Well, thank you. Thank you very much Lucy, good morning everyone, to Tim and Rebecca and thank you for the opportunity to come and speak first up at the AIC SA Conference this morning. I gather you had a successful afternoon yesterday, I wish you every success during the course of today’s discussions.
You know, it was very early on in my time as Minister for Education and Training that I came home from Canberra one Friday morning just in time to take my then-five-year-old daughter – who’s still five just – to school. And, on the way to school, Matilda said to me, Daddy, after school today can we go to the moon? I said, Tilly, the moon is a long way away. It’s not very easy to go to the moon; I don’t know that that will be possible. But, Daddy, can we try after school today, can we try and go to the moon? Well, Matilda, you’d need a rocket ship to get to the moon and Daddy doesn’t have a rocket ship and Mummy doesn’t have a rocket ship so, no, we probably can’t go to the moon. Well, after school today, can we go and buy a rocket ship to go to the moon.
Well, Matilda, rocket ships are very, very expensive and Mommy and Daddy probably don’t have enough money to be able to buy a rocket ship even if we knew where we could buy a rocket ship from. Well, you’ll just have to work harder Daddy, won’t you?
Now, I tell that story because across both my portfolio of Education and Training but also overall in the Government’s direction, it encapsulates many things. Of course, it’s a nice light-hearted story to start with but as Minister for Education and Training our ambition, of course, involves ensuring that all aspects of our education and training system seek to harness that innocence of curiosity, that desire to know and understand things that are far, far away, and to build that into capability and knowledge and ingenuity and curiosity that stretches through life that drives a more innovative workforce, more innovative economy, allows us as a country to continue to make the types of changes that we are making from an economy fuelled very much by the mining and resources boom to one that is increasingly reliant upon the services and other aspects of our economy to create jobs and opportunity.
And also the fact that she recognises that work ethic is important. Sure, she puts that work ethic on Mummy and Daddy’s shoulders rather than her own at present in saying to work harder but, of course, it is a recognition that as a country we have to continue to focus on the quality of our output, on the productivity of our nation, and what it is that we can do to maintain ultimately our competitiveness. And it’s with that the Turnbull Government is really striving now to implement across my portfolio and more generally a range of policies that are designed to try to equip our workforce for the future and drive the competitiveness of Australia.
This morning, I’ll try to touch quickly across a few of those, particularly some of them as they relate to South Australia. To the big picture first of all, to the Australian economy and where we sit, and we sit in a very envious position. We have now put together 30-odd years of consecutive economic growth: the envy of pretty much any Western country in terms of that steady, consecutive [inaudible], governments have come and gone in that time, the Australian economy has kept on growing. And that is credit to the agility of the Australian economy, to the outward look of the Australian economy. The fact that at times we have grown because of our engagement in Europe or the Americas, at others times we’ve grown because of our engagement in Asia. We’ve seen Asian credit bubbles come and go, and we’ve rode through that. We’ve seen a global financial crisis come and go and we’ve rode through that. All of those different battles and hurdles we have managed to overcome.
Over the last year, we’ve seen around 180,000 jobs created nationally. Good news, but absolutely we feel certain pressures. We feel pressured in particular at present that wages growth is very flat compared to where it has been through much of that period of economic growth and, of course, that creates less of an impression and a feeling of wellbeing and growth across the economy because people don’t see it in their hip pocket, in their take home salary, in their wages. And, of course, that is a factor of very low inflation factors, very low nominal GDP and the type of price restraint that flows through into wages restraint. Our challenge is to make sure that with those low inflation factors, which are driven in part by the fact that our economy has come off of a period of significant boom, we are making a transition as I said before, into a more services-oriented economy.
We’re making up well in many ways. Yesterday morning I spoke to the International Education Conference in Melbourne. And international education, conveyancers I’m sure would well and truly know in terms of where parts of the property market have gone, has become an enormous, enormous part of our economy, our third largest export earner, a sector that generates around $19 billion worth of activity for Australia. In fact, at any one time we have around 500,000 international students studying in Australia. That’s one in 50 people in our country at any one particular point in time are students from overseas in our universities, our TAFEs, our private training providers, our schools, who of course are spending up on accommodation, dining, have family members that come and visit; all those different aspects.
And working to ensure we continue to grow that international education market is a critical part of our overall plan and effort, it’s why we’ve released recently the first ever International Education Strategy for an Australian Government. It brought together the ministries of Foreign Affairs and Trade, Immigration, Industry, and Education to make sure that across the whole-of-government, we are working closely with our education providers to keep growing that type of industry that is sustaining a new economy across Australia but an economy that creates many, many different jobs and supports many different jobs.
Overall, we’re looking to try to keep driving down cost pressures in business, particularly from a taxation perspective. In our first term, we sought to constrain pressures in energy prices that are still, of course, facing real pressure, particularly in a state like SA, with the removal of things like the carbon tax, took out certain cost pressures in relation to the energy market. We’re now seeking to implement some income tax changes that saw small measures of tax cuts on income tax passed through the Parliament a couple of weeks ago; and we’re progressing with our company tax reforms, which are geared very much at small and medium-sized businesses first of all receiving reductions in company tax to try to make them more competitive places to invest relative to other countries of the world where our company tax does sit a little higher than others on average. But, of course, also to make sure those small and medium business, businesses that particularly underpin the South Australian economy, actually have a bit extra left in their pocket to invest back into their staff, back into growing the business, back into new opportunities that can continue to grow and sustain our economy.
The trade deals that we’ve done as a Government, we’ll continue to work on, are equally about backing the best of Australian business to be able to grow. Free trade agreements in the last term with China, Korea, and Japan are critical arrangements that we’re building on through discussions with Indonesia, India, the Trans-Pacific Partnership more generally. And the types of businesses that they’re backing are businesses that in South Australia we should recognise as household names but also big employers.
Golden North Ice Cream has seen enormous growth under some of the trade opportunities that have already opened up through increased market access into Asia. Thomas Foods, traditionally just an old, wholesaler of meat has, of course, shifted to be a value-added producer and now one of South Australia’s biggest companies. When you come here during the footy, you’ll see their marketing splashed all over this stadium but, of course, they are selling our high-value, high-value-added products into the markets of Asia and doing so more effectively with more access as a result of the type of trade deals we’ve got.
Seven Fields Wines, another one who’ve spoken about enormous new opportunities they get because quotas and barriers to Australian wines going into China are reduced as a result of the type of deals we put there. These are all South Australian businesses, these are largely family-owned South Australian businesses, and they’re business who are growing and getting more export dollars in as a result of these type of new trade access arrangements.
So, across the board, these are important reforms that we hope will continue to drive that competiveness and investment in our economy to allow us to sustain, year on year, the type of growth that we need to create more jobs into the future. Now, my portfolio of course is about the human capital, the skills of Australians, to be able to fill those jobs as we create the economic circumstances for them to be created. And across each area of my responsibilities, from early education and childcare through to schools, vocational education, and higher education, we have significant reform agendas in play.
In the early years, the reform agendas are driven by two attributes. One is of course quality early learning experiences. We know that those pre-school years are critical to actually [inaudible] school. So, getting the measures right to ensure that through early education, through childcare services, through pre-school, the basics of reading are being established so that children actually start on our early education, our childhood measure; start school capable of succeeding and participating in the school environment is critical.
It’s also though driven by supporting workforce participation. We have major reforms before the Parliament to change the way in which childcare subsidies operate so that we shift some of our payments that are going to families from passive payments that are simply income support to providing great support to low and middle income families to pay for their childcare so that our reforms can see the lowest income Australians who currently receive about 72 per cent of childcare bills paid for when they’re in the workforce, shifting up to about 85 per cent of those fees being paid. That we will remove the cap on childcare subsidies for most working Australians so that there’s greater support for participation in the workforce by parents of young children and giving them that assistance to do so and shifting some of those payments from government, as I say, from passive welfare into supportive, active engagement in the economy.
Across the school spectrum, we released in the Budget this year a document called Quality Schools, Quality Outcomes that outlines a range of reforms we want to see right across school education in Australia. They include at the earliest years a year one soft touch assessment, where we want a standard approach to recognising whether children are learning phonetic awareness, the basic construction of sounds and words, their reading skills, their basic numeracy skills, so that we have common approaches to recognise where children are not meeting the standard we expect them to be at by age five or six and therefore are able to ensure there are common approaches to early intervention for those children who need help.
At present, we estimate around 200,000 kids in our school system can’t read properly. And if you can’t read properly, of course, you’re not going to do terribly well with any of the other things that are so important to learning and succeeding in your school education life or other aspects of education. So, getting earlier assessment there that allows for earlier intervention can, of course, make the world of difference because left as it all too often is now until age eight or nine when students might be sitting year three NAPLAN-type tests, it is too late.
Equally we have ambitions at the other end of the spectrum to see minimum standards in literacy and numeracy apply for school leavers so that you as employers often when you look to interview somebody who waves around a high school certificate have confidence that it actually means something about the minimum literacy standards and minimum numeracy standards that that child has. We’re not talking about every single person undertaking year 12 having to do maths and English, but we are saying that every single person who’s leaving year 12 should have minimum standards in their literacy capabilities, minimum standards in their numeracy skills, at least up to a middle high school level that have been successfully obtained to actually warrant that high school certificate.
Equally, for those who do have higher ambitions when going on to university, we want to see more of them actually sticking with the study of maths and science. Too many universities spend too much time now providing catch up maths lessons to people who’ve enrolled in engineering because they dropped maths before they got to year 12. Of course, those types of disciplines require maths skills and require kids to keep them up so setting in place better minimum entry standards into universities that ensure schools, parents, and kids keep the ambition and stay [inaudible] enrolment in some areas of maths and science, is another critical area of our report.
Equally, we want to back our most competent teachers. We’re asking the states to look at shifting some of the pay structures for teachers from payments that are currently based largely on time served, to payments that are based on professional recognition, of achievement, competency, leadership skills. Not pay for performance in the sense that we’re going to pay teachers whose classes do better more because that comes with all sorts of challenges in terms of the type of schools and the differences in those schools. But pay at least for professional recognition of skills and competencies and rewarding, therefore, our best and brightest and most competent teachers to keep them in the profession and ideally keep them and incentivise them to go into some of the schools that need the help the most.
In the higher education landscape, I want to create a situation where our universities are better encouraged to specialise, to pursue their areas of excellence. And so the payment approach we have for universities is under review at present and we’re having a look at how we can best shift the incentives for universities to hear them, to think about those areas that they are most excellent in rather than every university having to offer exactly the same course offering and, in doing so, becoming a [inaudible] sort of likeness of one another. We think competition within our university sector is important but actually making sure they do so in a way where they’re backing the means of their economy and local skillset.
I’ll wrap up so that hopefully we might have time for a couple of questions in the vocational sector because I am aware that there’s an interest in the reforms we’ve announced most recently around the ending of the VET FEE-HELP scheme and its replacement model, the new VET Student Loans Program. The principle behind providing student loans to vocational students is a critically important one because it provides us with the opportunity to treat those students in the same type of way as we treat university students to say you don’t need to pay upfront fees, we’re going to back you to undertake studies that we think are just as worthwhile and valuable as we do studies in the Higher Education landscape.
The problem with the VET FEE-HELP program though was it had essentially no safeguards around it when it was established and opened up in 2012. We saw poor-quality providers providing loans to students who were inadequately prepared, if they were prepared or interested at all in the studies they were being signed up to, in courses that all too often were being over-saturated with graduates with little or no employment prospect at terribly inflated prices. Just a couple of numbers, the scale of the loans we were offering under the VET FEE-HELP program grew from around $350 million in 2012 across the country to $2.9 billion by 2015. We saw course fees in some areas go from about $5000 to about $30,000 and, yet, some of the providers were offering completion rates that were less than 10 per cent. So, transparently, this was an area of gross national shame and an enormous wastage of taxpayer’s money, debts that were being incurred by students many of whom will never pay them back but still debts that have real impact on their lives because it affects their credit rating and other factors that will go through their lives with them.
So, we’re bringing the old failed scheme to an abrupt end at the end of this year and seeking to replace it with a new model built from the ground up where we have tougher barriers to entry as to the providers who can offer courses. We’re letting the TAFEs and the public providers straight in but private providers will face much higher barriers to entry for courses in future. We are putting loan caps in place to bring down the pressure on prices. So, courses are being aligned with what we believe reasonable cost of delivery is in terms of the loan caps of $5000, $10,000, and $15,000 that are being applied, with exclusions for very high-priced courses, like aviation and so on, so that we can deal with those on a case-by-case basis.
And we’ve sought to limit the scope from more than 800 courses to around 360. Our approach for doing so has been to use the skills needs lists that all of the states and territories release and to say if you’re on two skills needs lists across the country, then you get automatic access. We’ve added on to that then the areas of STEM skills as well as some agricultural sector courses that we could see as automatic pathways in. We’ve put that list out for consultation and Rebecca told me on the way in that apparently conveyancing isn’t on the list, so I gather I’m going to be lobbied afterwards and you argue the case, and of course it’s out for consultation for genuine reason.
Most of the courses that have dropped off are courses that I would either dub as lifestyle courses, in some cases. Others are courses where we would genuinely and reasonably expect that employers would be picking up the cost of them. For example, there were diplomas of witness protection programs in place which are pretty much only delivered by police forces and, of course, they’re paid for by police forces and have no need to exist in a otherwise government-subsidised, open access scheme. But I recognise that there will be others and if there are genuine cases, potentially like conveyancing, where we actually have limited scope for the employer to cover the cost and the absence of an [inaudible] loan from the Government will prevent people from coming in, diversifying their [inaudible], starting up new businesses, the types of people we want to see, then we’re open to that and, of course, we’ll listen to arguments from the sector in doing so before we resolve finally that list over the next couple of weeks.
So, look, I want to thank you as business people, as leaders in South Australia for what you do to facilitate much of the activity and growth in our economy. Our decision to maintain negative gearing arrangements, our decisions to try to create more competitive environments for business that I spoke about before are all decisions designed to continue to facilitate investment and growth in our economy. Our education and training policies are designed to try to make sure that we give Australians the best possible capacity for that economic growth because it is from that that we achieve and create more jobs in the future, jobs that maintain Australia as a high-wage, high social safety net, high quality of living country that we all enjoy living in. So, thank you very much, thank you for the opportunity to come and speak today. If there’s time for some questions, I’d love to take a couple, but otherwise I wish you all the best in your deliberations today and your business activities in the future. Thank you very much.