John Howard (Bennelong, Liberal Party, Prime Minister) Share this | Hansard source

by leave—The purpose of this statement is to announce new investments by the Commonwealth towards a more skilled and dynamic workforce.

Australia’s labour market is the strongest in generations. Unemployment is at a 30-year low. Workforce participation is at an all-time high. More than 10 million Australians are in jobs, working to build a better life for themselves and their families.

Further evidence was revealed just half an hour ago showing that another 30,000 jobs were created in the month of September, which means that more than 205,000 new jobs have been created in Australia since the introduction of the Work Choices legislation. This economic strength is the dividend of policies geared to preserving Australia’s prosperity. As the OECD has pointed out, far from relying on luck, Australia has ‘made its own luck’ in recent years by virtue of structural reforms and macroeconomic policies that have bolstered our economy’s resilience.

In this parliament alone, the coalition has set about further increasing workforce participation and productivity through reforms to workplace relations, reforms to welfare arrangements, superannuation reform and, after tax cuts in 2004, more tax cuts in 2005 and 2006. All the while we have continued to run strong budget surpluses.

We know that tomorrow’s prosperity is not assured. We know it must be earned through further reform of our economy and we know it rests crucially on harnessing the skills and talents of the Australian people.

This financial year the government is investing more than $2.5 billion in vocational and technical education, a real increase of 85 per cent on a decade ago. More than 403,000 Australian apprentices are in training this year, up from 154,800 in 1996.

With our investment in 25 Australian technical colleges the government has said quite emphatically that the days when a trade or vocational qualification was deemed ‘second class’ in our society are over.

Young Australians have more opportunities than ever before to do what they want to do and be what they want to be.

To compete and prosper in the decades to come, Australia will require a more skilled workforce whose members are adaptable throughout their careers to changing product and skills demands.

Today I announce Skills for the Future: new investments totalling $837 million over five years to help build a more highly skilled and responsive workforce to support Australia’s long-term economic growth.

The primary focus of this package is on raising the skills of Australia’s adult workforce. Skills for the Future also carries a clear message about the importance of upgrading skills over the course of an individual’s working life.

It responds to demands from employers for a higher level of skills, a broader range of skills and more frequent updating of skills. It helps more Australians wanting to take up a trade apprenticeship in mid-career, as well as assisting apprentices to acquire the necessary skills to run their own businesses. And it makes a substantial new investment in Australia’s future engineering skills.

Earlier this year, I joined state and territory leaders in launching a new national reform agenda which includes a focus on human capital. An agreed priority was to ‘increase the proportion of adults who have the skills and qualifications needed to enjoy active and productive working lives’.

Today’s investment is by far the largest contribution so far to this agenda. I therefore call on state and territory leaders to make concrete their commitment to a more skilled Australian workforce.

An educated and skilled labour force is increasingly in tight supply the world over. With Australia enjoying the longest economic expansion in her history it is not surprising that demand for skilled workers is very high especially in parts of the economy benefiting from strong commodity prices.

In conjunction with today’s announcements, I release an analysis by the Treasury and the Department of the Prime Minister and Cabinet that puts some of the more breathless commentary about a skills ‘crisis’ into proper perspective.

The paper makes the essential point that some level of skills shortages is part of the normal functioning of a healthy and dynamic labour market. As pressures emerge, people re-skill and respond to wage signals in order to adapt to changes in labour demand.

The economy is adjusting well to the demands of the commodity boom, with a large increase in labour supply and contained wage growth. The government’s policy framework has allowed the economy to run at a high level of capacity utilisation without igniting high inflation.

The contrast with previous episodes of commodity boom-related labour market tightness is very stark. For example, in the mid-1970s demand pressures in some sectors led to a surge in wages and inflation across the whole economy.

Greater diversity in wage growth across the economy is a key difference between now and then. Higher relative wages in sectors experiencing skills shortages act as an increased incentive for individuals to develop highly demanded skills.

If all wages were to go up by similar amounts—as in the days of centralised wage fixing—this incentive would disappear.

This illustrates just one way in which the government’s reforms to workplace relations are helping to preserve our prosperity and it demonstrates further why the Leader of Opposition’s policies—which would bring back the worst excesses of industry-wide, union-dominated, pattern bargaining—are bad for Australia’s future economic growth.

Not only would Labor’s approach inflict great damage on our mining and resources industries, it would also be a hammer blow to Australian farmers and firms in the manufacturing and services sectors, which are not experiencing boom conditions.

A time of high prices for minerals and resources is precisely the worst time to be contemplating a lurch back to failed policies of the past.

A dynamic, flexible labour market is one of Australia’s greatest economic assets. Jeopardise that and you jeopardise the very foundations of future prosperity.

While it is clear that claims about a skills crisis are exaggerated, Australia does face real skills challenges arising from an ageing population, rapid technological change and an increasingly competitive global economy.

The retirement of the baby boomers will continue to put downward pressure on the number of participants in our labour market. Demand for a more skilled workforce is being driven by globalisation and technological change. These twin forces pose a particular challenge to many lower skilled Australians.

Building a more skilled Australia requires a flexible partnership across the community involving all levels of government, business, education and training providers and individuals.

Information is necessarily dispersed. And a range of variables can change the mix of jobs in an economy over time.

Skilling Australia must be a shared responsibility.

State and territory governments have particular responsibilities in the area of vocational and technical education. As the owners and operators of TAFE, they must ensure that Australia’s public sector training providers become more flexible and responsive to the needs of employers and individuals.

State Labor governments must stop jacking up TAFE fees.

Business too has to bear its share of the responsibility for improving the skills of Australia’s workforce. The oft-heard claim that people are the greatest asset of a company should be more than an employer slogan. Training and skills development must be a part of core business.

The government also recognises the importance of both individual choice and individual responsibility when it comes to skilling decisions. Increasingly, workers want to be able to respond to change and access training opportunities throughout their working lives.

An education and training system predicated on a world where someone was educated until young adulthood and then entered a job lasting roughly 40 years has become basically obsolete in the 21st century.

Recognising the need for our education and training institutions to become more flexible and responsive to individual needs, today’s announcement includes a large investment in individuals.

Work skills vouchers

One of the biggest skills challenges we face as a nation is to improve the basic skills of our workforce. Almost a third of Australians aged between 25 and 64 are without year 12 or equivalent qualifications.

Many adults fall short of functional levels of literacy and numeracy which are now essential for just about all jobs, and certainly all jobs that involve the operation of computers and digital technology.

This problem largely reflects lower education participation by young Australians two and three decades ago and previous migration programs which placed much less emphasis on skills.

Because many Australians left school or arrived in this country without the levels of English literacy and numeracy necessary to gain qualifications, they miss out on the opportunity to move into more skilled jobs. This leaves them vulnerable to economic change and Australia misses out on their full potential.

Today’s announcement gives many Australians an opportunity for a new start at obtaining skills. In some cases, a second chance.

Improvements in basic skills will assist people already in employment to move into higher positions and help those who are looking for work to find jobs.

From 1 January 2007, the government will invest $408 million over five years to support people aged 25 years and over who do not have year 12 or equivalent qualifications.

Each year, up to 30,000 vouchers valued at up to $3,000 will be made available to individuals in this group. In priority order, vouchers will be allocated to:

• Unskilled workers wishing to acquire qualifications;
• Income support recipients, such as parents and carers returning to the workforce, who will face active job search requirements in the next two years;
• Unemployed job seekers in receipt of income support and participating in the Job Network who are undertaking active job search; and
• People not in the labour force, either voluntarily or because of carer responsibilities, who intend to seek work after achieving their qualification.

Courses for which the vouchers can be used in TAFEs and private or community colleges will be all accredited literacy/numeracy and basic education courses and all vocational certificate II courses.

These work skills vouchers represent a major investment in closing the gap between the skills-rich and the skills-poor in our community.

A symbol of the government’s commitment to individual advancement and economic opportunity, they are as much a symbol of our commitment to social cohesion and national unity.

As well as offering Australians new opportunities, these vouchers will deliver more resources into Australia’s education and training institutions, while presenting them with new challenges.

A particular challenge is to cater to the needs of people without fond memories of school. To make the idea of accredited training more attractive to individuals with high needs, education and training providers will need to find ways to make adult learning more individualised and rewarding.

The government’s policy objectives are very clear. We want the users of our education and training system to be the drivers of the system. And we want greater competition in the training market.

Business too has a responsibility to develop strategies to accommodate workers looking to take up these vouchers. Small businesses in particular may face challenges in restructuring work arrangements and employer groups will need to provide their members with advice and examples of best practice.

More support for apprentices

This government continues to make a major investment in Australia’s apprenticeship system—a system which languished under a Labor government obsessed with the singular virtues of a university education.

The government believes more Australians should be given the opportunity to upgrade their skills through a traditional trade apprenticeship, especially workers in mid-career.

For many people, making the switch to a trade carries a real financial penalty. It can be especially hard for men and women in the workforce with family responsibilities.

The government will therefore invest an additional $307 million over five years in new financial incentives to support mid-career workers undertaking a traditional trade apprenticeship.

From 1 July 2007, these incentives will be available each year for up to 10,000 people aged 30 and over who are starting an apprenticeship at the certificate III or certificate IV level in an occupation in high demand. Those 30 and over already undertaking an apprenticeship in these occupations in July 2007 will also be eligible.

The amount payable by the government will be $150 a week (or $7,800 a year) in the first year and $100 a week (or $5,200 a year) in the second year. As an apprentice becomes more skilled in the second year their award wage will rise. Therefore, the wage subsidy can be reduced.

This initiative will more than double the number of people undertaking apprenticeships midway through their career.

The incentive will take one of two forms—either paid to an employer or paid direct to the apprentice.

Currently, under some industrial arrangements, if an existing worker becomes an apprentice their employer is required to maintain their existing wage. In other circumstances, employers may have to pay an adult apprenticeship rate where the worker is 21 or more.

Such arrangements create a disincentive for employers to allow their workers to take up an apprenticeship or to engage older apprentices. And in these cases, the new mid-career incentive will be paid to employers to subsidise wage costs.

In other cases, when a worker becomes an apprentice their income can drop to the junior apprenticeship rate. In this situation, the new incentive will be paid directly to the apprentice to boost his or her income.

With the emergence of a more self-reliant and entrepreneurial culture over the last decade, more Australians are keen to start their own business off the back of a traditional trade apprenticeship. For example, more than 50 per cent of all construction tradespeople are self-employed. Employers are also seeking a broader skills base among qualified tradespeople.

To assist Australia’s new breed of worker-entrepreneur, I announce today a new Business Skills Voucher for Apprentices to be available from 1 January 2007.

About 6,300 apprentices each year will receive vouchers of up to $500 to contribute towards the costs of accredited business skills training, at a total cost of $12.3 million over five years.

Apprentices who are undertaking an apprenticeship in a traditional trade will be eligible to apply for the voucher any time from the end of their second year until two years after completion.

The vouchers can be used in TAFEs and private or community colleges and will be separate to any business skills training provided as part of an apprenticeship. This is an important new investment in the enterprise workers of tomorrow.

Engineering places and higher technical skills

A strong skills base in science, engineering and technology is crucial to the foundations of national competitiveness. Qualified scientists and engineers are essential to research and development, innovation and productivity growth.

The increased globalisation of science and technology (not least with the rise of China and India as economic and technology powers) presents both challenges and opportunities for Australia. This has been a particular theme of my discussions with scientists and academics under the auspices of the Prime Minister’s Science, Engineering and Innovation Council in the last 12 months.

In July, the government released the first ever audit of science, engineering and technology skills in Australia. It found that our skills base in this area is substantial relative to overall employment, with about 13.5 per cent of employed Australians holding relevant qualifications. While this compares reasonably well with many OECD countries, there is no room for any complacency.

Increasingly, Australia faces a global market for talent. We need to work hard to train and retain our science, engineering and technology workers.

The skills audit found that Australia potentially faces a declining number of engineers available to meet industry needs due to demographic trends. Engineers Australia has also highlighted that a large proportion of current engineers who graduated in the 1960s and 1970s will retire over the next 10 years.

Against this backdrop, the government believes there is a strong need to increase Australia’s investment in engineering skills.

Today I announce that the government will invest $56 million over four years to fund an extra 500 Commonwealth-supported engineering places at university from 2008. These places are in addition to the 510 new engineering places commencing from 2007 which were announced by the Minister for Education, Science and Training on 24 July this year.

The minister will work with universities on how the places will be allocated between universities. Universities will be free to utilise the places in particular areas of engineering which are in demand.

This is consistent with a broad approach to skills development given the degree to which Australians with professional, associate professional and trade-level engineering qualifications are widely employed across the economy.

More generally, Australia needs to increase the opportunities for people to obtain higher level skills through vocational and technical education.

Today I announce additional employer incentives worth $54.4 million over five years so that more Australians will be supported in their workplaces to undertake diploma and advanced diploma level qualifications.

The Australian Apprenticeships Incentives Program will be extended from January 2007 in three ways to support training at the diploma and advanced diploma level.

First, we will remove the rule which prevents workers with prior qualifications at a certificate III and IV level from receiving benefits. Second, we will open the program to an employer’s existing workforce, not just new employees. And third, in consultation with industry, we will increase the range of eligible higher level qualifications in engineering, complementing the provision of more engineering places at university.

Up to 24,800 people will benefit from the new incentives over the next five years. Employers will receive incentive payments of $1,500 for each employee commencing a diploma or advanced diploma program and $2,500 when they complete.

Employer incentives could be paid for employment based training or, where this is not available, for institution based training.

The Australian government has now committed more than $2.5 billion to employer incentives for vocational and technical education over the next four years. Equally, we expect industry to live up to its responsibility to invest in the technical skills our economy will need in the future.

Conclusion

I do not in any way underestimate the challenges many businesses have in obtaining suitable staff today. We live in a workers’ market in Australia to a degree unmatched in my 32 years in politics.

One has to go back to before the doubling of unemployment in the Whitlam years to find anything comparable. With Australia having largely dismantled the protective wall that once surrounded it, what emerges is a picture of unparalleled economic strength.

Now the challenge is to build on that strength by maintaining our economic flexibility while investing in a more skilled and motivated workforce. Today’s announcement demonstrates this government’s commitment to a national reform agenda that will further increase workforce participation and productivity.

I thank my colleagues the Minister for Education, Science and Training and the Minister for Technical and Vocational Education for their contributions to the preparation of these policies.

As a matter of courtesy to the Leader of the Opposition, can I inform him that I will not be able to hear his reply, as I normally do in these matters, because of a luncheon engagement with the visiting Prime Minister of East Timor. In that vein I commend this statement to the House. I present the following document:

Skills for the Future—Ministerial Statement, 12 October 2006.

See this speech in context