The Annual Health Check: What the Productivity Commission's Report on Government Services 2026 Reveals About the State of VET

The Productivity Commission's Report on Government Services 2026 puts government spending on VET at $8.9 billion in 2024, a 5.4 per cent real rise, with completions up around 16 per cent since 2020, employment outcomes climbing, and student satisfaction near 90 per cent. Yet employer satisfaction keeps sliding, the transition to the Standards for RTOs 2025 is producing more adverse decisions, and the trainer workforce is ageing, and what each of those signals means for RTOs, policymakers and the sector's future.

Beyond the Headline Figures

The Productivity Commission's Report on Government Services is the most comprehensive annual assessment of how Australia's public services are performing. Released on 10 February 2026, the VET chapter of the 2026 edition draws on NCVER data, government figures and regulatory reporting to provide a detailed picture of a sector that is training millions of Australians, absorbing billions in public investment and producing outcomes that are, in most dimensions, measurably improving.

For practitioners and policymakers, the RoGS data provides an evidence base that goes beyond the headline figures most commonly cited in sector discussions. It tracks trends over time. It disaggregates outcomes by equity group, jurisdiction and qualification level. It reports on regulatory activity and compliance. And, critically, it reports on areas where performance is not improving, providing the uncomfortable data a healthy sector must confront.

This article analyses the RoGS 2026 VET data, examining what the numbers reveal about the system's scale, its outcomes, its equity performance, its regulatory landscape and the persistent challenges that the data, read carefully, makes impossible to ignore. Where the Commission's mid-year update to RoGS 2026 has since carried key series forward, those more recent figures are used and identified as such.

1. The System at a Glance: Scale, Investment and Structure

The scale of Australia's VET system, as reported in RoGS 2026, is substantial. Total government real recurrent expenditure on VET in 2024, including the user cost of capital, was $8.9 billion, a 5.4 per cent real increase from $8.4 billion in 2023. Excluding the user cost of capital, that translates to $430 per person aged 15 to 64. The expenditure is underpinned by $7.9 billion in state and territory recurrent spending, up 5.2 per cent on 2023, and works out to $21.36 per annual hour of training, slightly below the $21.74 recorded in 2023.

There are other funding flows outside the scope of the Commission's recurrent expenditure measure. The Australian Government provided around $2.4 billion to the states and territories in 2024 through Federation Funding Agreements, the majority ($2.2 billion) through ongoing payments and the remainder ($251.7 million) through milestone-based funding. RoGS also reports total government appropriations and recurrent program funding, inclusive of Australian Government transfers, at $9.5 billion in 2024, an 11.2 per cent decrease from $10.7 billion in 2023, reflecting the wind-down of some pandemic-era and temporary program funding. The two movements are not in tension. Core recurrent expenditure rose while one-off and temporary appropriations fell.

Around 1.2 million students participated in government-funded VET in 2024, the majority (789,100) in Certificate III or IV qualifications, within a total VET population of over 5.1 million students across all funding types. The concentration at Certificate III and IV level reflects the system's alignment with mid-level skills demand across trades, health and care, and business services. Student motivations confirm the employment orientation: 72.8 per cent of total VET completers undertook their training for employment-related reasons, with the government-funded figure slightly higher, and getting a job the single most cited motivation.

The provider landscape comprises 3,805 registered training organisations delivering nationally recognised training, of which 1,245, or 32.7 per cent, delivered government-funded nationally recognised training through state and territory training departments. Of the competitive funding flows, non-TAFE providers received over $1.6 billion in government VET delivery funding, approximately 24 per cent of the total, reflecting the mixed-market structure that has characterised the Australian VET system for decades.

The following table consolidates the key system measures from RoGS 2026.

2. Outcome Trends: What Is Improving and What Is Not

2.1 Rising Completions and Employment Outcomes

The headline outcome data is genuinely positive. Government-funded VET qualification completions among people aged 15 to 64 reached approximately 354,700 in 2024, up around 16 per cent on 2020. This reflects both the rebound from pandemic-era disruption and the impact of policy initiatives such as the Fee-Free TAFE Skills Agreement.

Employment and study outcomes show consistent improvement across the 2020 to 2024 period. In 2024, 86.4 per cent of government-funded completers achieved their main reason for training, up from 82.2 per cent in 2020. The proportion who improved their employment status rose from 54.4 per cent in 2020 to 63.3 per cent in 2024, a gain of 8.9 percentage points, though the 2020 baseline should be read with caution given the pandemic's effect on the labour market at the time. The proportion employed or in further study after training increased from 78.8 per cent to 84.8 per cent over the same period. The Commission's mid-year update to RoGS 2026 added VET National Data Asset figures for the first time, showing government-funded graduates recording a median income increase of $16,232 after training in the 2021 to 2022 cohort, with employment rates up 18.3 per cent against pre-enrolment levels.

These are substantial improvements. They demonstrate that government-funded VET is delivering on its core objective: helping people develop skills that translate into employment and further education. For RTOs, the figures provide a strong evidence base for communicating the value of VET to prospective learners, employers and the broader community.

2.2 Student Satisfaction: Stable but Not Growing

Student satisfaction with the overall quality of training was 89.5 per cent in 2024, effectively unchanged from 2020, and the mid-year update confirms it remains close to 90 per cent. Satisfaction with assessments was 89.3 per cent and satisfaction with instructors was 87.7 per cent. These are high figures by any measure, and the stability over the period suggests consistent quality rather than deterioration. The absence of improvement during a period of significant investment and regulatory reform is worth noting, however. It may indicate that the drivers of student satisfaction have plateaued and that further gains will require targeted intervention in specific areas rather than system-wide initiatives.

The data is more nuanced when disaggregated by equity group. Completers in remote and very remote areas recorded satisfaction of 94.3 per cent, the highest of any group and an increase of 3.0 percentage points since 2020. This is a significant finding. It suggests that providers operating in remote areas, often under the most challenging delivery conditions, are producing learner experiences that exceed metropolitan standards.

2.3 Employer Satisfaction: The Persistent Decline

The most concerning data point is employer satisfaction. In 2023, the year for which the February 2026 release reported employer survey data, 66.4 per cent of employers who engaged with VET were satisfied across all forms of engagement, down from 69.2 per cent in 2019 and 72.9 per cent in 2015. The Commission's mid-year update carried the series forward to 2025, recording 67.2 per cent, down from 71.4 per cent in 2017. Read either way, the trajectory is the same: a long, slow decline in employer satisfaction over roughly a decade. The fall in satisfaction with apprenticeships and traineeships is particularly pronounced, dropping from 81.7 per cent in 2015 to 73.2 per cent in 2023.

This is a trend the sector cannot afford to dismiss. Students are increasingly satisfied and achieving their goals. But employers, the end users of the competencies the VET system certifies, are becoming less satisfied with what VET delivers. The gap between student and employer satisfaction now sits at more than 22 percentage points. If it continues to widen, it risks undermining the labour market value of VET qualifications, the credibility of competency-based assessment, and the willingness of employers to engage with the system through apprenticeships, traineeships and partnerships with RTOs.

The following table tracks the key outcome measures from RoGS 2026 against their 2020 baselines, with employer satisfaction shown against its own survey years.

3. Equity: Who Is Being Reached and What They Are Achieving

Equity is a core reporting theme in RoGS, and the 2026 data shows improvements across groups that have traditionally faced barriers to participation and completion. The most significant equity finding is the growth in First Nations completions. Government-funded VET qualification completions among Aboriginal and Torres Strait Islander people aged 15 to 64 rose by 28 per cent to 22,400 between 2020 and 2024. This substantial increase reflects both targeted support, including Fee-Free TAFE places in priority areas, and broader participation growth across the system.

RoGS 2026 also presents an access finding that challenges conventional assumptions about where barriers to participation sit. Data from the Survey of Work-Related Training and Adult Learning shows the proportion of people who wanted to study below bachelor's degree level in the previous 12 months but could not was highest in major cities, at 2.7 per cent, and lowest in outer regional and remote areas, at 0.4 per cent. That data is from 2020 to 2021 and should be read with caution as to currency, but it complicates the narrative that access barriers are primarily a regional and remote issue. Unmet demand for VET appears concentrated in metropolitan areas, potentially reflecting cost pressures, the availability of places in specific qualifications, employer release barriers, or information and awareness gaps.

The following table summarises the key equity findings from RoGS 2026.

For RTOs and policymakers, the equity data presents a nuanced picture. First Nations completions are growing strongly. Remote learners are reporting the highest satisfaction. Barriers appear more distributed across the socio-economic spectrum than often assumed. And gender disparities, while present at the access stage, appear to moderate in terms of outcomes. The system is reaching a broad cross-section of Australians, which is precisely what $8.9 billion in annual investment should be delivering.

4. The Regulatory Landscape: Audit Activity and Adverse Decisions

RoGS 2026 reports regulatory activity across all three VET regulators: ASQA, VRQA and TAC. As at 30 June 2025, ASQA regulated 3,837 RTOs nationally, VRQA regulated 116 RTOs delivering to domestic students in Victoria, and TAC regulated 162 RTOs in Western Australia and Victoria.

The most significant regulatory data point is ASQA's adverse decision rate. In 2024 to 2025, 9.2 per cent of ASQA-regulated providers were subject to a compliance audit, and 2.3 per cent of all providers received an adverse decision as a result, up from 1.5 per cent in 2023 to 2024. This increase should be read in the context of the transition to the Standards for RTOs 2025, which became mandatory during the period. The uplift is consistent with what would be expected during a transition to new regulatory expectations, particularly given the emphasis in the 2025 Standards on outcomes, self-assurance and the separation of assessment design from assessment conduct.

By contrast, VRQA and TAC recorded no adverse decisions from compliance audits in 2024 to 2025. VRQA's audit rate was significantly lower, at 0.9 per cent, down from a 0.8 per cent adverse rate the prior year, while TAC's audit rate was comparable to ASQA's at 8.6 per cent. Caution is required in comparing across regulators, given different frameworks, audit types and legislative responsibilities.

For RTOs, the increase in ASQA adverse decisions is a practical signal. The transition to the 2025 Standards is not a theoretical shift. It is producing real compliance consequences for providers that have not adapted their practices, particularly in assessment system operation, pre-validation and the evidence of active quality management the new Standards require. The data confirms what CAQA has consistently advised: the 2025 Standards demand a level of demonstrated practice, not just documented policy, that many providers have not yet achieved.

5. The Workforce Signal: An Ageing Sector with Growing Demand

RoGS 2026 draws on workforce data from Jobs and Skills Australia's VET Workforce Study that warrants careful attention. The estimated VET workforce is over 110,000 people, a figure that has been broadly stable for several years, and overall growth across the decade has been minimal. Between 2011 and 2012 and 2017 to 2018, the number of VET teachers fell sharply before recovering only marginally through to 2020 to 2021.

The age profile is a strategic concern. The average age of the VET workforce is around 47 years, against 41 for the Australian workforce as a whole, and almost half the workforce is aged 50 and over. With the workforce predominantly female and heavily concentrated in major cities, the profile raises questions about succession planning, geographic coverage and the pipeline of new entrants into VET teaching and assessment roles.

The demand side tells a different story from the supply side. Demand for VET teachers has been growing well above the labour market average, with online job advertisements for VET teachers having doubled over the decade. VET teachers have been in national shortage for consecutive years; projections point to a need for around 3,800 additional VET teachers over five years, and Jobs and Skills Australia projects employment growth for the occupation of approximately 21 per cent by 2033. This is a sector where demand for qualified trainers and assessors is growing significantly faster than the overall labour market, while the existing workforce is ageing and has shown minimal growth for a decade. The implications for RTO workforce planning, for compliance with trainer and assessor credential requirements, and for the long-term capacity of the system to deliver quality training are substantial.

6. What the Data Means for RTOs and the Sector

RoGS 2026 describes a VET system that is, by most measures, performing well and improving. Government investment is substantial and increasing. Completions are rising. Employment outcomes are strengthening. Equity participation is broadening. Student satisfaction is high and stable. First Nations completions are growing by 28 per cent. Remote learners are reporting the highest satisfaction with the system.

But the data also reveals three structural concerns that sector leadership cannot overlook. First, employer satisfaction is declining, and the drop in apprenticeship and traineeship satisfaction is particularly sharp. If the gap between what learners experience and what employers need keeps widening, it will erode the labour market value of VET qualifications and the sector's social licence. Closing it requires stronger industry engagement, more rigorous assessment that reflects genuine workplace competency, and a willingness to hear what employers are saying about the graduates they receive.

Second, the regulatory data shows the transition to the 2025 Standards is producing real compliance consequences. The increase in ASQA adverse decisions from 1.5 to 2.3 per cent is not large in absolute terms, but it represents a significant change in direction. RTOs that have not aligned their assessment systems, pre-validation practices and evidence of active quality management with the 2025 Standards are at materially higher risk than they were twelve months ago.

Third, the workforce data describes a sector approaching a demographic challenge. An ageing workforce, minimal growth in teacher numbers and rapidly rising demand is a combination that, if not addressed through deliberate planning and investment, will constrain the system's capacity to deliver quality outcomes at scale.

For individual RTOs, the practical implications are clear. First, use the outcome data, particularly the employment and satisfaction figures, as a competitive asset in marketing and industry engagement. Second, take the employer satisfaction decline seriously by strengthening the quality and rigour of industry engagement, assessment and graduate preparation. Third, prepare for the regulatory expectations of the 2025 Standards by building active, documented assessment systems and quality processes that auditors are now evaluating. And fourth, invest in workforce planning, trainer recruitment and professional development so the people who deliver training are available, capable and current.

Conclusion: A System Worth Strengthening

The Productivity Commission's RoGS 2026 provides a rich, detailed and largely encouraging picture of Australia's VET system. It is delivering strong employment outcomes, high student satisfaction, improving equity participation and measurable economic value through skills development. The $8.9 billion in annual government investment is producing results that, in most dimensions, are trending in the right direction.

But the data also makes the vulnerabilities clear. Employer satisfaction is a warning signal that cannot be explained away. The regulatory transition is exposing compliance gaps that were previously invisible. And the workforce pipeline is a slow-moving challenge that will become acute if it is not addressed proactively.

For RTOs, policymakers, regulators and everyone who works in vocational education and training, the message is consistent. This is a system worth strengthening. The foundations are sound, the outcomes are improving, and the investment is substantial. Sustaining and extending those gains requires honest engagement with the data, including the data that is uncomfortable. The numbers that flatter the sector are easy to quote. The number to watch is the one moving the wrong way.

References and Further Reading

ASQA (2025). Annual Report 2024 to 2025. Australian Skills Quality Authority.

Jobs and Skills Australia (2024). VET Workforce Study. https://www.jobsandskills.gov.au

NCVER (2024). VET Student Outcomes. National Centre for Vocational Education Research.

Productivity Commission (2026). Report on Government Services 2026, Part B, Section 5: Vocational Education and Training. Released 10 February 2026. https://www.pc.gov.au/ongoing/report-on-government-services/child-care-education-and-training/vocational-education-and-training/

Productivity Commission (2026). Report on Government Services 2026: Mid-Year Update. https://www.pc.gov.au/ongoing/report-on-government-services/

Productivity Commission (2026). Report on Government Services 2026, Part B: Child Care, Education and Training. https://www.pc.gov.au/ongoing/report-on-government-services/child-care-education-and-training/