Release type: Speech


Second Reading Speech - Skills Australia Bill 2008

House of Representatives, Parliament House, Canberra

It gives me great pleasure to introduce the Skills Australia Bill 2008 as one of the first pieces of legislation to be dealt with by this Parliament.

This is an important piece of legislation.

It will establish Skills Australia, a statutory body that will provide the Government with independent, high quality advice to assist us in targeting government investment in training. It will give the Government advice that we can use to assist businesses and workers across the country.

This legislation is being brought in front of Parliament as a priority because we understand the urgent need to increase the supply of skilled workers, but also to ensure that our investment is targeted to where it is really needed and that the results of this investment are in line with what industry is demanding.

Skills Shortages and Inflation

Skills Australia is an important part of our fight to reduce the skills shortages that have plagued business. Estimates predict that Australia faces a shortage of as many as 240,000 skilled workers by 2016.

The Reserve Bank of Australia warned the Howard/Costello Government that skill shortages were threatening growth and contributing to higher inflation and higher interest rates on more than 20 occasions. The Coalition ignored these warnings and attempted to mask skill shortages by using phrases such as ‘skills needs’ or ‘skills gaps’.

The former Minister for Vocational and Further Education, Andrew Robb, admitted as much last year in an address to an industry group when he said:

"we've got a problem with skill shortage... I mean we knew it was coming but it has arrived with a force...And you know, it's only going to get worse."

The Rudd Labor Government is committed to tackling skill shortages head on.

Skills Australia is a key plank in the Government’s five point plan to fight inflation. This is a plan that addresses both the demand side and supply side pressures on inflation.

Under this plan the Australian Government will firstly ensure that we take the pressure off demand by running a strong budget surplus through fiscal restraint.

Finance Minister Lindsay Tanner has already announced $643 million in savings and the Government is committed to an intensive review of all Government spending to put downward pressure on inflation.

Secondly, in the period ahead the Australian Government will examine all options to provide real incentives to encourage private savings and has already announced new First Home Saver Accounts that will help Australians save a deposit for their first home.

Thirdly, we will be unfolding our plan for tackling chronic skills shortages in the economy. I will talk more about this shortly.

Fourthly, we will provide national leadership to tackle infrastructure bottlenecks through the development of Infrastructure Australia.

And fifthly, we will provide practical ways of helping people re-enter the workforce including removing disincentives to work and helping increase workforce participation.

By exercising fiscal restraint our plan aims to do everything we can to ease the pressure on inflation. Our plan deals with the chronic investment deficits in the capacity side of the economy, particularly investment in skills and infrastructure. The skills agenda is clearly a vital part of this broad whole of government plan.

Skills Australia

Establishing Skills Australia is the first step of many this Government will take as part of a comprehensive approach to overcoming the challenges our nation faces in securing a prosperous, productive future.

Skills Australia will be comprised of seven experts drawn from a range of backgrounds including economics, industry, academia and training providers. It represents an intellectual as well as a financial investment in the skills agenda.

Skills Australia will:

analyse current and emerging skills needs in the Australian economy – both in the broader economy and demands across industry sectors;

assess evidence from commissioned research and industry stakeholders to inform Australia’s workforce development needs;

widely distribute information from research and consultations with stakeholders to enable entrepreneurs, businesses and workers to have the necessary information to inform their training and employment decisions;

provide the Government with recommendations on current and future skills needs to help inform decisions to encourage skills formation and drive ongoing reforms to the education and training sector, including on priorities for the investment of public funds; and

establish and maintain relationships with relevant state bodies and authorities to inform its advice on current and future demand for skills and facilitate alignment of priorities for responses to skills needs.

The Skills Australia legislation establishes the operational arrangements to support the independent body, including provisions relating to conflict of interest issues, arrangements for the appointment and service of members, remuneration of its members, procedures about its conduct and arrangements for working groups to provide it with the capacity to investigate issues deeply, drawing on a wider range of stakeholders.

Skills Australia will provide the Government with advice about areas of acute skills shortage.

Without wishing to pre-empt their advice, there are some clearly identified areas of skills shortages we can anticipate. For example, the mining and construction sectors are likely to be prime candidates.

The mining industry is currently experiencing the highest vacancy to employment ratio, with around 3.7 vacancies for every 100 people employed in the industry. Wages growth is strongest in the mining industry, at 5.4 per cent through the year to the September quarter 2007, compared to 4.2 per cent across all industries.

The construction industry is also experiencing labour constraints. Wages growth in construction is at 4.8 per cent through the year to September 2007. The industry also has the highest proportion of employees with a certificate as their highest qualification, at 45.7 per cent. This means that it will benefit greatly from additional training places at diploma and above levels.

Skills Australia will play a pivotal role in boosting productivity and participation in the Australian economy by providing high quality advice to the Government. This will ensure that policies can be directed towards closing the skills gap – the gap between the demand for and supply of skilled workers.

New Training Places

Our Skilling Australia for the Future policy will increase and deepen the skills capacity of the Australian workforce and ensure demand for skills and training is matched. The Rudd Labor Government’s plan for our future skilled workforce will close the skills gap in the Australian economy in three key ways:

Firstly, by funding an additional 450,000 training places over the next four years.

This Government will take the advice of the Reserve Bank of Australia seriously by acting with urgency to make 20,000 of these new training places available from April 2008. These initial places will be directed to those outside the workforce and will help many Australians gain employment and stimulate workforce participation rates.

Higher Level Skills

Secondly, we will ensure that most of the 450,000 places lead to a higher level qualification, such as at the Certificate III level or above.

The new places will offer high-quality training opportunities which better suit the needs of our economy in the future. In an increasingly globalised world, we need to increase not only the number of Australians with skills and qualifications, but also the depth of skills in our workforce if we are to drive up productivity and compete internationally.

The Business Council of Australia estimates that nearly half of the qualifications needed to meet the predicted demand for skilled workers over the next decade will need to be at Certificate III level or above.

The Role of Industry

Thirdly, and most importantly, we are placing industry demand at the heart of the skills training system.

Part of the problem in increasing our national skill levels has been that training has not sufficiently matched industry’s needs. Businesses have not been provided with enough assistance to enable them to diagnose, predict and tailor training to their future workforce needs.

The Government will align skills development policies and training delivery with industry priorities, and position the training system to better meet the needs of individuals and industry.

New training places under the Skilling Australia for the Future policy will be allocated according to industry demand.

Training organisations must be encouraged to play their part and respond flexibly to increasingly diverse industry and individual needs. Training providers must deliver customised, relevant training that is integrated with, and supported by, workplace learning opportunities, at a time and place that suit business needs.

The Australian Government’s major reforms will help with better diagnosis of Australia’s skills needs and ensure new training places are delivered in a way that meets the needs of industry – helping more people secure meaningful jobs, and helping drive up productivity.

Drawing on the advice of Skills Australia, strengthened Industry Skills Councils will connect employers to the new training places. Industry Skills Councils will work with employers to identify their skills needs and match those needs with nationally accredited training.

Industry Skills Councils will also work with Employment Service Providers to give people outside the workforce access to training which matches industry and employers’ needs. Australia’s training system must shift to a system that is driven by, and which responds to, the needs of business, industry and the economy.

More than one-third of the additional 450,000 training places will be allocated to people currently outside or marginally attached to the workforce, to equip them with the skills they need to gain employment. The remaining places will be targeted at training people who are currently employed but who need to upgrade their skills.

Skilling Australia for the Future will also support up to 65,000 apprenticeships over the next four years.

A Cooperative Approach

The Rudd Labor Government is also committed to progressing the national skills agenda through the Council of Australian Governments.

Through COAG all governments in Australia agreed to work together to increase the productive capacity of the economy, address inflationary pressures and deliver higher quality services to the community.

Building on the work of COAG, my Department has begin discussions with State and Territory systems to ensure close coordination between governments in planning for and funding growth in training and skills development. It is only with a long term productivity agenda that we can hope to achieve simultaneously high economic growth, low unemployment and low inflation.

There are many shared and real benefits to be achieved by working together. We can expect a better return on publicly funded training investment. We can also increase the capacity of enterprises to adopt high-performance work practices that increase productivity through supporting their employees to realise their potential.

The Skills Australia Bill is the first element of the Australian Government’s policy framework to fight inflation by addressing skill shortages. We are "Skilling Australia for the Future". It is a challenging plan that requires all parties to make an active contribution.

It is only with all stakeholders actively engaged in the skills agenda that we can focus on our outcomes – to increase the productive capacity of the economy through a more highly-skilled workforce. The result will be an Australia where the career aspirations of individuals are recognised, nurtured and rewarded.

I commend the Bill to the House.Thank you.