The new Industry Skills Fund is a lean, mean development machine

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The Industry Skills Fund (ISF) Discussion Paper out for consultation and the webinars indicate a new settlement for investment and priorities in VET.

What’s the evidence of this?  Well there are a couple of key indicators that can’t go unnoticed.  Firstly the name of the fund… who is in control?  Industry and employers are.

The numbers are pretty small – just $476 million for 200,000 targeted training places ($1380 per place on average) and training support services to be delivered through the Fund over the next four years.  That’s 50 000 places/year starting from 1 January 2015.

“Australia needs a highly skilled workforce to adapt to structural change, rapid technological change and new business opportunities.”

Maybe the statement above from the Discussion Paper is what will become our national workforce vision?

Industries with new market opportunities get priority such as:

  • food and agribusiness;
  • mining equipment, technology and services;
  • medical technologies and pharmaceuticals;
  • oil and gas; and
  • advanced manufacturing.

It is pleasing to see Small and Medium Sized Enterprises (SME’s) receiving more attention and support from government via the ISF.

What are the economic drivers for this Fund?

“Increasing workforce capability will enable businesses to access new domestic and global markets and supply chains, to meet international quality standards, and to rapidly adjust to changing global economic conditions.”

Co-contribution is here to stay and I believe employers and individuals do need to invest,

“The Fund’s co-contribution feature will motivate employers to maximise outcomes and implement sustainable ongoing skills training.”

The Industry Skills Fund will form a suite of possible interventions via a Single Business Service Initiative alongside:

  • easy access to information on business-relevant topics including:  business start-up, banking, finance, accounting and marketing, advertising, small business counselling and information technology;
  • specific support programmes, including:  the Industry Skills Fund, the Entrepreneurs’ Infrastructure Programme, the R&D Tax Incentive, Cooperative Research Centres, the Industry Growth Fund, and other Department of Industry programmes and services;
  • other government services including business licensing information and referrals; and,
  • services provided by third parties to small businesses and state and territory government small business programmes and services.

We have long been advocating for an investment framework that has evidence based priorities.  The Discussion Paper highlights micro and SME’s especially where they may not have access to other funding support.

“The Fund will also assist employers who currently experience difficulty operating across multiple jurisdictions and businesses in Northern Australia seeking to grow, diversify and/or enter the export market.”

Aggregation of demand in terms of skills and workforce development is a concept that our work has reinforced as time and again we work across industry sectors and regions where we uncover common gaps.

“Consortia of applicants will be able to apply for funding where individual members satisfy these eligibility requirements. This will maximise the reach of funding and enable micro businesses to participate in training and workforce development opportunities where ‘critical mass’ of training participants can be achieved. This aggregation of demand will assist to minimise training costs.”

In terms of what is eligible for funding I’m really pleased to see thinking from the Department of Industry beyond training.

The Fund will provide support to businesses, seeking to skill, re-skill and/or up-skill their workforce to address critical skills gaps or shortages to increase the productivity and sustainability of their operations… However high quality, innovative or tailored training that is not yet part of a training package or accredited course could be supported by the fund.

Read non-accredited, new, emerging skill areas, skills that may take too long to get into a Training Package context or skill sets that are not endorsed (a pick and mix approach finally!) and offer an alternative… opens the door a little bit doesn’t it?

While broader reform is undertaken in the training system, the Fund will be designed to include the development of skills for leading edge businesses where current training offerings are not sufficiently targeted or responsive.

Support services are also eligible for funding support including,

… [those that] maximise training outcomes such as literacy and numeracy assistance, mentoring, support to access foreign markets and workforce development advice. 

The workforce development advice would include training needs analysis (including workforce skills audits) to identify skills gaps, skills risks and skills opportunities for competitive positioning, including mapping what is available within jurisdictions. 

The Fund will provide assistance to business to support the development of innovative training solutions that are not currently funded by the national training system.

So what’s the broader reform agenda then and what do you need to keep an eye on?

The Australian Government’s National Industry Investment and Competitiveness Agenda, to be released later this year, will focus on initiatives to promote national competitiveness and productivity including:

  • Economy-wide measures to boost the competitiveness of Australian manufacturing and lower the costs of doing business, such as options to reduce the costs of energy and regulation on Australian businesses;
  • Options to encourage innovation, including employee share schemes, support for research and development and commercialising good ideas;
  • Options to accelerate the development of productivity enhancing infrastructure;
  • Options to encourage the growth of small to medium businesses; and
  • Economy-wide incentive mechanisms to boost investment in Australia.

There is another telling statement about what is ‘not eligible’,

Australia’s vocational education and training system offers nationally accredited training through a range of registered training organisations, both public and private. State and territory governments are responsible for training within their jurisdictions, and both the Australian Government and states and territories provide significant funding to the system.

Regarding the statement in bold… my question is for how much longer especially as the National Partnership Agreement on VET comes up for renegotiation?

In terms of processes it looks as if there will be funding rounds every 2-3 months, with 3 main interrelated criteria being:

  1. Priority sector
  2. Micro or SME
  3. Identified business outcomes
  4. Ability to increase productivity and competitiveness

Hit all 4 criteria and your application will have a higher ranking.

I believe the co-contribution should be based upon turnover rather than size as I think that is a fairer way to allocate funds.  Working from a labour productivity perspective is an interesting concept but I’m not sure if it is clear as to what this means?

What is missing for me from the Discussion Paper, which also has a crossover into the Entrepreneurs Infrastructure Programme, is a couple of fundamental economic and workforce priorities.  In terms of answering the digital questionnaire this was drawn out including:

  • Business and Professional Services as knowledge intensive and so this could be reflected somewhere in the priorities
  • Growth for micros and SME’s should be encouraged with taking on Australian Apprenticeships (including School Based) as an easy next step
  • Regional projects should have more flexibility with the industry priorities reflecting regional needs
  • Digital capability should be a priority
  • Entrepreneurship, lean thinking and applying StartUp methodology (rapid development of new businesses) should be reflected in the priorities
  • The fund should allow for some way of recognising in-kind contribution particularly for those businesses with lower turnover and resources
  • For payment and reporting purposes I think there should be some consistency with templates, preferably an online system that can accommodate different types of projects.

The ISF is silent on other workforce strategies such as Australian Apprenticeships and the upcoming tender for Apprenticeship support services, Disability Employment Services, Job Services Australia and VET in Schools.  These interventions are linked in my view, as they can provide a solution to workforce issues and gaps in the context of a skills needs analysis or workforce plan.

For further information on what is likely with the Employment Services 2015 contract read the Exposure Draft and for VET in Schools track the New VET in Schools Framework development.

I encourage you to give feedback on the Industry Skills Fund via this link:

Download the Discussion Paper and register to attend the webinars.

Written by Wendy Perry, Head Workforce Planner, Workforce BluePrint, VET Strategist WPAA, presenting on VET reform – what’s happening now and what is likely in the future at the Jobs Australia Conference in Melbourne on 27.8.14.

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