JobTrainer: $2.5 Billion to Retrain Aussies — but It Won’t Save Universities

In today’s Money Morning…bye-bye classrooms…a new day of learning…things are likely never going to be the same again…and more…

It’s set to be an interesting day…

On the one hand we’ll find out exactly what unemployment was for the month of June. With many predicting a month-on-month rise from 7.1% to 7.3%.

A figure that Josh Frydenberg concedes doesn’t reflect the ‘effective’ unemployment rate. Because once the JobKeeper program comes to an end, unemployment is likely to be closer to 13.3%!

It goes to show just how pivotal the program has been, and how hard it will be to unwind…

Which is why, on the other hand, we’re set to see a fresh round of stimulus from the government.

See, as you’re probably aware, September was set to be the end for both JobKeeper and JobSeeker. A hard cut off that would likely lead to a hard shock for the economy.

Well aware of that, the government has been scrambling to find a way to keep the economy afloat while weaning it off of these programs. Desperately trying to find ways to save jobs without having to subsidise them long term.

That’s where JobTrainer is set to come in. The latest support package to be unveiled later today.

Headlining this new program is a $1.5 billion commitment to save 100,000 apprentices. Effectively, just more of the same job subsidising we’ve seen. A sign that the government is worried about ending the handouts too early.

However, JobTrainer is also set to deliver a $1 billion boost to the vocational education and training (VET) sector. With half of the funding to come from the federal government and the other half from the states.

A program that Morrison says:

…will ensure more Australians have the chance to reskill or upskill to fill the jobs on the other side of this crisis.

Free Report: ‘Why Your Bank Dividends Could Be Under Threat’

Bye-bye classrooms

The idea behind JobTrainer is to provide free or near-free training to people who need it. Namely the unemployed and people fresh out of school.

That means that going to TAFE may soon be free, or at least a whole lot cheaper. Providing people with the means to transition into skilled jobs that are in demand.

However, JobTrainer isn’t just about sending more people back to training. The program (and funding) is conditional on state’s reforming the VET sector. Namely, improving its ‘quality and relevance.

Now, I’m not going to hold my breath for anything overly transformational. At the end of the day, I expect TAFE will still be like TAFE.

But, providing more relevant courses in a more relevant way is a fascinating prospect.

I say this, because if you’re not aware, education has been turned on its head recently. Any Victorian parent will tell you all about the challenges of schooling without being able to go to school…

It’s a similar situation for university students too, with much of the curriculum now facilitated online.

And speaking of universities, things haven’t exactly been easy of late.

Case in point, UNSW just laid off 493 staff yesterday. Cutting 7% of its total work force and reducing its total faculties from eight to six.

The reason, of course, is that international student revenue has dried up. With borders in lockdown, they simply can’t fill the lecture halls like they used to.

It’s not like UNSW is the only one hurting though. The entire industry could lose $16 billion in revenue over the next three years. With the potential for some big-name institutions to collapse altogether.

Suffice to say, education as an industry has had to adapt rapidly. And the changes that we’ve seen, for better or worse, are likely here to stay for the foreseeable future.

A new era of learning

As an investor, this is something you can’t ignore.

Education is a huge part of our economy. One that has typically been dominated by the university sector.

But there are also plenty of public companies in the space too. Operators that also rode the international student boom with great success. RedHill Education Ltd [ASX:RDH] is a prime example.

RedHill started 2020 at a $1.76 per share — today it is trading at 53 cents per share. Having traded sideways ever since the March downturn.

It has clearly been one of the biggest losers of this pandemic. And whether it will ever recover is unclear.

Which brings me back to key goal of JobTrainer: relevancy.

Because at the end of the day, education was already changing prior to the pandemic. It was simply the catalyst that delivered the final push the industry needed.

The change I’m talking about, is of course online learning.

For more than a decade, online learning has been evolving and adapting. Leading to a wave of new courses and platforms.

Sites like Khan Academy, Skillshare, Udemy, and Coursera are just a few off the top of my head. Educators that have carved out a niche in delivering a specialised and tailored approach to learning.

They have paved the way for the future of education. A future that will likely define the post-pandemic model for teaching. We’ve already seen top universities like Stanford and Harvard toy with this model.

It’s a trend that you need to be aware of. Not only because it will shape the world around us, but also because it could be your ticket to make a small fortune.

Like I said, education is a huge industry in Australia, and there are some great companies you can invest in. Companies that are keenly aware of and working to make this future a reality.

Stocks like Janison Education Group Ltd [ASX:JAN] and 3P Learning Ltd [ASX:3PL] are two great examples. Companies that are leveraging online advantages to provide better learning outcomes.

Because no matter what happens for the broader education sector. Things are likely never going to be the same again.

Regards,

Ryan Clarkson-Ledward,
Editor, Money Morning

PS: Four Well-Positioned Small-Cap Stocks: These innovative Aussie companies are well placed to capitalise on post-lockdown megatrends. Click here to learn more.


Ryan Clarkson-Ledward is one of Money Morning’s analysts.

Ryan holds degrees in both communication and international business. He helps bring Money Morning readers the latest market updates, both locally and abroad. Ryan tackles all the issues investors need to know about that the mainstream media neglects.

Ryan’s primary focus is assisting Sam Volkering with background research and insight for readers by dissecting the latest events affecting the world. Working closely with Sam, they explore the latest in small-cap and technology stocks as well as cryptocurrency opportunities.

You can find Ryan’s contributing research, developments, and supporting information across several e-letters, including:


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