Government Senators' Report
1.1
During the course of this inquiry the committee has travelled widely
across Australia and heard from many people with an interest in current and
future skill needs, including representatives of industry, unions, the
Commonwealth and state and territory governments and professional
organisations, school teachers and students, apprentices, VET teachers and
administrators, and academics and other experts. While there were many
interesting and useful suggestions for change and improvements to the current
system for identifying and meeting current and future skill needs, few
witnesses, apart from one or two unions and academics, argued for radical
departure from current policy settings or frameworks, except perhaps in
relation to aspects of the New Apprenticeship scheme.
1.2
Most of the proposals, including many of those taken up in this report,
were consistent with the broad direction of current Government policy and
activity. These include refinements to the ASCO system, a more integrated
national database, action on career counselling, improved recognition of the
value of vocational education and training and careers in the traditional
trades, the VET in schools programs, recognition of prior learning,
articulation between vocational education and higher education and partnerships
between all three education sectors, industry and the community. As well,
Government senators note that ANTA has embarked on an ambitious program of
research and policy and program development in the context of the new national
strategy for VET. Many of the suggestions put to this committee are likely to
be considered as part of that process.
1.3
Some other proposals and recommendations in the report, however, reflect
the different policy stances of the Government and the Opposition on matters
such as more flexible workplace relations and the role of the market, including
mechanisms such as user choice, in improving choice and competition. The
Government’s policy recognises that the complexity of contemporary society and
economy and the pace of change, call for a training system and workplace
relations arrangements which allow for diverse response to diverse needs and
circumstances. The Opposition, in contrast, is seeking, through some of its
proposals, to reclaim union control over matters such as determining
enterprises’ training strategies and the wages and conditions of New
Apprentices on Australian Workplace Agreements and to insulate the public
provider, TAFE, from the competition it needs to remain a responsive and
flexible training system. Government senators see some of the calls for greater
union control and regulation as an opportunistic attempt to reclaim for unions,
including the education unions, some of the influence that their waning
membership has cost them.
1.4
As a general comment, Government senators also believe that the report,
while acknowledging the wide range of Government policy and program reviews
relating to skill needs, often fails to give adequate recognition to the many
significant Government achievements in these areas. These comments also seek to
redress the balance and place the report’s main findings and recommendations in
context, by highlighting some of the main policy achievements which are either
downplayed or ignored in the main report. For ease of reference, these are
listed under the relevant chapters.
Chapter 2 Skill Shortfall and
Future Skill Needs
1.5
Employers and industry groups appearing before the committee are
understandably concerned that governments take appropriate corrective action to
address persistent skill shortages, particularly in key areas of the trades and
professions. They, like Government senators, broadly support the Government’s
initiatives to deal with these shortages, including the industry-led National
Industry Skills Initiative in relation to the trades and the marketing campaign
in relation to New Apprenticeships in the traditional trades. But while the
Government has acted on industry concerns, and has taken action, discussed
below, to address shortages in some of the professions, it is important to
remember that skill shortages are often a normal feature of the labour market
and do not usually signal a policy failure by government. All too often they
are the unfortunate side-effect of a strongly growing economy and labour
market. Thus, while there were relatively few skill shortages in many of the
traditional trades during the recession of the early 1990s, shortages became
more apparent as the economy recovered and productivity surged in the mid-late
1990s.[1]
1.6
Since that time, under the capable management of the current government,
Australia’s economy has continued to perform strongly. GDP has continued to
grow by three and a half per cent a year, exceeding the strong growth rate of
the United States and the economy has performed one third better than that of
the OECD, taken as a whole. Even the damage to Asian markets in the late
nineties appears to have made little impact on Australia’s now robust economy.[2] While this strong economic growth
combined with relatively low unemployment levels bring significant benefits for
industry and individuals, they can add to the demand for skilled labour and
make it more difficult than usual to resolve skill shortages.
1.7
The development of a
flexible, responsive training system has been a high priority for the current
Government and can play an important role in assisting industry to take
corrective action when skill shortages arise. But, as VET expert Ms Kaye
Schofield told the committee, the
current skills shortages do not (with perhaps one exception) reflect a
failure of the training system:
Rarely can the training system be
blamed for skill imbalances nor will more vocational education and training
necessarily reduce the gap between employees and the skills demanded of the
market. Many of the skill imbalances currently being experienced by employers
should be viewed as a normal part of the business cycle. Sustained growth in
some industries and, conversely, industry downturns will impact on the demand
for skills, as will one-off and unpredictable events such as bushfires,
hailstorms, introduction of a new technology or new regulations and the effects
of structural/evolutionary changes in specific industries. Equally importantly,
imbalances between demand and supply may simply be the result of low pay and
unattractive working conditions.
Skill imbalances should not be interpreted as evidence of
systemic market failure. In most cases, the market will adjust although there
will be some lag time before it does so. Governments need to resist urgings
and the urge to ‘do something about them.’[3]
1.8
In this context, it
is worth noting that, while the main report makes much of the skill shortages
in the traditional trades, training in these areas remains strong: New
Apprenticeships in trades related occupations accounted for 35 per cent of all
New Apprenticeships, despite the fact these occupations account for only 13 per
cent of the workforce. There has also been strong growth in New Apprenticeships
in areas of the economy that are growing most strongly, including the services
area, such as business services, helping to ward off the possibility of skill
shortages emerging in these areas.
1.9
The main focus of the
report, while focusing on traditional trades, also provides some discussion of
shortages in the professions. Unfortunately, this is not balanced by a
recognition of the action being taken by the Commonwealth to provide extra
training places. Government senators note that the government’s reform package
for higher education, Our Universities: Backing Australia’s Future, has
the potential to make significant inroads into skill shortages in the
professions through the additional funding provided for:
- an additional 210 nurse places over next four years in regional
university campuses, rising to 574 places by 2007, at a total cost of $17.1
million;[4]
- additional teacher education places totalling $18.4 million over
3 years, with teaching remaining at HECS Band 1; and
- $121 million in additional funding to support the practical
component of teaching and nursing programs.[5]
1.10
The Government has also announced an additional 234 new university
medical places in 2004 based on advice to the Australian Health Ministers in
November 2002 from the Australian Medical Workforce Advisory Committee (AMWAC).[6]
1.11
Government senators believe that these actions, and other actions such
as the Government’s work with employers and the education sector on
employability skills will go a long way to improving the supply of suitably
skilled people.
Chapter 3: Skills Formation and the Labour Market
1.12
Government senators
do not consider that current training and related employment policy settings
neglect industry needs. The vocational education and training framework, and
training mechanisms such as New Apprenticeships, aim to provide maximum
flexibility to the employer and to the trainee to meet the training needs of
both. The expansion of student participation in VET reported by DEST at
hearings, with numbers doubling over the last decade to the point where there
are now 1.7 million students a year are a measure of the Government’s success
in meeting client needs.[7]
New Apprenticeships have given an ever growing number of people throughout the
community the opportunity to find employment that suits their needs, whether it
be entry or re-entry into the workforce, and to gain qualifications on which
they can build secure futures. Both of these developments assist businesses
meet the challenges they face in gaining and training the skilled people they
need to grow, in an environment of increased competitive pressure and
technological change.
1.13
Government senators
stand by the proven versatility of New Apprenticeships in companion with the
flexibility offered under Work Place Agreements; they also support the
continued provision of training wages and incentives for entry level and
existing workers as a means of maximising training opportunities for the New
Apprentice and the employer. Government senators are somewhat surprised that
the report is critical of these arrangements, given that the training wage
itself was originally a Labor government initiative, designed to expand
training opportunities. The current policy framework for New Apprenticeships
provides a more coherent and successful set of arrangements, for the benefit of
a broader and more diverse group of people, than the more fragmented and poorly
integrated arrangements for traineeships under the most recent Labor
governments.
1.14
Given these
achievements, Government senators reiterate their support for the view that
skill shortages are not an indicator of systemic failure in the supply or
training framework set up by the Government.[8]
Instead, the causes of shortages are attributable to a wide range of market
factors, as the National Industry Skills Initiative (NISI) found. In this
regard, Government senators also dispute the report’s finding that Commonwealth
incentives for New Apprenticeships are not adequately countering disincentives
to training in trade areas, and may be skewing growth into lower skill areas.
1.15
Consistent with the
findings of the NISI, much of the evidence to the inquiry indicated that lack
of interest by young people in apprenticeships in the traditional trades is one
of the main constraints in increasing take up of training in these areas. Too
often, the committee heard that the trades are considered ‘dirty, difficult and
dangerous’ often by those teachers or career counselors either biased in favour
of higher education or out of touch with the significant technological changes
that have taken place in the automotive, manufacturing and other industries
over the past decade. The Government’s marketing campaign for the traditional
trades and other actions through the NISI, are intended to break down some of
these myths and stereotypes. Television commercials on New Apprenticeships
advertise career opportunities in areas diverse as agriculture, hairdressing
and automotive mechanics and are reaching children before they have formed any
preconceptions about particular career options. The new website on traditional
trades is opening a window on the challenges and opportunities available to all
young people with a technical aptitude - male and female - and breaking down
outdated ideas about trades careers. Government senators understand that while
this campaign is yet to be formally evaluated, initial responses are very
promising.
1.16
At the same time,
Government senators acknowledge that the decline in interest in the traditional
trades contributes to the impression that training in these areas has reduced.
As noted above, much of the recent growth in New Apprenticeships has been in
new occupational areas, where employment is growing strongly, the
submission from the Department of Education, Science and Training (DEST)
quoting NCVER statistics, shows that this has not been at the expense of
training in traditional apprenticeships. Between 1995 and 2002, there was a 22
per cent growth in ‘traditional apprenticeship’ training from 97,610 to 119,340 and that ‘trades and related
workers’ are still the biggest occupational group in New Apprenticeships,
comprising nearly 36 per cent of those in training compared with only some 13
per cent of the workforce. NCVER also show that the number of young people
taking up traditional apprenticeships in the trades is as great as ever, with a
9.5 per cent increase between 1995 and 2002.[9]
And these increases in training have taken place at a time when employment in
many of the traditional trades is growing slowly if at all.
1.17
Government senators also note that the Commonwealth incentive
scheme has recently been reviewed, in consultation with major stakeholders and
a simplified and more targeted set of incentives, with a greater emphasis on
completions, training in emerging industries, and support for mature workers,
has been introduced.
1.18
The Job Network,
too, has undergone a rigorous process of review in recent years, with
Productivity Commission’s Independent Review, presented in June 2002,
providing a guide for adjustment over the last year. Government senators are
confident that the new arrangements under the Active Participation Model,
introduced on 1 July 2003, will resolve training-related and other concerns
about the capacity for skilled job matching raised during the inquiry process.
Changes under the Employment Services Contract 3 will allow Job Network members
refer their job seekers to complementary programmes, such as the New
Apprenticeships Access Programme (NAAP),
Literacy and Numeracy Programme (LLNP)
and Career Counselling. This co-operative cross-agency and cross-programme
arrangement will enhance the Commonwealth’s capacity to provide more effective
responses to skills needs across the full range of industries.
1.19
As the report acknowledges,
these major new developments are supported by a suite of companion initiatives
designed to target the young, indigenous, disadvantaged or mature age job
seeker. Additional funding to support these programs is available through the
new Job Seeker account, which will be used to purchase training. In the case of
mature age and indigenous jobseekers, the Job Seeker account will be available
in addition to funds provided through the Training Account and where
appropriate a Training Credit, to meet the costs of employment- related
training, included that provided by employers.
1.20
In the case of young job seekers, Intensive Support job search training
will provide targeted assistance for early school leavers. This allows for
recognition of different education outcomes. Jobseekers aged 16 to 24 will also
be required to participate in Intensive Job support job search training. The
focus here is on providing young people with a better idea about what employers
want, and what is necessary to find, obtain and maintain employment. The
Government will make an additional 21,000 Intensive Support Job Search training
places available over three years at a cost of $12.5 million to support these
young people make the difficult transition from school to work. Other
initiatives, such as a new website for young people entering the job market,
will build the link between Job Network, schools and employers. The important
link between education and employment is also being bridged by Department of
Education Workplace Relations (DEWR) and Department of Education Science and
Training (DEST) in a joint working group looking at ways to improve school to
work transitions.
1.21
Finally, Government
senators contend that the current policy approach to addressing training and
employment needs is already strategically targeted to yield the best value for
money. While youth training and the skilling of the unemployed is and must be a
key concern, the Government considers that the magnitude and diversity of
client needs warrants a carefully integrated plan, which it has evolved and is
constantly refining. Government senators note that important issues, such as
the potential implementation of Recognition of Prior Learning (RPL), are now
being closely examined, with some draft guidelines and policy directions on RPL being expected by March 2004.
Chapter 4: The Vocational Education and Training
Framework
1.22
The first part of this chapter is mainly concerned with funding and
calls for increases in Commonwealth and state funding for vocational education
and training. Once again, Government senators believe that these claims need to
be set in context.
1.23
It is a truism, of course, that there is never enough money to do all
the things that need to be done, and to the standard desired. Government
senators do not doubt that additional and perhaps unlimited Commonwealth and
state funding would translate into some improvements in the availability of
places and the quality of services in the VET sector. But responsible
government is not about writing blank cheques, but rather about priorities,
choices between competing needs and prudent expenditure of taxpayer funds.
Having said that, Government senators are concerned that the report paints a
misleadingly negative impression of growing Commonwealth contribution to VET,
particularly over the life of the last ANTA Agreement and the generosity of the
current offer. During 2003, the Commonwealth provided about $1.1 billion
to the states and territories for implementing VET goals including addressing
identified industry skill shortages.[10]
It has offered to increase this by 12.5 per cent or an additional $218.7
million, over the life of the next ANTA Agreement in 2004-06, providing a total
of $3.6 billion for the life of the next Agreement. This will fund more places
and improved quality and responsiveness. Industry supports the Commonwealth’s
offer and has called on states to provide matching funding.[11]
1.24
As to the adequacy of this offer, Government senators note that a recent
report on the long term demand for VET by Access Economics estimates that the
rate of growth in demand for VET over the period 2002-2010 will be
approximately half of that experienced over the period 1991 to 2001 (2.7 per
cent compared with 5.9 per cent).[12]
Calls for even more funding need to be seen in that context.
1.25
Finally, Government
senators observe that Australia’s national training system is a partnership
between the Commonwealth and states, with the latter often quick to call for
increased Commonwealth funding, while pulling back from their own commitments.
The New South Wales government, for example, in its 2003–04 budget introduced
fee increases of up to 300 per cent for some TAFE courses, affecting at least
40 per cent of NSW TAFE students and abolished some fee exemptions for
disadvantaged students. While the decision on fee exemptions for unemployed and
youth at risk has been reversed, other measures remain in force.[13]
Government senators remain deeply disturbed that the states are apparently
unwilling to support the training demands of industry in the traditional
trades. In late 2002, for example, VET plans submitted by New South Wales,
Victoria, Tasmania and South Australia all indicated that training places in
the key trades at TAFE and among private providers would be reduced. This means
places in building and construction, engineering, mining and automotive would
be lost while providers continue to offer courses in a range of ‘soft’ subjects
from craft courses to belly dancing.[14]
1.26
Government senators also believe that the section of this chapter on the
training policy and framework, including user choice policies and the VET in
schools program, should be read against the background that many of these
features were introduced as a result industry demands for greater
responsiveness, flexibility and national consistency in the training system and
criticism of the previously cumbersome training regulatory arrangements, as well
as to expand training opportunities, including for new industries. Readers also
need to be aware that, while the Commonwealth can show leadership, the impact
of the reforms can vary with the level of commitment of the state and territory
training agencies. Without cooperation, the cooperative federal system of VET
will not function as intended.
1.27
A key point of
concern for Government senators is the main report’s presumption that the
public provider, TAFE, should be accorded a privileged role within the VET
system, to the extent that the choice available to employers and employees
should be seriously curtailed simply in order to protect the position of TAFE.
The underlying message is that the main focus of the vocational education
system should be the needs and interests of the providers, rather than those of
the clients, that is the students and employers who pay for the education and
training and who have most to gain or lose from the training provided.
Government senators are completely opposed to this position and regard it as a
very poor basis for formulating public policy.
1.28
The weight of the
evidence to this inquiry indicates the need for more, not less, user choice, if
Australian employers and employees are to engage in training to the extent
that will clearly be needed to meet increasing skill formation challenges over
the next decade. Time and time again, the committee heard of instances where
TAFEs are failing to respond to the needs of employers, particularly small
businesses, and remote communities where TAFEs may be reluctant to travel at
times convenient to the local community. Witnesses from the Gulf area told the
committee that they prefer to have a choice of the RTO that will provide their
government funded training.[15]
Among the advantages of private RTOs is an ability to specialise in niche
areas, service remote or specialised clients and service clients with a
national reach, thus catering for the diversity of training needs. Following the introduction of user choice, Australia
now has a vibrant, diversified training market in which private RTOs, are
playing an increasingly important role. Major employer groups such as the ACCI
see user choice of training provider as fundamental to increasing employer
investment in training, and the current inflexibilities in the training system
as one of the main barriers to this investment. Government senators therefore
believe that further progress in implementing user choice is essential if we
are to resolve current skill shortages and pre-empt further shortages arising
in future.
1.29
The VET in schools program, discussed in the report, provides a good
illustration of the soundness of the Government’s policy framework for skills
formation. While there were earlier versions of this program before 1996, the
program’s expansion and development stems from a decision by the MINCO in 1996
to allocate $20 million of VET funds to state and territory authorities for
each of the calendar years 1997 to 2000. The Commonwealth provided additional
support, and the result has been a substantial growth in participation in VET
in schools and in the range of programs offered.[16]
While there are many suggestions for improvements or change to the program in
this report, there are few, if any, who do not support the general concept of
the program. The Government is well aware of industry and other calls for some
changes to the way the program operates and, in order to consider these
further, the Minister for Education, Science and Training, asked the House of
Representatives standing committee on education and training in July 2002 to
conduct an inquiry into the program and recommend improvements.
Chapter 5: Education and Training Pathways
1.30
Many of the suggestions and proposals in this chapter, while consistent
with the broad direction of Commonwealth policy, either seek commitment to some
specific initiatives or models brought to the committee’s attention during the
inquiry, or, as in the case of Government support for training existing
workers, take up some arguments made to the inquiry for a different approach.
1.31
Government senators generally support the recommendations
relating to issues such as improving the capacity of schools to prepare
students for further VET studies, collaborative partnerships, articulation
between VET and higher education, and exploring the broader applicability of
models such as the T3 program and the Cast CRC program. These are useful
suggestions made during the course of the inquiry which may merit further
examination and could lead to some practical improvements in the areas such as
the preparation of students for further vocational education and training.
Government senators note, however, that the Commonwealth is already laying firm
foundations for the development of more collaborative approaches through its
support for universities. For example, the Collaboration and Structural Reform
(CASR) Fund, under Our Universities: Backing Australia’s Future, with
$36.6 million over 3 years commencing in 2005, will provide competitive
funds to foster collaboration and structural reform in the higher education
sector, including course provision to be shared between two or more
institutions in order to ensure the most effective use of resources. The
proposal, to fund universities from 2005 on the basis of number of places and discipline
mix, will also allow for more
consideration of ways of supporting courses with small numbers[17]
but high public value, such as in cast metals related engineering or the
RMIT/Bosch model.
1.32
Government senators
are also convinced that the foundations for engaging students in these pathways
are already laid down. There is potential to build on current Job Network and
New Apprenticeship arrangements to support participation in the Cast CRC, RMI/
Bosch, and also Illawarra Skill centre proposals as referred to in the report.
In this regard, Government senators find some value in recommendation 20 in
Chapter 3, which commends the potential to combine New Apprenticeship
Incentives with Job Network assistance to support training and employment in
skill shortages areas.
1.33
But there are other
recommendations that government senators consider unnecessary, largely because
they propose actions or policies that are already being implemented by
Government. For example, the Commonwealth government through its VET in
Schools and Youth transition policies, is already active in promoting
partnerships between the three education sectors, industry and the local
community. There is, in any event, limitations on the Commonwealth in
facilitating and promoting these partnerships which are best handled at state
level. Similarly, Government senators, while not dissenting from the
recommendation in relation to career counseling, believe that the work
currently being undertaken by MCEETYA and the Commonwealth, will provide a
sound basis for future arrangements for career advice in schools.
1.34
Government senators, while supporting the principle and the thinking
behind the recommendation on Youth Transition, consider it premature, at this
time to introduce a complex, resource intensive set of bureaucratic
arrangements when the results of some recent significant initiatives in this
area are not yet available. The recent review of Youth Transition programs by
Allen Consulting Group for the Business Council of Australia, found that there
is ‘recent and widespread activity in education and training sectors around
Australia to improve the transition of young people from initial education to
further education and training and employment’.[18]
In particular, several states and territories, including Victoria and
Queensland, have recently introduced programs or mechanisms which have the
potential to translate into improved education and training and employment
outcomes for young school leavers. Government senators consider that there
should be time to evaluate the outcome of these initiatives and other
developments, before a commitment is made to further action.
1.35
Finally, government senators are not convinced, for the moment, of the
need for a separate program to support employers in training current workers.
Government senators note that a separate approach has the broad support of
industry and employers, although this may partly reflect the current
impediments to broad use of New Apprenticeships as an avenue for training
existing workers, through state and territory government limitations on user
choice and funding of the associated training. As DEST representatives
explained at the hearing on 15 August 2003, the significant costs of
establishing, administering and monitoring a separate scheme, need to be weighed
against the likely benefits. The committee heard some compelling arguments that
any scheme for training existing workers would need to be carefully targeted to
those most in need, such as mature workers lacking post-secondary education and
training, and/or priority areas of skill development. In this context, we note
from information supplied by ANTA that the New Apprenticeships scheme and
Commonwealth incentives for existing workers appear to be well targeted to the
needs of disadvantaged workers: of the estimated 72,244 existing workers who
commenced New Apprenticeships in 2002, 61,773 (85.5 per cent) had no
post-school qualification and were obtaining their first vocational
qualification, 5,055 (7.0 per cent) were upgrading from a lower VET qualification
and 1,260 (1.7 per cent) supplied no data on past education.
Chapter 6 : The Role of Industry and
other Stakeholders
1.36
The bulk of this
chapter deals with the recent changes to industry consultation arrangements,
although there is also a discussion of industry’s role and responsibilities for
training its workforce. Government senators note that the revised national
industry arrangements are matters for ANTA. Since ANTA appears to be satisfied
with the new arrangements, then there would appear to be little point in
outside observers suggesting that other arrangements would be preferable.
1.37
Government senators note the loud complaints from unions and some state
governments and ITAB members about the withdrawal of Commonwealth funding for
state ITABs but find some of the responses disingenuous. After all, if it is
true that ‘you value what you pay for’ as one academic has argued in support of
a training levy for industry, then it is clear that few state and territory
governments valued their industry advisory arrangements highly enough to make a
significant contribution to their operations. Government senators agree with
the Commonwealth Government that the arrangements for and funding of these
bodies, is a matter for state and territory governments. Claims that they are
an integral part of the national system, as made in this report, are, in the
view of Government senators, simply opportunistic attempts to preserve the
previous status quo for its beneficiaries.
1.38
Government senators
note that there are varying views on whether industry’s investment in training
is static, increasing or decreasing, depending on what measures are used. The
ABS Media Release earlier this year on its survey of employer investment in
training reported that employers spent 52 per cent more on structured training
for their employees in 2001-02 than in 1996.[19]
Despite this, and our general view that the main barrier to greater employer
investment in training is greater flexibility and responsiveness, government
senators see no objection to ANTA being asked to investigate the range of
options for increasing industry investment in training their workforce. We
note, however, that ANTA has undertaken a project to assess the relative
contribution for VET of individuals, industry and government.
Senator John
Tierney Senator Guy
Barnett
Deputy Chair
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