The Productivity Commission is recommending significant changes to Australia’s education and training system as part of its latest five-year productivity review. Changes to how university degrees might be funded and financial supports to higher education students are among a number of significant recommendations to government.
The federal government publicly released the report in March after it was provided to government by the Commission for consideration in February. The report makes 71 recommendations across 29 reform directions. The government has said it is progressing more than two-thirds of the 29 reform directives and is ‘methodically working through the specific recommendations’. The Treasurer Jim Chalmers has said that 36 of the 71 recommendations involve state and territory governments, which he will discuss in June, following the federal government’s May Budget.
In the report, the Commission advocates for ‘a cautious and gradual expansion of income-contingent loans to all career-oriented VET courses, starting at the Diploma level’ and ‘a return to a demand-driven university system, to meet growing demand and eliminate the distortions caused by funding caps for universities’.
It was the Productivity Commission in 2019 that found the demand-driven system had produced ‘mixed’ outcomes and results, especially for the new entrants to the higher education system, who generally had lower levels of literacy and numeracy, and lower ATAR scores. Dropout rates for these students were higher than students who would have otherwise attended university outside of the demand-driven system. You can read the Commission’s 2019 research paper on the demand-driven system here.
It was a former federal Labor government in 2010 that introduced a demand-driven funding regime for the higher education sector; however, the party’s Future Made in Australia Skills Plan, announced at the last federal election, promises only up to 20,000 new university places across 2022 and 2023. Whether Australia returns to a demand-driven system, or even if it is being included in the suite of recommendations under consideration by government, is yet to be revealed by the current federal Labor government.
The report finds that human capital will play a more important role than physical capital in improving productivity, while general and foundational skills will continue to underpin the workforce’s contribution to productivity. The report argues that by ensuring an adaptable system developing general capabilities as a complement to technical skills can provide resilience in the economy and workforce.
The final report suggests a number of other measures, including:
To read the Commission’s 5-year Productivity Inquiry: From learning to growth that deals with skills, education and training follow this link.
Ai Group made submissions to the Commission’s Inquiry into Australia’s Productivity Performance. You can read those submissions here and here.
