4 Methods for Setting a Training Budget in Australia

Setting a training budget can be challenging. There are many considerations to work through, and they often interconnect in ways that introduce real complexity. This article walks through four methods for arriving at a defensible training budget — and gives you a free calculator to pull it all together.

Three of these methods give you useful benchmarks based on what other organisations spend. The fourth — and most important — tells you what your organisation specifically should spend, based on the business outcomes you need training to drive. It’s the one that will serve you best in a budget conversation.

Many budget disagreements can be resolved through a bottom-up approach: list your expected training requirements for the next 12 months, estimate costs, and sum them up, and you have a budget. The problem is that without a well-defined training plan — supported by position descriptions, training needs analysis and personal training plans — this process almost always produces a budget that’s too small. And a small training budget creates an environment that doesn’t inspire training, which leads to an even smaller budget next year.

So let’s break the cycle.

Before choosing a method, here’s the current Australian data. According to Deloitte Access Economics research prepared for RMIT Online:

• Average per-employee L&D spend: Australian employers spent an average of $1,334 per employee on learning and development, with this figure estimated to rise to $1,538 — a significant uplift from prior years.
• Total Australian L&D market: Australian businesses are expected to spend approximately $8 billion on learning and development, reflecting 15% year-on-year growth — even against a soft economic backdrop.
• Revenue benchmark: Australian companies typically spend 1%–2% of revenue on training, with high human-capital industries (healthcare, financial services, professional services) often investing 3%–5%.
• Salary benchmark: Most organisations spend 2%–6% of total salary costs on training — a metric that more accurately reflects human capital investment than revenue alone.
• Employer intent: AHRI data from Q1 2025 found that 58% of Australian employers planned to increase training investment over the following 12 months, up sharply from 37% in early 2024. Key drivers include AI adoption, compliance complexity, and recognition that skills gaps are contributing to turnover.

Note: Superannuation increased to 12% from 1 July 2025. This affects the fully-loaded cost base underpinning salary-based training budget calculations — factor this in when using the salary percentage method.

Training intensity and spending by industry (Australia)

Training costs vary significantly by industry. The table below provides indicative per-employee benchmarks for key Australian sectors, based on training intensity, compliance obligations, and typical workforce profiles.

These are indicative ranges based on industry research and TH platform data. Actual spend varies by organisation size, training delivery model, and extent of compliance obligations. Accredited VET training and mandatory licensing programs are the primary drivers of above-average spend in regulated sectors.

The per-employee metric is the most commonly cited benchmark — and the most easily misapplied. Some industries are not people-dependent, while others are built entirely on human capital. Training needs vary by experience, role, and the pace of change in your sector. Like-for-like comparisons based on per-employee spend alone are rarely valid.

That said, it gives you a useful starting point. Based on current Australian data, the national average sits at $1,334–$1,538 per employee per year (Deloitte Access Economics / RMIT Online). For regulated or high-compliance sectors — aged care, financial services, law — the realistic range is $1,600–$2,500+.

If you want to compare yourself to a benchmark, this is your first data point. But don’t stop here.

A training budget expressed as a percentage of revenue gives you a top-down data point. It’s also subject to significant variation — an industry with heavy capital or machinery investment may generate the same revenue as a professional services firm while having very different training needs.

Nevertheless, this is a credible framework for a budget conversation. Most Australian benchmarks place the typical range at 1%–2% of revenue, with some organisations — particularly those in professional services, healthcare, and compliance-intensive sectors — investing closer to 3%–5%.

There is also a useful strategic logic here: as revenue grows, so should the training budget. If training is at least partly driving that revenue growth, there is a sound argument for increasing investment proportionally.

This metric is particularly valuable because it links training investment directly to human capital rather than business outputs. Growth in headcount — and therefore in salary costs — logically implies growth in training needs: induction, capability development, compliance. This connection is much cleaner than a revenue-based calculation.

Most benchmarks suggest organisations spend 2%–6% of total salary expenditure on training. To illustrate: an Australian business with 100 employees at an average salary of $80,000 has a total payroll of $8 million. Applying a 2%–6% range yields a training budget of $160,000–$480,000, or $1,600–$4,800 per employee.

You can also refine this metric by industry. Sectors with higher human capital intensity — aged care, financial services, law, government — tend to sit at the higher end of the range or above it.

Quick check: With average full-time Australian earnings around $82,900 (ABS, 2024–25), and super now at 12% (from 1 July 2025), the fully-loaded employment cost per employee is approximately $92,800+. At 2%–6% of that loaded cost, the implied training investment per employee is $1,856–$5,568 — meaningfully higher than a percentage of base salary alone.

The strategic method. The first three methods tell you what other organisations spend. This one tells you what your organisation should spend — based on the outcomes you need training to deliver.

The three benchmarks above are useful reference points. They represent the collective experience of thousands of businesses making training budget decisions. But they are disconnected from outcomes — they tell you how much others spend without explaining why, or whether that spending is working.

Method 4 asks a different question: what are your organisation’s strategic goals for the next 12 months, and how much of achieving those goals depends on improvements in human capability?

How to apply Method 4

Step 1: Identify your strategic goals for the next 12 months — revenue targets, client growth, expense reduction, productivity improvements.

Step 2: For each goal, estimate what percentage will be achieved through business initiatives (new products, pricing changes, process improvements) versus improvements in human capability (skills, knowledge, behaviours).

Step 3: For the portion attributable to human capability improvements, calculate the dollar value of the outcome.

Step 4: Apply a target training ROI to back-calculate an appropriate training investment. A working assumption of 500% ROI (every $1 invested returns $5 in outcome value) is a reasonable average across a range of training types — recognising that some training generates higher measurable returns (sales skills, productivity) and some generates non-monetary returns (compliance, safety, culture).

Method 4 in practice: accounting firm example

An accounting firm has the following key metrics for the coming year:

• Revenue: $1,750,000, with a goal of $1,850,000
• 990 annual client transactions, growing to 1,020
• 95% repeat clients — so only 5% new client acquisition required
• General expenses: $280,000, forecast to rise to $300,000
• Salary expenses: $525,000, rising to $530,000
• 10 staff — no change

The firm determines that training is responsible for driving the following outcomes:

• 2.6% increase in average transaction size — training fully responsible
• 3.0% increase in repeat business — training is mostly responsible
• 3.0% increase in new transactions — training is partly responsible
• 5.7% increase in staff productivity — training is equally responsible

Applying a 500% training ROI, the training budget calculator produces a recommended training budget of $19,200. This sits at mid-range on the revenue and salary benchmarks, and above average on a per-employee basis, which is appropriate, given that training is carrying significant responsibility for business outcomes.

No single method produces the right answer on its own. The power of this framework is in combining four data points and looking at where they converge. A training budget that is consistent across all four methods — per-employee, percentage of revenue, percentage of salary, and outcome-linked — is a budget you can defend confidently.

Where the methods diverge, it’s usually a signal: either your organisation has unusually high or low training intensity relative to your industry, or your strategic goals place an unusual demand on human capability development. Both are worth exploring.

To make this easy, download the Tribal Habits training budget calculator. Enter six strategic metrics (revenue, transactions, repeat clients, expenses, salaries, headcount), indicate how much training will contribute to each business outcome, and the calculator returns all four data points — with high/low ranges and a recommended budget figure.

See how Tribal Habits fits your budget. Tribal Habits uses per-active-user pricing — you only pay for staff who actually complete training. For organisations building or scaling an L&D function, this means your platform cost grows with your training activity rather than your headcount. See pricing at tribalhabits.com/pricing.

Most training ROI measurements occur after the event. They focus on determining what the ROI was, not what the ROI should have been. Setting a target ROI for training isn’t easy either, and it’s not always measurable via a metric. What is the ROI for staying compliant with technical knowledge or improving your delegation as a team leader?

For this analysis, we are going to have to set an average ROI metric to work across a range of training. Let’s suggest 500%. For every dollar you spend on training, you would like a five times return. Remember, we are seeking an average. Some training initiatives might justify a higher return – such as in sales or marketing – while other training initiatives are focused on non-monetary returns like morale, teamwork or innovation.

If we continue with our example above and apply a 500% ROI, then a training budget of $10,000 would seem appropriate to drive the $50,000 desired outcome.

Taking this further, if we could identify the significant measurable outcomes your business is seeking over the next 12 months, determine what percentage is driven by improvements in human capital and apply an average training ROI, then you could calculate an appropriate spend for training for each of those initiatives. The sum of the training spent for each outcome would yield a partial training budget.

Interestingly, this data point would be directly linked to your strategic outcomes. To complete the budget, you could add additional spending for training that is not linked to measurable strategic outcomes, like compliance or technical training. In combination, you have a training budget linked to strategic outcomes.

With this analysis, you now have four data points for a training budget. Within those data points, a suitable Most training ROI measurement happens after the event — the question is what the return was, not what the return should have been. Setting a target ROI for training in advance is more difficult, particularly where outcomes are non-monetary (compliance, culture, safety, team cohesion).

For Method 4 to work, you need a working ROI assumption. A benchmark of 500% — every dollar of training investment returning five dollars in measurable outcome value — is a practical starting point. Some training types will justify higher targets (sales skills, where revenue impact is directly measurable); others are better measured non-financially (WHS compliance, where the return is risk reduction rather than revenue).

The point is not precision — it is to give training investment the same rigour as any other business investment, rather than treating it as a discretionary cost that gets cut when times are tough.

For many Australian organisations, a significant portion of the training budget is non-discretionary. Compliance training required under legislation — WHS obligations, aged care Quality Standards, ASIC/AFCA CPD requirements, AML/CTF training, solicitor CPD — must be delivered regardless of ROI calculations.

The smart approach is to separate the training budget into two streams:

• Mandatory compliance training: Budget this first, based on actual obligations. An LMS that automates compliance recordkeeping and sends reminders can significantly reduce the administrative overhead of this stream.
• Capability and development training: Budget this using Methods 1–4, focusing on the outcome-linked investments that drive business results.

Together, these two streams give you a complete and defensible training budget — one that covers your legal obligations and your strategic goals.

For a practical framework on managing compliance training specifically, see: Compliance Training Framework for Australian Organisations.

New Zealand context

New Zealand organisations face a broadly similar training budget landscape to Australia, but with some important differences. The Health and Safety at Work Act 2015 (HSWA) drives significant mandatory training spend in NZ, particularly for organisations in construction, manufacturing, and primary industries. CPD requirements vary by profession. Per-employee spend benchmarks in NZ are broadly comparable to Australia, though the smaller business base means more NZ organisations rely on per-seat LMS pricing — making per-active-user models like Tribal Habits particularly cost-effective.

For more on Tribal Habits’ NZ-specific offering, see: Training platform for New Zealand businesses.

This information is general in nature and doesn’t constitute legal or compliance advice. Requirements vary by state, sector and organisation, so we’d always recommend checking with your regulator or professional adviser before relying on it.