Skilling Australia Fund

Speech
  • Assistant Minister for Vocational Education and Skills

Good Morning and can I say what a great pleasure it is to be with you this morning.

I thank you for inviting me here to talk about the new way forward for vocational education and training announced in last night’s federal budget.

The Turnbull Government has made an unprecedented, ongoing commitment to skilling Australians. We are committed to ensuring Australians can meet the rapidly changing needs of our economy.

Importantly, our changes will help provide the skilled workforce industry and employers are looking for, not just now, but in the decades ahead.

This has been a consistent message from stakeholders around the country during my extensive consultations over the past nine months since I came into this role.

Before I go into the details of our Skilling Australians Fund, I’d like to give you some background around my thinking in developing this new policy and a brief outline of its goals.

It will supersede the National Partnership Agreement on Skills Reform that delivered on average, $350 million a year to states and territories, 0r $1.75 billion over 5 years.

It should be noted that $1.1 billion of this funding under the NPA was for states and territories to achieve structural reform in VET, and they assure me the milestones have been met.

The remaining $600 million was for training outcomes.

What improvements in key indicators have we seen in VET over the five years of the NPA? Statistics suggest very little and in fact, in the key area of apprentices it’s been quite the reverse.

To me and many others, the most alarming statistic in the vocational education sector has been the significant decline in the number of apprentices in training.

The most recent available statistics reveal apprentice numbers had fallen by 46 per cent in four years.

In fact, the biggest annual fall occurred in Labor’s last year in office when the number of apprentices in training collapsed by just over 110,000 – or 22 per cent, and this decline followed cuts to employer incentives to take on an apprentice by the previous Labor Government.

As many here have indicated, the subsequent decline in apprentice numbers threatens the capacity of some major industries to meet their expected growth, not to mention the thousands of job opportunities that could be lost to Australians.

It was therefore clear what our priority had to be and I am now embarking an on an ambitious three stage program that will firstly;

  • Arrest the decline in Australian Apprentices in training.
  • Second; restore the number to 2012 levels when Labor’s withdrawal of employer incentives contributed to a massive decline, and
  • Further grow the number of apprentices in training to meet our future workforce needs.

To achieve this, I will work with states and territories to identify jointly funded projects to deliver an extra 300,000 apprentices over the next four years.

On June 2, I will be meeting with my state and territory Ministerial colleagues to commence negotiations that will deliver these outcomes.

What makes this strategy different you may ask?

The new Skilling Australians Fund announced by the Treasurer last night will be permanent; it will be targeted; and it will be outcomes focused.

A permanent Fund will end the constant uncertainty faced by the sector each time a National Partnership Agreement is coming to an end.

I’m sure you all agree that this alone is a welcome change.

The Skilling Australians Fund will be targeted towards skilling Australians in those occupations in high demand.

Priority industries include, but are not limited to;

  • Tourism
  • Hospitality
  • Health and Ageing
  • Engineering
  • Manufacturing
  • Building and Construction
  • Agriculture, and
  • Digital technologies

It will also focus on careers in sectors of future growth as well as those in regional and rural areas.

Most importantly our strategy will be outcomes focused to ensure that states and territories must achieve agreed milestones to qualify for funding.

The Skilling Australians Fund commits $1.5 billion over four years – a funding increase equivalent of about $70 million compared to the previous NPA.

This funding is on top of the Government’s yearly commitment of $1.2 billion to support Commonwealth Skills programs and the additional $1.5 billion per annum of Australian Government funding already provided to state and territory governments for their VET sectors each year.

The Fund marks an unprecedented re-engineering of how the Federal Government works with state and territory governments in the VET sector.

The change will help provide opportunities for all Australians to have access to the right skills for them to succeed.

By working together with states and territories to provide targeted funding, we can deliver up to 300,000 apprenticeship and trainee places.

As mentioned, the permanent Fund will focus on increasing participation in priority occupations, future skills needs, supporting structural adjustment and meeting the skills needs in regional Australia.

It will also expand the apprenticeships model of training.

I am committed to employment outcomes; a commitment I know is shared by my state and territory colleagues.

The Skilling Australians Fund will prioritise projects that reverse the decline in apprenticeships and traineeships in targeted areas.

The targeted nature of the funding will ensure those who complete training are well placed to gain employment and contribute to the economy into the future.

Importantly the Skilling Australians Fund introduces a new approach to Commonwealth support for state and territory training systems.

It will only support state and territory-led projects that deliver on the aims of the fund.

This is in stark contrast to the approach of the previous National Partnership Agreement for Skills Reform.

Under that Agreement funding was supposedly provided to achieve reform objectives, but what we saw was cost shifting by states and territories over the 5 year life of the agreement.

This was a bad outcome for all involved.

The need for better accountability and transparency is clear.

What we are offering states and territories through the Skilling Australians Fund is a genuine commitment to co-investment to boost our skilled workforce.

Good for the states and territories and good for the nation.

It will have shared funding commitments and accountability for each and every outcome.

State and territory governments have all consistently expressed the importance of a targeted approach to skills and training.

The Turnbull Government is committed to creating an environment for the investment in skills to succeed in producing better outcomes for students, employers and the economy as a whole.

It means states and territories will need to match the funding from the Commonwealth for the projects and commit to contribute an agreed level of funding for skills overall.

This is a significant and crucial change from the approach taken by the previous Government in through the National Partnership on Skills Reform.

It will ensure for the funding provided to states and territories, there will be demonstrated outcomes.

There are specific skills needs we must address as a nation and this model ensures that we meet them.

When anyone looks at the evidence, and I have, it becomes very clear that the guidelines under the previous agreement allowed the states and territories to actually withdraw money from their own respective VET sectors over the life of the agreement.

From 2006 to 2012, every state and territory was increasing the amount of funding it spent on VET, but the exact opposite occurred after the NPA was signed in 2012 and vocational education and training has suffered as a result.

The requirement under my new agreement for states to match Commonwealth funding will ensure that skills training is properly supported and end the cost shifting once and for all, no ifs, no buts – this ends now.

At this critical time for skills development in Australia, all levels of government must commit to quality outcomes.

I have listened very closely to stakeholders like you and from industry at all levels and have heard a strong and regular call for a new approach towards targeted occupations in demand and that we must address the decline in apprentices and trainees.

The Skilling Australians Fund is the new model to achieve that. 

The Skilling Australians Fund is the latest significant reform to the VET system.

The Government has acted consistently to ensure high quality, industry relevant skills for students and employers.

We have been methodical in our approach to reform. We have lifted quality, improved governance and placed industry at the centre of our training system.

From enhanced standards for registered training organisations and a stronger role for the national regulator, increased information for consumers, we have committed to ensuring the VET sector meets the needs of students and industry.

As a Government we recognise that innovation is necessary to maintain the relevance of the training system.

It is why we established the Australia Industry Skills Council and introduced a new model for the development of training packages to ensure they are relevant to the needs of industry. 

And with the new fund we are resetting the approach to the funding of VET to ensure ongoing investment in skills development and the training system can meet the needs of the Australian economy.

Since becoming Assistant Minister I have been clear that apprenticeships are my priority.

And I know I am not alone.

My consultations with a broad range of stakeholders, particular industry, have demonstrated an urgent need to boost Australia’s skilled workforce.

Stakeholders are clear that apprenticeships and traineeships are a sound model for ensuring the right mix of training and on-the-job experience.

Evidence also shows they are sound in delivering employment outcomes – with over 90 per cent of apprentices employed on completion[1].

Our Australian Apprenticeships Ambassadors include many who have gone on to amazing careers including: Scott Camm, AFL legend Kevin Sheedy and Neil Perry. I look forward to another exciting announcement later this week.

But all of us here today are too aware there are fewer apprentices and trainees now than there have been in the past.

And of those who do begin an apprenticeship or traineeship, not enough are completing their training.

This means fewer individuals and employers are benefiting. It impacts us all if we do not have the skilled workforce we need.

As a nation we have been reliant on skilled migration to help fill this gap. Skilled migrants have made a vital contribution to the economy but we recognise there is more to do to ensure we can fulfil the skills needs domestically.

That is why the Training Fund Contribution announced as a part of the changes to immigration rules will be used to train Australians to drive the future of productivity and jobs in Australia.

A focus on apprenticeships and traineeships will boost the number of Australians who choose the apprenticeship pathway, and succeed.

It will lead to more people with the skills they need for jobs in demand. More people in jobs will help grow our industries and keep the economy strong.

Industry and employers are constantly innovating and adapting to ensure they can meet the changing demands of the global economy.

Our apprenticeship and trainee system, and VET more broadly, is no different. It must evolve and innovate to meet the emerging skills and workforce needs.

This type of adaptation is nothing new to apprenticeships. A system with its beginnings in the middle ages, and is still in place today, must be adaptable.

It must also have at its core something that is timeless. I think this is the grounding in the real world of work.

It is this focus on real job experience that has withstood the test of time and proved itself to be a indispensable element of the training system.

The early forms of apprenticeships were based on experience and craftsmanship to pass on skills to future fletchers, bladesmiths and potters.

With the advent of the industrial revolution came innovations in apprenticeships with an increasingly formal workforce that needed specific skills to work with changing technology and mechanisation.

And, now again, more change is needed to rise to the challenges of the economy of the future.

Apprenticeships are without any doubt the flagship of VET, which is why I am committing a major priority of this fund to creating and embracing higher level apprenticeships to meet the rapidly changing needs of Industry 4.0 and the broader economy.

We must innovate to ensure the training system remains ahead of the needs of the economy.

We must evolve our models and how we invest in training to ensure we build on the strengths of our current system to deliver skilled Australians to meet industry needs.

Apprenticeships and traineeships, as the flagship of the VET system, are the priority of the Skilling Australians Fund.

The Fund will be targeted at reversing the decline in apprenticeships and traineeships in key areas identified by industry and states and territories.

It will be focused on meeting national skills priorities and skills in demand to ensure the funding is addressing the needs of employers.

It will place Australians into jobs that offer long term careers in growing industries.

The projects will also target specific identified growth industries, rural and regional areas, and where there is structural adjustment.

We have focused on these areas for a number of reasons:

We will meet skills national skills priorities needs by boosting participation to ensure a supply of apprentices and trainees to meet industry demand and fill skills gaps.

By increasing support for pre-apprenticeship programs we will lift the supply of apprenticeship-ready candidates, reduce the drop-out rate in the early years of apprenticeships and improve employer confidence in taking on new apprentices.

Investing in trade and non-trade apprenticeship and traineeships, including higher apprenticeships, will address the growing demand for higher-skilled workers.

It is time to modernise our investment to support growth, and service emerging and high-skill industry sectors.

Shifts due to structural adjustment, technological advances and globalisation are changing skills demand.

Regional and rural Australia will be a priority for the Skilling Australians Fund.

We know that rural and regional Australia makes up 29 per cent of our overall population share and yet accounts for 35 per cent of all trade apprentices and trainees.

Projects developed under the Fund will be prioritised to reflect the higher representation of those in rural and regional Australia in vocational education and apprenticeships.

The Skilling Australians Fund offers a wonderful opportunity to provide a positive impact on rural and regional Australia.

The Government also knows that increasing the number of apprentices and trainees who complete their training is critical.

Mentoring plays a vital role in supporting students to successfully complete training.

Our new $60 million Industry specialist mentoring for Australian Apprenticeships scheme goes right to the heart of this.

The scheme will provide over 46,000 mentoring places.

Industry will play a key role in the mentoring scheme - you will be essential in backing reforms to be delivered by the states.

There is another element to the projects under the Fund that is important to me.

Adjusting back into civilian life can be a difficult time for our former Australian Defence Force personnel and sadly it has too many tragic outcomes.

We know that getting a good job is a crucial part of assisting in this transition.

The focus of the projects will also be on supporting former Australian Defence Force service men and women to transition out of the services into an apprenticeship or traineeship pathway.

This additional support will help break down barriers which ex-ADF personnel face when looking for employment following their service.

I’m pleased that state and territory governments have all expressed the importance of a targeted approach to skills and training.

Our Skilling Australians Fund is a bold vision with a real plan and real dollars.

I look forward to working with the states and territories to ensure there is an investment in skills to ensure Australian industry continues to have access to a job-ready, skilled and productive workforce.

This unprecedented reform through the Skilling Australians Fund is a critical investment in the future of Australia.

It will ensure industry has the skilled workforce needed to grow the economy now and into the future.

The Fund will see states and territories working together to achieve common goals.

We share the responsibility for the future of our economy. We share a responsibility to be accountable for the money we invest in training.

This Partnership approach will ensure it’s a true partnership and acknowledges for the first time in a long time that the investment and outcomes are a shared responsibility.

It will support local businesses to achieve their goals by having access to the skilled workers they need.

It will get Australians into jobs, where there is a skills demand into the future, to increase productivity and help to lower unemployment levels.

Finally, it will be fundamental to the successful transition of our economy to maximise the opportunities of innovation and emerging industries.

It will provide skilled workforce and to drive economic growth.

I thank you for your input over the past nine months and look forward to working with you to achieve our ambitious targets that will be bring benefits to all Australians.

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