Andrew Southcott (Boothby, Liberal Party, Shadow Minister for Employment Participation and Apprenticeships and Training) Share this | Hansard source

Many factors have contributed to Australia’s current skill shortages. It is the result of trade training or technical education being talked down over the past 20 to 30 years, leading to a perception in the community that trade training is a second-best option to a university education. It is due to 16 years of uninterrupted strong growth in the economy and, as a consequence, strong jobs growth. We have an unemployment rate now at 4.1 per cent, the lowest since November 1974, and a growing workforce with growth in part-time jobs particularly strong. Some of the shortages are due to where we are in the business cycle. In its 2002 report Nature and causes of skill shortages: Reflections from the Commonwealth National Industry Skills Initiative Working Groups the then Department of Education, Science and Training, looking back over 20 years of skills needs, found that shortages in some areas, such as the construction trades and metal trades were evident at the peak of the business cycle whereas shortages in other areas, such as chefs and pastry cooks, have been widespread for most of the last 20 years. In other words, it is where we are in the business cycle.

The economy has been expanding for 16 years, and it is worth pointing out that in the most recent recession in the early 1990s there were no skill shortages because there was massive unemployment and almost a million people were out of work back then. However, Labor claim that skills shortages in Australia are a direct result of the former government’s neglect of the vocational education and training sector. This is simply not true. It is due to a strongly growing economy over 16 years and, as a consequence, strong jobs growth. In 1996, $1 billion was allocated to the vocational education and training sector. In 2007-08 the former government allocated $2.9 billion to the VET sector, an increase in real terms of 97 per cent. In total, the former government invested $24 billion in skills and training over 11½ years.

In 1996, 30,000 apprentices on average were completing apprenticeships and only 16,000 people over the age of 25 were undertaking one. Compare that to now. Over the last four years we have seen 544,000 apprentices completing an apprenticeship. In 2006 we had over 142,000 people complete an apprenticeship and we now have 160,000 people over the age of 25 currently undertaking an apprenticeship—that is a tenfold increase for mature age apprentices since 1996. We have also seen strong growth in recent years in traditional trade apprenticeships.

By comparison, and despite all their rhetoric about addressing skills shortages, one of the first decisions of the new government has been to scrap incentives for apprenticeships in agriculture and horticulture which provided apprentices with $800 for a tool kit and up to $1,000 to help meet training fees. To meet future skills needs, the former government was establishing 28 Australian technical colleges and had committed during the election that a re-elected coalition government would take that number to 100, at a cost of $2.1 billion. We now have over 2,000 students already receiving high-level training from ATCs—colleges which were opposed by Labor. We forecasted before the election that by next year 10,000 students would be receiving training from Australian technical colleges. Regrettably, these outstanding facilities will be transferred to schools after 2009. In addition to the technical colleges, we invested profoundly in work skill vouchers in order to meet popular demand. We pushed for more autonomy within the TAFE system and we were committed to supporting apprentices throughout their training because we believe there is more to skills and training than just providing training places. Most apprentices receive low wages, particularly during their first two years. That is why we introduced the Tools for Your Trade incentives, Commonwealth trade learning scholarships, Apprenticeship Wage Top-Up, training free vouchers and the living away from home allowance, which we extended to school based apprentices in October 2007.

The bill we are now debating, the Skills Australia Bill 2008, provides for the establishment of Skills Australia. The Rudd government have said that they will invest in additional training places and introduce an advisory board to tell them where these additional places should go. Skills Australia, an independent statutory body that will provide advice to the government on current and future demand for skills and training, will be created by this bill.

We are told this body will provide advice to the government on where to allocate the additional training places promised in Labor’s election policy document Skilling Australia for the future. It is expected that it will collect information and put together data on Australia’s current and future skills needs. There is nothing new about this. This function was done by the Australian National Training Authority. It is now being done by the National Industry Skills Committee and by the Department of Education, Employment and Workplace Relations. This is another of Labor’s boards that were announced during the election campaign to give them, on last count, 81 new bureaucracies.

The seven-member board which will make up Skills Australia will be appointed by the Minister for Education and Minister for Employment and Workplace Relations. To be appointed to the board, members must have between them experience in academia, in the provision of education and training and in economics and industry. However, despite this, who exactly will sit on the board is unclear. While we support the introduction of Skills Australia, its success will rely heavily on the people who sit on the board. Labor continues to stay quiet about who will be on the board.

The Australian Chamber of Commerce and Industry have called for the chair of the board to have an industry background. Again, there has been no response from Labor. The coalition believes it is critical that the new structure envisaged by Labor has strong business input at all levels. The first concern is that, unfortunately, there is inadequate business input in the proposed model outlined in Labor’s policy. The second concern is that the establishment of Skills Australia will create a second advisory body to advise the government on future workforce needs. Currently, there is the National Industry Skills Committee and also, as I said, DEEWR. They both currently perform this function. While Labor is putting a lot of faith in Skills Australia, it is merely a third source of advice for the government on where to allocate training places.

A case in point is that 20,000 training places have been allocated to begin on 1 April. Where these training places are to be allocated was not determined by Skills Australia; it was determined by the National Industry Skills Committee or by the Department of Education, Employment and Workplace Relations itself. Skills Australia is expected to provide advice to the government as to where the additional training places promised by Labor—that is, the additional 450,000 training places over the next four years—should go. This process relates only to these additional places. The arrangements under the 2005-08 Commonwealth-State Agreement for Skilling Australia’s Workforce will not be affected, including the functions of the National Industry Skills Committee. Under that agreement, the National Industry Skills Committee provides advice to the ministerial council on issues such as workforce planning and future training priorities within the Department of Education, Employment and Workplace Relations. The opposition would like to know what the relationship is between Skills Australia and the National Industry Skills Committee. What are the differences between Skills Australia and the National Industry Skills Committee? What will Skills Australia be doing that is not currently performed by the National Industry Skills Committee?

If Labor is serious about reducing duplication and reducing government spending then it should guarantee that Skills Australia and the National Industry Skills Committee will not be undertaking similar duties, duplicating work and research and thus wasting taxpayers’ money. Another concern is that labour forecasting is an imperfect science. Labor is putting enormous faith in the capacity of Skills Australia to forecast future skills needs.

In the Australian on 12 December, Gavin Moodie pointed out that ‘the experience of labour market forecasting has been poor. Anticipating future skills shortages is not easy.’ In fact, Mr Moodie stated that there is no record of any country successfully anticipating future skills needs.

In addition, the opposition has concerns about Labor’s centralised approach. We are told that, with Skills Australia’s advice on which industries are experiencing skills shortages, the government will allocate places directly to those sectors. This will work by the government allocating the additional places, on the advice of Skills Australia, to the industry skills councils, who will allocate the places to employers in those sectors experiencing skills shortages via a tender process and will set up training packages for training providers. In other words, instead of allocating places according to demand from the workforce—that is, where individuals themselves would like to train—the places will be allocated centrally by the minister. This puts enormous power in the hands of the Minister for Education and Minister for Employment and Workplace Relations. It concentrates unprecedented power in the office of the Deputy Prime Minister.

Labor have stated that this model is a demand-side approach. It is nothing of the sort. What they are doing is replacing a market based demand-side policy—the Australian skills vouchers—with a central planning solution where supply is provided by industry skills councils.

In an article in Campus Review entitled ‘Out in the cold’, Amy Owens, a former TAFE manager, had this to say about Labor’s policy:

... these arrangements are predicated on an unprecedented degree of centralised control over the distribution of training effort. They bypass the states and territories, current “user choice” mechanisms and other direct client-provider training transactions, and institutionalise Commonwealth controlled entities as the sole brokers of relations between employers and training providers.

Industry skills councils are bodies which provide training packages. There is considerable concern about the capacity of industry skills councils to deliver these places while focusing on the development of training packages.

A further concern the opposition has is that Labor have to realise that if their intention is to address skills shortages in certain sectors then providing training places has to be met with incentives to enter these particular sectors. If prospective students do not find a particular sector attractive then they will not enter that sector. As one columnist said:

… prospective students will choose to do something else rather than fill empty places in engineering, education and nursing if they don’t find them attractive.

People study what they want to and undertake vocational training in an industry they want to work in. People will follow their dream and find a career which suits their background and interests. If young students do not want to study science at university then they won’t. If they do not want to be a teacher, an accountant, a carpenter, a plumber, an electrician or a mechanic then they won’t. We can encourage people and provide incentives to alleviate the concerns that prospective students may have about undertaking a trade apprenticeship, such as the low apprenticeship wages they face in the first two years of training.

In fact, as a direct result of that concern we introduced a tax-free payment of $1,000 per year for students in the first two years of an apprenticeship in an area of skills shortages. In 2005 we introduced the Tools for Your Trade incentives, providing $800 tool kits to people undertaking an apprenticeship in an industry experiencing skills shortages. Up to 34,000 apprentices were able to receive tool kits each year—although not apprentices in agriculture or horticulture in rural areas—which is more than the number of completed apprenticeships in the last year of the former Labor government. In 2007 we extended that offer to people taking up training in agricultural and horticultural industries and provided them with up to $1,000 to pay for their training fees. Labor have now scrapped this initiative.

Here is another concern. Labor have announced a five-point approach to reduce pressure on inflation. Addressing bottlenecks and constraints in the economy was done by the previous government and it makes good public policy sense. However, sometimes I get the feeling that the left hand does not know what the right hand is doing. Case in point: the Minister for Finance and Deregulation is scrapping incentives for apprentices in the areas of agriculture and horticulture while the Minister for Education is proposing 60,000 additional apprentices over the next four years. It is great to have a plan to deal with inflation, and it is great to have five points, but you have to make sure that there is not an internal contradiction within those five points. It is always good for the left hand to know what the right hand is doing.

While the opposition offers qualified support for Skills Australia, we do not agree that the establishment should come at the expense of important incentive packages. If Labor do not support apprenticeship places with extra incentives then we will end up with a whole lot of research on where we have skills shortages but we will not have any students undertaking the training, because they will not be able to afford to pay their training fees or get a tool kit. There has been a shortage of chefs and pastry chefs for 20 years, and there are much more fundamental problems than simply providing the training places. While it is good in principle to allocate additional training places, it does not mean much if the people cannot afford to pay their training fees or cannot complete their apprenticeships due to financial hardship.

We also introduced a living away from home allowance for those who had to move away from home to complete their training. We extended that last year so that school based apprentices could receive this support. That is another thing that has been scrapped by the minister for finance’s razor gang cuts of February: Labor did not believe that school based apprentices required support and have scrapped that initiative as well. While it is good in principle to allocate additional training places, it does not mean a lot if secondary students cannot afford to move away from home to complete their training.

To encourage people to take up additional places, we also need to raise the perception of trade training. An apprenticeship should be, and needs to be, seen as important and as prized as a university degree. The former government’s Australian technical colleges were part of a longer plan to raise the prestige of trade training. Labor’s trade-training centres for all secondary schools will do nothing to raise the prestige of trade training—in fact, if anything they may do the opposite. The introduction of FEE-HELP into the VET industry was also part of this process to remove the barriers for people who want to upgrade their qualifications or take a higher VET qualification by attending a full-fee course. Labor are talking about introducing these places into the VET sector, but they are yet to provide us with any detail on how it will work in practice. For example: how will TAFE and the registered training organisations cope with the additional places?

We wanted to see greater autonomy given to TAFEs, to the level enjoyed by universities. With greater autonomy, TAFEs could respond to emerging labour needs much better than any politician can. If Labor really want to address skills shortages then they should not rely on these additional places and Skills Australia alone. The point is this: we offer qualified support for the establishment of Skills Australia, we support the extra training places and we agree with competitive tendering in the allocation of packages. But this has all been funded through the scrapping of the popular work skills voucher program. We are concerned about Labor’s approach of scrapping the work skills vouchers, which allow people to take up the training that they believe will benefit them in the courses they would like to do.

Workforce planning is difficult. When Labor were last in government they relied heavily on the Bureau of Labour Market Research. It failed to anticipate many workforce shortages. Their proposed model is a top-down approach which does not allow local TAFEs or registered training organisations to respond to local emerging needs. It has no way of responding as to where individuals would like to train themselves. The idea of Skills Australia is not a bad one, but our concerns are that under Labor’s proposed model there is insufficient input from business, who will be providing these future jobs, and that we have moved from a more responsive, demand-side approach to one where the supply of training places will be allocated in Minister Gillard’s surplus office.

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