This working paper examines key policy issues in the implementation of Australia's User Choice policy regarding allocating public funds for vocational education and training (VET). Part 1 explains the process used to obtain stakeholders regarding the User Choice policy, the administrative arrangements required to support it, and issues that must be resolved before its full implementation. Part 2 states the objectives of User Choice, and part 3 identifies its essential elements. The following key policy issues are discussed in part 4: issues related to the need for a common focus on User Choice; demand side issues (distribution of benefits and costs of training among employers, employees, and the government; greater involvement of employers in VET development; User Choice and small business; VET in schools; access and equity issues; information); supply responses (maintenance and enhancement of the momentum for structural reform to achieve a more open and competitive training market; third-party access; costing and pricing; and cost shifting); "thin" markets; and maintenance of the VET base. Part 5 considers matters that must be addressed if User Choice is to be introduced on an effective, sustainable basis. Appended is a discussion of principles underlying identification of user choice policy issues. (MN)