Group Training Conference - Skill 2 Work, Adelaide Hilton

Speech
  • Minister for Employment Participation
  • Minister Assisting the Prime Minister for Government Service Delivery

Check against delivery

I would like to acknowledge the Kaurna people as traditional owners on the land on which we meet and pay my respect to their elders past and present.

I would also like to acknowledge:

  • Jim Barron, the CEO of Group Training Australia
  • Members and representatives of group training organisations
  • Representatives of Employer and Industry organisations.
  • Departmental officials both federal and state
  • Ladies and gentlemen

I’m delighted to be here today at the Skill 2 Work conference with all of you from the group training and skills community. Unfortunately the Deputy Prime Minister, Julia Gillard couldn’t be here today and sends her apologies. I’m privileged to deliver the opening address in her absence.

That’s because, like the Deputy Prime Minister, the Rudd Government is passionate about skills. Passionate about investing in our young people. Passionate about skilling up job-seekers and workers. Passionate about investing in the system that delivers this training.

There’s a few things I want to touch on today for everyone here to keep in the back of their minds over the next few days. But my central message is that the major workforce challenge we face is our capacity to build the skills we need for the future.

Now every one knows the success story of the stimulus. It protected 200,000 jobs. It stopped the economy going into recession.

And while other countries are facing Government debt around 100 per cent of GDP, ours will peak at 10 per cent.

Although our unemployment rate is one per cent higher than its pre-crisis levels, in contrast unemployment across the major advanced economies is up to 2.2 per cent higher, and unemployment in the US is a massive 3.5 percent higher.

Australia has been able to achieve what no other major advanced economy could during the crisis - creating jobs. While our economy has added 187,000 jobs since the crisis began, the Euro zone has lost 3.6 million jobs and the US has lost a staggering 6.5 million jobs.Fiscal and monetary policy – as the Governor of the Reserve Bank said, has worked a treat. But this didn’t happen by accident. It happened because the Government took early and decisive action to cushion the economy from the worst effects of the GFC.

It’s not just the Government that’s saying this. In March Murilo Portugal of the International Monetary Fund told a conference in Canberra: "The outlook for Australia is a good one," and "Australia has been remarkably resilient to this global crisis and, in fact, it has grown this past year, which is different from any other advanced economy."

In contrast, the Opposition voted against the Stimulus six times. And I must say continue to oppose the Stimulus…

But putting aside the macro-economic and political story, there is also a skills story. The Stimulus protected the skills base of the Australian economy. Without it, hundreds of thousands of skilled workers would have been thrown on the unemployment scrapheap.

Especially in skills-intensive sectors like construction. There’s not only the human cost on unemployment. There’s also skill atrophy, skills under-utilisation and reduced labour market participation. All these things can hold a productive economy back.

One of the things that concerned me most last year was the disproportionate impact of the downturn on young people. I remember seeing figures that showed that young people made up more than 40 per cent of those who had become unemployed during the GFC. Last year the Housing Industry Association said in more than 4000 apprentices in the construction trades alone were laid off across Australia. I also remember seeing figures that showed that commencements in the traditional trades had plummeted by around 25 per cent.

When we went back and looked at what happened in the 1990s recession, we found commencements dropped by a similar figure. What was even more alarming is that it took more than a decade, 13 years in fact, for commencement numbers to come back to the level they were at before the down-turn.

So for 13 years, there was a cruel legacy – a hangover effect – of apprentice numbers being lower because of this lost opportunity. That legacy created a skills shortage which held us back – a big reason why there were skills shortages before the global recession. Last year, we were at risk of history repeating itself. Employers were not hiring apprentices.

So that’s why we rolled up our sleeves and put together Apprentice Kickstart. We tripled the first year bonus for taking on a traditional trades apprentice.

There are a few people in this room who helped us get the policy right. And there’s more than a few people here who helped make it a fantastic success.

We set ourselves a target of signing up 21,000 apprentices in the traditional trades. That’s because our modelling showed that commencements were continuing to decline faster than jobs growth. We estimated that there was a shortage of around 8,000 apprentices who were not hired because of the down turn.

Between December 2008 and February 2009 as the GFC was beginning to bite only 17,400 apprentices were hired. On trend, it would have meant that the summer period this year would have been even lower due to commencements tanking.

I’m pleased to say that as at 13 April 2010, there are 22,094 Kickstart Apprentices – 1,094 more than our target. That made good the drop in commencements from the downturn. And we did it in one year – not 13.

Across the trades we have increased new apprentice commencements in areas such as construction, electrical and automotive. The construction sector had the biggest increase, up 36 per cent on last year.

Even though we had indicated that the bonus would revert to the normal rate after 21,000 apprentices were signed up, we decided to pay for every traditional trade apprentice signed up over the summer.

Part of the reason we were so successful was because many people here in group training organisations joined with employers in taking on Kickstart apprentices.

I also know how instrumental Group Training Australia was in promoting the measure through its networks. GTA was also vital in tracking the success of the package. I was pleased to see the results of the GTA survey of employers on Apprentice Kickstart.

The results speak for themselves. One in two businesses said that Kickstart meant they were able to take on more apprentices than last year.And more than half of those businesses who didn’t increase their numbers said Kickstart helped them maintain their current levels of hiring new apprentices.

That’s a great result for GTA members. A great result for young people seeking to enter a trade. And great news for the future skills base the country will require over the next 5 to 10 years.

For people here today, it underlies just how important GTA is in working with Government to help build the skills Australia needs.

Now in case you haven’t already guessed, I’m big on apprentices.I trained as a metal worker, but like far too many apprentices, I didn’t complete my trade. My Grandmother probably wished I had!

But there is more to do on the Apprenticeship front. The Council of Australian Governments at its meeting last in December, agreed to a range of recommendations from the Australian Apprentices Taskforce to maximise the number of apprentices who commence and who complete apprenticeships, and to strengthen the apprenticeship system.

COAG’s agreed actions and recommendations are being implemented by an Action Group which has all governments and several industry stakeholders on it – including Group Training Australia.

Now Apprenticeships are just part of the Government’s productivity agenda. It’s an agenda that spans all portfolios but we know that a robust training system is the engine room of the economy.

Through my work on the National Resources Sector Employment Taskforce, I’ve seen first hand the looming skills challenge before us. There are more than 70 projects that will need in the vicinity of 80,000 jobs during the construction phase. And this call for skilled labour will have flow-on effects right through the economy.

It comes at the same time that we have a changing distribution of those participating in the labour market. The Intergenerational Report has spelled out the stark challenge.

And make no mistake—we have no choice on this. Between now and 2050, people aged 65 to 84 years will more than double. And the number of people aged 85 and over will more than quadruple. By 2050, there will be only 2.7 people of working age for every person aged 65 and over.

Today there are five. That’s a challenge.

Add to that the resources boom, climate change and health reform and you can see why it’s critical to lift productivity to meet these costs. We certainly have our work cut out for us.

Moreover, productivity has slowed over the past decade. Average annual labour productivity growth fell from 2.1 per cent in the 1990s, to 1.4 per cent in this decade.

So by investing in skills we don’t just replace those skilled baby boomers bowing out to a well earned retirement, we also expand the pool of skilled younger Australians. These are the ones who will help our businesses and industries build productivity growth.

It’s imperative that all players with a stake in skills keep the wheels of the training system moving – and that we adapt our approach to match the demands of the economy.

This is part of the reason why the Rudd Government set up Skills Australia - to advise us on demand for current, emerging and future workforce skills.

The Skills Australia Report that Robin Shreeve’s team released a few weeks ago –Australian Workforce Futures– had some good advice for government.

Here’s a taste:

  • Increase productivity by better mobilising and using skills in workplaces.
  • Expand tertiary enrolments so that 62 per cent of employees hold Certificate III or above qualifications by 2015, rising to 70 per cent by 2025, and
  • Invest more in special skills needs, especially among Indigenous and disadvantaged learners.

Robin will speak to you tomorrow so I won’t say anymore now – but if you have the time I would strongly encourage everyone here to take a look at their report.

In closing I note that Group Training – like so many active labour market concepts – was pioneered in Australia. Collaboration is at the very heart of the concept. And from where Government sits, our collaboration with Group Training Australia is very valuable indeed.

I thank the group training organisations here, and Group Training Australia, for helping the Government strengthen our vocational education and training system. Your network has the runs on the board when it comes to signing up people into training through Australian Apprenticeships.

I know the Deputy Prime Minister and myself look forward to hearing the ideas and strategies that come out of your discussions today. I wish you a fruitful and – dare I say it – productive conference!

For more information

Media mailbox: media@employment.gov.au