National Agreement for Skills and Workforce Development Review: Foundation Skills Components

In January, the Productivity Commission released their final report into the National Agreement for Skills and Workforce Development Review. In this post, I have cut the sections in the review that relate to foundation skills and pasted them here, with links to key references. Feel free to add comments on the Found Support Facebook page.


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The National Agreement for Skills and Workforce Development (NASWD) — which commenced in 2009 and was updated in 2012 — defines the framework for intergovernmental collaboration in VET. It sets out governments’ roles, policy aspirations, performance measures, and reform directions for the formal VET system. The Australian Government has asked the Commission to review progress against the targets, outcomes and performance indicators in the NASWD and to assess whether it is still an effective long-term framework for intergovernmental cooperation on VET policy.

Foundation skills and other targeted reforms

Pages 28-30

For many Australians, their participation in society and the economy is limited by poor ‘foundation skills’ — language, literacy, numeracy and digital literacy (LLND) skills. According to the OECD’s Programme for the International Assessment of Adult Competencies Survey — which was last undertaken in 2012 — two to three million Australians lacked the literacy and numeracy skills for the basic needs of modern life. Eighty per cent of people with below level 2 standards in literacy (which is broadly equivalent to the minimum national benchmark for NAPLAN year 9) came from a household where English is spoken at home. About 500 000 (20 per cent) came from households where English was not spoken. People lacking LLND skills are less likely to be employed and, if employed, are more likely to be in jobs with lower wages. Studies have also shown that LLND skills are important for civic participation. Many individuals and society would benefit substantially if LLND skill levels could be improved. Although Australian governments have a wide range of LLND programs, they roughly just keep pace with the flow of school leavers and new migrants who lack adequate LLND skills and will not greatly cut the share of the broader population that lacks these skills.

The Joyce Review recommended that governments commit, over time, to support fee-free foundation level education for all Australians who need training to achieve the benchmarks of level 2 literacy and numeracy in the Australian Core Skills Framework. And under the Heads of Agreement for Skills Reform, governments have made improving basic LLND skills a priority. This review suggests the first steps governments could take towards the aspirational goal of universal access to LLND skills.

What are the barriers to higher skill levels?

Fees are not the only barrier to foundation skills training and are unlikely to be the most important barrier for many prospective students. For high-need groups, fees are already low or zero. For others, government subsidies to reduce fee levels may not be the most effective way to encourage them to undertake training. Issues such as low confidence and stigma reduce some adults’ willingness to engage in LLND training. A variety of solutions — both in terms of outreach and course design — may be necessary to meet the needs of different types of learners.

Evaluations and academic research provide little guidance on how governments can best invest in LLND skills acquisition. There is no compelling case for any particular program, nor clear estimates of the cost of achieving better LLND outcomes. Longitudinal studies show that students need to be tracked for an extended period (up to 6 years) to determine whether there has been a significant improvement in skill levels.

These considerations imply that determining the best path towards higher LLND skill levels will require a gradualist approach, building the knowledge base over time.

Developing a national strategy

A national LLND skills strategy would bring together measures to improve school education, ‘second-chance’ learning in the VET sector and the other adult education services delivered by public and private providers. It should draw on the recently announced scoping study into foundation skills and be coordinated across the Australian, State and Territory governments, given they are all involved in service provision and funding. The strategy would sit above the NASWD and other education-related agreements, which would house the details of how the national strategy would be delivered in specific sectors.

Schools and the VET system will remain core elements of efforts to lift basic skill levels — schools because they will always be the best way of building foundation skills, and VET because it represents a well-structured, regulated, delivery mechanism to offer ‘second-chance’ learning designed for adults. Other training methods such as adult education, workplace training or job seeker courses will also be important if the strategy is to reach students who would not otherwise undertake training. Programs to provide English language skills to migrants should be maintained.

The current training options are more likely to reach people who have a strong incentive to undertake training — those who are in the job market, have newly arrived in Australia or need to improve their foundation skills to gain a qualification.

People not in the labour market, with poor experiences at school, who are homeless or facing other challenges will need well-designed outreach. The Foundation Skills for Your Future program offers a model to explore more tailored delivery as well as increased delivery in workplaces.

Evaluations of current delivery and new programs need to be improved and consolidated as part of the new strategy. These evaluations will also be more valuable if they include a longitudinal component in different settings.

High-level objectives and outcomes relating to LLND for the VET sector would be set out in the body of the new skills agreement. A detailed schedule to that agreement would elaborate on how to operationalise the agreement. The schedule would specify governments’ roles and responsibilities in relation to the programs covered by the schedule. The schedule would also cover how LLND training is funded, through both the skills Specific Purpose Payment and National Partnership Payments, with per-student funding retained for most activity delivered through the VET system, but block funding considered for organisations tackling more difficult-to-reach students.

Findings and recommendations

Pages 52-53


Two to three million adult Australians lack the literacy and numeracy skills for the basic needs of modern life. Without adequate language, literacy, numeracy and digital literacy (LLND) skills (equivalent to level 2 and above in the Australian Core Skills Framework), people cannot participate fully in society and the economy. Developing the LLND skills of these disadvantaged Australians would yield considerable public and private benefits.


The Australian, State and Territory governments should jointly develop a strategy to reduce the number of people with low language, literacy, numeracy and digital literacy (LLND) skills (below level 2 in the Australian Core Skills Framework). The LLND strategy should:

  • recognise the varied circumstances of people with low LLND skills
  • cover the range of LLND training programs across schools, the VET system, workplace programs and community adult education providers
  • guide and coordinate policies in these areas to improve LLND outcomes
  • facilitate a staged approach to expanding access to LLND training, using evaluations to inform where the greatest improvements can be achieved at lowest cost. The strategy should draw on the scoping study into foundation skills commissioned by Skills and Training Ministers in November 2020.


As part of the new LLND strategy, governments should identify the VET-specific, high-level objectives and outcomes relating to LLND skills for inclusion in the new intergovernmental agreement on skills. A schedule to the new agreement should contain the following key elements:

  • governments’ roles and responsibilities, in relation to the different programs
  • the relationship between jointly-funded programs and programs funded by a single 
level of government
  • LLND funding arrangements through both the skills Specific Purpose Payment and any National Partnership Payments with per-student funding retained as the main funding mechanism for most activity delivered through the VET system, but block funding considered for organisations tackling more difficult-to-reach students
  • reporting and accountability arrangements with respect to these programs, including a performance reporting framework.