ADDRESS TO NATIONAL MANUFACTURING SUMMIT 2018

27 Jun 2018

I acknowledge the traditional owners of the land on which we meet, and I pay my respects to elders past and present.
I would also like to acknowledge Geoff and Weld Australia for hosting the summit, as well as the event co-sponsors.
It is my great pleasure to be here today and take part in your discussions regarding the fragmentation of manufacturing skills and training – and what solutions we should be pursuing as a nation to ensure excellent technical training for the future.
 
The State of Manufacturing
 
As a former National Secretary of The Australian Manufacturing Workers Union it will be no surprise to anyone that I know manufacturing matters.
 
Manufacturing gave migrants like me an opportunity to work and prosper in Australia.
 
It is a disgrace that the government is determined to remove co-investment from the vehicle industry which was technologically, and in terms of research and development, so important to Australian manufacturing.
 
The manufacturing sector spurs economic development, drives innovation and productive growth; it stimulates economic activity in other sectors and provides quality jobs.
 
It is also larger than the industry statistics suggest, reaching into other areas of the economy through networks of production and service supply chains.
 
It appears the turnaround to employment growth in Australian manufacturing, suggested by Jim Stanford and Tom Swann in their report for last year’s summit, is holding true, and according to the May quarterly Labour Force data, is still trending upwards.
 
That is good news – but to capitalise on that growth and ensure the benefits are sustained, we need to ensure there is a system in place for effective and efficient skill formation.
 
Increasing demand for technical skills – Australia is falling short
 
Demand for deeper technical skills for the workforce, particularly in advanced manufacturing, is growing.
 
This is taking place in the context of accelerating technological change such as automation, artificial intelligence, machine learning, and the internet of things, additive manufacturing and synthetic biology.
 
The change is rapid and requires the generation and acquisition of complex, high order technical knowledge and skills.
 
This suggests a need for robust, deep and transferrable qualifications to provide a strong base for life-long learning and skill development.
Equally we need a strong culture of training and development in our workplaces.
 
Instead we face a series of inter-dependent factors that are constraining and undermining our skill formation system.
 
The system is characterised by low investment and fragmentation – and a growing propensity for short and partial qualifications increasingly directed at training to the enterprise.
 
Surveys of employers, including those in manufacturing, consistently report that supply for technicians and trade qualified workers is falling short of demand.
 
At the same time the OECD is reporting that Australia is at the bottom of the international leader charts when it comes to our capacity to engage in global value chains – and that the main barrier to that critical economic activity is our skill base.
 
Employers investment is inadequate
 
Employers as a group are not investing in skills development to the degree that is required.
 
The Reserve Bank Governor , Phillip Lowe, in a recent speech said, “One explanation for why firms are reporting that it is hard to find workers with the necessary skills is that the very high focus on cost control over recent times has led to reduced work-related training.”
 
We can see that in the decline in trade apprenticeships that started in 2013 and continues to worsen. Australia currently has the lowest trade training rate in more than a decade.
A research note released by AiG in April also highlights the issue of low employer investment.
 
AiG has been reporting over the course of many years that their members regard skill shortages and skills gaps as a prime barrier to business growth.
 
They point in particular to a lack of technical and trade skills, including engineering, ICT and science technicians, automotive and engineering trades workers, construction trades workers, electro-technology and telecommunication trades workers and food trades workers.
 
Despite this, only 2 percent of CEO’s in their recent survey intended to respond to their workforce skill shortages by hiring apprentices and trainees.
 
Instead they were planning to upskill existing workers (34%), hire in experienced workers (30%) and employ casuals and contractors (10%).
This is an unsustainable proposition.
 
If Australia is to take advantage of opportunities in the global economy and to build productive capacity domestically, employers need to be investing in the regeneration of strong foundational qualifications in the workforce.
 
Skills and vocational education policy is failing
 
Australia’s TAFE and vocational education system is under enormous pressure as a result of poor and incoherent policy development.
 
The system has been damaged by privatisation, poor regulation, and unhealthy competition which have failed to improve the quality, reduce the cost and increase access to education and training.
 
Marketisation of vocational education has opened the way for unscrupulous providers; left many students with debts for an education they have not received; and allowed low quality providers to operate across the system.
 
The sector has suffered significant reputational damage.
 
Funding and enrolments have significantly declined relative to the other sectors of the education and training system.
 
There is a palpable lack of leadership from the government in the VET system.
 
As a result we have seen:
 
•           An overall decline in outcomes for students with dropping enrolments and low completion rates;
•           Cost shifting to students via fee increases, growing limitations on access, and less government support relative to university students;
•           Growth in low quality privately delivered courses putting pressure on public providers trying to maintain high standards, resulting in a race to the bottom;
•           Dissatisfied employers, who report skill shortages and skill gaps;
•           Insufficient investment in infrastructure and in the development of a professional TAFE teaching workforce;
•           The decline of Australian apprenticeships and on the job-training opportunities;
•           A framework that delivers qualifications that are narrow, rigid, slow to adapt, and not fit for purpose; and
•           A lack of collaboration between government, business, unions, TAFE, and community and other providers in meeting the knowledge and skills challenges of Australia’s communities and economy.
 
The failures in current skill and vocational education policy have been well ventilated.
 
The unfortunate truth is that the current government is incapable developing policies to address these issues.
 
TAFE
 
According to the OECD Skills Outlook in 2017 one of the key reasons why nations, including Australia, have poor skill mixes for advanced technologies is that, and I quote “…the quality of education programmes varies widely at the same level of education, (and) individuals can have the same type of formal diploma but different levels of skill.”
 
In other words, where you have an education and training system that delivers inconsistent quality and outcomes, people lose trust in it.
 
It was National TAFE day last week. Parliament was visited by apprentices, parents and teachers - all of them expressing their reliance on the TAFE system and sharing their fears for its future.
Unfortunately those fears are well placed.
 
There has been a precipitous decline in TAFE, measured by lower funding resources and lower enrolments.
 
Courses have been curtailed, campuses closed and TAFE teachers and staff have lost their jobs.
 
In 2015 a total of $4 billion, or 42 per cent of total operating expenses for publicly funded VET, went to non-TAFE providers.[1]
 
In 1996, 98 per cent of students receiving publicly funded VET were in TAFE or not-for-profit community education providers but by 2016 this had fallen to 52 per cent and 6 per cent respectively.[2]
 
The OECD, not surprisingly suggests that a key means of improving national capacity to engage in global value chains and improve advanced technological skills, is to ensure
“…an education system with homogenous quality, or ex-post, for instance through measures to better signal individuals’ skills.”
 
If we are to move from the bottom of the OECD charts then we have to have a system that assures consistency and high quality in educational and training delivery.
Labor Policy
Labor believes that TAFE is central to achieving that aim.
TAFE is the anchor for a quality vocational education and training system and properly supported and resourced, provides Australia with a significant competitive advantage.

  • It has educated and trained millions of our citizens. 
  • It supports students who thrive in adult learning environments.
  • It delivers critical education and training services to regional and rural Australia.
  • It is the backbone of technical and trades training in this country.
  • It provides quality vocational training to the growing services and knowledge industries.
  • It delivers English language, literacy and numeracy teaching, smoothing the way for further education.
  • It plays a vital role in our skill formation system - sitting at the forefront of 21st century challenges.
  • It plays these multiple roles across the network, reaching into diverse communities, in hundreds of towns and suburbs across Australia.
  • It is essential to Australia’s future prospects and our domestic and international competitiveness

Once you lose a critical institution like TAFE it is very hard and very costly to get it back.
We cannot afford for TAFE to be under-funded while private firms engage in rent seeking and make profits of between 30-50 percent.
There is an immediate and urgent need to protect, stabilise and rebuild the TAFE network.
That is why Labor has committed that at least two thirds of all government funding for vocational education will go to TAFE.
The balance will go to not-for-profit community and adult educators and only the very best of the private providers with demonstrable links to specific industry requirements.
In every Labor VET delivery program TAFE will be given a key role.
The vocational education and training gravy train will end under a Labor government.
We have also committed $100 million to the Building TAFE for the Future Fund to commence a program of revitalising campuses across Australia.
Post-secondary commission of review
It is abundantly clear that we cannot afford for the education and training market to continue as it is currently designed.
That is why Tanya Plibersek, Terry Butler and myself have announced a once in a generation inquiry into the post-secondary education system to commence within the first 100 days of a Shorten Labor government.
There hasn’t been a national inquiry into TAFE since the Kangan Review in 1974. It is well overdue.
There has never been a national review that considers the full gamut of post-school education. It is time to have one.
The terms of reference are currently under consideration with advice from business, unions, educators and experts.
Without pre-empting the specific terms of reference, I do want to say something about some key matters the commission should be charged with.
In its consideration of how quality and trust can be returned to the vocational education system it should start by examining the critical role TAFE plays as an educational and social institution – in our communities and in local, national and global economies.
The review must seriously and rigorously consider alternatives to the competitive training market model.
It must also consider issues associated with the competency based training system and how that has facilitated fragmentation, and played a part in reducing the quality and portability of qualifications.
We are living in a time of rapid change that is impacting on all aspects of our lives.
Now more than ever we need a post-secondary education and training system that responds to those changes, and works for every Australian.
We need a system built on quality, collaboration, depth, reliability and transferability that:

  • equips people with knowledge and education for good working lives;
  • skills the workforce for existing and emerging jobs;
  • produces skills that power innovation and good jobs;
  • provides greater social engagement and inclusion by guaranteeing access to quality lifelong learning and further education;
  • in apprenticeships, provides a contract for employment and a contract for training with nationally recognised portable skills; and
  • recognises the importance of highly skilled TAFE teaching professionals.

Finding the best way forward will be complex. It will be both intellectually and practically challenging - but it needs to be done.
It is also abundantly clear that the only way it will happen is under a Labor government.
Closing
 
I will finish with a caution, a commitment and a request.
 
We should never assume that fixing the vocational education system is a silver bullet for any industry.
 
You can have the best educated and skilled workforce, and the most effective training system, but it will come to nothing if those skills are not effectively deployed.
 
We know that for workplaces to be high performing, employers need to utilise the skills they have at their disposal - through superior job design, work organisation and management systems – with quality jobs at the centre of their enterprises.
 
Having said that, a government that takes no leadership on the matter of skills - and believes workforce development will somehow look after itself through the invisible hand of the market - is abrogating an enormous national responsibility.
 
Labor will take on that leadership role.
 
What we ask in return is that unions, employers, educators, students, academics and communities work with us to address what are complex and demanding challenges – to build a world-class system of post-secondary education for all Australian’s.