Thank you very much Michael. Jenny Macklin, the Deputy Leader of the Opposition, ladies and gentlemen. I'm delighted to have this opportunity of contributing to the AFR conference on Skilling Australia and I compliment the AFR on the priority it is attaching to this very important issue.
I've been asked in opening the conference to focus on what, to use an old clich‚, is called the 'big picture'. For most of my public life, the big picture, economically speaking, has been about Australia's capacity to generate good jobs. So it is significant in itself that we are here today discussing not a shortage of high-wage jobs but rather a shortage of skilled workers. The Australian economy is now in the 15th year of the longest economic expansion in half a century, perhaps the longest since the gold rushes of the 19th Century. And in the last year alone some 400,000 new jobs were created - that's the largest number of jobs created in a 12-month period in Australia's recorded history. That brings to more than 1.7 million the number of new jobs created since this Government came to office. Our unemployment rate is now at a 30-year low and, despite high oil prices, inflation is still well contained. Long-term unemployment pleasingly is about a quarter of what it was during the early 1990s. More working age Australians are in employment than ever before. And the participation rate is now at a record high of 64.8 per cent. And average real wages have risen by almost 15 per cent since March of 1996.
We live, as never before, in a workers' market. Put this together with a highly competitive global economy and the fact that Australia has largely dismantled the protective wall that once surrounded it and what emerges is a picture of unparalleled economic strength. One is therefore tempted to say that only in Australia could an environment of very strong demand for high-skilled, high-wage jobs be considered by some as a crisis. That says something about the disposition for pessimism amongst many of our commentators on public affairs.
But having said that and tried to put the issue into perspective, I do not wish for a moment to underestimate the problem relating to skills. Many industries in Australia do suffer skills shortages and if they are left to worsen they could strangle future economic growth. In some areas we do clearly have a skills mismatch. And we face a major public policy challenge to make our skills development institutions more flexible and responsive to the needs of Australians of all ages - the old as much as the young. But it is a challenge, it's not a crisis, and we should approach it as such. It is incidentally a challenge of the kind that any Australian Prime Minister of the last 30 years would have happily traded for the problems of prolonged recession, double-digit unemployment, stubbornly high inflation and natural disasters.
Skilling Australia to ensure that the growing demand for skilled labour can be met is a challenge for the entire community - for governments at all levels, for business and for workers and those who represent them, and for Australian educators and for parents. It is, Mr Chairman, as much a cultural challenge as an economic one. As a community, we must re-think some of the received wisdom about economic and social success in contemporary Australia. We need to give all Australians - young and old - greater choice and opportunities to gain and update their skills. And we must clear away obstacles to skills development, not just in our training system, but also in our system of workplace regulation. It is now nearly half a century since Peter Drucker first coined the term the 'knowledge worker'. In my view, the prism through which we have tended to view knowledge workers has been far too narrow. Knowledge is not just the stuff of people in white coats or white collars. It is to be found just as much on the construction site, on the factory floor, at the mine, and on the farm as at the office.
Skilling Australia is about mobilising knowledge, not just in the classroom, the lecture hall or the laboratory, but in every single Australian workplace. It is about unleashing the talent and potential of our enterprise workers in every field of endeavour.
As the nature of work changes, we need structures that are flexible and responsive so that our industries and our people can adapt to new challenges. Few people expect or want the same job for the entirety of their working life. They want to be able to respond to change and access education and training opportunities throughout their working lives. They also want their skills to be portable. Barriers and inconsistencies that make it difficult for workers to respond to new opportunities are no longer affordable or acceptable.
My remarks this morning will focus on three aspects of the nation's skills challenge. The first relates to our schools. The second concerns a generational failure to see trades as a successful career path. And the third is our need to tackle specific impediments to skills development that exist both in our national training system and in the regulation of our labour market.
The foundation of any national skills effort must be in ensuring that all of our children get the best possible start at school. The Commonwealth continues to fund both government and non-government schools at record levels. But we know that school funding is only part of the story. Getting the basics right in our schools is more important than ever. Ensuring that all Australian students are able to read, write and count sounds very simple. But when it comes to equipping young Australians with the skills they need for the future we cannot underestimate its importance. That is why, for the first time, the Government is making common national testing in specific areas a condition of Commonwealth schools funding. For example, by 2008 all Australian students will have their literacy and numeracy assessed at years three, five, seven and nine. Ensuring Australian parents are given useful information on which to base informed choices about their children's schooling has been another priority of this Government. Parents want clear and honest assessments of how their child is progressing at school. Under the new Schools Assistance Act, school report cards will be written in plain English and parents will be informed of their child's performance against national standards and relative to the child's peer group in school.
The second element of the national skills challenge has been a particular concern of mine over many years and that is our failure as a society to value careers in trades. Too often, Australians have been persuaded that our prosperity is reliant on white-collar workers sitting at a computer and on shoe-horning more and more young people into university courses. Too often, young Australians have been persuaded that university is the best indeed the only path to success only to find that they were undertaking subjects that failed to capture either their interest or their imagination. A 20 per cent dropout rate in the first year of university tells us something is going wrong. We have failed to recognise that our traditional trades are vital to increased productivity and growth, although it is certainly true that the manner in which these trades are plied has often been transformed by information technology. Think, just as one example, of the skills required of today's auto mechanic.
It is now very clear that we were wrong to abolish the network of technical schools that provided a path of opportunity for many young people into the workforce. As a nation, we need to redress the bad decisions that were made in the past. Trade skills, new and traditional, are as valuable to our nation's continued economic development as many university qualifications. This year's Federal Budget included the biggest ever single injection of funds for vocational education and training by an Australian Government with the specific purpose of elevating the status of trades. This included the extension of Youth Allowance, Austudy and ABSTUDY to full-time apprentices, tax exempt $500 payments at the end of first and second year for eligible apprentices, and the extension of the Living Away from Home Allowance to eligible third-year apprentices.
A flagship commitment of the Government is to establish 25 Australian Technical Colleges in skills shortage areas. We have already announced 17 of these colleges and we are determined that the first of them will be up and running next year. The colleges will address specialised training in localised skills shortages, but will also offer at least four trades including engineering, automotive, construction, electrical and commercial cookery. In addition to trade skills, year 11 and 12 students will also study English, science, maths, IT skills, employability skills and small business skills. It may well be the case, for example, that vocational education is a better route to setting up a small business than a degree in business administration. That is why many skilled workers now move rapidly from being an employee to being self-employed contractors or establishing a family businesses. The aspirations of skilled tradespeople to run their own show may afford a much firmer underpinning to an entrepreneurial culture than the halls of the academy.
Let me be clear. I do not in any way denigrate university education. But I do believe that too many schoolchildren, and their parents, have been persuaded - quite wrongly - that university is the only path to success. Rather than measure our education success solely by year 12 retention rates, a better test is the success of young adults in making the transition from school to employment. It may be a quite sensible career decision for a young person to leave school for an apprenticeship at the end of year 10 rather than stay reluctantly at school believing that the only appropriate decision is to head to university. It is better still to provide opportunities for employment training and work experience at school, rather than force all students into academic subjects which capture neither their interest or their enthusiasm. The decision on whether to go to technical college or university, to study a trade or a university discipline, should be one for the student. It should be a matter of individual choice and reflect the abilities and the interests of the student.
Part of the problem is that governments have made the acquisition and the licensing of trade skills far too hard. The agencies of government, sometimes warring across jurisdictional boundaries, have too often sought to protect bureaucratic turf rather than the interests of the trainee or the nation. Let me cite just a few examples of this. A person can be working legally and competently as a qualified carpenter in one state but if they want to work in New South Wales, they have to get a licence from the New South Wales Department of Fair Trading. This may mean that they have to do another formal assessment and incur additional costs. In Western Australia, a single licence is required to operate as a plumber and a gasfitter. Despite there being an agreement at the national level on the competencies needed to work in both areas, in other states two separate licences are required. A young person who has achieved a hairdressing qualification from a private training organisation here in Victoria can carry on that trade in London, yet they are required to complete a full apprenticeship before they can do so in any other Australian state. And one case I've been informed of was of an electrician from the United Kingdom, he was judged competent by Trades Recognition Australia, he brought all his family out to Australia only to find that he could not obtain a licence in the state in which he settled.
It is still the case that Queensland is the only State to have fully embraced school-based trade apprenticeships, to have fully embraced school-based trade apprenticeships. New South Wales and Tasmania do not provide school-based apprenticeships, while in other states the opportunities are severely limited. Existing training arrangements do not always encourage flexibility. In most States, if a person leaves a four-year apprenticeship after two years, they get no recognition for the training they have done. If they started again there would be no automatic recognition of their prior learning. With a view to addressing some of these issues that currently bedevil our vocational education system I elevated this issue at the June meeting of the Council of Australian Governments. I want to work cooperatively with the States and Territories to ensure that our federal system delivers in the best interests of the nation. We will have failed, I think abysmally, if by the time COAG meets early next year we do not see progress in six key areas. One, ensuring that there is full mutual recognition of skills qualifications across Australia. In the year 2005 if we are interested seriously about the issue of skilling Australia we should as a people demand no less of our eight elected governments at a state level and of the national government. Secondly, making progression in apprenticeships based on competency and assessment of skills acquired, rather than of the time served. Three, enabling workers to have prior learning recognised so that they don't have to spend time unnecessarily studying what they already know. Fourthly, giving workers the opportunity to gain intermediate or specialised trade qualifications on their way to full apprenticeships. Fifthly, ensuring maximum flexibility in training for employers and apprentices. And finally, providing for more efficient recognition of qualifications gained overseas. This will require cooperation across different levels of government. We need to ensure that governments are putting their energies into fighting for the best outcomes for the trainee, industry and the country - and not fighting to safeguard their bureaucratic territory.
Almost half, Mr Chairman, of the $10.1 billion that the Commonwealth will provide for vocational education and training over the next four years will go to States and Territories under the new national training agreement. Victoria, Queensland, Western Australia, Tasmania and the Northern Territory have now signed this agreement. The other three jurisdictions should do so promptly. Our investment will only pay full dividends with further reform to improve the quality and flexibility of Australia's vocational education and training system. Again, money alone is not the answer. We need to get the structures right. To this end, the new training agreement provides for, one, full implementation of user-choice arrangements; two, moving towards a nationally consistent pricing policy for training and a nationally consistent policy on fees; three, workplace relations reforms, including offering Australian Workplace Agreements to TAFE teachers; fourthly, specific targets for mature age, disabled and indigenous training places; and finally, greater transparency in reporting and public accountability. To complement these longer term structural reforms, the Government has also, as you know, increased the skilled stream of the 2005-2006 migration programme for the eighth successive year. This will provide for up to 20,000 additional places for skilled migrants.
Some of the issues which currently pose barriers to a flexible, responsive national training system do not sit within the training system but cut across a number of areas including regulation and licensing of occupations and industrial relations systems. Our current workplace relations system still restricts access to apprenticeships and traineeships. The impediments to apprenticeships in the award system are not in the main due to specific award provisions. Rather they are due to the lack of appropriate wage provisions in the awards. Gaps in state awards, in particular, have meant that access to part-time and school-based traineeships and apprenticeships is largely precluded. Despite state governments agreeing in 1999, six years ago, that labour market regulations should not impede training arrangements, a recent study has shown that, with the exception of Queensland, almost no state awards allow flexible approaches to apprenticeships. In the federal system, the Australian Industrial Relations Commission approved a model clause for part-time and school-based apprenticeships in 2000. But since then only 22 federal awards have been varied and most of them on a restricted basis. Unfortunately, the trade union movement continues to obstruct the use of part-time and school-based apprenticeships. The building industry award, for example, was only recently updated to include a modified version of the relevant apprenticeships clause. This took three years, with the union consistently opposing any move to insert the clause. This is a symptom of a system which no longer meets Australia's needs in the 21st Century. The tangle of regulations that governs apprenticeships also highlights the need for a single, unified system of workplace relations across Australia.
As part of our workplace relations reforms, the Government will take steps to ensure that employment of apprentices and trainees ceases to be impeded by inadequate industrial relations arrangements. I can specifically announce today that the Government will, in its forthcoming legislation, require the Australian Fair Pay Commission to establish minimum training wages for all types of apprenticeships, including where there are currently gaps in state or federal award coverage. Awards will also be simplified so that any provisions that currently restrict the range of apprenticeships will be removed. Many of the relevant awards do not include appropriate minimum wages. To enable students to undertake school-based apprenticeships or traineeships, the new workplace relations legislation will establish such wages. These wages rates will be set at the levels that currently apply under federal awards. The Fair Pay Commission will eventually take over the responsibility for updating and adjusting these minimum wages. And I will issue a separate statement detailing the proposal on these matters at the end of this address.
Mr Chairman, in recent months I've spoken often about the challenge of economic reform in Australia being akin to participating in a foot race towards an ever receding finishing line. Tackling our nation's skills shortage is crucial to Australia staying up with the pack in this never-ending economic race. It is a challenge which requires both the incentives and the efficiency of the market and a clear understanding of the public good which only governments can provide. It means drawing on the best traditions in education, while making them responsive to the challenges of the 21st Century. It challenges all of us to open pathways for our young, but also importantly to give older citizens opportunities to make a fresh start in our ever-changing economic world. And sometimes it demands a national view to overcome the sectional interests and parochialism that stills finds its way into our politics.
I congratulate the Australian Financial Review on its initiative in organising this conference. It's of high significance and high importance to the economic future of this country. It has the enthusiastic support of the Commonwealth Government. I hope it is successful and I hope what comes out of this meeting adds to the store of knowledge and understanding in this extremely important area.
Thank you.
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