CEDA Lunchtime address: Meeting the needs of business with a skilled workforce

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

Four Seasons Hotel, 199 George St Sydney12.30pm Tuesday 13 July 2010

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Acknowledgements

  • I’d like to acknowledge the Gadigal people, the traditional owners of the land on which we meet, and pay my respects to their elders, past and present.
  • I’d also like to acknowledge
    • My parliamentary colleague, Scott Morrison
    • Dr Suzanne Rickard, CEDA State Director, NSW and the ACT
    • CEDA representative
    • Business, industry, education and training leaders
    • Ladies and gentlemen.

Introduction

It’s a great pleasure to be with you again and I thank you for the opportunity.

I’d like to begin by congratulating you on the 50th anniversary of CEDA. It’s wonderful to see CEDA is still going strong after all these years, and today’s forum is another testament to the pivotal role you play in the policy debate on our community.

I’ve been asked to share with you what the Government is doing to tackle unemployment and how we are working with business to identify and meet skills needs.

Improving workforce participation and boosting skills are issues that the Gillard Labor Government is passionate about, so today is an important opportunity to outline what steps we are undertaking.

I take it as the greatest honour to be the Employment Participation Minister in a Federal Labor Government because, if you’re in the Labor Party, employment is the key to bridging social disadvantage, the key to fighting inequality and to giving people opportunities to improve their livelihoods.

The key to meeting skills demands of our country is to increase the participation of the Australian workforce – through getting more people into work and training.

Our major challenges

As we have all heard many times in recent months, Australia has emerged from the global recession in good shape.

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

Australia has been able to achieve what no other major advanced economy could during the crisis - we created 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.

While other countries are facing Government debt around 100 per cent of GDP, ours will peak at 10 per cent and most importantly the economy will be back in surplus within three years.

But this didn’t happen by accident. It happened because the Government did what it had to do and acted, working closely with employers and unions to put the national interest first.

Six months ago Scott Morrison and I both attended the Master Builder's Conference on the Gold Coast and the feedback from builders and the President that night was that without the stimulus the construction sector would have been almost non existent.

But one of the much less heralded benefits of the Stimulus is the protection it provided to the skills base of the Australian economy. Think about it. Without the stimulus and the almost 50,000 infrastructure projects around the country, hundreds of thousands of skilled workers and apprentices would have been thrown on the unemployment scrapheap.

Unemployment is without doubt the biggest threat in an economic downturn but skill atrophy and skill under-utilisation are the threats in recovery. Thankfully these challenges have been alleviated because of the work provided by the stimulus.

So where to now?

There’s no doubt that the strong performance of the economy has produced new challenges, among them:

  • the persistent gaps in employment participation, especially in certain parts of the country
  • the demand for higher skills to maintain the economic recovery, and
  • how to establish a long-term base to tackle future challenges of demographic and economic change.

The Intergenerational Report has spelled out a stark challenge. Between now and 2050, the number of 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 in itself…

Add to that the resources boom, climate change and demand for health and aged care and you can see why lifting productivity and participation are critical to meeting, our future challenges.

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.

But skills acquisition takes time—more so in an increasingly knowledge-based economy, where the demand for lower skilled workers continues to decline and demand for higher skills and professional qualifications continues to rise.

Universities and long term skills need

An important long term commitment made by the Gillard Government to meet the demand for higher qualifications has been the decision to fund a demand-driven system of allocating Commonwealth funded university places.In 2010, the cap on over-enrolment was raised from 5 to 10 per cent. The cap will be removed completely in 2012. The demand driven funding system from 2012 will provide further capacity for growth, ensuring we help meet demand for university graduates and provide more access to students from disadvantaged back grounds.

Partnering with Industry

Of course we are also working closely with business, Industry Skills Councils, unions and training providers to address the twin challenges of persistent regional unemployment and potential skills shortages.

The cornerstone of this agenda is the Skills for Sustainable Growth package outlined in this year’s Budget. It targets critical areas of skills demand such as the resource construction and renewable sector and aims to create employment and training opportunities for all Australians.

Key to this package is its design.

Up-skilling workers and job seekers

Our $200 million Critical Skills Investment Fund is a joint investment by industry and government and is as flexible as possible to encourage industry led solutions.

We expect the fund to deliver up to 39,000 new training places over four years. It will be used to up-skill workers and train job seekers for the resources, construction, renewable energy and infrastructure sectors.

The Fund can also be used to train mature-age tradespeople to move into new roles as supervisors, mentors or trainers to help further develop our skills base.

Apprenticeships

The package also addresses the urgent need to train more apprentices. One of the things that concerned me most last year was the disproportionate impact of the downturn on apprenticeship commencements.

Last year the Housing Industry Association said more than 4,000 apprentices in the construction trades alone were laid off across Australia. Commencements in the traditional trades plummeted by around 25 per cent.

When we went back and looked at the figures from the 1990s recession, we found commencements dropped by a similar figure. What was even more alarming is we found it took over 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 and this played a role in the skills shortages we faced prior to the GFC.

So that’s why we listened and worked with industry groups and put together Apprentice Kickstart. We tripled the first year bonus for taking on a traditional trades apprentices and set ourselves a target of 21,000 apprentices over summer.

It has worked a treat. Apprentice Kickstart surpassed the target and has supported 25,800 new apprenticeships. A remarkable result that means within two years we’ve recovered the apprenticeships to around pre-recession levels.

But to meet the growing demands of business, we can’t stop there, we need to train more apprentices.

Under the Skills for Recovery package, we extended Apprentice Kickstart payments for small and medium-size enterprises and group training organisations that take on a new young apprentices in the traditional trades.

But we also recognise the need to shift the apprenticeship model—from one based on time served to one based on competency.

The $20 million Smarter Apprenticeships program will promote more flexible apprenticeship models—and accelerated on-the-job training and competency-based apprenticeships.

Foundation Skills

There are also long term and fundamental educational deficits among adult Australians that need to be addressed. Employers in the room will know this from experience.

An estimated 4.5 million people in the Australian workforce have inadequate language, literacy and numeracy skills. Sixty per cent of unemployed Australians currently lack the basic capabilities necessary to pass a Certificate III qualification.

The Australian Industry Group estimate that by raising literacy by 1 per cent productivity will rise by 2.5 per cent and per capita GDP 1.5 per cent.

The Australian Government is acting and is providing funding for an estimated 140,000 people to improve their literacy, numeracy and language skills with a massive boost to language literacy and numeracy places in the recent Budget.

Employment Services

Finally, the government is committed to raising employment participation and making the maximum use of our potential pool of job seekers, particularly disadvantaged job seekers.

During most of the past decade, Australia enjoyed unprecedented economic growth fuelled largely by a resources boom. That growth was most welcome, but there was a flip side to it—it didn’t benefit every Australian.

We know that:

  • the cycle of disadvantage among jobless families continues
  • people with disability and mental illness still face obstacles to participation
  • the employment gap between Indigenous people and other Australians remains large and unacceptable, and
  • long-term and very long-term unemployment remains high, particularly among older Australians.

Of course meeting skills needs must be complemented by engagement with the labour market. Recent reforms made to employment services are absolutely critical for those groups with low rates of workforce participation.

Regarding older workers, the Government’s Productive Ageing Package has provided funds of $43 million for additional training for older workers to skill them to be mentors for young apprentices as well as targeted extra employment service supports and career advice.

The Government’s new employment services, Job Services Australia, places greater financial incentives on securing jobs for disadvantaged job seekers.

I am extremely proud to say it is having a big impact. In its first year of operation, Job Services Australia providers have placed more than 363,000 job seekers into work. On a like-for-like basis, this is a 12 per cent improvement on the first year of the old Job Network. It’s particularly encouraging that of the total Job Services Australia placements, some 34 per cent, were of the most disadvantaged job seekers.

Reflecting this, the news is also promising on the Indigenous employment front. Job placements for Indigenous Australians reached more than 34,000 for the year—that is almost 10 per cent of total placements.

The new uncapped Disability Employment Service is also helping ensure job seekers with disability have greater opportunities to participate in the workforce a key reform given the need to reduce demand on the disability support pension.

Conclusion

Today I have raised just a few of the measures and policies the Australian Government is pursuing to meet the skills needs of business and the economy.

If I had more time I would have gone into the critical reforms taking place at the school level to raise retention and educational levels, our trades training centres in high schools and our strengthened compliance measures for job seekers based on the principles of mutual obligation.

We are working closely with industry, the training and education sector, and employment services to deliver a sustainable and inclusive economy that meets our skilled labour force needs, now and in the future.

I value the contribution of CEDA to the policy debate on Australia’s economy. And as always I welcome your views about how we can do better.

Thank you.

ENDS

For more information

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