16 Jul 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 Matthew for bringing us together today.
I appreciate the opportunity to outline part of Labor’s vision for the future of vocational education.
Skills and vocational education policy is failing
The unfortunate truth is that 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. Contrary to all of the hype privatisation and competition policy 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 – just 30 percent of graduates from VET in 2016 were in an occupation group related to their training;
  • 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 and other quality providers trying to maintain high standards, resulting in a race to the bottom;
  • Dissatisfied employers, who report skill shortages and skill gaps;
  • 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;
  • The proliferation of wasteful and rigid bureaucratic processes  - that have seen the development of 17,000 units of competence and 1,400 different qualifications, many of which remain unused;
  • Insufficient investment in infrastructure and in teacher qualifications and resources
  • The development of a market for low quality courses, and
  • At its very worst, the defrauding and exploitation of citizens trying to improve their lives through gaining education and qualifications.

The current government is incapable developing policies to address these issues.
There is an urgent need to deal with the real problems – holistically, across the system and head-on.
That is why Labor has committed to establishing a national inquiry into post-secondary education within the first 100 days of a Shorten government.
We will work with governments, students, experts, businesses, unions, TAFE, and community and other providers.
We must build a post-school education system that delivers technical innovation, creativity, new knowledge and skills acquisition to support a fair, prosperous and competitive Australia.
The training market and training packages
For nearly three decades we have been operating a national vocational education system based on two main pillars:

  • A training market – to facilitate competition and contestability amongst training providers, and
  • Competency based training packages - to closely tie vocational education and training to the needs of the labour market.

Given the on-going and widening cracks that have plagued the system it is time to reconsider those foundations.
We must assess, amongst other things, whether they are the right design principles for a modern vocational education system, in the context of post-secondary education and training.
The Australian training market provides a salutatory lesson in how market competition in education fails.
It is important to remember that rent-seeking and rorting in the VET market pre-dates VET FEE HELP and has outlasted it.
The truth is that operating in the training market is a lucrative business if you don’t care about quality.
Dr Phil Toner has described the growth of what he has called “the low quality training market”, and the conditions that have created ‘perverse incentives’ for students and employers not to demand quality training and for providers to supply this low quality training. 
Even when ASQA closes low quality or shonky RTOs - after the couple of years it takes to catch up with them - there is nothing to stop another such provider taking their place. In the five years to 2015 the annual combined rate of provider exits and entry was 13% - so barriers to entry are low.
Low quality provision is a pervasive problem in the system if RTO compliance measures are anything to go by. According to ASQA’s last annual report only 1 in 4 RTOs are compliant after their initial audit. Even more troubling, after RTOs are given the time and information to rectify the problems, half of them are still non-compliant.
The problems in the system have not been fixed by changes to the student loans regime; the problems have not been addressed by the endless tweaking of regulations.
The problems will not be fixed by simply tying VET funding to income based on a diminishing visa system.
In the government’s latest review of the regulatory system there is not one recommendation that goes to the heart of the problems in the sector - which is no fault of the reviewer – but is because the flaws are written into the very architecture of the system. 
The flaws were most certainly not addressed by the government’s highly ideological attack on TAFE SA last year. Their politically motivated call for a Senate Inquiry backfired with every independent expert highlighting endemic and systemic failings that the government continues to ignore.
It is a system that fails to assure quality.
As Phil Toner concludes,
“…the training market created both the opportunities and incentives for malfeasance and quality diminution on a grand scale.”
The commodification of education is summed up by the words of a capital investment adviser spruiking the money-making benefits of education, as quoted by Dr Toner:
‘Education is a beautiful business when it works. Fat fees, hefty annual increases, recurring income and high switching costs are just a few traits of high-performing education providers. Investors who have understood the sector’s potential have done exceptionally well...The sector has excellent long-term potential. Not-for-profit education providers...look like sitting ducks as technology eventually reshapes the sector’ (Featherstone 2014).
The investment adviser makes an important point –because most egregiously the training market and the commercial ascendency of for-profit training provision, has undermined the viability of the public provider, TAFE.
The flow of funding to the VET sector has reduced in real terms – and within that shrinking envelope, a much lower proportion is going to the public provider.
In 2015 a total of $4 billion, or 42 per cent of total operating expenses for publicly funded VET, went to non-TAFE providers. 
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.  
The development of competency based training packages was supposed to better align skill development with workplace needs and assist workers to get the right skills for existing jobs, enable them to build upon and advance their skills, while having them formally recognised and rewarded.
However, there are strong indications that this has not been realised – and instead has done damage to the post-secondary system more generally – and to the teaching workforce in particular.
A major deficiency associated with competency based training has been a lack of cohesion and depth in the learning that it supports, particularly in the absence of highly skilled and knowledgeable teachers and trainers.
We need to be asking whether the training market and training packages, as they have been developed and evolved in Australia, are operating for the public good. We need to ask fundamental questions of the current design:

  • Is the system supporting the development of productive and flourishing citizens?
  • Does it effectively provide the connections to workplaces, work and careers, that has been assumed? and
  • Are its graduates enabled and supported to adapt to a changing world and a rapidly transforming world of work?

The future of work and 21st century skills
Technology is reshaping our societies and cultures in ways we cannot understand or fully anticipate. It is also transforming the skills and jobs that are required in the labour market.
This necessarily impacts on our education and training institutions and systems.
It has long been the case – but the pace of change has accelerated with technologies such as automation, artificial intelligence, machine learning, and the internet of things, additive manufacturing and synthetic biology.
Not surprisingly, there has been an explosion of reports discussing the future of work - with a particular focus on skills and workforces.
Reports have been released by the OECD, the ILO and the World Bank, CSIRO and CEDA.
Deloittes, McKinsey and Co and PwC, to name a few of the multi-national consultancies, as well as outfits like Alpha Beta here in Australia - are competing for ascendancy as experts in the future of work. They have all published their own contributions.
All of these reports predict growing labour market volatility and call for greater worker flexibility, one way or another.
The latest report on future skills from the McKinsey Global Institute, Skill Shift: Automation and the Future of the Workforce, proposes a bankrupt vision of the future that would have workers becoming endlessly flexible in a gig economy - while businesses receive and dispatch workers as commodities.
They insist:

  • Workers will need to shift their mindsets to engage in lifelong learning.
  • A booming gig economy means external workers will be ‘leveraged’ and there will be growth in independent contractors and freelancers.
  • Existing workers will be retrained, redeployed or released. Hiring will be for those who already have the requisite skills that are suitable to the needs of the enterprise.
  • Organisations will be more agile – and CEOs will have to adapt as well – and adopt new talent strategies to orchestrate changes.

They go on to report that employers expect that governments will be responsible for strengthening safeguards for workers in transition and to encourage mobility. They see no role for industry in this regard. They offer no business involvement in the broader skill formation system.
Each of the reports also observe an increasing demand from employers for skills such as critical thinking, collaboration, communication and decision-making -  once known as generic skills, which have more recently been dubbed 21st century skills or ‘future skills’.
Employers have been complaining about the education systems’ failure to ensure such skills in their graduates for as long as I can remember.
Back in a 1999 report for AiG, Allen Consulting wrote:
“…an increasing premium is being placed on generic skills, both ‘hard’ (notably information technology skills) and ‘soft’ (eg problem-solving, team skills, willingness and ability to adapt) to be developed prior to recruitment.”
This statement would not be out of place in any of the reports I noted earlier – and no doubt these are critical attributes that employers seek from their employees in their workplaces.
As a technically trained mechanical fitter, problem-solving and decision-making was an integral part of my job.
As a maintenance fitter at Garden Island dockyard, GMH at Pagewood, National Springs and Liddell power station my workmates and I were confronted on an almost daily basis with problems that required the application of technical expertise and decision-making.
Without my trade training, I would have had no knowledge or technical skills with which to solve a problem, and no expertise with which to exercise my judgement.
Judgment and problem solving were not attributes, qualities or skills that were lifted off a shelf and ‘learnt’ out of context – they were inextricably linked to the knowledge and practice of my occupation.
A simplistic characterization of the absence of such skills, as gaps that can be filled by an extra unit in a training course or as a stand-alone micro-credential– is misguided.
It occurs to me that the source of the skills gaps employers are concerned about may be a result of, at least in part, poorly designed jobs and badly managed and organized work – rather than in the deficiencies of individual workers.
But one thing is for sure– further fragmenting and narrowing qualifications, is not the solution to a lack of critical thinking skills - and yet in the future of work literature from consultancies and employer associations, there is a frequent call for micro-credentialing and bizarrely, from the BCA for example, the capacity for ‘building your own qualifications’.
As it stands we have a system in place that lacks cohesion, facilitates fragmentation and adapts slowly.
NCVER data is showing a growth in students acquiring skill sets and a decline in full qualifications among the people enrolling in vocational education and training when compared to the three preceding years.
This should be a source of concern. Relying on narrow occupational qualifications, pieces of qualifications and enterprise specific skills is not the answer to the growing need for new skills or the on-going calls for 21st century skills.
We need a skill formation system that equips the workforce with skills that are transferable - with high levels of technical capability underpinned by a strong foundation of broad-based vocational knowledge; that can be enhanced with the acquisition of additional skills over one's working life.
We’ve known for a long time that firms are inclined to train to the requirements of the enterprise and unless there is intervention, polyvalent skills – those advanced skills that provide the precondition for the ability of fast “retooling” to unpredictable changes can go unsupported by most firms.
In other words, left to their own devices, and cheered on by the likes of McKinsey and Co, firms are likely to only invest in skills that provide a return to their own business. They are unlikely to recognise the nationwide productivity benefits of skilling across the economy.
A single foundational qualification will not set an individual up for a lifetime of work. But a regime of piecemeal, narrow, enterprise specific skills – will operate to de-skill and disempower Australian people – in their lives and in their work – to the detriment of our society and our economy.
If we are to deal with the problems in the existing VET system to build the skilled workforce of the future then it is essential that Labor wins government at the next election.
Only then will we be in a position to collaboratively work with industry, experts, unions, communities, TAFE and other VET providers to build a vocational education system that is fit for purpose and contributes to the productive performance of industry, and the skills and career paths of individual workers.
We have some very fundamental issues to resolve in the inquiry.
It will require us to have a strong vision of the future and then move towards it.
We have seen the impoverished McKinsey version of the future – the one that increases inequality, and facilitates low quality jobs and endlessly flexible labour swept along by the apparently inevitable force of the digital revolution – from which the McKinsey’s of the world will profit.
I don’t think that is a vision that Australians share.
The current design of the Australian vocational education system – with its increasing fragmentation and its narrow task-based reflection of the labour market – could very easily and quickly become the servant of the McKinsey vision.
Skill sets and top ups, training to tasks at the enterprise, building your own qualification - at the expense of vocational depth, identity, expertise, knowledge and autonomy.
We have consensus that reform is critical – we need an inquiry that will guide us to the best solutions.
It is part of the conversation we need to have as a community, as governments, as employers, as parents and as creators of a strong, fair society; and an economy that reduces inequality and operates in the service of that society
The only way that conversation and vision will be realised is under a Federal Labor government.
I invite all of you to be a part of it.

Authorised by Noah Carroll, ALP, Canberra.