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Jobs and Skills Australia Bill 2022 [and] Jobs and Skills Australia (National Skills Commissioner Repeal) Bill 2022



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ISSN 1328-8091

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BILLS DIGEST NO. 007, 2022-23 23 AUGUST 2022

Jobs and Skills Australia Bill 2022 [and] Jobs and Skills Australia (National Skills Commissioner Repeal) Bill 2022 Dr Hazel Ferguson Social Policy Section

Key points

• The Bills propose to abolish the role of the National Skills Commissioner, and replace the office of the National Skills Commission with a new body, Jobs and Skills Australia (JSA), headed by the JSA Director.

• The Jobs and Skills Australia Bill 2022 sets out JSA’s functions, consultation requirements, and staffing arrangements in general terms.

• The Government intends to introduce further legislation dealing with JSA’s scope, structure, and governance, informed by consultation on these matters, following the Jobs and Skills Summit, which is scheduled for September 2022.

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Contents

Purpose of the Bills ......................................................... 3

Background ..................................................................... 3

Australia’s skill needs .................................................. 3

The National Skills Commission .................................. 4

Skills training reform during the 46th Parliament ...... 5 Committee consideration ................................................ 5

Senate Education and Employment Legislation Committee ................................................................... 5

Senate Standing Committee for the Scrutiny of Bills .............................................................................. 5

Policy position of non-government parties/independents...................................................... 6

Position of major interest groups..................................... 6

Financial implications ...................................................... 6

Statement of Compatibility with Human Rights................ 6

Parliamentary Joint Committee on Human Rights ..... 6 Key issues and provisions ................................................ 6

JSA establishment and functions ................................ 6

Table 1 Current NSC functions and proposed JSA functions and consultation requirements .......... 7 The JSA Director and staff ........................................... 8

Concluding comments ..................................................... 9

Date introduced: 27 July 2022

House: House of Representatives

Portfolio: Employment and Workplace Relations

Commencement: The Acts created by the passage of these Bills will commence on the 8th day after Royal Assent. The Jobs and Skills Australia (National Skills Commissioner Repeal) Act 2022 will not commence if the Jobs and Skills Australia Act 2022 does not.

Links: The links to the Bill, its Explanatory Memorandum and second reading speech can be found on the home pages for the Jobs and Skills Australia Bill 2022 and Jobs and Skills Australia (National Skills Commissioner Repeal) Bill 2022, or through the Australian Parliament website.

When Bills have been passed and have received Royal Assent, they become Acts, which can be found at the Federal Register of Legislation website.

All hyperlinks in this Bills Digest are correct as at August 2022.

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Purpose of the Bills The Jobs and Skills Australia Bill 2022 (JSA Bill) and Jobs and Skills Australia (National Skills Commissioner Repeal) Bill 2022 ( NSC Repeal Bill) together propose to abolish the role of the National Skills Commissioner, and replace the office of the National Skills Commission (NSC) with a new body, Jobs and Skills Australia (JSA). The creation of JSA was one of the Government’s 2022 election commitments, having been originally announced in October 2019.1

The JSA Bill sets out the functions and staffing arrangements for JSA. The Government expects to introduce further legislation following consultation on JSA’s scope, structure, and governance, informed by the outcomes of the Jobs and Skills Summit, which is scheduled for September 2022.2

The NSC Repeal Bill provides for the immediate repeal of the National Skills Commissioner Act 2020 (N SC Act), under which the NSC operates, if the Jobs and Skills Australia Act comes into force.

Background

Australia’s skill needs Recruitment difficulties have recently gained considerable attention as employers in countries around the world report challenges in the wake of the global COVID-19 pandemic. According to a recent Organisation for Economic Cooperation and Development (OECD) working paper, Australia is experiencing some of the highest rates of labour shortages in the OECD.3

Australia’s experience reflects a combination of two distinct factors:

• short-term labour shortages, generally at lower skill levels, shaped by COVID-19 disruption, resulting in an inability to attract workers under prevailing pay and conditions

• persistent shortages of adequately qualified and skilled workers at higher skill levels, including in technical and trade-based occupations (that is, jobs requiring a Certificate III, Diploma, Advanced Diploma, Associate Degree, or Bachelor Degree, or equivalent experience).4

The NSC has found 19% of all assessed occupations, and 42% of Technician and Trade Occupations, are currently in national shortage.5

Employment projections suggest that job growth in high skill level and service-oriented occupations will continue to drive future demand to 2026, with almost two-thirds of projected employment growth concentrated in:

• health care and social assistance

• professional, scientific and technical services

• education and training

• accommodation and food services.6

Skill needs within occupations are also transforming, with skills related to caring, digital skills, non-routine cognitive skills, and communication and collaboration, increasingly required across a range

1. Australian Labor Party, ‘Your Education’, media release, n.d; Anthony Albanese (Leader of the Opposition), ‘Jobs and the Future of Work: Speech to CEDA, Perth’, media release, 29 O ctober 2019. 2. Brendan O'Connor, Second Reading Speech: Jobs and Skills Australia Bill 2022, House of Representatives, Debates, (proof), 27 July 2022, 16. 3. Organisation for Economic Cooperation and Development (OECD), The Post-COVID-19 Rise in Labour Shortages, working

paper, 1721 (Paris: OECD, 2022). 4. Damian Oliver (Assistant Secretary for Pricing and Performance, National Skills Commission), ‘Speech to the ITEC22 Conference’, 3 June 2022. 5. ‘Skills Priority List’, National Skills Commission (NSC), last updated 8 February 2022. 6. ‘Projecting employment to 2026’, NSC, 29 March 2022.

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of occupations.7 The shift in digital skill requirements has been particularly pronounced in light of the COVID-19 driven acceleration of the digital transformation, with countries facing common challenges in the area of digital skills acquisition among workers and firms.8

The importance of education and training in meeting these needs has been reaffirmed during COVID-19, as the acceleration of existing trends towards higher-skill employment has combined with decreased access to skilled migration due to border closures.9 As borders open, Australia continues to face challenges associated with international competition for skilled workers.10 A range of initiatives have been introduced in both higher education and vocational education and training (VET) with the aim of better matching skill demand with the skills offered by workers.11 However, efforts to enact wider-scale skills training reforms have largely stalled.

The National Skills Commission Successive Australian Governments have sought to coordinate domestic responses to skill needs through statutory skills related bodies.12 The NSC was announced in the 2019-20 Budget as part of the ‘Delivering Skills for Today and Tomorrow’ suite of measures that formed the response to the Strengthening Skills: Expert Review of Australia's Vocational Education and Training System (the Joyce Review), which had been commissioned in the lead-up to the 2019 election.13

The NSC commenced operating in an interim capacity in July 2020 and was formally established under the NSC Act from September 2020. It is currently responsible for providing advice and information about Australia’s labour market; current, emerging and future workforce skills needs; the performance of the VET system; VET pricing; and return on investment in VET.14

It is likely too early to judge the NSC’s impact in terms of responding to Australia’s skill needs. In 2020 and 2021, it focused on establishment and an initial body of work including:

• labour market analysis, which had previously been a departmental responsibility

• developing and consulting on an Australian Skills Classification

• producing its inaugural report, The State of Australia’s Skills 2021: Now and into the Future as required under the NSC Act

• reviewing the national skills needs of Australia and producing a Skills Priority List

• examining VET course prices, and publishing the VET Average Price Benchmark report

• producing a number of industry, occupation and skill-specific reports, such as on Emerging Occupations, the Care Workforce, Digital Skills, and the Health Care and Social Assistance industry.

7. NSC, State of Australia’s Skills 2021: Now and into the Future, (Canberra: NSC, 2021). 8. OECD, The Post-COVID-19 Rise in Labour Shortages, 9. 9. NSC, State of Australia’s Skills 2021, 52 and 76-78; Productivity Commission (PC), 5-year Productivity Inquiry: The Key to Prosperity, in terim report, 1, (Canberra: PC, July 2022), xi and 47-49.

10. PC, 5-year Productivity Inquiry, 47-49. 11. Examples of initiatives include the JobTrainer Fund, Boosting Apprenticeship Commencements, and some elements of the Job-ready Graduates Package. Further detail is available in Hazel Ferguson, ‘Tertiary Education and COVID-19 Recovery’, Parliamentary Library Briefing Book: Key issues for the 47th Parliament, (Canberra: Parliamentary Library, June 2022).

12. This history is detailed in Hazel Ferguson, ‘National Skills Commissioner Bill 2020’, Bills Digest, 100, 2019-20, (Canberra: Parliamentary Library, 2020). 13. S. Joyce, Strengthening Skills: Expert Review of Australia's Vocational Education and Training System, (Canberra: Department of the Prime Minister and Cabinet (PM&C), 2019); Australian Government, ‘Budget 2019-20’, Budget Measures: Budget Paper

No. 2: 2019-20, 69-70; Hazel Ferguson, ‘Delivering Skills for Today and Tomorrow: Government's response to the Joyce Review’, F lagPost (blog), Parliamentary Library, 24 April 2019). 14. National Skills Commissioner Act 2020 (NSC Act), section 7.

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Skills training reform during the 46th Parliament Responsibility for VET is shared between the Australian Government and the states and territories. Each state and territory administers VET delivery within its jurisdiction, while the Australian Government supports these efforts via funding delivered under intergovernmental agreements, and supports VET students and apprentice employers directly via VET Student Loans, Trade Support Loans, and apprenticeship incentives. Significant influence is also exercised by agreement through the national VET regulator, the Australian Skills Quality Authority.

The major intergovernmental agreement for VET is the National Agreement for Skills and Workforce Development ( NASWD). The NASWD sets out jurisdictions’ shared responsibilities and is the basis for approximately $1.6 billion of ongoing National Specific Purpose Payments from the Australian Government to states and territories each year.15

In 2020, the Productivity Commission released a review of the NASWD, concluding it is ‘overdue for replacement’, and recommending a new agreement implement a range of changes including (but not limited to):

• improving returns on investment by using NSC work on efficient costs as the basis for common course subsidies

• setting minimum fees for Certificate III

• applying more contestability to public funding of TAFE.16

A Heads of Agreement for Skills Reform was subsequently finalised with the states and territories in July 2020.17 However, jurisdictions did not reach agreement over the expected replacement for the NASWD during the 46th Parliament. This was reportedly related to elements of the draft

agreement, including possible reductions in funding for TAFE, and the proposed role of the NSC in setting prices and subsidies (work that is currently undertaken by the states and territories based on each jurisdiction’s skill needs, with a different system operating in each jurisdiction).18 The 2022-23 Budget allocated an additional $3.7 billion over 5 years from 2022-23 to work with states and territories on this issue, flagging skills reform as a significant issue to be addressed during the 47th Parliament.19

Committee consideration

Senate Education and Employment Legislation Committee On 28 July 2022 the Senate referred the Bills to the Education and Employment Legislation Committee for inquiry and report by 23 September 2022.20 Further information is available at the homepage to the inquiry.21

Senate Standing Committee for the Scrutiny of Bills At the time of writing, the Senate Standing Committee for the Scrutiny of Bills had not considered the Bills.22

15. Australian Government, ‘Budget 2022-23’, Federal Financial Relations: Budget Paper No. 3: 2022-23, 45. 16. ‘Skills and Workforce Development Agreement’, PC, n.d.; PC, National Agreement for Skills and Workforce Development Review, ( Canberra: PC, 2020). 17. ‘Heads of Agreement for Skills Reform’, PM&C, 5 August 2020. 18. Ronald Mizen and Julie Hare, ‘Discussions Turn Sour on $3.7b National Skills Deal’, Australian Financial Review, 1 April 2022, 6. 19. Hazel Ferguson and Matthew Thomas, ‘Skills Training’, Budget Review 2022-23, (Canberra: Parliamentary Library, April 2022);

Australian Government, ‘Budget 2022-23’, Budget Measures: Budget Paper No. 2: 2022-23, 78-79. 20. Senate Standing Committee for the Selection of Bills, Report, 2, 2022, 28 July 2022. 21. Senate Education and Employment Committees, Inquiry into the Jobs and Skills Australia Bill 2022 [Provisions] and the Jobs

and Skills Australia (National Skills Commissioner Repeal) Bill 2022 [Provisions]. 22. Senate Standing Committee for the Scrutiny of Bills, Index of bills considered by the committee, 31 March 2022.

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Policy position of non-government parties/independents At the time of writing, no comments on the Bills from non-government parties/independents were located. However, when JSA was originally announced by Labor in 2019, the Coalition characterised the idea as a ‘renaming’ of the NSC.23

Position of major interest groups The Bills are supported by a range of education and training, union, and employer stakeholders, as discussed in the key issues and provisions section of this Bills Digest.

Financial implications The Explanatory Memorandum to the Bills states that they will have no financial impact, as the creation of JSA will be funded from savings from abolishing the NSC.24

Statement of Compatibility with Human Rights As required under Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 (Cth), the Government has assessed the Bills’ compatibility with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of that Act. The Government considers that the Bills are compatible.25

Parliamentary Joint Committee on Human Rights At the time of writing, the Parliamentary Joint Committee on Human Rights had not considered the Bills.26

Key issues and provisions

JSA establishment and functions As summarised in Table 1 below, JSA’s proposed remit as set out in clause 9 of the JSA Bill is substantially similar to the NSC’s under section 7 of the NSC Act, with a focus on workforce skill needs and VET common to both. However:

• while the NSC’s current advisory functions include VET pricing and returns on investment, JSA will provide advice on a smaller number of less narrowly defined topics, and consider the ‘resourcing and funding requirements’ for accessible quality VET delivery as part of a new research function—this appears to signal a step back from the idea of national VET price setting

• while the NSC’s current advisory responsibilities are substantially VET-specific, JSA’s advisory functions have been drafted in broader terms, which would appear to allow the new body greater scope to consider skill needs in industries and occupations not served by the VET sector (for example, occupations requiring a higher education).

Additionally, the consultation requirements to be imposed on JSA under clause 10 of the JSA Bill are not paralleled anywhere in the current NSC Act.

23. Michaelia Cash (Minister for Employment, Skills, Small and Family Business), ‘Labor’s Policy Plagiarism’, media release, 29 October 2019. 24. Explanatory Memorandum, Jobs and Skills Australia Bill 2022 [and] Jobs and Skills Australia (National Skills Commissioner Repeal) Bill 2022, 3. 25. The Statement of Compatibility with Human Rights can be found at pages 4-8 of the Explanatory Memorandum to the Bills. 26. Parliamentary Joint Committee on Human Rights, Index of bills considered by the committee, 25 March 2022.

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It appears JSA’s proposed areas of inquiry are supported by stakeholders, with the Group of Eight universities and Australian Chamber of Commerce and Industry welcoming the inclusion of capacity studies and workforce forecasting in JSA’s functions.27

A number of key stakeholders, including Universities Australia, the Independent Tertiary Education Council Australia, the Australian Education Union, and the Business Council of Australia, have also welcomed the JSA Bill’s emphasis on working with and drawing on the expertise of education and training providers, state and territory governments, unions, and industry.28

However, while welcoming the Bills, others have pointed to the lack of detail in the current drafting. Most notably, the Bills include only limited provision for JSA’s independence, and do not specify the circumstances when consultation would be required, or how it would be undertaken.

Ai Group has suggested that ‘[i]t is important that Jobs and Skills Australia be an independent agency with a strong industry board’, while TAFE Directors Australia has pointed to the need for JSA’s approach to allow for local leadership in response to skill needs.29 The Government anticipates introducing further legislation fleshing out these governance issues following consultation.30

Table 1 Current NSC functions and proposed JSA functions and consultation requirements

Function NSC JSA

Provide advice to the Minister or to the Secretary in relation to:

Australia’s current, emerging and future workforce skills needs. Australia’s current and emerging labour market, including advice on

workforce needs and priorities.

The development of efficient prices for VET courses. Australia’s current, emerging and future skills and training needs and

priorities (including in relation to apprenticeships).

The public and private return on government investment in VET qualifications.

The adequacy of the Australian system for providing VET, including training outcomes.

The performance of Australia’s system for providing VET.

Issues affecting the state of the Australian and international labour markets.

Opportunities to improve access, skills development and choice for regional, rural and remote Australia in relation to VET.

27. Group of Eight universities, ‘Go8 Supports Solution to National Skills Shortage’, media release, 28 August 2022; Australian Chamber of Commerce and Industry, ‘Jobs and Skills Australia Offers Pathway to Overcoming Skills Crisis’, media release, 27 July 2022.

28. Universities Australia, ‘Jobs and Skills Australia Critical to Our Future’, media release, 27 July 2022; Independent Tertiary Education Council Australia, ‘Jobs and Skills Australia Legislation Introduced into Parliament’, media release, 27 July 2022; Australian Education Union, ‘AEU Statement on Jobs and Skills Australia’, media release, 28 July 2022; and the Business Council of Australia, ‘Skills will be Critical to Reaching the Frontier’, media release, 27 July 2022.

29. Ai Group, ‘Jobs and Skills Australia Key to Recalibrating National Skills Strategy’, media release, 28 July 2022; TAFE Directors Australia, ‘Responding to Future Skills’, media release, n.d. 30. Brendan O'Connor, Second Reading Speech: Jobs and Skills Australia Bill 2022, House of Representatives, Debates, (proof), 27 July 2022, 16.

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Function NSC JSA

Undertake research and analysis

Nil. Prepare capacity studies, including

for emerging and growing industries and occupations.

Undertake workforce forecasting, assess workforce skills requirements and undertake cross-industry workforce analysis.

Undertake research and analysis on the resourcing and funding requirements for registered training organisations (within the meaning of the National Vocational Education and Training Regulator Act 2011) to deliver accessible quality VET courses.

Inform the public

All matters mentioned within the NSC’s advisory functions. All matters mentioned within JSA’s advisory and research functions.

Collect, analyse, share and publish data and other information

All matters mentioned within the NSC’s advisory functions. All matters mentioned within JSA’s advisory and research functions.

Other functions

As conferred on the Commissioner by the rules, by the NSC Act or by any other law of the Commonwealth, or is incidental or conducive to the performance of the above functions.

As conferred on JSA by the rules (made by the Minister under clause 30 of the JSA Bill) by the Jobs and Skills Australia Act or by any other law of the Commonwealth, or incidental or conducive to the performance of the above functions.

Consult Nil. ‘Where appropriate’, JSA must

consult and work with: - state and territory governments - relevant authorities of state

and territory governments - employers, unions, training providers and other industry

stakeholders, and other persons or bodies with an interest in the labour market, workforce skills or workforce training needs.

Sources: NSC Act, section 7; JSA Bill, clauses 9 and 10.

The JSA Director and staff The NSC Repeal Bill proposes to repeal the NSC Act if the Jobs and Skills Australia Act comes into force. No transitional arrangements for the NSC are included in the Bills. The NSC, along with the

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appointment of the inaugural National Skills Commissioner, would therefore be dissolved on commencement of the NSC Repeal Act.

The JSA Bill proposes that the JSA will be headed by a JSA Director, appointed by the Minister by written instrument for a period of up to 1 year.31 The Director’s remuneration is to be determined by the Remuneration Tribunal, or in the absence of such a determination, prescribed by the rules made by the Minister (which would be disallowable).32

The Minister will have the power to direct the JSA Director regarding the performance of their role (with such direction not being a legislative instrument, and thus not open to scrutiny or disallowance by the Parliament).33 However, this cannot relate to the content of advice given by the JSA Director, which affords JSA a degree of independence.34

The JSA Director is to be supported by a staff made up of Australian Public Service employees of the department (currently the Department of Employment and Workplace Relations) or other departments.35 The JSA Director may also engage consultants to assist with their functions.36

Concluding comments The creation of JSA appears to have two benefits over the current NSC, which may assist to resolve the current impasse in skills training reform: it includes consultation as one of the new agency’s responsibilities under its establishing legislation, and it does not include the VET pricing focus which appears to have been a barrier to agreement over the replacement for the NASWD. Further, its broader remit may provide more opportunities to consider skill needs beyond those occupations served by VET.

However, as some stakeholders have identified, the success of the JSA model will largely depend on governance arrangements that are not included in the current Bills. The development of such arrangements, and the transition from the NSC to JSA will need to be carefully managed.

Otherwise, there is a risk that the creation of JSA will repeat the tendency of past governments to lose money and corporate memory setting up and abolishing broadly similar bodies.37

31. JSA Bill, clauses 12, 13 and 18. 32. JSA Bill, clauses 20 and 30. 33. JSA Bill, clause 27. 34. JSA Bill, clause 27. 35. JSA Bill, clauses 14 and 15. 36. JSA Bill, clause 16. 37. John Ross, ‘New Australian Workforce Agency to Target Graduate Shortage Areas’, Times Higher Education, 28 July 2022.

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