Skilling Australia's Workforce Act 2005

This Act establishes the Commonwealth’s framework for funding vocational education and training (VET) across Australia. It authorises the Federal Government to pay financial assistance to States and Territories for TAFE institutes, apprenticeships, and training programs, but attaches strict conditions to ensure national consistency and industry relevance.

How it works:

• Funding streams: The Commonwealth provides money for capital projects (buildings and equipment) and day-to-day running costs (recurrent expenditure), as well as special “strategic national initiatives.” Payments are capped at roughly $1.2–1.3 billion per year.

• Agreement-based: States must sign two key agreements to receive money: the Skilling Australia’s Workforce Agreement (a national compact) and, from 2006 onwards, bilateral agreements with the Commonwealth. They must also submit annual VET plans for ministerial approval.

• Strict conditions: Funding comes with strings attached. States must:

  • Implement workplace reforms in TAFEs, including flexible employment, performance pay, and neutral stance on trade unions;
  • Expand user choice, allowing employers and apprentices to pick their training provider (not just TAFE);
  • Shift to competence-based training (qualifying based on skills, not just time spent in class);