Education and training in Australia represent a significant sector of the economy, comprising some 7 percent of the Gross Domestic Product. Public policy is fashioned to support three main sectors: schools, vocational education and training, and higher education. The mix of Commonwealth policy across these sectors is determined by distribution of federal responsibilities and emerging needs of the sector and the community. A major issue for public policy is the very rapid development of the knowledge economy and its meaning for the future of learning and work. Particular issues concern the meaning of the concept of lifelong learning, how best to smooth the transitions between learning and work and between learning experiences, and the very wide gap that still remains between indigenous and nonindigenous Australians in levels of educational access, participation, progression, performance, and outcomes. Significant developments in government/public administration are shaping the type of policy responses available for public support and delivery of education and training. The main trend is the growing use of private providers in a contestable delivery framework. Consequences of the separation of purchaser and provider (policymaker and policy implementer) are greater transparency of costs and new challenges in risk management. (Six tables illustrate changes in employment by occupation, high growth occupations, declining occupations, and industry changes in expenditure on training.) (Author/YLB)