Administration of the Australian Apprenticeships Incentives Program

23 Apr 2015

This audit assessed the effectiveness of the (former) Department of Industry’s administration of the Australian Apprenticeships Incentives Program.

Audit objectives, criteria and scope

The audit objective was to assess the effectiveness of Industry’s administration of the AAIP. To form a conclusion against the audit objective, the ANAO adopted the following high-level criteria:

  • an effective governance framework for the AAIP has been implemented and Industry provided suitable guidance, processes and tools to support the AACs to effectively deliver AAIP services;
  • suitable contractual arrangements, including sound contract management practices, were in place to support service delivery by the AACs and overall program management by Industry; and
  • appropriate program management, performance monitoring and reporting structures were in place and used to inform the administration of the AAIP.

The audit focussed on arrangements in place since 1 July 2012—the commencement of the current round of Support Services contracts. The ANAO examined relevant AAIP documentation, including a sample of contracts between the Australian Government and the AACs, and conducted interviews with key staff from Industry and a selection of AACs. The ANAO also analysed data from the Training and Youth Internet Management System (TYIMS).

The audit did not examine the management of individual Australian Apprenticeships or of the AACs. In addition, the audit did not examine the procurement undertaken by the then DEEWR in 2011–12 to establish the current round of contracts, nor the procurement undertaken by Industry to establish the Support Network.

The AAIP was previously audited by the ANAO in Audit Report No.9 2007–08, Australian Apprenticeships. That audit assessed the effectiveness of the former Department of Education, Science and Training's (DEST) administration of its role in Australian Apprenticeships. The audit found that the program was appropriately used by employers, that financial assistance payments to employers were accurate, and that contract management practices were sound. The audit did however identify an opportunity to improve performance monitoring and evaluation activities and recommended (Recommendation No.2) that DEST:

  • analyse program usage by employers of apprentices and trainees in occupations in national demand; and
  • perform a sensitivity analysis of incentives payments to employers compared with Australian Apprenticeships completions.

The current audit examined whether the two parts of the recommendation have been implemented.

Overall conclusion

Administered by the Department of Industry (Industry) at the time of the audit, the Australian Apprenticeships Incentives Program (AAIP) aims to contribute to the development of a highly skilled and relevant workforce by providing financial incentives to support employers and apprentices undertake Australian Apprenticeships. A key component of the program is the delivery of Australian Apprenticeships Support Services (Support Services) under contract by Australian Apprenticeships Centres (AACs). The current contract round commenced on 1 July 2012, and is scheduled to end on 30 June 2015. To the end of December 2014, total AAIP expenditure in the current contract round has been approximately $2.8 billion—comprising $2.3 billion in financial assistance grants and $0.5 billion in fees paid to the AACs.

Overall, Industry’s administration of the AAIP in the current Support Services contract round was generally effective. Appropriate contract and program management arrangements were largely in place, and operating as intended. Notably, Industry’s processes for monitoring the performance of the contracted service providers (the AACs), including arrangements for assessing AACs’ compliance with contractual requirements, were soundly-based and well‑targeted. The majority of AACs were performing reasonably well against most performance measures, and over the two completed years of the current contract round, the combined total of reported employers and apprentices assisted by the AAIP has been in-line with Industry’s targets. Generally, AAIP payments made from 1 July 2012 to 30 June 2014 examined by the ANAO accorded with the program’s eligibility criteria and related policy conditions. Nonetheless, the audit highlighted some opportunities to further strengthen the AAIP’s management and oversight arrangements. This includes more regular data analysis to help assess the integrity of apprenticeship records and identify incorrect payments, and the development of a structured evaluation framework to help assess the program’s performance against its policy objective and intended outcomes.

In the current contract round, Industry implemented relevant contract and program management arrangements and practices, which contributed to the overall effectiveness of the delivery of the AAIP and the Support Services. These arrangements included:

  • fit-for-purpose contracts with the AACs, including clear service delivery requirements and performance measurement arrangements;
  • a multi-faceted and well-targeted approach to monitoring the activities of the AACs, including assessing compliance against contractual requirements. A central part of these monitoring activities was a structured approach to assessing the validity of AACs’ eligibility assessments;
  • generally well-designed risk management arrangements, including processes for assessing and managing the risks associated with fraud and conflicts of interest; and
  • well-founded and instructive internal management reporting arrangements.

Industry’s internal performance measurement and reporting arrangements provided departmental management with a range of useful and relevant information. In particular, the program’s performance measures included a useful mix of intermediate and proxy targets. However, these measures did not enable a complete assessment of the extent to which the AAIP is achieving its objective or intended outcomes. Further, Industry did not put in place an evaluation plan for the AAIP, and had not, at the time of the program’s transfer to Education and Training, conducted a formal evaluation of the effectiveness or performance of the AAIP during the current contract round. A program of structured evaluation activity would assist Education and Training to better assess the AAIP’s performance.

The ANAO’s examination of AAIP-related records in the Training and Youth Internet Management System (TYIMS) identified shortcomings in record‑keeping arrangements, as well as some 960 incorrect financial assistance payments with a value of approximately $970 000. Although the incorrect payments identified are financially immaterial—representing less than 1 per cent of total program expenditure in the period 1 July 2012 to 30 June 2014—the results suggest that there would be benefit in regularising data analysis activities and upgrading data matching and validation functions.

The ANAO has made one recommendation to Education and Training aimed at improving the evaluation framework for AAIP, noting that well‑designed monitoring and review arrangements can assist entities, and other interested stakeholders, make informed assessments about a program’s progress and relative contribution towards its intended outcomes and expected benefits.

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