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New industry engagement arrangements - Industry Clusters

Frequently Asked Questions


Industry Clusters are being established to lead and drive the performance of the national Vocational Education and Training (VET) system to meet the evolving skills and training needs of industry and employers.

The new arrangements will address past and current challenges with industry engagement in the national training system, to strengthen outcomes for both learners and employers and support Australia's economic recovery.

The new arrangements are designed to improve the speed to market of qualifications and ensure training product development is aligned to skills in demand and meets industry need, thereby increasing workforce productivity and delivering more learners into jobs.

The Industry Clusters will replace the current industry engagement system, including the 67 Industry Reference Committees (IRCs), and 6 Skills Service Organisations (SSOs), and are expected to be fully implemented by 1 January 2023.

Successive reviews and consultations with a wide range of stakeholders over several years has informed the new arrangements. A Transition Advisory Group with membership of major industry stakeholders and representatives from small business, unions and states and territories provided advice on the transition and implementation arrangements for Industry Clusters.

Improving industry engagement

Why move to an Industry Cluster arrangement?

The new Industry Cluster model is designed to address past and current challenges with industry engagement in VET, identified from extensive stakeholder consultations and multiple reviews over many years. Stakeholders have consistently supported the need for a stronger, more strategic role for industry, and a smaller number of industry-led organisations.

The new industry engagement arrangements elevate industry leadership in VET so industry can more effectively address current workforce challenges and prepare for new and emerging skills needs.

A smaller number of related sectors grouped together in an Industry Cluster enables greater cross-sector collaboration and ensures future training product design meets a broader range of current and emerging skills needs. It will also increase the ability of generic or similar skill sets to be shared across different sectors while reducing the duplication of training products.

The Australian Government is increasing investment to better resource the system and will provide an additional $149.2 million to establish and support the Industry Cluster model.

How will the new industry engagement arrangements improve outcomes for learners?

An industry-led system will be responsive to learner needs and ensure graduates have the right skills for the jobs in demand. Industry Clusters will be responsible for ensuring training products are aligned with the skills needed by industry and training meets industry requirements. It will ensure learners have the skills and training that employers are looking for and deliver more learners into jobs.

Industry Clusters will work together with RTOs to support continuous improvement and employer engagement in the national VET system. They will work with RTOs to develop resources for training providers to improve training and assessment practices for learners, and work with employers to offer more work placements to drive better outcomes for learners.

How will the new industry engagement arrangements support the delivery of training and assessment?

A key responsibility of Industry Clusters will be to drive improvements in the development and delivery of training and assessment. To achieve this, Industry Clusters will collaborate with RTOs and across the training sector to connect national training products with delivery of training 'on the ground' and longer-term workforce development.

Industry Clusters will work together with RTOs to develop resources for training providers, trainers, assessors and employers to improve training and assessment practices, including in-workplace assessment. They will support RTOs by developing learning materials and other resources to improve the delivery of training to meet workforce and skills needs, particularly within small or 'thin' markets such as regional, rural and remote areas.

How will the new industry engagement arrangements improve outcomes for employers?

A strong, strategic industry voice in VET will strengthen outcomes for employers and support Australia's economic recovery. The new arrangements will allow industry to address strategic workforce challenges and to ensure training products are developed and updated faster to meet the evolving needs of industry. By aligning training product development with skills in demand, industry will ensure graduates have the skills and training employers need. It will also lead to increased workforce productivity and deliver more learners into jobs.

Roles and Responsibilities

What will the Industry Clusters be responsible for?

Industry Clusters will have a broad range of responsibilities and accountability, including:

  • Workforce planning - address workforce challenges through strategies to identify, forecast and respond to skills needs across a range of educational pathways, including VET and higher education

  • Training product development - improve the quality, speed to market and responsiveness of training products. This includes piloting emerging products and testing new approaches to meet workforce, skills, and industry needs

  • Implementation, promotion and monitoring - ensure training delivery meets employer needs, career pathways are mapped and promoted, and the impact of delivery is monitored

  • Industry stewardship - act as a source of intelligence on issues affecting their industries and provide advice on VET system policies to ensure they are fit-for-purpose.

Transition timing

When will the Industry Clusters commence?

The Industry Clusters are expected to be fully implemented by 1 January 2023.

What is happening with the existing Industry Reference Committees and the Skills Service Organisations?

The Industry Clusters, once established, will replace the current industry engagement arrangements which include the 67 Industry Reference Committees and 6 Skills Service Organisations. IRCs, supported by SSOs, will continue to operate throughout 2022, including to ensure that existing updates to training products are finalised.

How will the national VET system continue to be supported until the Industry Clusters commence operation?

The Industry Reference Committees and Skills Service Organisations will continue to operate until the end of 2022 while the new arrangements are being set up. This will ensure:

  • continuity and stability of the VET system

  • sufficient time for existing training product reviews to be completed

  • qualifications remain up to date

  • a timely and high-quality handover of training products and related artefacts to the Industry Clusters

  • flexibility for Industry Clusters to take on training product work as required.

What is happening with the Skills Organisation Pilots in the new system?

Valuable lessons from the establishment and early work of the Skills Organisation Pilots have been central to the development of the new industry engagement arrangements.

The Skills Organisation Pilots will not extend beyond their current funding period in mid-2023 and will need to apply through the open competitive grants process if they want to become an Industry Cluster under the new arrangements.

Establishing Industry Clusters

How will the Industry Clusters be formed?

Industry Clusters will be established through a two-staged approach to market. The first stage will involve an open competitive process seeking proposals to establish and subsequently operate an Industry Cluster. The second stage involves a closed non-competitive process to enable clusters, once established, to put forward detailed proposals to deliver on their full functions.

Why are the clusters being established this way?

There are several benefits to establishing Industry Clusters this way including:

  • provides transparency as applicants will be assessed on common criteria and selected on merit

  • provides Industry Clusters sufficient time to establish and undertake workforce planning prior to taking on other functions.


What type of entities will Industry Clusters be?

The recommended legal structure for Industry Clusters is to be established as not-for-profit companies, limited by guarantee, incorporated under the Corporations Act 2001. They will be required to operate in accordance with the principles of good corporate governance.

How will Industry Cluster boards be structured?

Industry Clusters will require high performing skill-based Boards that are well regarded and drawn from their industry sectors. Industry Clusters will be established with a majority of independent directors and no more than eight board director members, or nine including the Chair. Board directors will be appointed by members. Membership and board structures will be informed by the unique features of the relevant industries.

What will the operational structure of Industry Clusters look like?

The recommended operational structure for Industry Clusters includes:

  • a skills-based board, (i.e. a non-representative board) with a majority of independent directors, no more than eight board director members, (nine including the Chair) a high calibre CEO appointed by and reporting directly to the board

  • staff/secretariat with research, technical and administrative capabilities

  • strategic taskforces and technical advisory sub-committees to inform the strategic direction of the board, and the work of the Industry Cluster

  • Formal mechanisms in place to support cross-collaboration at the strategic and practitioner levels

  • Robust dispute mechanisms to enable disputes to be settled prior to submitting training products for approval.

How will Cluster performance be measured?

Robust accountability and performance mechanisms, together with strong change management processes will be implemented across all levels of the national training system to drive Industry Cluster performance and ensure the model delivers on Skills Ministers' reform ambitions.

Industry Clusters will be held accountable under the grant agreement for delivering outcomes that are aligned with a performance framework. This will provide clarity around performance expectations and assist strategic planning. Performance and accountability measures will focus on the impact and quality of activities delivered under the four functions; strategic workforce planning, development of training products; implementation, promotion and monitoring; and industry stewardship. Focus of key performance indicators under the framework will be on the achievement of outcomes and the impact of the Clusters' activities across the economy.

The role of the independent assurance body will provide checks and balances within the national training system to ensure that training products developed by Industry Clusters adhere to the standards and policies set by Skills Ministers. A regular health check of the national training system will be conducted through the performance framework and a formative evaluation will be undertaken to identify if reform objectives are being met and target areas for continuous quality improvement.

How will Industry Clusters engage with stakeholders?

To deliver on their responsibilities and achieve their objectives, Industry Clusters will need to work across and between clusters and collaborate with a range of stakeholders including industry, employers, peak bodies, unions, RTOs, other tertiary institutions, states and territories, the National Careers Institute (NCI), and the National Skills Commission (NSC).

Industry Clusters will be required to develop a stakeholder engagement plan that outlines how the Industry Cluster will engage a diverse range of stakeholder voices within the industry sectors to which it is responsible to ensure it is addressing the skills needs of all employers, including small to medium enterprises and niche industries within their remit.

How will Industry Clusters engage with RTOs?

A core performance requirement of the Industry Clusters will be quality engagement with RTOs to deliver improved training and employment outcomes for learners. Through training product development that is responsive to industry needs, Industry Clusters will improve the quality, speed to market and responsiveness of training products, and support the delivery of training and assessment to support RTOs to deliver high-quality student learning experiences.

Under the new arrangements, where industry has responsibility for developing qualification and training products, Industry Clusters will work cooperatively and closely with RTOs to identify, develop and implement improvements to training products. Industry Clusters will also work together with RTOs to develop resources for training providers, trainers, assessors and employers to improve training, including work placements, and assessment practices for learners, including through in-workplace assessment.

For an outline of the new industry engagement architecture including the features and functions of the new industry engagement arrangements and the roles and responsibilities of stakeholders, see factsheet 2.

Structure of Industry Clusters

How many Industry Clusters will there be in the new system?

The preferred proposal is to establish and fund 9 Industry Clusters. Fewer Industry Clusters will enable greater cross-sector collaboration and ensure training products meet a broader range of skills needs. It will also provide flexibility and economies of scale to reduce duplication and related costs of overlapping content and increase capacity to share units on generic or similar skills.

How was the model developed?

The design of the proposed model was informed by the Australian and New Zealand Standard Industrial Classification (ANZSIC) codes which group clusters based on key business activities. This model uses industry and industry leadership as its basis, thereby grouping related sectors and sub-sectors. It is also future focused to accommodate new and emerging industry sectors such as space and hydrogen.

What are the industry groupings under the proposed 9 cluster model?

The proposed 9 clusters are listed below:

  • Agribusiness and Food Production

  • Arts and Personal Services

  • Building, Construction and Property

  • Early Educators, Health and Human Services

  • Finance, Technology and Business

  • Government, Education and Public

  • Manufacturing, Print and Textiles

  • Mining, Resources and Energy

  • Wholesale, Retail, Transport and Logistics.

Is there room for flexibility or scope to propose an alternative alignment?

Yes, while the 9-cluster model is the preferred arrangement, it is recognised that flexibility is required for industry to self-organise and identify the cluster grouping best aligned to the skills needs of their sectors. Industries will have the opportunity to propose alternate arrangements through the grants round.

Where do current training products fit under the 9-cluster model?

Industry GroupingsRelated national training products
Agribusiness and Food Production
  • ACM Animal Care and Management
  • AHC Agriculture, Horticulture and Conservation and Land Management
  • AMP Australian Meat Processing
  • FBP Food, Beverage and Pharmaceutical (food and beverage production)
  • FWP Forest and Wood Products
  • RGR Racing and Breeding
  • SFI Seafood Industry
Arts and Personal Services
  • CUA Creative Arts and Culture
  • SFL Floristry
  • SHB Hairdressing and Beauty Services
  • SIF Funeral Services
  • SIS Sport, Fitness and Recreation
  • SIT Tourism, Travel and Hospitality
Building, Construction and Property
  • CPC/CPC08 Construction, Plumbing and Services
  • CPP/CPP07 Property Services
  • NWP National Water
  • RII Resources and Infrastructure Industry (civil infrastructure)
  • UEE Electrotechnology (general electrical services)
Early Educators, Health and Human Services
  • CHC Community Services
  • HLT Health
Finance, Technology and Business
  • BSB Business Services
  • FNS Financial Services
  • ICT Information and Communications Technology
Government, Education and Public
  • CSC Correctional Services
  • DEF Defence
  • FSK Foundation Skills
  • LGA Local Government
  • POL Police
  • PSP Public Sector
  • PUA Public Safety
  • TAE Training and Education
Manufacturing, Print and Textiles
  • AUM Automotive Manufacturing
  • AUR Automotive Retail, Service and Repair (service & repair)
  • FBP Food, Beverage and Pharmaceutical (pharmaceutical production)
  • ICP Printing and Graphic Arts
  • MEA Aeroskills
  • MEM/MEM05 Manufacturing/Metals and Engineering
  • MSF Furnishing
  • MSL Laboratory Operations
  • MSM/MSA07 Manufacturing
  • MSS Sustainability
  • MST/LMT07 Textiles, Clothing and Footwear
  • PMA Chemical, Hydrocarbons and Refining
  • PMB Plastics, Rubber and Cablemaking
  • PPM Pulp and Paper Manufacturing Industry
Mining, Resources and Energy
  • RII Resources and Infrastructure Industry (mining)
  • UEE Electrotechnology (utility services)
  • UEG Gas Industry
  • UEP Electricity Supply Industry – Generation Sector
  • UET Transmission, Distribution and Rail Sector
Wholesale, Retail, Transport and Logistics
  • AUR Automotive Retail, Service and Repair (retail)
  • AVI Aviation
  • MAR Maritime
  • SIR Retail Services
  • TLI Transport and Logistics

For an overview of the proposed Industry Cluster structure and composition, see factsheet 3.

Winding down of Training Product Development work

What will happen to training product development work in 2022?

There will be a phased winding down of the current training product development (TPD) while the new arrangements are being established throughout 2022. This will mean the Industry Reference Committees (IRCs), supported by Skills Service Organisations (SSOs), will continue to have responsibility for national training products until December 2022. Similarly, the Australian Industry Skills Committee (AISC) will continue to have responsibility for the approval of training products until the end of 2022.

However, the priority for 2022 is to complete existing training product projects. No new training product projects will be commissioned during 2022 with limited exceptions such as urgent and unforeseen events.

Any new requests for new training product projects can still be approved under the existing arrangements until the end of this year. New training product projects approved between now and December 2021 will need to be completed by September 2022.

What is meant by training product projects that are urgent or unforeseen? How will this be determined?

No new training products will be commissioned during 2022, with limited exceptions to allow flexibility for exceptional circumstances where a new or amended training product is essential.

This could include where a training product is required to respond to an urgent requirement and unforeseen event (e.g. regulatory changes, major and sudden labour market adjustments), and involves the revision/creation of new training products that must be rapidly implemented during 2022--2023.

What will happen to existing training product projects due after September 2022?

A small number of existing training product projects are due between October -- December 2022. The Department will work with SSOs, IRCs and the AISC to ensure that, as far as practicable, these are completed and approved before the end of 2022. Any training product projects that cannot be completed by the end of December 2022 will be handed over to Industry Clusters when transition occurs.

IRC membership terms expire 31 December 2021. Will existing members be extended?

Advice on IRC membership extensions will be provided once the AISC has further considered transition arrangements at its meeting in November 2021.

SSO funding agreements expire 31 December 2021. What is happening to these?

SSOs will continue to be funded to support IRCs during 2022. Subject to Commonwealth financial and grant management requirements, the Commonwealth will work with SSOs to extend current grant agreements to ensure continuity of service to IRCs for a further 12 months.

Where can I find more information on current training product development and the AISC?

Visit aisc.net.au for more information.

For an overview of TPD wind down arrangements see factsheet 4.

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