Fostering Flexibility, Innovation and
Responsiveness in VET:
Meeting Industry Needs for the Future
A Strategic Issues Paper
By the National Industry Skills Committee
August 2008
Disclaimer:
This paper was developed by the National Industry Skills Committee (NISC)
as strategic advice for the Ministerial Council for Vocational and Technical
Education (MCVTE). Please note that the views expressed in this paper are
those of the NISC and do not necessarily reflect the views of the MCVTE.

Fostering Flexibility, Innovation and Responsiveness in VET:
Meeting Industry Needs for the Future
Contents
1 Executive summary 1
2 Fostering Flexibility, Innovation and Responsiveness in
VET: Meeting Industry Needs for the Future 2
3 Future Industry Skill Needs 3
4 Definitions 4
5 Progress and Achievement 5
6 Future Strategies and Initiatives 7

Fostering Flexibility, Innovation and Responsiveness in VET:
Meeting Industry Needs for the Future
1 Executive summary
The focus of this paper is on what the National Industry Skills Committee believes can
be done to continue to improve the responsiveness and flexibility of the VET sector and
its capacity to provide innovative approaches in meeting industry skills needs.
Research indicates that skills development for enterprises and for existing workers is
most effective when it is highly relevant to business and employee needs and is
delivered in a way which reflects those needs and the circumstances of both the
enterprise and its employees.
The creation of a more flexible and demand responsive VET system has been central
to the development of a national VET system in Australia over the past two decades. It
is clear that many providers, and the business units within them, are very flexible and
innovative in terms of the ways they develop, implement and deliver training solutions
for enterprises and address their business needs.
Notwithstanding these achievements, several studies and reports continue to highlight
a range of shortcomings in the VET system from an industry perspective. These
shortcomings relate to both (1) how enterprises access VET, and (2) when they do, the
extent to which the system generally and RTOs specifically are responsive to it and are
then able to meet those needs flexibly.
The NISC believes that these constraints need to be tackled through strategies and
initiatives at three levels. These initiatives are set out in section 6 of this paper but in
summary, the NISC recommends that MCVTE considers the following package of
reforms:
At the system level
1. More flexible arrangements and packaging rules for qualifications and training
packages;
2. Improve governance arrangements for TAFE to support industry
responsiveness and partnerships with enterprises;
3. Facilitate RTO/enterprise co-provider models; and
4. Ensure VET regulation, accountability and performance measurement supports
innovative delivery.
At the training provider level
5. Establish a national VET e-learning strategy; and
6. Improve VET workforce capability in identifying and responding to industry
needs.
At the enterprise level
7. Improve capability to identify enterprise skills needs and improve information
about VET products and services and provider capability; and
8. More flexible and effective use of employer incentives.
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Fostering Flexibility, Innovation and Responsiveness in VET:
Meeting Industry Needs for the Future
2 Fostering Flexibility, Innovation and Responsiveness in VET:
Meeting Industry Needs for the Future
Purpose
The focus of this paper is on what can be done to continue to improve the
responsiveness and flexibility of the VET sector and its capacity to provide innovative
approaches in meeting industry skills needs. The paper draws on the findings of a
background issues paper prepared by NCVER, including an analysis of relevant
research. This paper also reflects the outcomes of a workshop of NISC members,
enterprises, RTO practitioners and VET researchers. However, the proposals outlined
in the paper reflect detailed consideration by the NISC itself in relation to a range of
strategies to foster greater flexibility innovation and responsiveness in VET to meet
future industry needs.
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Fostering Flexibility, Innovation and Responsiveness in VET:
Meeting Industry Needs for the Future
3 Future Industry Skill Needs
There is increasing recognition within government and industry that workforce skills are
crucial to improving business growth, productivity and competitiveness as well as their
capacity to reinvest for the future. There is also evidence that employee skill needs are
deepening and broadening. The impact of demographic change is throwing increasing
focus on the importance of reskilling the existing workforce. This recognition is reflected
in the Council of Australian Governments’ human capital, skills and productivity
agenda.
Employees learn in many ways, including informally on the job, through structured
training provided by the company or a provider, and through formal accredited training
delivered by public, private or enterprise-based vocational education and training (VET)
providers.
These different forms of training are most commonly provided through traditional face-
to-face delivery both on and off the job, through the integration of work and learning
(experiential learning, through job rotation, mentoring, and performance feedback) and
increasingly through the use of technology enabled learning.
TAFE, a wide variety of private providers and a range of other organisations are the
principal providers of vocational training to industry, whether structured or formally
recognised. However, there are also many other providers of vocational training
including suppliers, professional and industry-based associations, group training
companies, community-based providers, schools, universities, workplace trainers and
consultants.
A fundamental objective of skills reform in Australia has been to ensure that industry is
able to define its current and future skills needs, and to ensure that the VET system
and training providers understand and are able to respond to industry needs. The NISC
sees this ongoing objective as crucial to increasing innovation, flexibility and
responsiveness in VET.
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Fostering Flexibility, Innovation and Responsiveness in VET:
Meeting Industry Needs for the Future
4 Definitions
At the outset, it is important to clearly define what is meant by the terms
responsiveness, flexibility and innovation.
For the purposes of this paper the NISC has adopted the following definitions:
 Responsiveness means the capacity of an RTO to understand the core
business of an enterprise, its markets, factors influencing those markets, how
these impact on skills requirements to develop and the capacity of the RTO to
develop and deliver a skills development response to those requirements;
 Flexibility means capacity by the RTO to adopt and deliver skills development
strategies which are most relevant to the enterprise and employee needs both in
content and delivery requirements, and to adapt those strategies in response to
feedback and changing circumstances; and
 Innovation means the capacity of the RTO to access and develop new and
different ways of developing skills, including through the use of new technology
and emerging teaching and learning strategies.
Flexible delivery is also a broad concept, covering not only teaching, but also flexibility
in the operational systems that support delivery. It is also about improving training
access through delivery in workplaces, by using e-learning and making training
available in regional, rural and remote areas. VET providers need to be flexible in terms
of the range of learning approaches they use and be willing to adapt them to suit the
preferred learning styles of different learner groups.
Research indicates that skills development for enterprises and for existing workers is
most effective when it is highly relevant to business and employee needs and is
delivered in a way which reflects those needs and the circumstances of both the
enterprise and its employees including reduced direct and indirect costs such as
downtime when employees are involved in training.
This requires a strong capability by RTOs to work with firms to understand their
business goals and needs and how these needs translate into employee skills
requirements. Research, case studies and outcomes from the workshop for this project
suggest that enterprise/RTO co-provider models are a particularly effective way of
building these relationships and achieving effective outcomes.
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Fostering Flexibility, Innovation and Responsiveness in VET:
Meeting Industry Needs for the Future
5 Progress and Achievement
The creation of a more flexible and demand responsive VET system has been central
to the development of a national VET system in Australia over the past two decades.
The NISC recognises many of the achievements to date. In summary, major reforms to
achieve these objectives include the opening up of the training market through a
common national regulatory framework for public and private providers, the introduction
of ‘user choice’ for apprenticeship and traineeship funding and contestability for some
public funding (although the level of contestability has not increased in recent years).
There has also been significant investment in the Australian Flexible Learning
Framework which was established in 2000 to support the VET system ‘to meet the
rapidly increasing demand for flexible learning and e-learning from industry, enterprise
and clients’.
There has also been a significant increase in workplace delivery by VET providers. For
example, a major multi-sector TAFE Institute in Victoria now has over 25 percent of its
total delivery in workplaces.
There has also been growth in formal partnerships between firms and RTOs, including
models where RTOs operate on an ongoing basis from the premises of firms and are
highly integrated into the business and HR processes of the enterprise as in-house
providers.
From the evidence available and good practice examples cited in the Background
Paper prepared for this project, it is clear to the NISC that many providers, and the
business units within them, are very flexible and innovative in terms of the ways they
develop, implement and deliver training solutions for enterprises and address their
business needs.
Constraints
Notwithstanding these achievements, several studies and reports continue to highlight
a range of shortcomings in the VET system from an industry perspective. Too often,
innovative practices are implemented with, at best, partial recognition and support
through the broader VET system. In the view of the NISC, they are not sufficiently
generalised across the VET system because of constraints at the system, provider and
enterprise level.
These constraints affect enterprises’ capacity to access VET and the extent to which
the system generally and RTOs specifically are responsive to and able to flexibly meet
enterprise needs.
In summary, employers still report that:
 the training system is confusing and in particular it is difficult to access
information about provider quality and capability;
 the process to access VET is difficult. As a result, small to medium enterprises,
in particular, tend to avoid formal training – preferring structured training or
learning informally on the job;
 employers cannot always readily access the training they seek and in particular,
formal training is not always available at the time, location and mode of delivery
that suits their needs;
 employers find that the training offered is not always relevant to their business
needs and too often reflects what the provider wants to deliver rather than what
the enterprise requires;
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Fostering Flexibility, Innovation and Responsiveness in VET:
Meeting Industry Needs for the Future
 VET programs need to be flexible, able to be customised readily to meet
employers’ needs, and be updated regularly to meet emerging needs;
 the VET system needs to be more flexible in the recognition of people’s skills. It
needs to incorporate accelerated attainment of skills and qualifications with an
emphasis on a simplified and less bureaucratic approach to the recognition of
prior learning (RPL);
 the teachers and trainers that providers have on staff are not always relevantly
skilled nor aware of the latest practices in industry, and training equipment is not
state-of-the-art; and
 there is variation in the consistency and quality of delivery.
Employers themselves are not necessarily good at identifying and defining their skills
needs, and investment levels in training vary considerably between enterprises and
industry sectors.
Registered Training Organisations and VET practitioners also report a range of factors
which limit their capacity to respond flexibly to industry needs and to adopt innovative
skills development strategies. These factors include:
 the governance of public providers which reduce the incentive to partner with
industry; for example where TAFE Institutes are not able to retain earnings from
commercial activities;
 the extent to which a provider’s own governance and internal culture enable its
individual business units to act flexibly and commercially to service particular
and varying industry needs;
 staffing issues including constraints in existing industrial agreements and the
ageing and highly casualised workforce of the VET sector;
 the regulatory system which in the past has placed too great an emphasis on
compliance and applying ‘rules’ rather than supporting approaches which
support innovation, responsiveness and flexibility;
 accountability measures and performance measures which tend to focus on inputs,
efficiency and student throughputs rather than innovation and flexibility; and
 the extent to which National Training Packages meet specific enterprise needs
or can be customised to meet those needs.
The nature of VET funding also has a significant influence on flexibility and
responsiveness, including:
 profile funding where centrally determined priorities constrain local flexibility and
responsiveness;
 the role of contestable funding in helping to drive innovation flexibility and
responsiveness;
 specific purpose funding programs where prescriptive guidelines and
accountability requirements may limit flexibility and responsiveness; and
 eligibility criteria for employer incentives for retraining existing workers which
may result in enrolments in inappropriate qualifications and the use of specified
delivery methods.
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Fostering Flexibility, Innovation and Responsiveness in VET:
Meeting Industry Needs for the Future
6 Future Strategies and Initiatives
While many of the foundations for a highly responsive, innovative and flexible VET
system have been laid, and considerable progress has been made, many constraints
still exist. In the view of the NISC, these constraints need to be tackled at three levels:
 at the system level;
 at the training provider level; and
 at the enterprise level.
Our objective is to translate individual cases and examples of flexible, responsive and
innovative delivery into systemic practice. To achieve this objective, the NISC therefore
suggests that MCVTE consider the following suite of measures.
We recognise that a range of strategies are being considered by MCVTE and through
the COAG human capital and skills and productivity agenda, some in similar areas to
those outlined below.
System Level Strategies
1. More flexible arrangements and packaging rules for qualifications and
training packages.
National Training Packages define what RTOs can deliver in most industry areas.
They need to both reflect the diverse needs of enterprises and be able to be
flexibly implemented so that RTOs can flexibly respond to enterprise needs.
2. Improved governance arrangements for TAFE to support industry
responsiveness and partnerships with enterprises.
The governance structure for TAFE Institutes should support their roles as multi-
million dollar enterprises, with diverse revenue streams. They must be able to
respond quickly and flexibly to enterprise and industry needs, enter into formal
partnerships with enterprises and be able to retain and reinvest revenue in
innovative products and services.
3. Facilitate RTO/enterprise co-provider models.
At present, public VET funding is still driven by student contact hours derived
from conventional face to face delivery. In this model, there is little scope for
teachers and trainers to be funded to undertake an enterprise skill needs
analysis, and there is often a clear separation between publicly funded and fee for
service programs. However, where nationally recognised outcomes are achieved,
there are both public and private benefits and the potential exists to leverage
investment, engagement and expertise from enterprises with RTOs through
co-provider models.
A specific program could facilitate and support RTO/enterprise co-provider delivery
models.
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Fostering Flexibility, Innovation and Responsiveness in VET:
Meeting Industry Needs for the Future
4. Ensure VET regulation, accountability and performance measurement
supports innovative delivery.
Criteria for compliance under the AQTF, accountability for public funding and
measurement of RTO and system performance should encourage and recognise,
rather than constrain, responsive and innovative delivery. Specific reforms could
include:
 broadening measurement of teacher\\trainer output to include training
needs analysis, partnerships with enterprises and innovation;
 focussing on outputs including completions, participation levels and
skills recognition rather than student contact hours;
 establishing KPIs to measure the uptake of innovative delivery (e.g.
workbased, e-learning);
 ensuring AQTF compliance systems audit focus on outcomes and
supports innovation rather than just compliance with inputs.
Provider Level Strategies
5. Establish a national VET e-learning strategy.
This could include the development of a platform through which RTOs and
enterprises can readily access a wide range of e-learning programs and
resources across the VET sector.
6. Improve VET workforce capability in identifying and responding to industry
needs.
The ageing of the VET workforce represents both a challenge and an opportunity to
build the capability of the existing VET workforce, and those entering the VET
workforce, in key areas including:
 training needs analysis;
 workplace delivery;
 skills recognition;
 building and managing co-provider models; and
 identifying, creating and deploying innovative delivery models.
Remuneration levels for VET staff will also need to be considered for careers in
VET to be competitive with other industries, particularly in areas of skills
shortages.
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Fostering Flexibility, Innovation and Responsiveness in VET:
Meeting Industry Needs for the Future
Enterprise Level Strategies
7. Improved capability to identify enterprise skills needs and improved
information about VET products and services and provider capability.
VET delivery will be most effective when enterprises are able to:
 create ‘informed demand’ by identifying and clearly articulating their skills
needs;
 understand the range of VET services and products available; and
 source training providers with the quality and capability to meet their needs.
Enterprise capability could be increased through the training of staff in training
needs analysis, by building a network of intermediary agencies to advise and
assist enterprises and by developing systems for reporting on RTO capability and
performance.
8. More flexible and effective use of employer incentives.
Current employer incentives for existing workers are targeted to traineeships which
may not be appropriate for the needs of enterprises or employees and have limited
eligibility criteria.
Eligibility for employer incentives could be broadened to include existing workers
involved in nationally recognised training undertaken through work-based
learning, including literacy and numeracy programs.
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