Prime Minister Scott Morrison has vowed to fix Australia’s flawed skills and training system as a key plank of the government’s coronavirus economic recovery.

Mr Morrison will address the National Press Club in Canberra on Tuesday in a headland speech unveiling the coalition’s reform plans on training and industrial relations.

Overhauling the skills system will be a priority to stimulate job creation in a changing labour market.

Under Mr Morrison’s plan, funding would be more closely linked to skill gaps based on what businesses need.

Industry will be given greater power to shape training, with pilot schemes across human services, digital technologies and mining used as examples for other sectors.

Mr Morrison will make the case to ditch a “clunky and unresponsive” system in favour of more consistency across states and greater transparency around spending.

“The current National Agreement for Skills and Workforce Development is also fundamentally flawed and needs to change,” a draft of the prime minister’s speech says.

Mr Morrison is critical of $1.5 billion in annual untied funding being handed to states without checks.

“The Commonwealth has no line of sight on how states use this funding,” he is expected to say.

“Where targets do exist, they are aspirational. If not met, there are no consequences.”

Subsidies, loans and other funding would be based on the scope for return on investment.

There would also be greater consistency between the vocational education and training, and higher education sectors.

The National Skills Commission will provide detailed labour market analysis to replace lists of apprenticeships and skilled migration along with other up-to-date data.

Mr Morrison’s JobMaker plan rejects calls for government to play a major role in recovery over a longer period of time

“At some point, you’ve got to get your economy out of ICU,” he will say.

“You’ve got to get it off the medication before it becomes too accustomed to it.”

Labor leader Anthony Albanese has argued government should play a vital role while also acknowledging the need to strengthen the private sector.

Mr Morrison is also expected to outline a process guiding industrial relations reform, considered another crucial area in the economic rebuild.

The prime minister will warn against retreating into a “downward spiral” of protectionism on trade while stressing the importance of reducing debt burdens.

“We must not borrow from future generations what we cannot return to them,” he will say.