ADDRESS TO TAFE DIRECTORS AUSTRALIA CONVENTION

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 the members of the TAFE Board and international guests who have travelled so far to be here.

I would like to thank Mary Faraone, Chair of TAFE Directors Australia and Craig Robertson, CEO of TAFE Directors Australia  for inviting me to speak at the Convention today.

It is my great pleasure to do so.

The TAFE system is an iconic institution and sits at the center of Australian life.

The contribution it has made, from its establishment as workman’s colleges and mechanics institutes in the 19th century and its evolution through to the great Network it is today, has been immense.

It has educated and trained millions of our citizens. 

It is the backbone of trades training in this country.

It supports students who thrive in an adult learning environment.

It delivers critical education and training services to regional and rural Australia.

The TAFE network plays a vital role in our skill formation system - sitting at the forefront of 21st century challenges.

That is what I want to talk about today – the acquisition and transfer of skills for modern workplaces; the uncertain future of work; the failure of the training market; and the central role Labor believes TAFE will play in ensuring that we build on the system we have, to create the skill system we need.

Any consideration of our skill formation system requires understanding of our labour market and what is happening in Australian workplaces. They are inextricably linked.

We are living in a time of rapid change driven by globalization, artificial intelligence, robotics and digital transformation. It is impacting on all aspects of our lives.

It is reshaping employment – new jobs are being created, old ones are going and new skills are increasingly being required across the board – but the fundamental nature of jobs is also being tested.

American scholar and Obama appointee, David Weil, in his 2014 book The Fissured Workplace, describes the range of mechanisms that have led to the fracturing of what he calls the ‘standard employment relationship’ over the last 40 years.

He shows that the rise (or re-emergence) of outsourcing in the US through subcontracting, labour hire, and franchising have all contributed to increasing the precariousness and instability of work – and the distancing of the relationship between workers and employers.

Australian employment statistics tell the same story of growing underemployment, fragmented work and increasingly short-tenured contracts.

Australia has the third highest proportion of part time work in the industrialized world - and up to a half of those people want more hours of work.

Nearly one-quarter of Australians are currently in casual employment with a further two million employed as independent contractors or other business operators, a substantial proportion of whom are in dependent contracting arrangements. 

We are seeing the rise of the ‘gig economy’, where work is being commissioned via digital platforms and being paid as piece-work.

The gig economy is being hailed in some circles as a great disrupter, giving power to the consumer and opening the way for an army of highly skilled and adaptable portfolio workers. 

I am more inclined to agree with analysis by Dr Jim Stanford from the Centre for Future Work.

He characterises the digital arrangement of work as widening the already existing cracks in the regulation of employment – and shows that the core features of gig work - its precariousness, insecurity and potential for exploitation of the vulnerable by the powerful – follow a longstanding pattern.

While gig work is distributed through a digital app, the underpinning business model – whereby workers absorb risk and businesses make profit – is nothing new in capitalism.

It is a digital version of the ‘bull ring’ or day labour - where historically, unskilled workers, would compete with each other to be hired for a day, with no guarantee of further work.

The dynamics of fragmented workplaces and precarious employment are not inevitable. The inequality they lead to are avoidable.

Bull rings no longer operate on our waterfronts. A hundred years ago workers were still marching for the 8 hour day – now the 38 hour week exists as a national employment standard – notwithstanding the Coalition’s desire to erase penalty rates and vilify unions.

The truth is that effective policy and regulation can and should be designed and implemented to close the widening cracks in our industrial arrangements.

The gig economy and the work it generates can and should be made fairer.

Experts, including Professor Andrew Stewart, are examining how regulation can be extended to cover new types of work and improve the fairness of existing workplaces.

It is clear that technological change is transforming the skills required at work and the jobs in the labour market. This has long been the case – but the pace of change has become rapid.

If current trends continue – even with improved regulations that protect against poor quality jobs - individuals will need to be able to move between jobs, occupations and industries and gain new skills in existing jobs. This will need to be achieved at a greater rate and across the lifecycle, than ever before.

Recent data released by the NCVER shows 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.

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 the working life.

There is an empirical basis for believing that this approach is both sensible and viable.

The Foundation for Young Australians analysed 2.7 million job advertisements revealing that there are seven clusters of jobs with closely aligned skills.

A person working in a job has skills suitable to a further 13 other jobs – and with the addition of another skill, they are suited to a further 44 jobs.

Those findings support experts, like Leesa Wheelahan and John Buchanan, who suggest that qualifications need to be designed around ‘vocational streams’ rather than narrow occupations – and that this will help to prepare people for greater job mobility and more efficiently provide the skills that businesses need.

Rather than re-qualifying for every new job, deep and transferrable knowledge and technical skills will provide the base on which workers can build new and additional skills.

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 market changes’ – most commonly associated with the German dual system – can go unsupported by most firms.

In other words, left to their own devises, 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.

Andrew Palmer writing in the The Economist earlier this year describes trends in the US and the UK that tell a cautionary tale.

He reports a growing practice amongst higher education graduates, already encumbered with large debts, paying for additional training to secure jobs in a competitive and shifting labour market.

He points to graduates who are paying up to $15,000 to undertake 10 week long immersive ‘boot camp’ courses to gain, in this case, computer based skills – such as web design and digital user experience.

A recent report by the NCVER recounts the experience of a young man – who at the age of 25 after finishing a health science degree, undertook 4 other courses to enhance his employability.

Since its inception in 2014 under the coalition government, Trade Support Loans have accumulated to $382 million of debt for Australian apprentices. That includes 8,000 young apprentices and trainees under the age of 18 that already carry between them $31 million of debt.

The trend to increasingly shift the cost of skills development onto individuals, particularly young people before even fully entering the labour market, is troubling - particularly as it coincides with a withdrawal of investment in skills by employers.

The Economist article, quoting a 2015 Economic Report of the President, states America’s Council of Economic Advisers found,

“…that the share of the country’s workers receiving on-the-job training has fallen steadily between 1996 and 2008. In Britain the average amount of training received by workers almost halved between 1997 and 2009 to just 0.69 hours a week.”

I suppose this is behind the decision of the British Conservative government to implement a training levy on many British employers.

In Australia we no longer collect national data on employer expenditure on training, but academics report that Australian firms are also reducing their investment in the training system. That reduced investment can be seen in the decline in the training rate for apprentices and trainees.

Outsourcing, off-shoring, importing skilled workers, the growth in contract, part time and casual employment all contribute to reducing investment in skill formation by employers.

There are islands of training excellence, companies that have excellent records of upskilling their workforce – too many other employers are profiting from skills in which they are failing to invest. This is unsustainable.

Taken together – the increasing need for strong foundational qualifications, the fragmentation of employment, the need for lifelong learning, increasing pressures due to rapid technological change, the withdrawal of employer investment in skills and the propensity to skill to the firm, along with increased employment insecurity - require a concerted and coordinated response.

There is an urgent need for a new social contract to sustain quality jobs – and ensure that investment in skill development is shared fairly amongst employers, governments and workers. Increasing cost shifting to employees is unfair and will have a negative effect on the productive performance of the economy.

It is my belief that without a new social contract the skill formation system is at risk of further entrenching rising inequality. We will fail to deliver the quality education and training that is critical for our economic and social prosperity.

That brings me to the architecture of the training market.

The competitive training and education market model has lost its way. It is failing the Australian community and we are paying a heavy price.

We are seeing terrible cases of rorting by some registered training organisations where the profit motive exceeds their commitment to quality training.

One of the country’s largest providers, Careers Australia, reeled in hundreds of millions of tax payer dollars through VET-FEE HELP. In December 2015 they paid out $44 million in dividends to shareholders – and a year later has gone into receivership leaving 15,000 students with unfinished courses and 1,000 staff without jobs.

The skills quality regulator, ASQA, has described the training market as a  ‘race to the bottom’ – as quality training provision is systematically being costed out by high turnover, low cost, poor quality training.

The government’s own regulator is pointing to a fundamental flaw in the competitive training market.

Profiteering and exploitation is ruining young lives - but it is also destroying quality and trust in our vocational education system.

Young people are uncertain of the future that vocational education provides.

Parents are less inclined to encourage their kids onto a vocational pathway.

Employers rely less and less on VET qualifications as markers of skill and competence.

Too many employers are failing to invest in training for their workforce - unfairly placing the responsibility on a shrinking number of employers who still recognise the importance to their businesses of investing in the skills of their workforce.

We are seeing this playing out in dropping VET enrolments, falling apprenticeship numbers, appalling completion rates and the impact on TAFEs market share.

The Coalition government has failed to understand the fundamental problems that plague our skill formation system.

They have withdrawn funding and support from vocational education and training.

Since coming to office the Liberals and Nationals have cut over $3 billion in funding for skills and TAFE – including a cut of $637 million in the last Budget.

Their Skilling Australians Fund is a proposal that relies entirely on insecure funding generated by visa fees for foreign workers.

If the number of temporary work visas goes down, the funding for skills and TAFE will drop.

Research released by the Australian Population Research Institute earlier this month predicts that due to immigration policy changes, there will be a dramatic drop in the number of skilled migration visas.

Not surprisingly, independent analysts have identified that the Skilling Australians funding model is inherently flawed.

The Coalition is promising it will deliver 300,000 additional apprenticeships over the next four years.

That would require 30 per cent of all new jobs, up to the year 2020, going to apprentices and trainees — even though they currently occupy just 2.2 per cent of jobs.

If the government pursues that target within that timeframe, with this farcical funding regime - quality will suffer. The last thing we need is a return to ‘burger flipper’ traineeships that were simply wage subsidies for low paid jobs.

We need to move beyond a skills culture where industry complains and governments react.

It benefits no one – not the young people trying to break into the labour market, the adults needing to gain more and new skills – or the businesses that seek creative, knowledgeable and skilled workers to realise innovation and enhance productivity.

The issues are complex and multilayered – today I have briefly touched on some and left others for another time – but the problems are surmountable when we tackle them collaboratively and with common purpose.

Labor started that conversation at the National Skills Summit earlier this year with employers, unions, TAFEs and other providers, and experts.

There is cause for optimism – there was great willingness across all the parties present to keep building on the best of what we have in the system - and to learn from the mistakes of the past.

Labor will keep having that conversation. 

If we are to be a nation with well-paid secure jobs in the future, we need to be investing in TAFE and skills.

Nationally there was a 30 percent drop in government funded training at TAFE between 2013 and 2016.

We are in serious danger of losing the institutional capacity to deliver skills if we don’t sustain our TAFE network.

We must ensure that only Registered Training Organisations that meet the highest standards and deliver the best outcomes are supported by government funding and the rent seekers and rorters that bring the private training sector into disrepute are weeded out.

Labor has announced that we will secure funding for vocational education and training in the Budget and ensure that at least two thirds of it will go to the most trusted VET provider in the country - and that is TAFE.

The remaining one third of funding will be open to only the very best not for profit training providers and quality private RTOs.

Under Labor the days of the vocational education and training gravy train will end.

Labor will return the $637 million to VET that was stripped out of the last budget and we will guarantee that level of funding with the states.

In conclusion I would like to take a moment to pay tribute to the people who make up the TAFE Network – the dedicated educators, teachers and directors.

Their professionalism - their capacity and willingness to collaborate and innovate - will continue to help students and learners navigate through the challenges that lay ahead. Just as they have always done.

They deserve our great thanks for enriching the lives of so many Australians.

Without the TAFE Network, Australia would be less competitive, less skilled and less innovative.

Labor recognises this and we will ensure TAFE continues its tremendous contribution to this great country.