Release type: Speech

Date:

Australian Council for Private Education and Training (ACPET) 2008 National Conference

Australian Council for Private Education and Training (ACPET) 2008 National Conference Hobart,29 August 2008

ACKNOWLEDGEMENTS

Thank you Julie [Moss, Chair of ACPET] and thank you to ACPET for giving me this opportunity to take part in your conference discussions.

I want to start by acknowledging the traditional owners of the land on which we meet, the Mouheneener People.

ECONOMIC CHANGE REQUIRES A NEW ERA OF REFORM

Today I want to talk about something very important to Tasmania, the Australian people, our economy and everyone here: the need to modernize, expand and strengthen Australia’s vocational education and training industry.

More than two decades ago now Australia under the Hawke Labor Government embarked on a major reform of our education and training system.

All of us here would be familiar with the scale and nature of those reforms. And indeed some of you will be here because of them.

Between 1984 and 1992:

  • year-12 retention were increased by 110 percent;
  • university enrolments were increased by 57 percent; and
  • TAFE enrolments went up by more than 25 percent.

We moved from a minority to a mass higher education and training system in less than a decade.

And many of the innovations we introduced like the Higher Education Contribution Scheme became models for change around the world.

Those reforms were needed to cope with a rapidly changing economic and social landscape created by new technological developments and new demands for educational opportunities. And in the process they created one of Australia’s largest export industries.

The change that made those reforms inescapable hasn’t stopped. It has intensified and sped up.

And the failure to keep pace with that change in recent years has had a severe negative effect on our economy, leading to skill shortages and inflationary pressures that have led to interest rate rises and held back growth.

Workforce participation rates have stagnated, acting as a drag on national productivity.

Employers now cite lack of access to skilled workers as a significant barrier to competitiveness and success.

In the face of this level of change, we need to once again embrace reform and expansion.

VET IS CENTRAL TO THE EDUCATION REVOLUTION

In opposition and now in government, Kevin Rudd and I have been addressing this through our call for an Education Revolution.

To bring that revolution about we’re making large scale investments in early childhood education, schools and universities.

But the revolution won’t succeed unless we make a corresponding effort in vocational education and training.

We have to increase VET completions and modernize and improve the quality of the courses we offer if we are to give our people the depth and breadth of skills they need for a 21st century economy and reach our goal of making Australia one of the most highly educated and trained nations on earth

There’s still a long way to go.

ABS 2007 Survey of Education and Work tells us that over 7 million Australians aged 15-64 now hold no post-school qualification. We have to significantly reduce that number over the next decade.

And research by the Centre for Economics of Education and Training suggests that on current projections Australia will be short of around 240,000 employees with VET qualifications in 2016. We will need to quadruple the number of advanced diplomas and double the number of diplomas to meet projected demands.

We also have to overcome shortages for skilled employees now exist in areas like ICT, tourism, leisure, building and construction, the metal trades and engineering.

And we have to re-tool and train our own VET workforce to build capacity in emerging skill areas. Just like school and university education before them VET is being transformed by the continuing evolution of a knowledge-based economy. The demand for higher-level skills continues to increase. Almost no area of employment is immune. From warehousing to food production and transport, Australian workers now need basic and sometimes mid- to high-range skills in fields like ICT, biotechnology and environmental sustainability. Modernization is needed.

The stakes are high.

They’re high for individuals because these days to get a good job and avoid unemployment young people increasingly need a post-school qualification at Certificate III or above. We know for instance, that having post-school VET qualifications reduces a young person’s likelihood of being unemployed by an average of 40 percent.

And they’re high for our economy because without skills Australia will lose part of its competitive advantage in attracting new investment and growth. We’ve been ahead of our neighboring countries in terms of skills for a long time, but with their massive investments in education and training, the countries of the Asia-Pacific region are catching up.

SKILLING AUSTRALIA FOR THE FUTURE

The Government has responded to this situation by making the future of the vocational education and training system a central element of the national reform agenda of the Council of Australian Governments.

To guide us, CoAG has set exacting targets. By 2020 we aim to:

  • halve the proportion of 20-to-64 years olds without Certificate III or higher qualifications; and
  • double the number of diploma and advanced diploma completions.

Our starting point must be to come to grips with the patterns of change in the economy so we can pinpoint where the new jobs are emerging.

To guide us through this we’ve established a new body, Skills Australia, and reinvigorated existing Industry Skills Councils.

And I want to thank ACPET for your important collaboration with my Department, with the Industry Skills Councils and with State and Territory governments to help us define where the most important skills challenges are.

To help us meet the demand identified through this process, we’re significantly increasing the nation’s trade training effort, including:

  • $2.5 billion to establish Trade Training Centres in our secondary schools, with facilities that meet industry standards in both traditional and emerging industries; and,
  • 630 000 new training places, including 85 000 new apprenticeships, with the majority at the crucial Certificate III and higher levels.

The creation of these places is now well under way.

Since 1 April 2008 more than 42 000 job seekers have enrolled in the program, with more than 29 000 having commenced training. There are currently 587 Registered Training Organisations participating in Phase II of the job seeker element of the program, delivering more than 3 500 qualifications from Certificate II to Diploma level.

SKILLING TASMANIA FOR THE FUTURE

Here in Tasmania 1179 people have enrolled in qualifications such as Security Operations, Community Services Support Work and Hospitality (Kitchen Operations), provided by 18 Registered Training Organisations in 47 training sites.

Today I am pleased to announce that last week agreement was reached between the Commonwealth and the Tasmanian Government to deliver the first round of training places for existing workers.

This pilot phase will involve a joint investment of more than one and a quarter million dollars [$1.259 million] over the next six months to provide workers in Tasmania with the chance to upgrade their skills and gain higher level qualifications.

From August to December, 458 training places will be available to Tasmanian workers at the Certificate III to Advanced Diploma levels for existing workers in a range of industries, including skill shortage areas of forestry, building and construction, electrotechnology, manufacturing, community services and hospitality.

I congratulate the Tasmanian Government as the second state to sign up to deliver the places under the program and look forward to finalizing agreements with other states and territories in the coming weeks.

VET REFORM IS CRUCIAL

Whilst the Productivity Places Program will provide a much needed injection of skills with 630 000 new training, these alone won’t be sufficient to ensure Australia has the vocational skills base it needs into the future.

We also have to ensure our public and private training providers are supported by the right policy framework.

The Rudd Government is committed to reforming the nation’s training system to drive productivity growth, increase workforce participation and address skills shortages.

The Rudd Government is committed to establishing a flexible national training system that has meeting the needs of industry and students as its central priority.

Only by embracing innovation and reform will we develop the new infrastructure and capabilities required for economic security and continued prosperity.

Policy makers across the country are now embracing reform of the vocational education and training sector.

Earlier this week the Victorian Government announced an ambitious package of reforms aimed at dramatically increasing the number of people able to access training and upgrade their skills.

The Commonwealth will support all jurisdictions that pursue reform in vocational education and training.

There are a number of different ways that the training sector can be reformed to meet the challenges of the future and the needs of individuals, industry and therefore the modern economy.

The Commonwealth will support Victoria in the introduction of an Income Contingent Loan (ICL) scheme for government subsidised diploma and advanced diploma students. The Commonwealth will also meet the administrative costs of the scheme and not charge a loan fee to students.

This will increase access for those without the financial resources, boost the quality of courses and expand the number of places for students.

The Commonwealth will support all jurisdictions that pursue reform in vocational education and training and is working cooperatively with State and Territory Governments through the Council of Australian Governments to deliver solutions to the nation's skills shortage.

In COAG’s view, improving VET provision requires meeting 6 broad criteria:

  1. Allowing student and employer demand to drive changes in course provision.
  2. Improving competition between providers to enable those best able to meet demand to do so.
  3. Providing greater transparency to allow students to make informed choices and governments to make better investment decisions.
  4. Encouraging public and private investment though appropriate regulatory change, tax policy, employment programs and financial incentives.
  5. Providing quality guarantees through an appropriate framework. In this case the Australian Training Quality Framework. And…
  6. Ensuring that this does not create financial barriers to participation and that major equity concerns are met.

In other words, we need to establish a properly designed market that will allocate resources in the most intelligent way but without ignoring important quality and equity issues.

Thanks to the existence of a large pool of high quality private providers Australia already has a market for vocational training provision.

The point is to make it work at an optimal level by combining a strong institutional framework with fully empowered and informed consumers and measures to prevent the disadvantaged from being excluded.

Attempts by previous governments to create a training market have not been fully successful because they neglected to design an adequate market structure. Instead they focused almost solely on subsidizing private providers at the expense of universal service provision.

This did not solve quality or equity problems or create a market with long-term viability.

COAG’s reform approach will meet those needs.

The whole community stands to gain from such improvements, especially students, because increased provision of higher level qualifications will mean more secure jobs and higher future wages.

Whilst in the Victorian example fees for some students will increase, this has to be seen against two important factors.

The first is the increasing returns now available to skilled workers. We know from the employment pages that workers with VET qualifications in key industry areas can now expect to earn high wages, in many instances rivaling those with university degrees.

And research suggests that the higher the VET qualification someone obtains the higher their expected return. For instance, a certificate III or IV qualification increases expected earnings by 20 percent and a diploma or advanced diploma increases it by 37 percent.

And the second is that Commonwealth assistance through the provision of an Income Contingent Loan scheme for diploma and advanced diploma students, with all administrative costs met by the Commonwealth, will ensure that no one is denied a post-compulsory VET place because they don’t have the ability to pay up-front fees.

I know some oppose some of these changes. But in my view they will create a far stronger system that will reward quality service providers, benefit students and enable the VET system to better reward talented teaching and training staff.

Nobody, whether they are TAFE or private owners, administrators, staff or students has anything to fear.

In fact, there is much to gain. These reforms to VET are merely the start of the Rudd Government’s plans to expand and improve VET in Australia.

EIF – MODERNIZING VET INFRASTRUCTURE

They will be complemented by increasing places and increased investment in innovation from the Commonwealth’s new $11 billion Education Investment Fund.

The EIF will fund new capital expenditure as well as renewal and refurbishment of existing facilities.

We expect it to help transform the VET sector and increase its capacity to meet the skill needs of Australians into the next decade.

CONCLUSION

The Government believes that a human capital revolution is needed to equip Australia for the challenges of a fast-changing, knowledge-based global economy.

Only by embracing innovation and reform, and matching this with increased public and private investment will we develop the new infrastructure and capabilities required for success.

These improvements must be applied right across the education system, including in VET.

And they must apply to all providers whether public or private, large or small.

The Government’s investments to date have started to make a difference. But they are only a start. Much more will be achieved over the coming years as new places come online, capital investments are made and the benefits of a more contestable VET system flow through.

It promises a brighter, stronger future for VET, its workforce and most importantly its students.

And I look forward to working with the private providers to make it happen.

Thank you.