Meeting the skills challenge

Speech
  • Minister for Tertiary Education, Skills, Jobs and Workplace Relations

First I would like to acknowledge the Ngunawal people, their elders past and present on whose land we are meeting today.

I’d like to thank the Australian Chamber of Commerce and Industry for inviting me to outline the Government’s strategic approach to addressing the skills challenge we face as a nation.

It is a challenge we must meet if we are to achieve our goal of sharing the benefits of the next mining boom.

We know the massive pipeline of investment forecast in the resources sector in the years ahead will create unprecedented demand for labour and skills across a range of industries.

Treasury forecasts contained in the Budget predict an additional 500 000 jobs will be created by 2013 as the economy once again hits full capacity.

It is worth remembering that there have been 750 000 jobs created in the past three years and we are now set to build on this extraordinary growth.

At the same time our unemployment rate is predicted to fall to 4.5 per cent.

These factors will combine to exert pressure on the labour market.

The challenge for the Government is to do everything we can to ensure industry has access to the skilled workers it needs to capitalise on this record investment.

We must not be stymied by a lack of human capital. We must meet the challenge of providing a skilled workforce to allow industry to maximise the benefits of the next boom.

Skills Australia has attempted to put in context the skills challenge we face during the next 10 to 15 years.

It projects 4.6 million additional qualifications will be required over the next 15 years due to employment growth.

We will need an additional 2.4 million people in the workforce with qualifications at Certificate III and higher by 2015.

This will increase to 5.2 million by 2025 to meet industry demand.

At the same time we experience this rapid increase in demand for skilled workers, the number of unskilled jobs will decline.

The economy is changing.

I am regularly reminding people that when we talk about the mining industry we are not talking about lots of people in yellow vests digging holes – it’s quite the opposite.

Most of the jobs in the resources sector are high skilled jobs.

Chevron’s Gorgon project is a case in point. This is a massive and long term project which is expected to create 10 000 direct and indirect jobs.

Following the demand for skilled workers during the construction phase, the company expects to have up to 500 people working offshore on the project.

There will be another 3 000 people working in the company’s Perth offices. These will include engineers, IT professionals, human resources managers, and financial officers – all professional occupations.

So the job creation, once the project is through the construction phase, is very much in jobs which require a tertiary qualification.

I think it’s important that we have that broader understanding of what is happening in our economy.

I must say I tire of people presenting the skills challenge we face as a “crisis”.

It is a great challenge to have.

Our challenge is whether we have enough Australians to do the high paid, high skilled work on offer.

My counterpart in the United States of America is worried about 9 per cent unemployment rates that see cities and suburbs turning into ghost towns because there are no jobs.

So I think we have to be real about the nature of the challenge we face. I see this as a positive challenge.

We have choice. We can meet this challenge by importing thousands of overseas workers or we can train and skill our own.Our priority is to train and skill our own.

There is a place for skilled migration and I am a great supporter of that. But fundamentally, as a community we should be giving our greatest opportunities to our own people to get the training and skills they need to meet the demands in the economy.

We have the opportunity to provide thousands of young Australians with rewarding careers that will see them earning high incomes.

That’s why we have made a record investment in our nation’s universities and uncapped student places.

That’s why we are on track to reach the national target that by 2025, 40 per cent of all 26 to 34 year-olds will hold a qualification at bachelor's degree or above.

That’s why at the heart of the Budget is a $3 billion investment in skills and training designed to meet our key challenge of delivering the skilled workers industry needs.

To address this fundamental economic challenge, the Government is seeking to harness the potential of those in our community who are not currently engaged in the workforce.

Those who are locked out of a job because they lack the basic skills and training.

Those who, with the right training, can help meet the increasing demand for workers.

Now, more than ever, skills are the passport for a job and keys to the future.

If we are to support industry to adapt to the workplace of tomorrow and maximise the benefits of the boom we must invest in modern, flexible training that provides the skilled workers they need.

The Government has set out a blueprint for our engagement with industry to ensure that together we make this mining boom work for all Australians.

The reform agenda

While the Government has a critical role to play in ensuring that we meet the skills challenge, the reality is that this is a job the Government cannot do alone.

If we are to keep pace with the demand for skilled workers, then government and industry must work in partnership.

The Gillard Government is taking a broad reformist approach to the skills challenge.

In the Budget we outlined our approach which includes:

  • placing industry at the heart of the training effort to deliver skilled workers;
  • reforming the VET sector to meet the longer term needs of the economy;
  • reforming the Australian apprenticeship system; and
  • improving workforce participation.

Partnership is at the heart of our ambitious blueprint to reform the way we train Australians.

This agenda demands a concerted and collaborative effort from all of us and we will only succeed if government and industry works together.

The Government is confident that we can get the best results if we put industry front and centre in our national training effort with the full cooperation of the Australian, state and territory governments.

TheBuilding Australia’s Future Workforce package announced in the Budget has been universally welcomed by industry.

Over the next six years, we will invest $3 billion to educate and train the skilled workers the Australian economy needs.

This is a major investment in the nation’s future, particularly in the context of extremely tight budgetary conditions.

In snapshot it includes:

  • creating a new $558 million National Workforce Development Fund;
  • reforming the vocational and education sector by putting reform criteria around our $7 billion base funding agreement with the states—and offering up to $1.75 billion of additional funding for states prepared to sign up to more ambitious reform over the five years from 2012–13;
  • reforming the apprenticeship system to make it modern and flexible; and
  • measures to boost workforce participation to give disadvantaged Australians the skills they need to get a job.

The new National Workforce Development Fund is the vehicle through which government and industry will work together – sharing responsibility to deliver an estimated 130,000 high quality training places.

The Fund builds on the success of the Enterprise Based Productivity Places Program which was implemented in 2010.

This was an innovative program designed to target our investment in training to directly meet the needs of business.

The Government initially allocated $25 million to assist small, medium and large size businesses tackle their skills needs.

We were overwhelmed by the response. We received more than $75 million in bids from businesses across Australia, including businesses in rural and regional Australia.

In light of this response we doubled the funding to $50 million and the training is still ongoing.

The evidence shows that this industry and Government partnership has proven incredibly successful.

More than 8 000 people are being trained in 285 different qualifications across all industry sectors – from building and construction, to photovoltaic systems to harvesting and haulage.

Almost 50 per cent of those currently in training work for small businesses and more than 50 per cent live in regional and remote areas.

So, this is a model that obviously works for both employers and employees and it is the model we have adopted in the new National Workforce Development Fund.

The Fund will respond to the most critical emerging skills needs facing our economy, recognising that skills shortages are not just confined to the big end of town.

Skills shortages also affect small business which are a critical part of the economy, employing more than 5 million people - around half of all private sector employment.

The successful take up of the Critical Skills Investment Fund also indicates that this is a model that industry supports—a model where industry takes a hands on role and partners with Government to address workforce and training needs.

Last year we established the Critical Skills Investment Fund to target workforce development opportunities in the resources, construction, infrastructure and renewable energy sectors.

In response to a national call for proposals under this initiative, we received, and are currently assessing, more than 190 expressions of interest from small, medium and large enterprises across the four critical sectors.

The most competitive have been invited to submit full proposals which will be assessed and I expect to be able to announce successful enterprises in coming months.

This strong response is further indication that the industry partnership model works. It has the support of the industry sector and it enables us to respond effectively to the emerging skills needs of our economy.

Under the National Workforce Development Fund, industry will be able to seek Government contributions to the costs associated with training its current or future workforce. The size of the contribution will vary, with smaller businesses receiving relatively more assistance.

This fund will be administered by a new National Workforce and Productivity Agency—an independent body, formed by expanding the roles and functions of Skills Australia with an additional $25 million in funding.

This Agency represents a fundamental opportunity for industry to have a role in setting the direction for future training in Australia. It will be independent and have the resources it needs to effectively set the future direction of our training effort.

It will ensure that training is driven by the workforce development and business needs of enterprises. Employers will be able to seek support to help purchase the training they need in the format that suits their business to deliver valuable qualifications to their employees.

The Government recognises that those who are best placed to know what skills are needed are industry representatives. The Agency will give industry the capacity to act on that knowledge.

Along with its role in investing in the training needed, the Agency will also provide the Government with clear and independent advice on the skills needs of industry sectors, regions and disadvantaged Australians— to guide Government in its policy making, so we are on the front foot in anticipating the skills required across the nation, meeting the needs of industry.

And this is where Vocational Education and Training sector plays a pivotal role.

VET is at the frontline when it comes to achieving higher workforce participation and it does some very important work.

Across Australia VET reaches people of all ages, giving them new skills and allowing them to change their lives.

In fact, more than 60 per cent of VET students are 24 or older and many live in regional and rural areas.

VET also reaches people who have only been intermittently connected with the world of work or who have struggled at school.

  • almost double the proportion of students from low socio-economic backgrounds
  • triple the proportion of students from non-English speaking backgrounds
  • and five times the proportion of Indigenous students

Reforming the VET sector is a top priority for the Government with the aim of increasing quality and transparency and getting the best possible results from our investment.

The Gillard Government has already achieved fundamental reform of school and university education.

We uncapped university places and opened the door of opportunity to all those who are eligible.

As a result of our historic reforms we have significantly increased enrolments and a new generation of Australians will now enjoy the life changing opportunity to achieve a university qualification.

We introduced a new level of transparency with the launch of MySchool and laid the foundation of a national curriculum.

In our second term in office our focus will be on reforming the Vocational Education and Training to give Australians skills for life.

The skills they need to get off the sidelines and join in our success.

Skills to get a new start, a better job, a higher pay packet.

Skills to achieve their full potential.

If we are to meet the growing demand for skilled labour and improve productivity and participation this reform is critical.

The first step will be renegotiating the National Agreement for Skills and Workforce Development with the states and territories. This is worth more than $7 billion over five years from 2012–13.

The Government will also supplement this funding with an extra $1.75 billion over the same period for jurisdictions that are prepared to sign up to the reform program to improve the performance and quality of their public training systems.

Our vision for reform of the VET sector is to deliver better quality, higher level training which meets the needs of employers and students, supports competitive industries, and is better matched to future jobs growth.

We want to see greater transparency—so it is clear Government funds are being properly targeted to skills needs, and employers. And so that students can choose the training organisations which perform well and best meet their needs.

We want the sector to be more efficient so that investments in skills can deliver the right skills to the economy at the right time.

And we want the sector to support equity through increased participation by groups not currently fully engaged in work and to be able to upskill existing workers so they can stay engaged in employment as skills requirements change.

A smarter apprenticeship system

Hand in hand with the reform of the VET sector is our determination to lift the performance of our apprenticeship system.

Too often we hear stories of young people starting an apprenticeship only to leave before completing their training.

Some may think the course too long; others take the short-term option of unskilled jobs without looking to the future.

Low completion rates represent a significant loss of effort and investment, with between 40% and 50% of apprentices failing to complete their training.

This means that of the 448 000 Australians currently undertaking apprenticeships and traineeships only about half of them will complete their training and gain a qualification.

The cost of this is immense for individuals, companies and the training organisations.

The onus is on us to lift the quality of apprenticeship training to keep our apprentices on track and that means developing innovative and streamlined training system.

To do this the Government is investing more than $100 million over four years so apprentices can move more efficiently through their training.

We will support competency based initiatives which acknowledge the skills some mature age workers bring to their training and allow students to move through their apprenticeship as they demonstrate the required competencies.

This builds on the Adult Apprenticeship project announced by the Government in response to the National Resources Sector Taskforce. It opens up greater opportunities for existing workers to upgrade their skills while maintaining quality in our training effort.

It will also fund a $101 million apprenticeship mentoring package which will help people choose the right training pathway and complete their training.

Both the accelerated apprenticeships measure and the mentoring funding will be aimed at industry organisations that are well placed to know how to improve apprenticeship arrangements in their sector.

I want to flag with industry that the Government is committed to a fundamental reshaping of the Australian Apprenticeship system. The changes we have announced were just the first step in the reforms recommended by the Expert Panel.

The Government knows that many stakeholders are keen to engage with it on those reforms and we will be holding a consultative process over coming months to identify more substantive changes to the apprenticeship system which I aim to announce by the end of the year.

This new funding will help our apprentices aim high and complete their training.

Of course, it goes without saying that if you don’t have decent literacy and numeracy skills, the door is slammed shut on many jobs.

And that’s a scenario for too many Australians who are locked out before they can even begin.

The Australian Bureau of Statistics tells us that more than 4 million working age Australians need additional literacy and numeracy skills to be able to function effectively in a modern workplace and participate fully in life.

It is a barrier to employment, a barrier to improved productivity, a barrier to improved skills.

As part of the Government’s strategic plan to address this issue we will invest $143 million over four years to expand the Language, Literacy and Numeracy Program to help an extra 30 000 job seekers to improve their skills.

This builds on the $120 million investment foundation skills made in the 2010-2011 budget.

Addressing adult literacy and numeracy can be difficult because people are often reluctant to admit they have a problem in this area.

One of the things I am keen to talk to industry about is how we expand language and literacy programs for existing workers using the extra $20 million we are investing over the next four years.

I am also pleased to say an additional $19.7 million will be invested to maintain the number of places in the Australian Apprenticeships Access program which provides pre-vocational training, job search support and post placement support to vulnerable job seekers who want to pursue an Australian apprenticeship.

Conclusion

The Government is investing in a range of measures to ensure we are able to meet the skills challenge confronting the economy and share the benefits of our economic growth with all Australian.

I have not had the time today to address the participation measures we are introducing to assist more Australians into work. These measures are designed to help increase our national workforce and give people an opportunity to fully participate in our society.

There will never be a better time than now to give those people who face barriers to employment the opportunity to get off the sidelines and into work.

I am pleased to say that I have had a great deal of very positive feedback from a wide range of employers who are keen to be involved and work with disadvantaged groups to increase participation.

The Government wants to give Australian the skills they need to make the most of the opportunities which lie ahead.

Skills to overcome the barriers which see too many Australians locked out of our success.

Skills to get a better job, skills to build a better future.

To deliver these skills for life, the Government is moving to provide more support for demand driven and targeted skills training.

To respond directly to critical skills needs, we will work in partnership with industry.

We will respond to the employers who need skilled workers and we will invest in partnerships with employers to deliver those workers.

We will work together to meet the challenge of skilling Australia.

For more information

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