Chapter 1 - Introduction to the inquiry
Conduct of the inquiry
1.1
The Senate referred this inquiry to the Employment, Workplace Relations
and Education References Committee on 23 October 2002, with an initial report
date in subsequently 6 November 2003.
1.2
The terms of reference for the inquiry are:
- areas of skills shortage and labour demand in different areas and
locations, with particular emphasis on projecting future skills requirements;
- the effectiveness of current Commonwealth, state and territory
education, training and employment policies, and programs and mechanisms for
meeting current and future skills needs, and any recommended improvements;
- the effectiveness of industry strategies to meet current and
emerging skill needs;
- the performance and capacity of Job Network to match skills availability
with labour-market needs on a regional basis and the need for improvements;
- strategies to anticipate the vocational education and training needs
flowing from industry restructuring and redundancies, and any recommended
improvements; and
- consultation arrangements with industry, unions and the community on
labour-market trends and skills demand in particular, and any recommended
appropriate changes.
1.3
The inquiry was advertised nationally and the committee wrote to Commonwealth
agencies such as the Australian National Training Authority (ANTA), the
Department of Education, Science and Technology (DEST), and the Department of
Employment and Workplace Relations (DEWR), and contacted state and territory
authorities as well as other relevant organisations and individual experts. The
committee received 103 submissions, and heard from a wide range of stakeholders
at public hearings and roundtable discussions in Brisbane, Gladstone, Cairns,
Mareeba, Perth, Kwinana, Port Augusta, Launceston, Dandenong, Melbourne, Newcastle,
Sydney, Darwin, Adelaide and Canberra. Visits were also made to a number of
schools, TAFEs and skill centres and members of the committee met with industry
and community groups in Wollongong, Port Kembla, Maitland, Cessnock, Brisbane
and the Gold Coast. The committee thanks all those who made submissions, gave
evidence or hosted a visit.
Object of the inquiry
1.4
The inquiry was prompted by industry concerns about persistent,
widespread skill shortages over the past decade and concerns about future
shortages resulting from a combination of demographic, technological and
business process change and, in some industries, a serious erosion of the
skills base. Related to these were concerns that the current policies, programs
and mechanisms for identifying and responding to current and future skill needs
may not provide an adequate framework for responding to these challenges. As
well there was a sense of frustration with the persistence of unacceptably high
levels of unemployment and under-employment in some locations, alongside skill
shortages, suggesting the need for better mechanisms for identifying and using
the skills available within the community.
1.5
The inquiry’s terms of reference were very broad and ranged across complex
and frequently changing policies and programs in the areas of vocational
education, training and employment. The complexity of the policy and program
environment and the pace of change was a particular challenge for the inquiry.
As an illustration, the list below details some of the Commonwealth or national
policies, programs or arrangements which were subject to significant change,
review or new initiatives, immediately before or during the course of the
inquiry. These cover almost all of the terms of reference:
- the new national strategy for vocational education and training;
- arrangements for industry advisory bodies at the national and
state level;
- ANTA’s arrangements for identifying current and future skill
needs;
- the classification system used as the basis for statistical
reporting on occupational trends in the labour market (ASCO);
- labour market and other employment assistance programs associated
with Job Network;
- Commonwealth incentives for New Apprenticeships;
- User Choice policy and principles;
- the role and funding of group training organisations;
- the principles and framework for development of training
packages; and
- policies and programs relating to VET in Schools, youth
transition, career counselling.
1.6
A number of states and territories also undertook major reviews of
skills related issues, during the life of the inquiry.
1.7
The committee has therefore been unable to deal with the full range of
issues raised during the inquiry in the time available and has not had the
opportunity to consider the full range of extensive research which may have
been helpful to its report. Instead it has chosen to focus on issues that were
most prominent during the inquiry, at the expense of some equally important
issues and areas of the terms of reference.
1.8
The result is that there is a clear emphasis on skill shortages and
needs in the traditional trades, and on the current arrangements for vocational
education and training, and minimal coverage of skill shortages and needs in
the professions or other occupations where higher education is the main avenue
for skill formation. This does not discount the importance of skill needs and
skill shortages in those areas. Indeed,
it is clear from evidence to the inquiry and in the public domain, that the
persistent and widespread shortages of some professionals, including nursing
and teaching professionals, are among the serious skill issues currently facing
Australia.
1.9
Other issues arose in relation to how current arrangements might be
better targeted to address regional needs. At hearings in regional locations,
for example, the committee learned about the problems of seasonal industries,
from tourism through fisheries and agriculture. In isolated areas retaining
skilled people was a significant challenge, as was the generation and attraction
of a skills base to support present and planned project developments. The
report deals with these matters in the context of discussion about of the
effectiveness of the overarching framework to provide for skills needs.
Important areas such as the role of migration in meeting current and future
skill needs, the training needs of people with disabilities and issues related
to restructuring and redundancies, and
the long-term unemployed have in the main not been canvassed in the
report, and may merit separate reviews at another time.
1.10
However, an area that struck the committee as being in need of more
immediate investigation were outcomes under Indigenous education and training.
Evidence taken in Darwin and Cairns identified problems with remote area training,
the appropriateness of training offered and its delivery, and reported the
mixed benefits accorded by the Commonwealth Development Employment Program
(CDEP). On a more positive note, the committee also heard that partnerships
between industry and Indigenous land councils in the Northern Territory are
beginning to make the necessary link between training and employment outcomes,
although continuing opportunities for Indigenous people may only be realised by
careful planning and commitment. The committee concluded that this mix of
problem and potential requires a more complete investigation. While Indigenous
matters are not dealt with in any detail in report, the committee intends to
take up this issue by attempting to program an inquiry into Indigenous skills
and employment issues before the end of this, the 40thParliament.
Overview of issues
1.11
The overarching message during the inquiry was the need to recognise
that Australia is facing a major skills formation challenge, both in the
immediate future and accelerating over the next two decades, due to the
combined effect of a shrinking cohort of young workforce entrants, a depleted
stock of skills in some key industries and occupations and the accelerating
need for new skills, flowing from technological and business process change.
There are implications for funding
of vocational education and training and higher education, as well as
for a host of policies and practices, covering the areas of retirement,
superannuation, and flexible working conditions, as well as vocational
education and training, pathways between education and training, youth
transition, the labour market and industry policy and assistance for unemployed
people, especially the long-term
unemployed. This report focuses on those matters that were raised during
the inquiry.
1.12
At the same time, a striking feature of this inquiry was the scale and
diversity of stakeholder interests and perspectives on current and future skill
needs, and the divergent and sometimes contradictory views on issues such as
the need for greater flexibility in training delivery and content and on
priorities for targeting of incentives and financial support. Submissions from
the Commonwealth highlighted the contribution of current policies and programs
in meeting national skill needs, including the role of the cooperative federal
system for vocational education and training (VET), programs and policies in
areas such as youth transition, VET in schools, the National Industry Skills
Initiative, labour market and related information, workplace relations and
employment programs. They identified flexibility and responsiveness, and a
de-regulated, market-driven approach, as the cornerstone of Commonwealth policy
in relation to the labour market, education and training, and employment
assistance.
1.13
Commonwealth submissions also pointed to some of the main achievements
in relation to skills formation, including increasing rates of participation in
post-secondary school education, and vocational education and training in
particular, with around 1.76 million or 13 per cent of Australians undertaking
a VET course in 2001.[1]
The Department of Education, Science and Training (DEST) highlighted the growth
in New Apprenticeships and in VET in schools programs: with 374,800
people in New Apprenticeships training in December 2002, more than double the
number five years ago[2]
and around 170,000 school students undertaking VET in
schools in 2001.[3]
1.14
Submissions from state governments were understandably more concerned
with how well national and Commonwealth skills formation policies, structures
and funding arrangements support their individual economic and social
development strategies. States also had a greater focus on the outcomes of
training and employment policy, including whether the mix and distribution of
skills meet local industry and community development objectives. Many were
concerned about the inadequate funding of vocational education and training and
aspects of the broader policy framework including reporting measures, user
choice policies and Commonwealth incentives for New Apprenticeships, which are
seen to be channelling an increasing proportion of Commonwealth and state
government training expenditure into lower skill areas, restricting the scope
for investment in areas of greater strategic economic or social importance.
1.15
Employer representatives generally supported the thrust of current
Commonwealth and national policy, and specifically the emphasis on a
market-driven system responsive to employer demand but argued for even more
flexibility and responsiveness in workplace relations and training delivery and
greater progress in consistency in state and territory arrangements for
training, in line with the goals of a national system.
1.16
Current and projected shortages of occupation-specific and generic
skills, the training needs of the existing workforce and improved arrangements
for identifying and responding to changing skill needs, were also major issues
for employers. The Australian Industry Group (AiG), with a membership
concentrated in the construction and manufacturing industry, was particularly
concerned about the effect of major resource and construction projects
scheduled over the next five to ten years, given that the skills pool in the
engineering, manufacturing and parts of the construction trades are almost
empty. While relevant state and territory governments have developed their own
skills formation strategies for these projects, the AiG argued for a national
approach to identifying the nature and scale of the associated skill needs and
for accelerated training strategies, to overcome the long lead times normally
associated with training in these areas. Employers generally are looking for a
more integrated national approach to identifying skill needs and more tangible
progress towards a national framework for skills formation.
1.17
The demographic squeeze, from the declining pool of new workforce
entrants over the next decade, alongside poor education and employment outcomes
for a significant minority of young people, was
identified by the Business Council of Australia and the Dusseldorp
Skills Forum, as one of the most critical skills formation, and indeed
economic and social policy issues, facing Australia. The Dusseldorp Skills Forum submitted a proposal to
modernise Australia’ s system of transition support for young people leaving
school by bringing the disparate patchwork of existing arrangements and
initiatives into a cohesive framework.
1.18
Unions shared some common concerns with employers, including the need
for an increased emphasis on training of the existing workforce and greater
consistency and integrity in the national training system. For the ACTU, there
is a need for Commonwealth and states to adopt a consistent approach to New
Apprenticeships incentives and for better targeting of incentives towards
higher and intermediate skill levels and skills formation in areas of national
priority. More generally unions see the reliance on the market and employer
demand, with some targeted innovation initiatives, as an inadequate basis for
skills formation policy. They cite persistent skill shortages, a rundown in
skills in key industries, inequitable access to training and disproportionate
public investment in low skill occupations as the unfortunate, but perhaps
inevitable, outcomes of the current policy settings.
1.19
A number of expert witnesses also raised concerns about the contribution
of current policy to the growing polarisation of the workforce between high
skill, high wage and low skill, low wage employment. Another concern was the urgent
need to address the depletion of skill stocks and the rundown in skills
formation, partly driven by economic and policy settings of the 1980s and
1990s. This phenomenon, likened to farmers eating their seeds, is particularly
marked in manufacturing industry, many engineering occupations and some areas
of education, including the TAFE sector.
1.20
Academic and other experts pointed out, however, that the current
competitive business environment and policy settings create a disincentive for
many employers to make the necessary investment in skill formation. They, along
with unions, argue for policies which will make training a more attractive
investment for more employers, particularly those operating in industries of
strategic economic or social importance, including the manufacturing, health
and education sectors. Unions argue that the national skills councils provide
the ideal forum for developing these strategies, and the role of these and
their resourcing need to be strengthened accordingly.
1.21
Some themes were present in a broad cross-section of submissions. The
need for ‘seamless and multiple pathways’ between school, vocational and higher
education and a culture and policy that supports lifelong learning was an issue
for almost all stakeholders. While these have been part of the policy agenda
and rhetoric for some time, the committee gained the sense that there is a
stronger momentum building for more tangible progress in this area. A
coordinated policy framework for considering cross-sectoral issues may be a
precondition to more substantial progress in this area. Another widely held
aspiration was for more tangible progress in realising the potential of the
national system, particularly in terms of automatic national recognition of
qualifications and registered training organisations, greater consistency in
qualification and occupational licencing requirements and approval of training
pathways.
1.22
The current policy and processes relating to the training packages,
which set out the competencies required for effective performance in the
workplace, and the pathways to qualifications, were also a source of many
criticisms and suggestions. The committee found it encouraging to see that the
Australian National Training Authority (ANTA), as the ‘guardian’ of the national
system, now appears more open to taking these criticisms on board during its
current examination of the training packages.
1.23
There was also consensus about the importance of engaging more of the
growing number of small and medium enterprises (SMEs) in providing structured
training leading to national qualifications for new workforce entrants, and a
recognition of the challenge this presents. Given, the policy emphasis on
enterprise-based training, the engagement of SMEs appeared as the
stumbling block to training policy, with the capacity of the system to uphold
skills development, especially for the more expensive trades apprenticeships,
thrown into doubt.
Structure of the report
1.24
These themes inform the body of the report which comprises the following
chapters.
- Chapter 2: Skills Shortfalls and Future Skill Needs
This chapter assesses the evidence in relation to the
prevalence, causes and consequences of skill shortages and also examines the
current arrangements for identifying current and future skill needs. It found that there are widespread and
persistent skill shortages, as commonly defined, in many of the traditional
trades and some professions and that there are also a wide range of occupational shortages and skill gaps
not recorded in official statistics. It canvasses the arguments for a
reliable and comprehensive information base, an issue raised by employer
representatives, professional associations, unions and some other stakeholders.
It concludes that there is a compelling case for the development of a more
integrated and coordinated approach to collection and dissemination of
information on current and future skill needs and makes several recommendations
to this end.
- Chapter 3: Skills Formation and the Labour Market
1.25
There are two main issues discussed in this chapter. The first is
whether the current policy is effectively promoting the development of both
high level skills and intermediate skills. The second is the nexus between
labour market and skill formation, with particular focus on New Apprenticeships
program and the Job Network. The chapter looks briefly at the policy framework
set out for vocational education and training and tests its effectiveness to
meet skills needs under the competitive conditions of the labour market today.
1.26
The committee found that, despite the policy focus on achieving high
level skill development, the present approach to skill formation appears to be
not well suited to labour market conditions. The prevailing view was that there
is a mismatch between what the system is offering and what the majority of
employers need to address their skill requirements. The enterprise focussed
training approach was faulted by the increased competition in the marketplace
now comprising large numbers of SMEs, against a reduction in training by large
companies and privatised public utilities. The result is that training at
intermediate skill levels and for para-professional qualifications has remained
static, or has actually dropped in real terms, while there has been an
overwhelming increase in low level training under the impetus of the New
Apprenticeships.
1.27
The committee concludes that adjustments are needed to New
Apprenticeships to tip the balance in favour intermediate and higher skills
development. A companion theme was to ensure that there are quality assurance
standards of training and employment attached to New Apprenticeships. The
chapter explores a range of support mechanisms including: development of performance indicators to
better differentiate training outcomes; adjustments to legislation governing
New Apprenticeships; a redistribution and adjustment of incentive
payments; provision of targeted incentives to encourage industry/education and
inter-institutional training developments; and for Recognition of Prior
Learning. Finally the chapter focuses on Job Network, with a particular
interest in its capacity to redress transition difficulties of young people, to retrain people for employment in
skill shortage areas and to meet regional needs.
- Chapter 4: The Vocational Education and Training Framework
1.28
The focus of this chapter is on the adequacy of the current vocational
education and training policy settings, funding arrangements and institutional
framework for meeting Australia’s current and future skill needs. The committee
found evidence that the current funding levels and arrangements provide an
inadequate basis for responding to unmet demand, both latent and officially
recorded, and for providing a more diverse range of training responses for
industry and individuals. One
level of the adequacy of funding is the ability to meet current demand: the
Australian Bureau of Statistics in December 2002 estimated unmet demand for
TAFE as 40,000 persons nationally, with almost 15,000 of these being under 25
years of age.[4]
1.29
A particular concern is that the current funding models and
accountability and reporting measures for the VET system, are not compatible
with the objectives of the new national strategy, the development of a high
skill workforce, promotion of innovation and strengthening communities and
regions, or with development of a quality, responsive system that can provide
diverse responses to skill needs. Other important findings related to the
adequacy of training packages to meet industry needs; the requirement for
employability skills and the capacity of skill centres to provide intensive
training assistance and meet other
training needs.
- Chapter 5: Education and Training Pathways
1.30
Multiple training pathways are important to cater for the diversity of
individual’s preferences and circumstances and to enable individuals to
maintain lifelong employability, in an environment where jobs, occupations and
workplaces and the associated skill requirements, are continually being
transformed. This chapter briefly examines the adequacy of some of the current
arrangements for providing individuals and industries with ‘seamless pathways’
for skill formation.
1.31
An important issue was the need to consolidate careers management and
advice for young people. The committee concludes that all students are entitled
to access to professionally trained and well informed careers advisers. To consolidate policy approaches
to youth transitions, the committee also supports the implementation of a more
systematic and integrated approach to increase the number of young people
completing 12 years of school or equivalent vocational education and training
(or ‘decent work’) within the next five years. The committee also believes that
an entitlement to 12 years of schooling or equivalent vocational education and
training should extend to people who have left school, including unemployed
young people under the age of 21. A number of suggestions are made for
improving articulation between VET and higher education. Consideration of the
training needs of existing workers also suggests that there should be a
separate program for this purpose.
1.32
The committee also found that many schools are placing undue emphasis on
school retention rates as the sole measure of success in achieving improved
education and training outcomes for young people, ignoring the need for
students leaving before year 12 and gaining an ‘equivalent VET qualification’
being counted as successful outcomes.
- Chapter 6: The Role of Industry and Other Stakeholders
1.33
The main focus of this chapter is the role of industry in identifying
and responding to the skill needs of its workforce. There is a strong focus on
the recent changes to industry advisory arrangements, with a number of
stakeholders concerned that they signal a further shift in Commonwealth policy
away from the tripartite (employer-union-government) principles on which the
current training system was established. Union and some employer groups share
concerns that the current proposals for the number of advisory bodies and
funding levels are being driven by financial considerations rather than an
objective assessment of the requirements for an effective system.
1.34
The second main theme of this chapter is the need for a policy framework
that promotes greater industry responsibility for training its workforce
including a discussion on the role of levies and other strategies for sharing
costs and benefits across an industry. Finally, the chapter touches briefly on
the need for consultative and other arrangements within the national training
system to include the full range of stakeholders, where appropriate. Due to
time constraints, this matter is not examined in the detail that it deserves.
Navigation: Previous Page | Contents | Next Page