Ministers for the Department of Industry and Science
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National Skills Summit Address

25 June 2014
Canberra

Skills, training and VET reform are at the heart of our economic plan for Australia.

If we are smart and make targeted and strategic reforms in this sector we will lay the platform for enhanced productivity, jobs growth and greater prosperity for industry and the Australian economy.

All of us in this room understand the significance of a sophisticated and flexible skills and training structure, that has as its most fundamental objective a focus on skilling Australians for real jobs in the real world.

This is a reality that is well understood in the business community also, where any failure to deliver the right people with the right skills has the most profound effects, in terms of lost opportunities and falling productivity.

As the Industry Minister I have one of the most diverse portfolios in the Government.

It covers Australia’s traditional industries such as manufacturing and food processing, and also covers our economic powerhouse sectors of energy and resources, as well as science and of course skills and training.

It’s what you might call a super-portfolio, but not only because of its size.

This portfolio is also the super power driving the Australian economy.

Skills, training and the VET sector have found their ideal home in this portfolio, because in bringing together our most potent economic drivers, we are creating new opportunities for Australia to continue our fine record of combining the great ideas borne of ingenuity, creativity and the entrepreneurship with the ability to deliver through determination, practicality and good old fashioned hard work.

Our focus must be on delivering the skilled workers that businesses need and to prepare job ready apprentices and trainees.

The era of training for training’s sake is over.

A skilled and productive workforce is essential to our economy, so skills and training is at the heart of the Industry portfolio and the Government’s economic strategy.

Global competition

Australia is competing in a highly competitive global economic environment.

The reality is that if we are to prosper we need to be more productive and more innovative.

And we must have the foresight and imagination to create the cutting edge, wealth producing industries of the future.

Nature of VET in Australia

The Australian Government’s role in skills and training is to provide leadership to ensure national priorities are met.

In recent years the skills and training system has become complex and bogged down in red tape.

Its excessive complexity and duplication has created a disincentive for participation for employers and students, which means Australia is not taking full advantage of opportunities to build its most productive workforce.

The changes we make under this Government are a once in a generation chance to put skills and training in the hands of industry and employers and to make the system more effective, more efficient and more responsive to the needs of business.

VET is a highly dynamic and diverse market, providing training for a wide range of occupations across Australia.

And it is becoming increasingly competitive with around 3 million students in VET – and only around 1.5 million of those in Government-subsidised training places.

There is also the strong international market for VET.

However, since I’ve taken over as the responsible Minister, I’ve had a lot of people in my office telling me that the system isn’t working as well as it should and what the Government needs to do to ‘fix’ it.

The Government can’t fix everything, but by working with the sector, the Government can set up a framework that lets a quality system operate to deliver outcomes and one that encourages innovation rather than setting up barriers.

We are seeing innovative and cutting-edge courses, new ways of delivering training, better partnering and collaboration.

The need for reform

Australia will always need a strong skills sector that can prepare our workforce to deal with structural transformation.

But the feedback that I am getting is that improvements are essential to ensure the VET system delivers Australian businesses with the skills they need now, and into the future.

While there are around 3 million students in VET each year, the ABS tells us that there are also around 4.6 million learners in work-related training outside of the nationally recognised VET system.

Our own survey of employers tells us that some eighty per cent are satisfied, but what of the employers who don’t use VET?

One of the first things I did when I took on the responsibility for VET was to establish a taskforce to look at the system and listen closely to the views of all those with an interest in skills and training.

There has been open engagement with industry bodies, individual employers, training providers, regulators and a range of others right across the country where people who are on the ground shared their ideas for improving the sector.

I’ve heard your views.

And it is very clear to me that meaningful reform is needed:

  • Employers are concerned they aren’t getting the skilled workers they need.
  • Training providers feel weighed down by red tape, endless process and excessive regulation. High quality providers are not rewarded for their hard work, and low quality providers are still allowed to operate.
  • And students, parents and employers tell me they can’t always get the information to make the right decisions about the training they need and to get the most out of the training services that are available.

So, our challenge is to build a better VET system and to increase industry confidence in it.

This Government’s reform agenda is the first in a long time to look at all aspects of VET, to look at the system as a whole, to take account of its diversity and make sure that any changes made are focused on achieving:

  • A stronger role for industry.
  • Better training and employment outcomes for students.
  • Simpler systems with less red tape.
  • And better targeted and more effective Government funding.

Earlier this year, I met with my state and territory colleagues at the inaugural COAG Industry and Skills Council meeting and we discussed the reform agenda.

At that meeting, we agreed to six reform objectives with three priority areas for immediate action.

Today, I want to provide an overview of the Government’s approach to reform in the VET sector across those six objectives, what we’ve achieved so far and what we are working to achieve in the future.

Governance

One of the three priority areas identified by ministers in April was to ensure that industry is involved in policy development and oversight of the performance of the VET sector and to streamline governance arrangements.

We have already acted to change that.

We have streamlined the complex and bureaucratic governance arrangements we inherited.

We have reduced the multitude of committees and subcommittees that were often overlapping and duplicating each other.

We’ve also moved to address the previous arrangements which gave industry no formal decision making role in the sector.

Qualifications that are flexible and meet industry needs

Industry has called for VET qualifications to be more flexible and better focussed on meeting the needs of industry.

I am keen to work with industry and the VET sector to look at the issues being raised about the quality and duration of training and concerns around the veracity of assessment processes.

I believe that industry must have a stronger role in defining the content of the training being delivered, including any specific requirements for the delivery and assessment of training.

Soon I will be announcing a new industry-led advisory group to help the Government deliver the broad reform agenda.

Industry will chair the committee; and they will have the majority say over decisions.

Longer term, I also want to undertake a number of sectoral studies – for example in the oil and gas industry – to determine how the VET sector can better support particular industries and the changing workforce needs.

Another of the priorities identified by Ministers in April was to reduce the burden on the VET sector arising from the constant updates to training packages.

We have already taken the first step. We have cut the red tape and eliminated fees imposed on training providers when minor changes are made to training packages.

We are working across Government to extend this reform measure to registration requirements around international students.

We are also looking to batch the release of training package updates – perhaps to once a year.

We are also looking to ensure that the downstream impacts of changes are fully considered at the development phase.

We’ll be consulting with you on these additional reforms shortly.

Trade apprenticeships that are valued and utilised

In many industries, apprenticeships provide the best pathway for skills development.

Almost 100,000 employers—62 per cent of whom are small business owners—currently employ around 400,000 apprentices and trainees nationally.  That’s just on three and a half per cent of the Australian workforce.

Between 2003 and 2013, more than 1.6 million apprentices and trainees completed their training and brought valuable new skills to the workforce.

But even with these impressive numbers and despite the strong support of industry and employers, the apprenticeships system faces challenges.

Apprentice attrition is high and completion rates low – more than 30 per cent of apprentices withdraw in the first year and just over 50 per cent finish their training.

This represents a wasted investment for employers, Government and individuals who do not complete, while impacting the long-term supply of skilled workers.

These trends must be reversed.

Employers, particularly small business owners, need better support to recruit, train and retain apprentices.

Individuals need greater assistance and guidance to engage in and complete apprenticeships which offer a distinctive learning and earning pathway to a rewarding career.

And the system as a whole needs to be simplified, streamlined and made more flexible to help industry re-engage with apprenticeships and get on with the job of training a skilled workforce.

The Government is committed to making these things happen.

To start we are delivering on our commitment to introduce Trade Support Loans for apprentices to encourage more young people to take up a trade and complete their qualification.

And I am pleased to say this legislation passed the House of Representatives last night.

Up to $20,000 will be available to apprentices studying in skills needs areas.

The loans target occupations on the National Skills Needs List such as plumbers, diesel mechanics, electricians and fitters, as well as priority areas in horticulture and agriculture.

The objective is to assist apprentices with the costs of living and learning and completing an apprenticeship.

We want apprentices to start their training, but most importantly we want them to finish it.

A 20 per cent discount will be applied on the amount borrowed on completion and apprentices won’t make any repayments until they’re earning a sustainable income of more than $50,000.

Building on the introduction of these loans, the Government is close to finalising reform of Australian Apprenticeships Support Services, currently delivered through the national network of Australian Apprenticeships Centres.

I anticipate we will approach the market in late 2014 to contract providers to deliver next generation support services, due to commence from 1 July 2015.

Stakeholders are calling for services that will help employers recruit, train and retain apprentices, assist individuals to make an informed choice about an apprenticeship that’s right for them and lift retention and completion rates.

This Government has also allocated $5 million to extend mentoring projects to give apprentices the support and guidance they need to stick with it when things seem tough.

On top of these measures we are working in partnership with States and Territories to improve the system.

Streamlining and standardisation of apprenticeship and traineeship pathways across Australia is a critical component of this work.

Responsive and fair regulation

Reducing costs for business is a key theme of the reform agenda.

With this in mind, we are reforming the way the VET system is regulated so as to cut red tape.

The third key priority agreed by Ministers in April was to re-examine the standards for providers and regulators.

The standards against which training providers are judged should make it clear what is expected of them.

Eighty per cent of providers audited by ASQA are non-compliant initially, the majority over issues that are easily remedied.

Given 20 days to fix things up – the figure drops to twenty-five per cent non-compliance.

This suggests two things to me:

  • Firstly, that the standards themselves need to be clearer about what is required.
  • Secondly, that there needs to be more information available to providers about what compliance looks like.

In light of the considerable feedback received by the VET Reform Taskforce about the standards, we have revisited the work done by the former National Skills Standards Council.

And in conjunction with key stakeholders we’ve developed a revised draft set of standards.

Today I am releasing these draft standards for your comment and further input.

The new draft standards will support quality and provide clarity around marketing of training courses, subcontracting arrangements and compliance.

They will be available later today on the VET Reform website and I invite you all take a look and provide your feedback into the development process.

When you look at them, you will see that the new draft standards remove several of the more contentious reforms proposed by the former NSSC that would have added to the regulatory burden in the sector.

For example, the new draft does not propose a change from registered training organisation to licensed training organisation.

You will also notice that the proposed requirement for an Accountable Education Officer has been removed.

This doesn’t mean that we are placing a lesser emphasis on quality.

We will still require a registered provider to meet quality standards and have a robust approach to quality assurance.

But we won’t dictate how that is demonstrated.

The requirement for all training providers to become incorporated has been removed to enable small and medium sized providers to continue with their existing organisational structures.

In conjunction with implementing new standards, we will also be clearer about the role of the Australian Skills Quality Authority and how it regulates training providers against the standards.

There are two key elements of this new approach that you will see in the short term.

  • Firstly, ASQA is working to ensure that, by the time the final standards are released, there will be sufficient information available for the sector so that providers are clear about what compliance with those new standards means.
  • Secondly, ASQA will be paying more attention to working with poor quality providers and, where necessary, take action to sanction them.

As you know, the former COAG Standing Council sought a review of ASQA’s efficiency and effectiveness, known as the ASQA process review.

Today I’m releasing that review.

The purpose of the review was to inform Ministers about the operation of ASQA before they considered any increase in ASQA’s fees.

ASQA hasn’t started a process to raise its fees for 2014-15 and that’s because, at least for the foreseeable future, that isn’t going to happen.

And I’ll be looking at options for a different way of funding ASQA that better reflects what we want to get out of VET regulation.

The process review makes a number of findings for how improvements can be made to the way ASQA operates that are consistent with what we are hearing from the VET reform process.

The findings included:

  • Improving ASQA’s ICT support to get better case management and risk assessment.
  • Work on better streamlining in relation to training package updates.
  • And providing more guidance for RTOs on how to comply.

We are looking at ways to make these things happen.  Ultimately you will see an approach to regulation that is much better targeted to the circumstances of individual RTOs.

And I want to commend the ASQA Commissioner, Chris Robinson, who will be talking to you later today, for ASQA’s open participation in this process review.

But we are not stopping there in cutting red tape for training providers.

We have agreed to adopt the recommendations of the Review of RTO VET Data Reporting Requirements and will work in partnership with State and Territory Governments to streamline data reporting requirements.

We are working to reduce requirements on training providers who offer courses to both domestic and international students.

And the recent changes we’ve made to student visa processing arrangements for some VET students is a good next step, enhancing the Government’s commitment to growing Australia’s international education sector.

I acknowledge that the VET sector needs regulation to support quality and confidence in the system, but I am committed to ensuring that regulation is responsive and fair.

Better information for consumers

But a quality system isn’t just one that is appropriately regulated.

It is also one that offers choice and I am also determined to ensure students and employers have the information they need to make informed decisions.

The Government is putting in place a number of measures to improve information flow and the signals being sent to the market.

The revamped consumer information website provides a directory of training providers to help prospective student find a service that meets their particular needs and circumstances.

The introduction of the Unique Student Identifier at the beginning of next year will improve the transparency of the VET sector by giving students online access to all their training records across their lifetime.

And the new single service delivery centre will provide business with one easy access point to find out about the entire range of Government training and support programs.

We will explore further the innovative ideas that are being suggested through the feedback provided to the VET Reform Taskforce.

Better targeting of funding

Funding for VET has to be well-targeted to avoid duplication and disruption to the fee-for-service market.

Significant reforms in funding were needed and already we have already announced:

  • A $476 million Industry Skills Fund that will provide employers up to 200,000 training places and support services, including literacy and numeracy training and mentoring.
  • Trade Support Loans.
  • Streamlined Commonwealth programmes, reducing duplication and complexity.
  • Improved VET FEE-HELP arrangements.
  • And expanded access to Commonwealth supported places to students studying at all higher education providers and for sub-bachelor qualifications (including diplomas, advanced diplomas and associated degrees).

The Commonwealth will spend approximately $1.4 billion next financial year on its own VET programs.

This is in addition to the $1.8 billion in funding the Commonwealth will provide to States and Territories over the same period. And the States and Territories contribute a further amount of more than $4 billion annually.

All these measures are designed with the goal of spending taxpayer’s money well and getting the best training and employment outcomes for VET students.

We will work with the States and Territories to ensure our policy goals are clear and the money we invest is spent well and gets good employment outcomes.

We have some world-class facilities out there, and we need to think laterally about how we can encourage greater use and get the most from them.

Conclusion

If we get VET reform right we can make an enormous contribution to a better Australia – a more dynamic, more competitive and more productive Australia.

The reform agenda I’ve outlined today will create the necessary framework to ensure the training system is truly industry-led.

The new industry-led advisory committee will be instrumental in developing phase two of the reforms.

Together, at the end of this reform process, we will achieve a dynamic system that supports Australia’s competitiveness and growth.

It will be a streamlined but flexible system of training packages and qualifications that meet business needs.

Our focus must be on effective use of taxpayers’ funds to deliver quality training that encourages high performing training providers.

Apprentices and trainees are the skilled workers of our future.

It is my goal to ensure Australians see apprenticeships and traineeships as high calibre options for future education, on par with a university degree.

In conjunction with the VET sector, we will deliver a system that delivers the skilled workers that business needs to enhance productivity and capitalise on the industries of the future.

Media Contact: Mr Macfarlane's office 02 6277 7070