New industry engagement arrangements
Vocational education and training (VET) is central to Australia’s economic growth and business productivity and is a key part of Australia’s economic recovery from COVID-19. The Australian, State and Territory governments have agreed to reforming the VET system to ensure it is delivering for learners and employers. This will equip Australians with the skills they need to upskill in current roles or apply for new and emerging jobs.
Read the Ministerial Statement from the Hon Stuart Robert MP, Minister for Employment, Workforce, Skills, Small and Family Business, about the new arrangements for industry engagement in VET. You can also read the Minister’s media release announcing the grant opening.
Why is the system changing?
Strengthening the role of industry and empowering them to drive reforms to Australia’s VET system is key to ensuring employers and individuals can access the right skills at the right time.
Industry needs a strong, strategic voice in VET to drive collaboration across sectors, address strategic workforce challenges and to ensure qualifications are developed and updated faster to meet the evolving needs of industry.
Industry Clusters will need to build strong partnerships with Registered Training Organisations (RTOs) to ensure delivery issues are considered early in training product design, and to ensure training and assessment practices meet employer needs.
A strengthened industry voice in VET will mean qualifications align with the skills that are in demand now and into the future, leading to increased workforce productivity and more learners in secure jobs. It will ensure VET is seen as an optimal choice for learners, alongside universities and other tertiary institutions.
Reinvigorating the VET system at a time of global economic uncertainty, will also support individuals to re-train and re-skill to find and to stay in work, through courses that link with and build on their existing experience and training.
New Industry Clusters will be established by the Australian Government to provide industry with a stronger, more strategic voice and broader role in ensuring Australia’s VET system continues to deliver on employer and learner needs. As part of the 2021-22 Budget, The Australian Government provided an additional $149.2 million funding over four years, bringing the total investment to $292.5 million to support these new industry engagement arrangements.
The Industry Clusters will be groups of aligned industries with a strategic leadership role to identify, forecast and respond to the current and emerging skills needs and workforce challenges of their industries.
They will be responsible for ensuring qualifications are developed and updated faster and training products are aligned with the needs of industry. They will also have a role working cooperatively with Registered Training Organisations (RTOs) to ensure training delivery also meets employer needs and working with the National Careers Institute to promote careers.
The clusters will become a key source of intelligence and advice regarding workforce issues and will also play a role informing the policies that guide the VET system and the extent to which they are fit-for-purpose to meet industry and learner needs.
Industry Clusters will engage 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).
Read: Factsheet on the new industry engagement architecture including the features and functions of the new industry engagement arrangements and the roles and responsibilities of stakeholders.
Establishing Industry Clusters
Industry Clusters will be established through a two-stage grant opportunity.
On 3 December 2021, stage one of the grant process opened. Stage one involved an open competitive process seeking applications to establish and subsequently operate an Industry Cluster.
This stage closed on 31 March 2022.
The second stage involves a closed non-competitive process to enable the newly established clusters to put forward applications to deliver on their full functions.
Industry Cluster structure
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.
A proposed model for 9 Industry Clusters has been developed reflecting feedback and advice from stakeholders. The proposed model was developed to respond to workforce needs effectively and efficiently, as well as maximise collaboration across the national training system.
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.
Independent training product assurance function
To support the industry engagement reforms, the Australian Skills Quality Authority (ASQA) will provide training product assurance initially from 1 January 2023 to 31 December 2024. ASQA will assess training products for compliance against standards and policies set by Skills Ministers (currently referred to as the Training Package Organising Framework), ensuring that training products are high-quality and address the skills needs of both employers and learners.
ASQA will also work to build the capacity of Industry Clusters, by providing guidance and support on any emerging or common issues, risks and difficulties within training product development. This educative function will drive the continuous improvement of training product development, especially during the formative stages of the new arrangements.
As the VET sector’s national independent statutory authority, ASQA will improve transparency, accountability, and confidence in training products for employers, learners and training providers.
The legislative instrument conferring this function onto ASQA can be found at the Federal Register of Legislation. Skills Ministers have agreed to undertake a post-implementation review of the new industry engagement arrangements to assess whether the system is working as intended, and to make improvements where needed. ASQA will initially take on the training product assurance function until 31 December 2024, subject to the outcomes of this review.
The new Industry Clusters will replace the current industry engagement arrangements which includes the 67 Industry Reference Committees (IRCs) and 6 Skills Service Organisations (SSOs) and are expected to be fully operational by 1 January 2023.
IRCs and SSOs will retain responsibility for training packages and training product development until the end of 2022. The Australian Industry and Skills Committee (AISC) will continue to review proposed changes to national training products until the end of 2022.
IRCs will continue to be responsible for training product work until January 2023, when Industry Clusters will be fully operational. The priority for 2022 is to complete existing training product development projects. No new training product projects will be commissioned during 2022, with limited exceptions. A phased wind-down of current arrangements for training product development will ensure a smooth transition and minimise disruption to learners, training providers and employers.
Stakeholder feedback and Transition Advisory Group
The new industry engagement arrangements have been informed by several reviews and extensive stakeholder feedback over many years, including the consultations held earlier this year. You can read what we heard from stakeholders in the article ‘Moving towards better industry engagement in VET’.
At the request of Skills Ministers, a Transition Advisory Group from industry, employers, VET experts and unions, was established to provide advice on implementation and transition arrangements for the new industry engagement model with a focus on minimising disruption to the existing VET system. You can read the Transition Advisory Group's advice to Skills Ministers here.
For more information about the advisory group, you can download the Terms of Reference, which includes its membership below:
Applications received at the end of Stage One of the grant opportunity are now being assessed with successful applicants progressing to Stage two from mid-2022.
- 3 December 2021 – Stage one grant opportunity opened
- 14 December 2021 – Industry Briefing 1 (completed)
- 20 January 2022 – Industry Briefing 2 (completed)
- 3 March 2022 – Industry Briefing 3 (completed)
- 31 March 2022 (11.30pm AEDT) – Stage one closed
- Mid-2022 – Stage two grant opportunity opens
- 1 January 2023 – Industry Clusters expected to be fully operational
Frequently Asked Questions
For more information, please see the Frequently Asked Questions.
Enhancing industry engagement is one of many measures Australian governments are taking to improve the VET system. The National Skills Commission and the National Careers Institute have been established, along with other reforms, such as Quality Reform and Qualifications Reform as set out in the Heads of Agreement for Skills Reform.
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