Chamber of Commerce and Industry Western Australia lunch

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

Acknowledgments

I pay my respects to the Noongar people, the traditional owners of the land we are meeting on.

Good afternoon. It’s a pleasure to be back here at the Chamber.

Introduction

We meet here today to discuss an issue of great importance for the country and for the West: how to ensure Australians are able to share in the economic benefits of the next mining boom.

There are tremendous opportunities ahead of us during this period of economic growth but we must not become complacent, especially here in Western Australia, where the investment in the resource sector is most apparent.

We have firsthand experience that success creates its own challenges—and the most obvious challenge confronting us is the need to ensure we have enough skilled workers to meet growing demand.

This is a great challenge to have, particularly when we compare our experience to those of our counterparts in the United States and Europe who are battling unemployment rates in excess of nine per cent.

But it is a real challenge that we must address.

That’s why last month’s federal Budget, invested more than $3 billion in building the skills the economy needs.

At the heart of this investment is a new approach to training through the new National Workforce Development Fund.

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

It builds on the success of the Enterprise Based Productivity Places Program which was implemented in 2010 and the Critical Skills Investment Fund which will respond to demand for skilled workers in the resources, construction, infrastructure and renewable energy industry sectors.

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.

A new independent body – the National Workforce and Productivity Agency — will be formed by expanding the roles and functions of Skills Australia with an additional $25 million in funding.Through the Agency, industry will have the opportunity to set the direction for future training in Australia.

Employers will be able to seek support to help purchase the training they need in the format that best suits their business to deliver valuable qualifications to their employees.

We are committed to working in partnership with industry to deliver the skilled workers we need and the Fund will be critical to achieving this goal.

Today I want to talk more specifically about one important aspect of the skills challenge - Australian Apprenticeships.

As you know, apprenticeships are an important training vehicle for the Australian labour force in providing the necessary skills to drive the economy. For decades, the apprenticeship system has been a pathway into rewarding jobs for many Australians.

But like all systems, Australian Apprenticeships needs to be reformed and modernised to suit the needs of today and to prepare for the future.

Reform is needed because the evidence shows that the system isn’t keeping up. Today

  • Some 60 occupations remain on the National Skills Needs List—we have to fill them.
  • The resources sector alone will be short around 36 000 tradespeople by 2015—we have to produce them.
  • Just over half of all apprentices and trainees fail to complete their qualifications—we have to get that rate down.

I could quote many more statistics at you, referenced by the Expert Panel which undertook a review of Australian Apprenticeships and by the National Resources Sector Employment Taskforce.

But I suspect that you are all aware of implications of these statistics first hand:

  • School leavers are coming to you lacking in basic employment skills…
  • Apprentices are pulling out after less than a year, leaving you out-of-pocket and out of time…
  • Apprenticeships are taking too long to complete and their training does not deliver the actual skills needed for your business…
  • …this all leads to jobs you can’t fill, contracts you can’t bid for, and opportunities gone begging.

These problems necessitate important but ultimately second-best solutions, like increasing short-term skilled migration.

I say second-best not because I’m against skilled migration. I’m not. But because getting more Australians, especially young people, to achieve qualifications and job readiness will also help address those social problems that stem from long term unemployment and impose huge and unnecessary burdens on both government spending, and the community at large.

But the good news is, there are people doing something about it.

Addressing the problems

While it’s true some employers haven’t been pulling their weight when it comes to employing apprentices, this is changing.

I note that CCIWA is taking on 800 apprentices and trainees through its own registered training provider and actively participating in the apprenticeship reform process.

Companies big and small across the country, but particularly here in the West, have been vocal in their calls for improvements to resource sector apprentice preparation, recruitment and training.

And the Government has been listening.

Last year we set up the Apprenticeships for the 21st Century Expert Panel to advise us on reform options for the system.

Its report, released in February, pointed out that while the system isn’t fundamentally broken, wide-ranging reform is needed to ensure Australian Apprenticeships can meet the needs of our 21st century economy.

The report found the system is too complex, that completion rates are unacceptably low, and that the system is insufficiently responsive to industry’s need for new skills.

We have to address these problems, and we are.

The importance of skills to our nation

But let’s for a moment remind ourselves why this is fundamentally important.

In short, addressing the skills problem allows us the opportunity to ensure the benefits of this record investment are shared by more Australians.

It will help us address the problems associated with our “patchwork” or “two-speed” economy by matching skills supply with skills demand and providing opportunities to more Australians.

We are all aware of the huge gaps persisting in skills attainment and employment between Indigenous and non-Indigenous Australians. Skills should be seen as an important part of the reconciliation process. By skilling more Indigenous Australians we can empower them socially and economically and work towards ending the disparity between Indigenous and non-Indigenous Australians.

The fundamental importance of having skills is something we can all understand, not just as economists and employers, but as individuals, and especially as parents who want to see our children develop and prosper.

Giving people skills is about giving them more than job opportunities - it’s about giving people purpose, self-confidence and independence.

And in an economy that requires people to be more flexible and more mobile, and in which unskilled jobs are fast disappearing, it’s the only real guarantee of economic security.

The Government is determined to ensure that we meet our social contract with the Australian people. That we enable Australians from all walks of life to share in our opportunities on offer in our strengthening economy.

Our achievements to date

So what have we achieved and where to next?

Since 2007 the incentives paid by this Federal Government for apprenticeships have almost doubled and the number of apprentices in training has risen from 410, 000 to 440, 700.

And we achieved this despite the initial fall in apprenticeship commencements at the height of the Global Financial Crisis.

The latest figures released by the National Centre for Vocational Education Research show there was a 6.3 per cent increase in the number of Australian Apprenticeships and traineeships in the last year alone, and a 15.7 per cent increase in the number of commencements over the same period.

We have to keep the momentum going, which we will do by addressing the major challenges to the apprentice system set down by the Expert Panel in its February Report.

I can assure you that this report will not be left on the shelf to gather dust.

The Expert Panel report gives us the opportunity to rethink the Australian Apprenticeships system and change it to ensure that it is simplified and responsive to the needs of industry and the economy.

The report provides an opportunity for overdue change - for lasting reformand the Government intends to pursue this as an ongoing priority.

Last month’s Budget focused efforts on two of the major issues facing the Australian Apprenticeship system, and allocated a total of $201 million to some new solutions.

Lifting the completion rate

The first measure sets out to cut the high apprentice and trainee drop out rate of 52 per cent. I should add that I know there is some controversy around that figure and the reported completion rates in various sectors. I accept that there is far more to the story than one figure, but there is also no denying that we can do more to support apprentices and their employers in their first years.

We know why many young apprentices drop out. Sometimes they’re lured away by more money elsewhere, and sometimes they just change their minds about the choice they have made. But often it’s because they have no source of advice and support, which can lead them to choose the wrong trade or become disheartened about an unsatisfactory workplace.

Mentoring is one of the best ways to address this, and so the Budget allocated around $80 million to provide mentoring assistance for up to 40, 000 eligible Australian Apprentices, over four years. Mentors will be sourced from experienced tradespersons and others who will provide the necessary guidance, assistance and motivation to help apprentices continue their training.

And a further $ 21.5 million will fund the appointment of more than 140 Apprenticeship Advisers who will provide information and advice about which trade is best suited to which applicant.

In both the mentoring and advisory services the Government will be looking to industry for proposals on the delivery of these services. Because industry is well placed to know what support is needed. In many cases such schemes are already being run by industry in isolation. These measures provide an opportunity to grow those schemes and support new ways of delivering these services.

Advancing competency-based apprenticeships

The second reform measure contained in the Budget aims to allow for accelerated apprenticeships underpinned by competency-based rather than time-based apprentice training.

The concept of competency-based training has been widely accepted but insufficiently adopted.

Let me say, I understand the very human desire to keep on with a system that has until recently served us well for many years. But most now recognise the very idea of a four-year indentureship as an anachronism in the fast-turnaround world of today, when people want to get on with their lives and industry needs skilled workers in a hurry.

It’s also not relevant to mature-aged apprentices, who are making up an increasing proportion of the total intake of all Australian Apprentices.

It’s not about cutting corners; it’s about cutting out unnecessary delays; and it’s about focusing on the modern skills that industry needs. Proposals will have to demonstrate that they maintain the quality of training and the qualification gained.

We believe it will ultimately benefit employers, apprentices and the wider economy.

And to speed up the transition to competency-based apprenticeships, the Budget included a $100 million investment in its Accelerated Australian Apprenticeships initiative.

It will be carried out in cooperation with Industry Skills Councils and peak industry bodies who will develop projects tailored to suit specific enterprises in adopting competency-based training that is suitable for them.

This investment follows the Government’s commitment to a ground breaking adult apprenticeship project announced as part of our response to the National Resources Sector Employment Taskforce.

The $4 million project is targeted at recruiting experienced workers, recognising the existing skills they have and training them to complete all the competencies required to obtain a full trade qualification within 18 months.

It’s about saying to existing workers - you’ve got skills, you’ve got experiences that should allow you to progress to tradesman level and take those opportunities that are available in a much quicker time, provided you’ve got the key competencies.

Once again, it’s not about lowering standards, it’s about giving people in the workforce the opportunities.

This project is about making sure that existing employees and workers from across Australia are recruited into the resources sector and construction sector jobs.

Part of a range of initiatives

The reforms outlined in the Budget are of course just two among the many apprenticeship-related initiatives currently under way.

Trades Training Centres in Schools and National Trade Cadetships are preparing school students for entry into the right apprenticeship for them. The Government is interested in getting industry more involved in both, because unless employers have confidence in the training outcomes from these programs they won’t succeed.

The Australian Apprenticeship Access program is making apprenticeships available to Australians from disadvantaged backgrounds, including those at-risk, those who have experienced homelessness and Indigenous students.

The Trades Apprentice Income Bonus is rewarding apprentices who stick with their trade.

And from next year the National Occupational Licensing Scheme will save tradespersons who operate interstate from having to license in more than one jurisdiction - a major new flexibility for the Australian economy.

There will be no levy

Having told you what recommendations of the Expert Panel’s Report we have adopted and are already acting upon, let me reassure you that there is one recommendation we won’t be accepting - the recommendation to impose a levy on employers to fund change of the system.

Not all worthwhile reform requires money to be thrown at it and, as I am sure you are aware, there is a limit to government largesse in this as in any other area.

The Government intends to devote resources where they will provide the most benefit. But we believe the system can be improved without increase to the financial or regulatory burden of employers. It is the Government’s intention to work with industry as partners to bring about worthwhile and sustainable reform.

Conclusion - the way forward on apprenticeship reform

So there is much more to do beyond the measures announced in the Budget.

I have therefore asked my department to embark on a comprehensive consultation process to build on the public submissions provided by stakeholders in response to the Expert Panel Report.

This consultation process will involve meetings with key stakeholders on the way forward for apprenticeship reform.

This is not a Government going through the motions of consultation for the sake of appearance - I hold the view that genuine consultation with those who will be affected by change is the best way to keep reform going.

Our commitment in this can’t be doubted. We believe skills to be the most important economic and social issue of the moment. We made our Budget about it. And we are making it a focus of the rest of this term in office.

And we believe that you, the users of the system, are the ones best placed to provide constructive advice and suggestions on how improvements can best be implemented.

Worthwhile reform is never easy, but the Government is confident that with a positive partnership with industry we will be able to work towards change that will lead to a more streamlined, flexible and responsive Australian Apprenticeship system that will continue to make a major contribution to Australia’s prosperity.

Thank you, and I look forward to working with you to keep the skills agenda going strongly.

For more information

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