Ministers for the Department of Industry and Science
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Address to the National VET Conference

11 September 2014
Brisbane Convention and Exhibition Centre QLD

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Thank you for the welcome and for the opportunity to speak with you today.

Your national conference is being held at a very auspicious time and I hear for the first time the conference has attracted more than 1000 delegates.

I know that Australia has already celebrated National Skills Week, and I joined with the VET sector to launch it here in Brisbane a couple of weeks ago.

But I think Skills Week should have an encore, because the skills and training sector is firmly in the national spotlight this week as the Government is announcing the most significant reforms to the vocational education and training sector in several decades.

I am delighted to take this opportunity today to speak with you about the Government’s second tranche of reforms that complement the changes I announced alongside the Prime Minister earlier this week.

The Australian Government is overhauling the skills and training system, with a package of reforms that elevate trades and vocational education to the centre of Australia’s economy and put the focus squarely on ensuring Australian workers are highly skilled and job-ready.

The Government’s reforms will create a new streamlined and effective system to replace the unwieldy and overly bureaucratic system that has become bogged down in red tape.

The era of training for training’s sake is over. After the churn of numerous Skills Ministers under the former Labor Government, the Commonwealth is proud to be taking an active role in this space.

The most important goal of the skills and training sector is to provide industry with the skilled and productive workers it needs to capitalise on the opportunities of the future and to give young Australians the best opportunity to get a job.

The current system has lost sight of its fundamental purpose of connecting skilled workers with a job.

With job outcomes as a priority and an ever growing mobile workforce I will be working closely with State and Territory Ministers to deliver a truly national training system.

While I recognise that there are varied skills priorities across different regions, if we want a truly national training system which meets the needs of employers, more needs to be done to align what’s currently a fractured system.

There is too much red tape in the sector and the first example that comes to mind relates to apprenticeship centres who spend more than half their time and resources filling out paperwork.

The true success of the VET sector must be measured in how well it connects skilled workers to real jobs, not how much paperwork is completed.

The current ‘sign- up’ culture has seen a churning of people through the system and often left without support once the initial training contract is lodged.

The Australian economy is in transition, moving away from the traditional sectors of heavy manufacturing and commodity-based production.

It will be essential that Australia has a highly-skilled, sophisticated and adaptable workforce with the skills to drive productivity gains and capitalise on new global opportunities.

One of Australia’s greatest strengths is the adaptability and creativity of our workers.  We must use that strength to its full advantage, by restoring pride in the value of a trade or an apprenticeship.

The Australian Government believes trades are on par with a university degree, and both sets of skilled workers will be essential to our future productivity.

The Government will introduce a new Australian Apprenticeship Support Network to replace the existing apprenticeship centre model.

It will be a smarter and outcome-driven way of apprenticeship training with a focus on providing the skills industry needs.

The Australian Government will invest around $200 million per year in the new Australian Apprenticeship Support Network.

The current apprenticeship centres manage the administration of apprenticeships, but they’re willing and ready to shift their focus from administration to higher-value business services.

The new apprenticeship network and upgraded IT system to go with it will remove the requirement for paper-based filing – there are some 3 million paper files currently in storage.

One centre this week even told me they waste money every quarter spraying for paper mites.

The new apprenticeship network will be announced in early 2015 after a competitive tender process is run later this year. Current providers and new businesses are encouraged to tender.

The new arrangements will shift the focus from administration to integrated, client-centred support including:

  • Job-matching of potential apprentices and employers
  • The provision of advice about different training options
  • Personalised mentoring for apprentices identified as needing extra support
  • Guidance to businesses about taking on an apprentice
  • The administration of an apprenticeship including the training contract
  • The administration of apprenticeship payments and employer incentives

Industry will decide the direction of training to ensure Australia’s apprentices and trainees are job ready.

The Government will trial two pilot programmes that will extend the opportunities for acquiring a skill to more young Australians, in particular those in rural and remote Australia and those who have become disengaged from education and training.

The Training for Employment Scholarships programme will provide 7,500 places and target unemployed young people aged 18-24, where an offer of a job is made.

It will be the first of its kind in which the power to choose wholly funded Government training will be in the hands of employers.

The Youth Employment Pathway programme will provide 3,000 training places for disengaged youth under in regional areas.

It will focus on youth aged 15 to 18 by giving community organisations access to training vouchers that can be tailored to meet to need of the individual youth in their service.

These reforms will continue the Australian Government’s focus on building the industries of the future and the highly skilled and innovative workforce needed to compete in global markets.

The need for reform

Australia’s VET system needs reform.

The most telling statistic is that just one in two apprentices completes their training.

Between 2011 and 2013, employer satisfaction with accredited VET system decreased from 84 to 78 per cent.

There has also been a fall in use of the VET system by employers in the same period, from 56 to 52 per cent.

There’s also too much churn and waste in the VET system.

The National Centre for Vocational Education Research estimates that for students beginning their study in 2012, only 36 per cent will complete their qualification, perhaps it’s time to look at allocating a greater percentage of funding to skills sets rather than just full qualifications.

Yet we need more people with skills, with the right skills, to lift productivity.

To address these issues the Government is implementing a package of reforms, and today I am announcing the second tranche of those reforms.

ASQA changes

As I’ve said, but it is worth repeating, the Government believes an apprenticeship or vocational qualification is of equal value as a university degree.

Both skill sets will be essential to ensuring Australia has the most productive and highly skilled workforce to compete in the industries of the future.

Therefore, when we talk about trades and vocational training, we are talking about the foundation of the next wave of development in our economy.

Australia should ensure the highest of standards in our skills and training system, but we must ensure that in delivering sophisticated skills and training, the system isn’t so over-burdened with red tape and bureaucracy that it ends up being counterproductive.

The Government will put in place reforms that will get rid of the excessive red tape for high-performing training providers and let them get on with what it is that they do best – delivering the highest calibre training that meets industry and the economy’s needs.

Quality training speaks for itself.

In such a highly competitive environment, the best way to ensure an RTO delivers high quality training is to let it stand on its reputation – not fill out reams and reams of paperwork and jump through endless hoops.

In recognition of this, under this Government’s reforms, ASQA will more broadly delegate the power for training providers to make decisions about changing the scope of their registration.

At the moment training providers are required to constantly seek approval from ASQA before they offer new courses or make changes to the courses they are already delivering.

The result is an excessive amount of red tape and too much time spent filling out forms instead of filling classrooms or workshops.

Maintaining the highest of standards is non-negotiable and ASQA has a very important and very well-defined role to play.

But to ensure those standards are maintained the regulator’s time and resources will be best spent by dealing with clear cases of breached standards, not micromanaging the delivery of on-the-ground training.

ASQA should be a regulator, not a book keeper.

Equally, the time and resources of high performing training providers will be best spent in getting on with the job.

What this means in practice is that the training providers who have consistently demonstrated the highest of standards and regulatory compliance will no longer have to seek ASQA’s permission to make changes to their registration.

Providers that have consistently demonstrated a high level of regulatory compliance will shortly be contacted and invited to apply for the delegation.

This is an important first step towards a more ‘earned autonomy’ model for regulating the VET sector – and will mean that high performing providers will have less interaction with the regulator.

These are sensible and simple changes which reward high performing providers and show how serious we are about getting rid of the red tape that has burdened our economy.

But let there be no doubt – there is no role in our skills and training system for a lowering of standards or dodgy providers.

We need to deal with poor quality providers, but not at the expense of overburdening everyone else.

As well as dealing with poor quality providers, we also need to deal with brokers of training, that is businesses that are not training providers but who sell training to potential students.

Some brokers, who act unscrupulously, are undermining the reputation of the training system.

That must stop.

We have all heard about brokers who mislead people to get them to sign up for training.  They offer dubious incentives to encourage people to enroll.  They don’t tell people about the debt they are signing up to – or any real information about whether the training will lead to a job.

Some of the outrageous examples that we’ve heard about include nursing home residents being signed up to diploma level courses and incurring thousands of dollars of debt with little capacity to pay it back.

We’ve also heard cases of young people being stopped on the street and offered an iPad to sign up for a course they don’t need.

The Government is determined to stamp this out and we are looking at measures to achieve this.

The new standards make RTOs responsible for the behaviour of any brokers subcontracted by them.

ASQA will therefore be able to take regulatory action against an RTO using a broker, if the broker is breaching these standards.

But this is just a first step. The Government continue to look at further measures to curb any inappropriate behaviour by brokers.

And this may include legislative action if needed.

Moving to a more ‘earned autonomy’ model of regulation

ASQA is now automatically updating training providers’ scope of registration to include any new, equivalent version of a training product they are already registered to deliver.

Providers don’t have to apply to do this – it is automatic.

And, there is no fee.

ASQA has also removed the requirement for a financial viability assessment to be undertaken as part of the re-registration process for existing providers.

ASQA must operate as a modern regulator.

Under the reforms ASQA will be more proactive and provide better information to providers about what they need to do to be compliant.

ASQA will operate more on a risk-based model focusing attention on the poor performing providers and high risk courses and its fees won’t change for the foreseeable future.

We want to move towards an ‘earned-autonomy’ regulatory system for those proven high performing providers and more will be said about these measures in the coming months.

Industry Councils

The fundamental objective of all the reforms we are implementing is to make the skills and training system industry focused and industry led.

The training system must be more effective at matching skilled workers with the jobs that industry needs.

As many you will know, the Government has been engaged in a wide consultation process, meeting with all parts of the VET sector to hear your feedback, in all states and territories of Australia.

We’ve had more than 5000 consultations with industry and stakeholders, through face-to-face meetings, forums and by taking submissions.

Our commitment to consultation isn’t lip service.  The Government is determined to ensure industry has a greater say in our training system.

In our consultations we’ve heard plenty about where the system is going wrong, in terms of excessive regulation and red tape.

But we’ve also heard plenty about the type of skills and training businesses would like to have easy access to.

So the next logical step in improving the system is to get more and better input from businesses not only in how training is delivered, but also what type of training is delivered.

While it is true that industry is already consulted about some of the content of training packages, there is more that can be done.

The important questions that have shaped the new approach include a more thorough consideration of exactly who is industry, how their views ae represented, and how we can deliver the diversity of training they need.

Earlier this week I gave a speech to The Sydney Institute that focused on the way our economy is evolving.

Just like virtually every other developed nation, Australia is experiencing a transition from our traditional heavy manufacturing base to a greater focus on professional services and advanced or technological manufacturing.

In order to establish our place in international markets, Australia must focus on its strengths by developing the key sectors and industries in which we have a competitive edge.

Those include agribusiness, energy, mining technology, medical technology and advanced manufacturing.

A vital component in developing these industries and areas of competitive strength will be to ensure our workforce is equipped with specific skill sets that industry needs.

There can be no more assertions ‘one-size-fits’ all.

Our businesses and industries of the future will be increasingly specialised and focused on niche markets, and the skills required will be equally as specialised.

Therefore it’s time to change the way we develop training packages.

At the end of the current contract period with the 12 Industry Skills Councils,  we will move to a more contestable model for the development and maintenance of training packages – of course the current ISCs are welcome to tender under this new model along with new groups.

There are several ways we could achieve this desired outcome, and in keeping with our approach of full consultation I am interested in hearing your views.

I will release a discussion paper shortly, looking at the processes we currently have and exploring new ways for the future.

Collectively, the Commonwealth and the states fund training by more than $6 billion per year.

Around one-and-a-half million Australians take up those subsidies every year.

There’s a significant investment of public money at stake, as well as a significant investment in the future productivity and prosperity of our economy.

We must ensure both investments are made in the most efficient and effective way.

Industry-driven changes

The bottom line in all of these reforms is to give industry a greater say in the type of training that is delivered and the outcomes of training.

I expect the changes will lead to a more flexible skills and training system in which there is a focus on both skills and skill sets.

Industry must have the freedom to design the type of training they’re after.

If that means training an employee in a full trade or qualification – then so be it.

But it may also mean selecting a few competencies out of a full trade and supporting a worker to upskill with specific skill sets that are required for the job.

From next year, when the unique student identifier comes into place, people will have an online record of all the training they have done and will therefore have greater flexibility and mobility to acquire the skills they need right now and then build on them in the future as the move into new jobs and take up new opportunities.

Additional measures

Industry will have further involvement in other reforms to the sector at a grass roots level.

We are on track to introduce new standards for training providers from January.

Under the new standards, providers will be required not only to engage with industry, but to demonstrate how industry has informed their training and assessment.

In addition, I have established the VET Advisory Board. The five members of the Board bring a depth of experience from across industry.

The Board will provide advice directly to me on priorities for reforming the VET sector, providing a clear avenue for industry to drive VET reform.  

This board is not to be confused with the replacement NSSC whose membership will be agreed between COAG Industry and Skills Council later this year.

I am already taking action to deliver on the six reform objectives we as a group agreed in April at the first COAG meeting.

Conclusion

Australia’s skilled workforce will be one of our nation’s most important assets in the years ahead, as we transition our economy to take advantage of our competitive strengths.

The most important role of the Australian system is to link skilled workers with jobs.

Through this Government’s package of reforms we will create a skills and training system that is industry-led, sophisticated and flexible.

The Australian Government is determined to work with the skills and training and VET sector to implement the significant reforms we have announced this week, which will set Australia on course for strong, sustainable industries that are powered by a sophisticated, adaptable and productive workforce.

Media contact: Mr Macfarlane's office 02 6277 7070