to set up the demand-driven training system, by establishing strong partnerships among stakeholders. In 2003, the pilot was scaled up to the national level under the Ministry of Labour.

Source: Adapted from OECD (2019[20]), Adult Learning in Italy: What role for training funds?, https://doi.org/10.1787/9789264311978-en.

3.4.2. Responsive education and training system

Making the education and training offer both attractive and responsive to changing labour market needs is critical to motivating adults to participate. Without this, financial incentives are unlikely to be effective at boosting participation. Quality assurance measures are therefore highly important, and information on the quality of programmes and providers should be shared with end users.

Education and training programmes must respond flexibly to changing skills needs. In Australia, the industry-led system of developing and updating VET training packages through industry reference committees (IRCs) helps to ensure that the skills and knowledge that adults acquire in VET align with employers’ needs (OECD, 2018[4]). However, there has been criticism that the speed of development of training packages for formal VET qualifications is too slow (Joyce, 2019[17]). As a result, the training may not be updated quickly enough to keep pace with changing skills demand. Indeed, employers who chose non-formal training instead of formal training cited that they did so because non-formal training was more tailored to their needs than formal training (this was the second main reason, after cost-effectiveness). Employers in the information and communications technology (ICT) industry reported using vendor-provided training (a type of unaccredited training that is offered directly by vendors or suppliers) because it is at the forefront of new technologies and concepts and thus more qualified than accredited training to undertake skill development in ICT (White, De Silva and Rittie, 2018[21]).

A responsive training system also means that there are flexible options for training delivery that accommodate the family and work-related time commitments faced by adult learners. Many countries offer different forms of flexible learning provision, including on a part-time basis, during evenings or weekends, as distance or online learning, or in a modular and/or credit-based format. The ABS’ WRTAL survey shows that while traditional classroom instruction remains the most common form of work-related non-formal training in Australia, the use of online training is rising: 19% of adults age 25-64 used this training delivery method in 2017, up from 13% in 2013. The rise in participation in online learning is likely due to it being less costly compared to face-to-face learning, and better suited to people who “are working, have caring responsibilities, are geographically distant, or who want to undertake a course at a speed that suits them” (Productivity Commission, 2017[22]). There is also evidence that demand for short courses is rising – enrolments in skill sets (i.e. bundled units of competency in VET) rose from 150 000 to 250 000 between 2015 and 2017 (DET, n.d.[23]). Australia’s competency-based VET framework is well set up to support this type of modular approach to adult learning, which allows adult learners to build skills and knowledge incrementally over their career, either to meet specific skills needs as they arise or to combine to eventually build full formal qualifications. However, this is not the case in HE where flexible modes of training delivery are less common. Australia should develop more flexible modes of training delivery in HE, including options for part-time, weekend and evening courses, modular learning, and distance or online learning.

3.4.3. Qualification frameworks

Motivating adults to pursue learning opportunities also requires that there be clear links between skills, qualifications and occupations. Qualification frameworks establish these links and facilitate comparisons of different education and training systems across states and territories, as well as across countries. Strong qualification frameworks are particularly important for creating a harmonised understanding of the value of particular qualifications in a federated country like Australia, where responsibility for education and training lies largely with states and territories.

Australia is currently conducting a review of its qualification framework for regulated qualifications (Australian Qualification Framework, AQF) (DET, n.d.[23]). One of the considerations under review is whether short form credentials like skill sets, short courses (including units of competency in VET), MOOCs or professional and vendor qualifications should be recognised within the AQF. The advantage of having them recognised would be the reputation for quality education provided by Australia’s regulated tertiary education system, and to increase transparency about what is being offered by short form credentials and what could be gained by attaining one (DET, n.d.[23]). For learners, such recognition could increase motivation to participate in this type of training by making it portable from one employer to the next. While some types of short form credentials like skills sets and short courses are closely linked to regulated qualifications, thus making them easier to quality assure, others like MOOCs or vendor qualifications are not linked to regulated qualifications. Solving this quality assurance challenge represents a key hurdle in recognising short form credentials in the AQF. The Productivity Commission suggests that the Australian Government investigate areas of VET where an independent certification model could robustly test a person’s skills to overcome this challenge (Productivity Commission, 2017[22]).

References

[12] ATN (2018), “Lifelong Skills: Equipping Australians for the future of work”, Australian Technology Network of Universities.

[11] BCA (2018), “Future-Proof: Australia’s Future Post-Secondary Education and Skills System”, Business Council of Australia.

[18] Cedefop (2012), “Training leave: Policies and practice in Europe”, European Centre for the Development of Vocational Training, Luxembourg, http://dx.doi.org/10.2801/12416.

[1] Chapman, B. (1996), “The rationale for the Higher Education Contribution Scheme”, Australian Universities Review, https://files.eric.ed.gov/fulltext/EJ527928.pdf.

[23] DET (n.d.), “Australian Qualifications Framework Review”, Department of Education and Training, https://www.education.gov.au/australian-qualifications-framework-review-0.

[5] Edmonds, D. and T. Bradley (2015), “Mechanical boon: will automation advance Australia? | Department of Industry, Innovation and Science”, Department of Industry, Innovation and Science, https://www.industry.gov.au/data-and-publications/staff-research-papers/mechanical-boon-will-automation-advance-australia (accessed on 11 February 2019).

[6] Fialho, P., G. Quintini and M. Vandeweyer (2019), “Returns to different forms of job-related training: Factoring in informal learning”, OECD Social Employment and Migration working paper, Forthcoming, OECD.

[16] HIA (2001), “HIA Policy Training Levies”, National Policy Congress, https://hia.com.au/-/media/HIA-Website/Files/Media-Centre/Policies/training-levies.ashx (accessed on 22 March 2019).

[17] Joyce, S. (2019), Strengthening Skills: Expert Review of Australia’s Vocational Education and Training System, Department of the Prime Minister and Cabinet, Canberra, http://www.pmc.gov.au/government/its-honour. (accessed on 10 April 2019).

[8] KPMG (2018), “The importance of TAFE to Victoria’s prosperity”, KPMG, https://assets.kpmg/content/dam/kpmg/au/pdf/2018/importance-of-tafe-to-victorias-prosperity-kpmg-final-report-june-2018.pdf.

[2] Leigh, A. (2008), “Returns to Education in Australia”, Economic Papers: A journal of applied economics and policy, Vol. 27/3, pp. 233-249, http://dx.doi.org/10.1111/j.1759-3441.2008.tb01040.x.

[20] OECD (2019), Adult Learning in Italy: What Role for Training Funds ?, Getting Skills Right, OECD Publishing, Paris, https://dx.doi.org/10.1787/9789264311978-en.

[15] OECD (2019), OECD Employment Outlook 2019: The Future of Work, OECD Publishing, Paris, https://dx.doi.org/10.1787/9ee00155-en.

[4] OECD (2018), Getting Skills Right: Australia, Getting Skills Right, OECD Publishing, Paris, https://dx.doi.org/10.1787/9789264303539-en.

[19] OECD (2017), Behavioural Insights and Public Policy: Lessons from Around the World, OECD Publishing, Paris, https://dx.doi.org/10.1787/9789264270480-en.

[9] OECD (2017), Financial Incentives for Steering Education and Training, Getting Skills Right, OECD Publishing, Paris, https://dx.doi.org/10.1787/9789264272415-en.

[3] Oreopoulos, P. and U. Petronijevic (2013), “Making College Worth It: A Review of the Returns to Higher Education”, The Future of Children, Vol. 23/1, pp. 41-65, http://dx.doi.org/10.1353/foc.2013.0001.

[13] Per Capita (2018), “Submission to the Senate Select Committee Inquiry on the Future of Work and Workers, Submission 61”, Senate Select Committee on the Future of Work and Workers.

[22] Productivity Commission (2017), “Shifting the Dial: 5 Year Productivity Review, Report No. 84”, Productivity Commission, Canberra, http://www.itsanhonour.gov.au (accessed on 11 April 2019).

[14] Productivity Commission (2017), “Upskilling and Retraining, Shifting the Dial: 5-year Productivity Review, Supporting Paper No. 8”, Productivity Commission, Canberra.

[7] The Senate (2018), “Select Committee on the Future of Work and Workers”, Commonwealth of Australia.

[10] Torres, C. (2012), “Taxes and Investment in Skills”, OECD Taxation Working Papers, No. 13, OECD Publishing, Paris, https://dx.doi.org/10.1787/5k92sn0qv5mp-en.

[21] White, I., N. De Silva and T. Rittie (2018), “Unaccredited training: why employers use it and does it meet their needs?”, National Centre for Vocational Education Research, Adelaide, https://www.ncver.edu.au/research-and-statistics/publications/all-publications/unaccredited-training-why-employers-use-it-and-does-it-meet-their-needs (accessed on 11 April 2019).

Notes

← 1. Australian Bureau of Statistics, 6306.0 - Employee Earnings and Hours, Australia, May 2018, www.abs.gov.au/ausstats/[email protected]/0/27641437D6780D1FCA2568A9001393DF?Opendocument

← 2. www.centre-inffo.fr/site-centre-inffo/actualites-centre-inffo/la-caisse-des-depots-se-voit-officiellement-confier-la-gestion-du-compte-personnel-de-formation

← 3. The liberal professions include lawyers, notaries, architects, doctors, dentists and accounts, among others. They require special training in the arts or sciences, and their activities are usually closely regulated by national governments or professional bodies. (https://ec.europa.eu/growth/smes/promoting-entrepreneurship/we-work-for/liberal-professions_en).

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