Tuesday 26 June 2018, 4:30pm
Note: The following has not been checked against delivery.
I would like to acknowledge the Ngunnawal people as the traditional custodians of the land on which we are meeting, and their elders past and present.
I would like to thank Mr Geoff Crittenden and the team at Weld Australia for inviting me to speak today.
I hope you’ve enjoyed today’s conference.
Occasions such as this are a great opportunity for your sector to come together to discuss the pressing issues of the day, and chart a way forward.
The importance of the manufacturing industry
One of two themes of today’s conference is about the role of Australia’s training system in supporting the future of manufacturing in Australia.
Despite a difficult period for manufacturing, in the face of both domestic and global challenges, it remains a vital part of Australian industry.
You only have to look at the numbers where manufacturing contributes around $100 billion to Australia’s annual GDP.
The manufacturing sector employs around 900,000 Australian workers and contributes over 25 per cent of business expenditure on research and development.
This final figure represents the important role manufacturing plays in the development of new technologies, with a flow-on benefit to the myriad of other industries further along the supply chain.
As new technologies and processes are interwoven into business, new opportunities to improve productivity and competitiveness are created.
Ultimately, manufacturing is a driving force of the future growth of our economy.
We have seen advances in areas like 3D printing, nanotechnology and quantum computing.
While big data and analytics, automation, robotics and biotechnology continue to evolve and drive change in the way we work.
Changes like these have a nearly boundless potential to alter the way we work.
But change isn’t passive and we cannot wait for developments in new technology to benefit our industries.
To take advantage of these changes we need to take action, we need to be prepared.
The Advanced Manufacturing Growth Centre has emphasised that continued growth in the manufacturing sector depends on manufacturers moving up the value chain, and embracing production efficiencies and innovation in order to develop new products and grow their value proposition to customers.
The Growth Centre’s analysis also shows that almost half (47%) of Australia’s manufacturing workforce is employed in jobs related to R&D, design, logistics, and sales and service functions, as opposed to core production roles.
The report finds many firms are diversifying to perform pre-production functions (such as R&D and design) as well as post-production functions in areas like sales and customer service.
For the manufacturing sector to increase its competitiveness, it will need to upgrade its occupational and skill profile to include additional R&D and design workers, high and medium skill production workers and sales and service workers.
A workforce with these skills will need to be trained to make this a reality.
This is where the vocational education and training sector is well placed to assist the workforce in transition.
What I would like to talk about today are the steps we’ve taken to empower industry when it comes to both targeting investment in VET and ensuring training itself is fit for purpose.
By working together we can position Australia’s VET sector to support industry with the skilled workforce it needs.
As I’m sure you’ll be aware, since 2012 apprenticeship numbers have been in decline.
Likewise, state investment in VET has been falling almost across the board.
Under the previous five year National Partnership Agreement, about $1.56 billion from state budgets was cut from VET.
This resulted in skills shortages forcing businesses to recruit from overseas, leaving many Australians on the outer.
The Government is committed to not only arresting this decline, but reversing it through the Skilling Australians Fund (the Fund).
The Fund provides an estimated $1.5 billion from 2017-18 to 2021-22 to grow the number of apprentices and trainees to support Australia’s future productivity, jobs and growth.
This includes provisions for matched funding by the states and territories to ensure achievement of the outcomes of the Fund.
Under the agreement, each state will have the opportunity to develop projects for consideration by the Commonwealth.
Importantly though, the states will need to demonstrate that industry were engaged in the development of these projects.
This is a significant feature of the Fund, because it ensures there is industry buy-in for any project that receives funding.
This way, we know funding will only be directed to where there is a demonstrated need, as identified by industry.
The Government is working to ensure the content of VET is responsive to the needs of industry.
Only through strong engagement with industry can we ensure VET qualifications are current and aligned to skills need.
In 2015 we established the Australian Industry and Skills Committee (AISC) to provide the industry leadership to respond effectively to industry needs.
I’m aware that AISC member Neil Coulson, the Victorian Skills Commissioner, spoke to you today.
This body provides advice to government on industry skill needs and oversees the development of competencies for the VET system.
The AISC itself receives advice from more than 60 Industry Reference Committees (IRC).
These bodies are made up of industry leaders and subject matter experts from a range of sectors – these are people with an intimate knowledge of their sectors, and an understanding of what skill sets a graduate needs to succeed.
The AISC already has a proven track record of responding to industry change as it occurs.
It is driving a range of forward looking cross-industry skills projects, in areas such as big data, supply chain management, automation, digital skills and cyber security.
I don’t need to point out the reliance and relevance of these projects to the manufacturing industry and workforce.
These projects will leverage effort across a range of industry sectors, to capture and ‘codify’ the skills that businesses and students increasingly require in training packages.
This work complements the AISC ‘business as usual’ work that drives the system wide modernisation of vocational competencies.
This work also complements the government training package reform agenda currently underway.
The reform agenda is focused on improvements to the design of qualifications to best equip learners with the skills they need for employment in the context of technological change.
Expanding the focus of training products to include broader skills, such as problem solving, language, numeracy and digital literacy, will enable learners to gain more transferable skills that will allow them to access a broader range of employment and economic opportunities.
The AISC is establishing a new ‘Industry 4.0’ Industry Reference Committee.
This committee is tasked with overseeing efforts across the training system to adopt future-focussed skills in response to greater automation and digitalisation of work practices.
The Industry 4.0 Industry Reference Committee will help future-proof the national training system, respond to innovation and identify skills needs not covered by existing qualifications.
The committee will link to the Prime Minister’s Taskforce on Industry 4.0 and include industry leaders and subject matter experts in areas such as advanced manufacturing, cyber, ICT and transport and logistics.
I encourage you contribute your valuable insights to the work of the committee.
When it comes to advanced manufacturing, another area the Government is focused on is the Naval Shipbuilding program.
This project puts the Industry 4.0 challenges for the VET sector in context and demonstrates the need to ensure that VET is fully engaged in long-term skilling of key infrastructure projects.
The Naval Shipbuilding program puts in place a long-term pipeline of projects, which will be underpinned by a highly skilled workforce.
The newly established Naval Shipbuilding College, and a new Naval Shipbuilding Industry Reference Committee, will ensure qualifications capture the right skills and standard for this industry.
The College will operate under a hub and spoke model, involving education and training providers across Australia.
It will ensure a suitably skilled workforce is available to meet industry’s needs in delivering Australia’s continuous naval shipbuilding programs.
The naval shipbuilding enterprise will support long-term, secure employment for Australian workers.
To support this industry the workforce is expected to grow to around 5000, with more than double this number of workers in sustainment activities and throughout supply chains.
The design and construction of modern naval vessels requires extensive design and engineering.
A naval vessel represents an extremely complex system that demands advanced manufacturing and outfitting techniques, to be successfully completed.
While many of these skills exist in Australia, whether in shipbuilding or adjacent industries, it is critical that the design and construction of Australia’s future fleet is at the cutting edge of technology, materials and production techniques.
The continued evolution of the Australian skilled workforce, and the training system behind it, is critical to the successful delivery of the enhanced naval capability outlined in the 2016 Defence White Paper and the 2017 Naval Shipbuilding Plan.
I consider business and industry to be in partnership with Government.
Positioning VET to support the future of manufacturing means engaging the manufacturing industry at all levels - from training providers to the national governance of the system.
It means supporting apprenticeships through targeted funding; and being willing to embrace innovation in the product and design of the VET system.
We want our students to be equipped with the skills industry needs.
While this is good for business, it’s also good for students, because it means they’re employable and gives them the opportunity to have a long and rewarding career.
The Turnbull Government is committed to continuing to engage with industry, to keep our training relevant and responsive to the realities of the workplace.
I hope todays conference has been a success and I look forward to working with the manufacturing sector in the future as we progress this important work.