Prime Minister Scott Morrison has signalled more federal control over skills training, accusing the states of running a system that is complex, clunky and unresponsive, despite massive federal funding going their way.
Mr Morrison, who will unveil a new "JobMaker" concept at the National Press Club on Tuesday, says the Commonwealth hands over $1.5 billion in funding every year for the states to run vocational training.
The arrangement is "fundamentally flawed and needs to change", Mr Morrison says. The money is untied, with no end date, no questions asked, no Commonwealth line of sight over how it is spent and a lack of accountability.
In his speech, Mr Morrison will draw on his experience with the America's Cup campaign in New Zealand in 2000 as he articulates a way out of the coronavirus crisis. Despite the enormous money in the yacht race, Team New Zealand worked at old chairs at a scuffed up table, in an office that looked like it had been saved from demolition, he says. When he commented on the surrounds, he was told that "in Team New Zealand there was only one question - what makes the boat go faster?"
"At some point you've got to get your economy out of ICU," Mr Morrison says. "You've got to get it off the medication before it becomes too accustomed to it.
"We must enable our businesses to earn our way out of this crisis. That means focussing on the things that can make our businesses go faster."
He rejects a return to protectionism, saying Australia must remain outward looking and open, and build on its strengths, including manufacturing, resources and agriculture, as well as science, medical research and space.
JobMaker includes a set of industrial relations reforms which he will reveal more about on Tuesday.
Mr Morrison said all states and territories except Tasmania have reduced their vocational education spend by an average of 25 per cent (calculated per capita for people of working age) over the past decade.
Vocational students faced a bewildering field of choices, with more than 1400 qualifications on offer, no visibility about the quality of different providers, and big variations in fees.
Last year, a certificate III in Blinds, Awning, Security Screens received a subsidy of $3726 in Queensland, $9630 in NSW and nothing in Victoria. In 2017, a diploma of nursing was subsidised by $19,963 in Western Australia and $8218 in Queensland and Queensland students ended up with debts twice those of NSW.
Mr Morrison's JobMaker concept follows the JobKeeper wage subsidy and the JobSeeker unemployment benefit.
His skills training push builds on work before the coronavirus - the Joyce review into vocational education was delivered to the government before the last election, and late last year Mr Morrison appointed Adam Boyton to head a new National Skills Commission to start work on July 1.
Mr Morrison said Mr Boyton would report each year on what skills were needed, replacing the existing lists for apprenticeships and skilled migration, and he would publish real-time data which would show emerging skills shortages and other trends and pressures.
Mr Morrison said the national hospitals agreement was a good model for the future of skills funding - with nationally consistent prices for courses.
He wants more transparency about how money is spent, better coordination between courses and what businesses need, and a more simple, consistent system.
Mr Morrison's speech comes as Deloitte Access Economics calls for major economic reforms that it says could significantly truncate the pain of the recession.
Deloitte has modelled three scenarios, from mild to harsh to severe, and partner Kristian Kolding says says to achieve the mild scenario Australia must first avoid a jump in cases, which that meant a significant improvement in testing and tracking technology so distancing and travel bans could be lifted. The government must also inject more stimulus, with the heavy lifting having to come from government now interest rates had no room to move.
And it should reduce red tape, support more digitisation especially in health and education, reform skills training, and embark on tax reforms, including the state-level stamp duty.
Skills had already moved from the hand to the head, and now must move from the head to the heart, he said, with more demand for the softer skills of caring, emotional connection and communication in the new economy.
"The government has focused on managing the crisis and buffering the impact, which I think they have done. The question remains now are they going to be able to find the mettle to stimulate the growth part of this scenario and let us come out of hibernation supported by a significant government stimulus," he said.
Deloitte's three scenarios are:
Mild: Physical distancing ends, and the economic recovery begins this year, with a vaccine in April 2021. GDP falls 4.7 per cent this year but rises quickly next year Unemployment peaks at 8.4 per cent this year before a steady decline, reaching the pre-coronavirus level in 2023. Migration returns to normal levels by 2023.
Harsh: Virus case numbers rise to over 15,000, with physical distancing remaining, and a vaccine by July next year. Unemployment rate peaks at 10 per cent this year. Deflation sets in (with prices falling), and interest rates rise, delaying the recovery, with no major economic reforms. In this scenario "wealth, incomes and confidence are all badly damaged".
Severe: Australia's eagerness to restart the economy leads to a recovery this year but a second wave of infections hits, and case numbers rise above 40,000 with no vaccine till mid 2022. People reduce spending, generating a downward spiral by putting pressure on the viability of businesses, and extended deflation (falling prices) creates a "liquidity trap", where real interest rates rise despite very high unemployment. Unemployment sits at over 9 per cent for the next three years. GDP falls next year as well as this year, down 6.6 per cent in 2021. Skills deteriorate and "become obsolete for the long term unemployed".