Australia's vocational education and training system is underperforming, hard to navigate and inconsistent across the country, an interim report from the Productivity Commission has found.
Commissioner Jonathan Coppel said the VET sector has suffered from a "very serious image problem", especially due to rorting of the former VET FEE-HELP student loans, and students were often channeled into university.
"The image of VET is one that has been tarnished and that's propagated often by parents of student but also within schools.
"It's a very complicated system to navigate. There are thousands of providers. There are hundreds and hundreds of different courses and some of that gets lost in translation."
In its review of the National Agreement for Skills and Workforce Development, the Productivity Commission proposes ways to use the sector's $6.1 billion in government funding more effectively and make the system more responsive to the needs of students and employers.
It found there was a drift away from formal VET courses towards short courses and there was a high non-completion rate, particularly for trade apprentices which was about 50 per cent.
Employer satisfaction with nationally recognised training was also in steady decline, from about 86 per cent in 2009 to 79 per cent in 2019.
Each state and territory has a different approach to calculating the course costs and developing skills priority lists while course subsidies vary widely between jurisdictions. For example, the subsidy for a certificate III in individual support, a course you would study to work in aged or disability care, varies from about $5750 in the ACT to $12,750 in the Northern Territory.
The report says information about courses needed to be more easily available and presented in a clear way to help prospective students make appropriate choices.
"These are often one of the most important decisions that people make, the type of career they want to follow, and yet it's very hard to get a sense of what would be the cost of that to the student," Mr Coppel said.
The report suggests ways to streamline the system and make it more accessible to more Australians. One way is to make loans available to more students as the current VET student loans system is extremely limited.
"The vast bulk of VET students don't have access to a student loan and we know there's a large number of those who are also not benefiting from a government-funded place. They've either been supported by their employer or the students themselves," Mr Coppel said.
A system of vouchers provided to students, rather than payments to registered training organisations, could be used to facilitate user choice.
The Productivity Commission sees scope for the National Skills Commission to develop a robust method for states and territories to determine skill priority lists. It recommends states and territories also use common methods to calculate course costs and determine loadings.
It proposes the National Careers Institute, which was created in 2019 and recruited television personality Scott Cam as national careers ambassador, could become a hub for information about VET courses and providers.
The review comes after Prime Minister Scott Morrison said the system was "fundamentally flawed" and signalled a move to further federal control over how $1.7 billion of federal funds were spent annually by the states and territories.
Mr Coppel said it was an "opportune time" to review the system as the nation grapples with the fallout from the COVID-19 pandemic.
"It's disrupted the VET sector and it's disrupted many sectors and that means many jobs that existed may no longer exist or many jobs may require different skills. So the role that the sector plays to provide a qualification or to reskill remains important."
The Productivity Commission will be accepting submissions until July 17, 2020 with a view to delivering a final report in November.