Reform is not just reviews, roundtables and recommendations – it’s solutions.
This article does not present a reform story by analysis of what’s needed to be fixed and why. Rather it presents a solution, a national model for an economy wide and industry-led structured investment in digital skilling, training and workforce development, focussed on AI and cyber skills. It’s presented in reverse order, the endpoint first as a hypothetical National Press Club announcement so readers averse to deep detail can read this to get the working gist. Appendix 1 then provides the details.
The formal education and training system is not delivering fast enough nor in a manner that meets the on-job needs and urgency of business and employee uplift in AI/cyber and digital skills. There is no integrating architecture that incentivises and combines the efforts of employers, educators and government. This article thus sets a solution challenge; if not this way, then design something better.
HYPOTHETICAL – FOR IMMEDIATE RELEASE
ZZZ Minister Launches Landmark National Business Investment in AI and Digital Skills: Powering Productivity and Australia's Future Economy:
CANBERRA, ACT – [Date: Today, xxxx, 2025] – The ZZZ Minister today addressed the National Press Club, unveiling a transformative national framework to reignite Australia's investment in skills and workforce capability. Underpinning this ambitious agenda is a modern architecture of cooperative sectoral investment obligations and a groundbreaking National Skills Reinvestment Scheme, built on the simplicity and integrity of Australia's Goods and Services Tax (GST) system.
"Today, we are taking a decisive step to secure Australia's economic future," the ZZZ Minister declared. "In the Prime Minister’s recent economic outlook speech, 4 July 2025, he said our government was ‘determined to create the right framework and make the right investments in skills and training to ensure Artificial Intelligence (AI) is a contributor, not a competitor’. Here is our way forward.
“The digital revolution is not waiting for us. AI and cybersecurity are not just buzzwords; they are the bedrock of productivity, innovation, and national security in the 21st century. Our ability to compete, to create secure jobs, and to lift living standards for all Australians hinges on our collective capacity to embrace this future. It impacts both for-profit and non-profit entities, so our solutions must cover both."
“For over a decade, Australia’s productivity growth has stagnated. Not for lack of talent. Not for lack of enterprise. But because our systems for workforce capability have not kept pace with our economic ambition. We’ve asked businesses to innovate. Workers to adapt. Governments to invest. But what’s missing is a shared architecture that mutually binds growth to capability”.
“To some degree all workers are now tech workers. Australia needs some 1.3 million tech specialists by 2030. Businesses risk underinvestment in retraining their own workforce, especially in fast-moving fields like AI and cyber. There is presently no existing mandate nor clear incentive to do so”.
“Our small and medium (SME) businesses are the backbone of our economy. And yet, they struggle most to access training resources, navigate changing technology, and compete on capability. Businesses large and small often don’t know how – or don’t have the incentives – to invest in structured, measurable workplace training. AI and digital tools are racing ahead, yet too many firms, SMEs especially, are standing still. This initiative is directed at those firms that most need such help”.
“We need to lift our game. Where’s the reliable national data on industry spend on training, or industry spend on training with our tertiary institutions? Doesn’t exist. Supportive accounting standards? Scant. Our mutual governance? Fragmented. Our ambition? Too often outsourced to disconnected programs.
We can no longer afford to simply react. We must proactively invest in our people, equipping them with the cutting-edge digital, AI, and cyber skills that every sector of our economy desperately needs."
“The initiatives I announce today is not set and forget, it’s initially for 5 years, long enough for ‘booster’ incentives to have impact, delivered by means adroit enough to be readily adjusted based on new data”.
Key Pillars of the National Skills Reinvestment Scheme:
1. The "Digital Drive" GST Boost Credit:
At the heart of the new framework is a transformative reform to the GST system. For the first time, businesses and non-profit entities across Australia will receive a boosted tax credit for eligible expenditure on employee reskilling in clearly defined activities in digital skills, AI and cyber.
"This is not just about getting your GST back," the ZZZ Minister explained. "This is about getting more back. It's a direct, immediate financial incentive, delivered through the familiar Business Activity Statement (BAS), putting money back into the hands of those who are investing in key skills”.
- Financial Incentive: The "Digital Drive" boost will provide an additional percentage credit on top of the standard GST input tax credit (or a percentage incentive on skills expenditure, exclusive of GST) for verifiable, direct staff training in defined digital, AI, and cyber competencies.
- Fairness and Accessibility: The scheme features a tiered and expenditure capped system, with eligibility for “Digital Drive” boost initially structured on entity size, providing boost incentives that are meaningful and accessible to SMEs as well as like sized non-profit organisations.
- Evidence Based and Staged: All businesses (whether initially eligible or not for the ‘Digital Drive Boost’) will record via limited additions to their BAS records their direct expenditure on employee skilling, including staff training in defined digital, AI, and cyber competencies. This will inform staged policy implementation of priority skilling activities and GST "boost" eligibility.
- Business Simplicity: In amending the BAS system, to deliver faster cash flow credits, the ZZZ Minister said: “Let me be clear: we will not mandate complexity. We will not burden businesses with bureaucracy. What we offer is incentives, clarity, fairness, and shared accountability”.
- Budget Certainty: Given the business-size related ‘capped expenditure and credit limits’, the ZZZ Minister said: “It’s not open-ended and demand driven, it can be fiscally modelled and budgeted, it is adjustable to uptake and impact and will be targeted to entities most in need”.
- Transparency and Tracking: Amended accounting standards will underpin the scheme, ensuring clarity and compliance. Expenditure on direct training costs, will provide an unprecedented, real-time national dataset on business and non-profit investment in critical skills, enabling better policy formulation and tracking of Australia's progress. The ZZZ Minister said: “Not only will Boards pay greater attention to strategic investment in digital skills, but it also means the age of old-fashioned business surveys is over”.
2. The "AI & Cyber Connect" Mentoring Program:
Recognising that not all businesses know where to start, the ZZZ Minister announced the establishment of the "AI & Cyber Connect" Mentoring Program.
- On-Demand Expertise: This program will allow SME companies and non-profits to access government-approved, business credentialed AI and cyber experts, ‘AI Business Mentors’, for intensive, business on-site, customised advisory and tutoring for up to two weeks initially.
- Shared Investment: Government will 50:50 co-fund with business costs of these expert engagements, with business costs also directly eligible for the "Digital Drive" GST Boost Credit, fostering a cooperative investment model between government and industry.
- Rigorous Credentialing: Based on rigorous credentialing of expertise AI Business Mentors will be issued a limited term ‘AI/Cyber ninja’ status, ensuring businesses receive the highest quality, practical, and up-to-date advice. "We want you to 'dial a digital expert' with confidence, and that your feedback will also determine any ninja status renewals" the ZZZ Minister stated.
- National AI/Cyber ‘Digital Excellence Accelerator’ (DEA): The new DEA will be overseen by the existing NAIC. It will be tasked to (a) with industry and union advice, define skilling activities, national qualifications and formal non-accredited in company skilling/training (all with FSO input) that will unambiguously define allowable expenditure under incentive ‘boost’ credits; and (b) manage credentialling, placements and performance of the ‘Ai/Cyber ninja’ fleet.
3. Cooperative Sectoral Investment and the National Skills Reinvestment Pool:
The ZZZ Minister outlined a commitment to a modern architecture of cooperative sectoral investment obligations. “This is the next part of our staged roll out. In order to set well evidenced parameters and to fairly adjust thresholds for any large entity inclusion in these obligations, businesses will have up to 12 months to detail (via the new GST mechanism) their own investment in workforce skills. Thereafter:
- For Large Employers: The Government will introduce a mandatory level of contribution for Australia's largest companies (those with aggregated annual turnover exceeding [insert specific threshold, e.g., $100 million or $250 million, or 100+ employees]) to a new "National Skills Reinvestment Pool."
- Invest or Contribute: These large entities will be required to either meet a minimum annual expenditure on eligible digital/AI/cyber staff training (as defined by the DEA based on industry/union advice) or pay the shortfall into the National Skills Reinvestment Pool.
"This is about shared responsibility," the ZZZ Minister asserted. "We have looked closely at the history of the old Training Guarantee Levy and extracted the learnings, where it did, and did not work, especially for SMEs. And we recognise early AI adoption in charities in the care sector”.
“The limited evidence to date indicates our largest corporates, banks and tech companies, are surging ahead having capacity to invest in Ai/cyber and digital employee skills. It’s those who don’t, to at least a desirable threshold, that will be required to contribute. The message is: invest in your own people or invest into the national pool that supports the broader skills ecosystem."
- Funding the Future: The National Skills Reinvestment Pool will directly offset the government's costs in delivering the "Digital Drive" GST Boost Credit and the "AI & Cyber Connect" Mentoring Program, ensuring the long-term sustainability of the initiative.
A National Endeavour for a Digital Australia – A Competitive Nation We Choose to Build
"This is more than just a new policy; it's a new mindset," the ZZZ Minister concluded. "It's about breaking down the silos between government, business, and education. Our greatest asset is our people, and their ability to adapt, innovate, and thrive in a rapidly changing world."
“The issue isn’t simply about underfunding – it’s systemic mis-design. Australia has no coherent fiscal mechanism that binds economic growth to the ‘on-job’ development of its human capital. We measure productivity quarterly, we publish job ads in thousands – yet we cannot track, incentivise, or govern how businesses invest in skills. Such skills are needed in both ‘for profit’ and ‘non-profit’ entities. The GST ‘boost mechanism’ reaches both and offers timely cash flow incentives”.
“This must be a shared endeavour. Business leaders: we need your support. We need you to see skills investment as an enabler, not an obligation. Union partners: we need your insight and advocacy to ensure quality, equity and inclusion remain central. Educators and providers: we need agile, accredited programs that speak to real productivity. And from government – you will see transparency, clear definitions, consistent agile administration, and the humility to course-correct when needed”.
The ZZZ Minister emphasised underpinning supports with clear accounting standards and audit practices to ensure integrity and effectiveness. “It will also elevate attention to the boardroom companies' strategic investment in human capital, within company financial declarations”.
The ZZZ Minister declared "It’s time to make workforce capability a measurable, auditable, and shared national obligation – not just a hopeful outcome. The National Skills Reinvestment Scheme is key part to driving productivity and, equitably, creating better job opportunities”.
Background Context to the Initiative
Opportunity – Digital is now the Economy, AI and Cyber its Present Lead Elements
The digital revolution is all pervasive and remodels economies and societies. Our ability to compete, to create good jobs, and to lift living standards hinges on our collective capacity to embrace this future.
Australia’s labour productivity per worker has long stagnated and is now in decline. Primary reasons include: capital shallowing (under investment in leading edge technology and equipment reduces output per hour); weak business investment; growth in share of employment in the non-market service sector (lower and lesser productivity options); and declines in multi-factor productivity (efficiency in using both labour and capital has dropped).
Australia also sits at a crossroads of demographics, migration and skilling. The economy is shifting, the workforce is ageing, and the demand for new capabilities e.g. AI, cyber, digital is outpacing supply. Public budgets are tightening, and traditional training subsidies are losing traction.
Example evidence: Australia’s AI ecosystem; AI in Australia Economic Blueprint; future digital skills shortfalls; AI Jobs Barometers, Australia needs to boost cyber and AI skills, calls for Digital Skills Overall, AI economic boost, PC AI Advice and Mandatory Enforceable Agreements in use of AI.
Paucity of Measures of Business Investment in Skills
Australia last formerly measured business investment in skills and training in 2001/02 [there have been a few independent estimates since]; it dropped out of OECD international benchmark “Survey of Adult Skills’ ten years back; the current tools for national industry classification ANZSIC represents a bygone era (OSCA occupations are being refreshed); and there is desire to build a national ‘skills taxonomy’.
Example evidence: Ready Set Upskill, Business Investment in Skills, and Learning Curve.
Erosion of Skills Business Investment, Over Reliance on Post School Education and Training
Australia’s investment by employers in workforce development has been quietly eroding. Despite widespread concern about skills shortages, measured business expenditure on R&D intensity has stagnated and – in the absence of sound national data – expenditure on workforce training also, with investment mostly limited to larger companies. Systems linking industry growth to capability building have weakened – a disconnect between economic ambition and the human capital needed to realise it.
Arguably, employers have focussed more on repeatedly extoling governments to sharpen alignment of all public funding/financing of post-school education and training courses to employers’ ‘on-job needs’, thereby pushing the re-framing of universities especially as deliverers of ‘sqals’. This advocacy has dwarfed any evidence and effort of employers’ own direct/cooperative investment in work skills.
Australia’s business investment in skills and training has been in structural decline since the early 2000s, with fragmented mechanisms and outdated data collection obscuring the problem. Large firms invest sporadically, SMEs face capacity and access barriers, and non-profits – despite employing thousands – sit largely outside fiscal incentive systems.
It Requires Us to Do Things Never Done Before
Reform of the GST creating a targeted ‘boost’ credit system to incentivise both ‘profit’ and ‘non-profit’ entities; unambiguous definition of ‘eligible expenditure(s)’ in digital/AI/cyber skills in nationally accredited or formal ‘in-business’ non-accredited training; minimum necessary, simplest to requirement BAS amendments; and tracking of training expenditure for assessing ‘boost credit’, and for assessing expenditure obligations and pooling of funds from entities falling short of desired thresholds.
This isn’t just a workforce issue – it’s a nation-building one. We now need the policy courage to connect national digital skilling, procurement, taxation, and accounting standards into a single architecture for strategic digital/AI/cyber workforce training reinvestment. [HYPOTHETICAL ENDS]
[The details, benefits, challenges and expected objections to this model are set out in Appendix 1. Please email jcsfowler@gmail.com if you wish a copy].