The final report of the national VET review, “Strengthening Skills: Expert Review of Australia’s Vocational Education and Training System” (Joyce Review) has just been published, and its early stage recommendations have been comprehensively adopted within the announced national budget. A further inquiry into Australia’s post-secondary education is promised by the alternative national government, if elected. There are also other ongoing public reviews and policy propositions pertinent to Australia’s tertiary education system.
The key recommendations of the Joyce Review imply a very major repositioning of all governments in their independent and relative roles, responsibilities and funding of VET. Given this, it is timely to take stock of Australia’s various legal and operational models for inter-governmental cooperation. This paper has then two interlinked purposes. The first is to summarise various ‘federated’ governance models that have been devised and are in operation. These have framed inter-government relations across many different areas of public policy. The second is to review models recently deployed in tertiary education, especially in VET, and consider any future implications in the light of the Joyce Review.
Understanding past landscapes is helpful in grappling with future terrain. It helps objective sober assessment of need for change and possible change options.
From the inception of the agreed ‘federated architecture’ in 1901 to present day, participant governments have had to accommodate cross border relationships in regards to multiple areas of public policy and governance. This need has escalated as the nation has evolved and modernised, along with contemporary interpretation of the Constitution’s ground rules.
Intergovernmental arrangements boil down to finding acceptable common ground in matters that typically are contested: control of policy, decision making, funding and regulation. VET in particular has been terrain for prolonged cooperation/tussle by all governments on their relative roles in all facets of VET’s ownership, control and funding.
Cooperative federalism is guided by three principles. One is ‘subsidiarity’, proximity of government to the community. Think here for example about Tasmania needing to know most about and to train people in salmon farming and skills. Subsidiarity is also argued as a subtle driver of productivity, promoting competitive tension between States. There is strong evidence of State-initiated policy innovation flowing to national benefit.
The second is ‘alignment of responsibilities and allocation of roles to the level of government with the corresponding geographical scale’. Big issues like defence or immigration are the realm of national government. But think here of differing views as to whether State training entitlement systems and apprentice/trainee systems operate best within a jurisdiction’s boundaries or not; and the fresh propositions made by Joyce to move key aspects of VET governance to national frameworks yet still wanting to well preserve State decision making.
So except where the Commonwealth’s powers are undisputed, our ‘federation’ requires us to ‘get the mob round the table’ and find solutions. Any player can ‘gather a willing mob’, either ‘horizontally’ between States, or ‘vertically’ between States and Commonwealth.
Such conversations ideally start by agreeing a collective purpose. Parties have to first work out what collective outcomes they seek and what practical betterments they want. The Joyce Review advocates six headline ‘betterments’ with a roadmap for change.
In general federal reform agreements arrive first as principles and high level directions, typically announced by heads of governments or ministers. The deeper details of control, cooperative governance, funding, and ongoing regulation are then thrashed out including the stickier issues: ‘who gets to make decisions and who pays’.
Reforms also need agreement to legal structures to give effect to change, these structures need to operate both within constitutional boundaries and also be best suited-to-purpose to support effective implementation in typically complex, case-specific circumstances.
(b) enactment by one unit in the Federation of a standard law which can then be adopted by other parties to the intergovernmental agreement.
The referral of State legislative powers authorising Commonwealth law-making under s 51(xxxvii) on a particular topic or according to the text of a proposed Bill.
Executive cooperation by way of intergovernmental agreements.
History shows there is no ‘one solution for all cases’. Indeed as a federation we have been modestly innovative in finding solutions. As with most innovations, different models have enjoyed temporary popularity, and also occasionally been disturbed by decisions of the High Court. A good example is the long history of Australia’s Corporations law and ultimate States’ referral of power.
Table 1 categorises different models of legal structures for ‘federated cooperation’ between the Australian governments with examples from multiple areas of public policy.
Greater harmonisation, but allows for the States to implement their own versions and/or uniformity undermined if parliaments amend the legislation too much Crimes at Sea Acts, Crown Proceedings Acts, Defamation Acts, Uniform Evidence Legislation.
Viewed at full ‘wing-span’ federated cooperation at its ‘loosest’ is done in non-legally binding agreements for ‘harmonisation’ practices (such as policy and regulations), at its ‘tightest’ it is an agreed cooperative hand over (or perhaps take over) of powers and control at one level of government. One step higher than non-binding ‘harmonisation’ is commitment to amend jurisdictional Acts to achieve legislative conformity. States agree to pass ‘mirror’ legislation to give effect to ‘one national law’ but over time uniformity may drift apart.
Applied complementary law models are legislation enacted by one jurisdiction and adopted by parliaments of other jurisdictions. Referral or ‘hand-over’ of powers is relatively rare and potentially fraught as it involves States ceding legal control and authority. Positive examples are many and work to the national good. Another option is the Commonwealth may interpret expansively its ‘heads of power’ and exercise unilateral legal authority to take over an area, subject to either cooperation or challenge by States. A more benign approach, typically less confronting from a constitutional perspective, is cooperative intergovernmental agreements.
In many cases an oversight and enforcement authority, ie regulator(s) is part of the change package. There are variations in construct such as: a national body that agrees to coordinate regulation but each State has its own regulator (eg Work Health and Safety); a single national regulator run by the Commonwealth (eg Australian National Consumer Laws) yet still allowing States to set local laws and have regulators for employers not covered by the federal law. Another is where the governments legislate for one and the same regulatory body by cooperative legislation with a single regulatory body created in effect multiple times (eg National Rail Safety, Heavy Vehicle Regulation, and Australian Health Practitioners).
‘Federated cooperation’ has then a long and complex history. Past cases illustrate whether either tinkering or major reform, there is a need for deep understanding of complexity and respect for case-specific context before amending extant systems and their legal and regulatory structures. This is absolutely true for VET given its history and desired future.
How then does all this relate to Australia’s ‘post schooling’ tertiary education system?
The circumstances of the HE sector are relatively settled. By way of their historic establishment, public universities are institutions of State legislation to who universities owe small residual governance and accountability.
The national Higher Education (HE) regulator Tertiary Education Quality and Standards Agency (TEQSA) was established in 2011. This was enacted unilaterally under discreet Commonwealth legislation covering education accreditation and quality control. In establishing TEQSA the Commonwealth imposed its constitutional powers in deeming the purpose and operation of universities to be ‘trading corporations’.
Supported by the Commonwealth’s overwhelming funding/financing, this regulatory reform was in effect a unilateral ‘take-over’ by the Commonwealth and not a ‘referral of power’. Whilst debated this approach has been accepted, as it is underpinned by High Court decisions on the expanded reach of the Constitution’s corporations powers.
This view holds for higher education at least, that under its corporations powers, the Commonwealth can now ‘mandate rather than buy’ compliance. Other than research grants supporting students, there is somewhat greater uncertainty with regards to the funding of general university research. This has only an implicit ‘nationhood’ element and arguably not an explicit constitutional basis. Lastly, Education Services for Overseas Students falls squarely into Commonwealth control. Given the above, the recent undetailed proposal to reverse domestic arrangements to revert universities to full state control is perplexing.
VET is an area where the Commonwealth lacks any explicit constitutional authority to impose its governance nationally. It could seek to regulate only partially (such as for corporations, or in the Territories) but this is impractical so it cooperates with States. Present ‘federated cooperation’ arrangements are detailed in the recent national VET-sector review.
Historically, a ‘leaked’ draft COAG paper in 2016 set out the framework for a Commonwealth take-over of VET, but it was soon dropped. Recently ACPET the peak body representing private RTO interests boldly advocated without any detail for a Commonwealth takeover of the VET sector within one tertiary education system.
Such a ‘take-over’ (by whatever mechanism) was contemplated and rejected by Joyce. In the ‘referral of power’ that led to the establishment of the Australian Skills Quality Authority, (ASQA) other non-regulatory VET functions were specifically ‘carved out‘ to remain within State’s control. This included control of apprentice training and its related policy and administration, VET training in general and the operation of State TAFE systems.
This is how matters now stand.
A referral of constitutional power by a majority of States allowed the Commonwealth to legislate for a national VET regulator ASQA in 2011 including powers and standards to regulate training providers and training products. Prior to this States had their own legislation for VET regulation with its inherent functions and costs. The ‘referral of power’ was led in this instance via the NSW Parliament and adopted by most States except Victoria and Western Australia who agreed to cooperate on their terms, and ‘mirror’ the Commonwealth legislation. This has led to some operational complexity and compromise and the Joyce Review firmly proposes these States reconsider their position.
An unintended complexity of this referral is that States also rightfully impose specific quality conditions within their contracts for procurement of training services. This is not regulation per se, but seen by RTOs as ‘another higher level and burden’ of regulation. This too the Joyce Review proposes to ‘iron out’ to become uniform across all States.
As noted above, governance of most VET functions and activities were ‘carved out’. This means, other than regulation and specific initiatives like the Student Identifiers Act, the (domestic) operation of the national VET sector is governed by eight different State and Territory VET-specific Acts and their underlying policies, including apprentices.
Present arrangements for federated cooperation in VET are thus founded on “executive cooperation by way of intergovernmental agreements”. The National Agreement for Skills and Workforce Development (NASWD) 2009 cast under the Intergovernmental Agreement on Federal Financial Relations defines roles and separate/shared responsibilities for governments and also Commonwealth funding. There are other (Commonwealth/State) National Partnerships (NP), such as the present NP Skilling Australians Fund.
Agreements and Partnerships are just that, their terms are not enforceable, nor actionable in the style of a commercial contract. The NASWD had no ongoing ‘maintenance of proportional funding effort’ obligations on States. Over time the unenforceable terms and other impinging national policies (eg ‘demand-driven funding’ in universities) created fertile opportunity for cost shifting between governments, undermining VET’s outputs.
This is evident in a steady trend decline in government-funded VET, confirmed by the Productivity Commission in its Report on Government Services that shows graphically that NASWD targets are not even close to being on track. There has also been a steady decrease in revenues from governments in both VET funding subsidies and loans since about 2012 (with modest increases in 2017 in some States).
Hence the most fundamental proposition of all in the Joyce Review is that governments go back to ground level and renegotiate a National Agreement (and Partnership) to include agreed fixed future proportional resource effort as well as nationally uniform course pricing.
Apprenticeships are the most recognised flagship of the VET system but their numbers have declined (especially in traineeships, less so in trades). Apprenticeships illustrate best the long history and complexity of national federated arrangements in VET. This complexity is bound up in legality, custom and tradition. There are positive but inefficient federated cooperative relations across all governments, network brokers and employers linked by deeply intertwined funding. The Joyce Review notes the system declines and inefficiencies which have drawn further budget response to address efficiencies and incentives.
Apprenticeships have two tightly interwoven functional domains, one employment related being legislation, policies and implementation which sit dominantly with Commonwealth governance (as one example see the Fair Work Ombudsman’s survey that found significant non-compliance with workplace laws for apprentices).
What the Commonwealth has not – or at least not yet – attempted to do is to take over complete responsibility for regulating training. Most of its subsidies to employers are made conditional on the making of a formal training contract. This must be registered with the relevant State or Territory training authority, [under their terms of the legislation], rather than having to conform to separate federal requirements.
States and Territories historically committed to ‘harmonise’ (not ‘mirror legislate’) to best eliminate differences in the detail of their apprentice training contracts, policies and practices. This process was agreed within Schedule 1 of National Partnership on Skills Reform. It covered a myriad of details but outcomes were not reported on in the NP review.
Legislatively States and Territories retain the right to make decisions on what occupations can be ‘declared’ as being appropriate to an apprenticeship or traineeship. There is largely conformity across jurisdictions, but by no means national uniformity. Recent data shows that of the 1414 apprenticeship and traineeship qualifications recorded, 110 are classified as traditional apprenticeships, 1197 as traineeships and there are mixed views among the states and territories on the remaining 107 qualifications. This extent of non-conformity is likely diminishing. There are examples of classification differences apprenticeship vs traineeship across the same training package qualifications and variance in nominal full-time durations. These differences either respect regional economic interests and jurisdictional funding preferences, or alternatively argue the need to create a single national system that meets the needs of employers and students.
The Commonwealth seems not to have expressed any view of its constitutional powers in this area. There is an untested and hypothetical argument that a large majority of present employers of apprentices and trainees would be deemed owners/managers of companies that are ‘constitutional corporations’. Such employers, when in benefit of ‘on job’ Commonwealth incentives, plus system support and all non-training benefits (about $600m Commonwealth funding annually), might be argued as within reach of the Commonwealth’s corporations powers for not only apprentice employment, but also by extension associated training, given most RTOs exist and operate under Commonwealth law. But the present law is unambiguous in the referral ‘carve’ out, as reflected in the Fair Work Act expressed above.
The VET sector has a number of valuable and indeed essential ‘system cogs’ that play a vital and constructive part in ‘federated cooperation’. This includes three aspects in particular: advice on jobs demand and skills supply; creating contemporary training products (courses and qualifications) to train students via outputs of quality RTOs; and public (student and employer) VET information systems and career advice.
The propositions of the Joyce Review and the budget decision, in summary, is to sweep up almost all of the above functions under an overarching umbrella of a new National Skills Commission that will also be charged to develop efficient pricing for training, oversee new Skills Organisations so industry leads development of VET qualifications and training products, and host a National Careers Institute, supported by the VET information strategy. Initial expertise is proposed to be aggregated capability from Commonwealth departments.
The history of VET shows variants of these vital ‘cogs’ get ‘plugged in and out’. In “Common Cause: Strengthening Australia’s Cooperative Federalism” the Australian National Training Authority (ANTA) was written up (pg.17) as a positive case study.
Policy reform – Federal bodies established to drive reform need to have a clearly defined policy agenda.
Cooperative design – Federal bodies need to be designed to facilitate cooperation. In the ANTA case, having non-government leadership was important in mediating Commonwealth and State and Territory interests to achieve shared objectives for sector reform.
ANTA was abolished in 2005 and much of its functions swung back under the then Commonwealth department. Under a new Government in 2007, independent VET advisory functions in particular future workforce skills were peeled off into a new legislated agency, Skills Australia in 2008, and this evolved by legislative amendments into the Australian Workforce Productivity Agency, which was closed in 2014. And functions then swung back again into the department. Along the way smaller connecting incidental cogs (eg GTOs, ISCs, and perhaps now the AISC and SSOs) tend to get ‘retooled and replaced’.
The Commonwealth will in time provide greater detail, following consultation and working with States, as to the scope, functions, governance and authority of the proposed National Skills Commission. The limited description of its functions suggests its size and shadow will be similar to ANTA’s, though its ‘foot print’ may slightly differ. Early critique suggests funding may have been better prioritised for training over building a new central bureaucracy.
Taken as a whole, if all the Joyce proposals adopted by government eventuate by implementing the full road map, it represents a very profound repositioning of federated cooperation in VET. This may be seen by some as an opportunity and by others as a loss.
The plans of an alternative national government may, or may not, be as seismic. Its budget reply places TAFEs squarely and dominantly in the centre of the VET system.
The recent history of cooperative federalism in Australia demonstrates a tendency to treat as national a whole range of issues which, not so long ago, would have been regarded as local. The concentration of central power to which this trend contributes began many years ago. ….Cooperative federalism today is in part extra-constitutional. Driven by political imperatives it yields results on a consensual basis which go well beyond those achievable by the exercise of Commonwealth legislative power and the separate exercise by the States of their powers. In that sense the cooperative federalism movement may be seen to overshadow expansive interpretations of Commonwealth power under the Constitution. …. although cooperative and thus respecting the formal constitutional position of the States, it contributes towards centralisation. For every topic which is treated as national becomes potentially a matter which, somewhere along the line, it can be argued is best dealt with by a national government.
Learning from history means successful examples of reform in ‘federated cooperation’ must ideally both balance and also score high on all its principles of subsidiarity, national uniformity and comity, underpinned by practical legal certainty.
And ultimately it’s not about governments – rather it’s about students, employers, jobs and national productivity.