SIMON BIRMINGHAM: It is a delight to be with you all at the INAP conference today. Can I start by saying that it is always a pleasure at gatherings such as this, to follow on from the traditional welcome to country provided by Australia’s indigenous peoples and particularly today in the case of the Wathaurong people and I do acknowledge their very special connection to country, not just the Wathaurong people, but all of Australia’s indigenous peoples and nations and their connection to the country of their elders and their past, present and future.
It is a real pleasure, of course, to address an esteemed international gathering like this one with more than 100 delegates attending from many different corners around the world, around 12 different nations including Switzerland, China, Ireland and the United States. It is a demonstration that it is a truly international gathering and a real opportunity to share leading practice and innovation in the field of apprenticeship delivery and policy.
I do want to welcome you all to Australia on behalf of the Australian government to, in particular, the beautiful city of Ballarat, a slightly frosty city of Ballarat this morning, but beautiful nonetheless and it is indeed turning in to an outstanding day outside and I hope that outside of the conference you will all get to enjoy some of Australia’s magnificent beauty and features of the new spring weather that is upon us and some of the wonderful land that you indeed heard of before.
It is a special pleasure as well to have this conference hosted here at the Federation University. Federation University is a leading provider of not just higher education qualifications, but a supporter of vocational education and increasingly involved in providing leading policy and alternatives in school to higher learning transition pathways and I’m very pleased that Federation College, a key part of the Federation University, will be one of our two pilot programs for the Pathways in Technology Early College High-School, the P-TECH model, that we are trialling in Australia, adapted from the United States and that here in Ballarat this university, through the Federation College, will be a leader in that P-TECH program, providing a new alternative and a new model for employers to work with school students and to provide them with the type of knowledge and learning experience through their schooling that can equip them best for employment in to the future. So, it is a great opportunity, I think, for all of us, but particularly for Federation University to demonstrate leadership and innovation in this space, just as the people in this room do so in their fields all around the world.
Just last week in Australia, some of our biggest corporate, union, welfare, economic and academic leaders came together for the National Reform Summit. It brought together around 90 such figures representing some of the most significant commentary and policy and analysis and leadership organisations in Australia outside of the political sphere. The 17 page document produced at the end of the Summit called for reform of tertiary education – including and vocational education and Training – to provide qualifications relevant to current and future market requirements. This was one of the most particular areas of commentary by the National Reform Summit and it was a demonstration that our business, our union, our welfare leaders all recognise the vital importance of vocational education, apprenticeships, traineeships as pathways to greater productivity, greater economic prosperity and, of course, maintaining livelihoods and lifestyle choices for all Australians. It also throws out some challenges because there is a sense that there is sometimes a mismatch between the qualifications on offer and the needs of business and, as a government, our priority has been very much to try to ensure that reforms to vocational education link training to jobs. Link the content of training to the skills needed for jobs because that, of course, is what is meant to be at the heart of vocational learning. The beauty of the apprenticeship model is because of the work placed nature of the learning that occurs through the apprenticeship model, we can have great confidence that it is always up to speed in terms of its linkage with employment outcomes with the needs of business and it is why I think it is such a successful and iconic model here in Australia and many other corners of the world.
It is incredibly valuable to me to have such a range of international experts on apprenticeships in the one place – so many different backgrounds because apprenticeships policy is not something that we should look at in isolation in a country like Australia, it is something that we can learn from each other in regard to.
As the Australian Minister, just in my short 8 months or so in this role, I’ve noticed just in the English speaking world, some of the particular focus on driving greater interest in apprenticeships. Of course, in the United Kingdom where it was a key feature of the recent election campaign; the commitment of the government to 3 million apprentices. To see Hillary Clinton in the United States, make it a feature of her campaign in relation to the type of tax credits being giving to business to hire more apprentices. It shows that apprenticeships, just as they’ve developed in a very iconic and leading fashion here in Australia and in nations like Germany where INAP initiated itself, demonstrate the real importance of continued support for apprenticeship models in our economic and political landscape.
The conference theme – Architectures for apprenticeship: Achieving economic and social goals – is particularly pertinent given the economic challenges that we and other nations face around the world. Although the world way have been feeling like it was moving toward some sort of equilibrium following the global financial crisis, the softening of the Chinese economy and the subsequent flow on to financial markets all over the world demonstrates this is not a time for complacency, but a time for continued action by governments around the world to support workplace policies and training policies that can lift productivity. It is clear the need for strong policies and programmes to achieve economic and social goals must remain an imperative for governments the world over because apprenticeships deliver both economic objectives through increased productivity and social objectives through increased participation.
Here in Australia, we have around 316,000 apprentices including more than 2,000 here in Ballarat. Apprentices make up around 3% of the national workforce. This is a significant proportion of workers given apprenticeship completers go on to perform high-skill roles which underpin a sizable part of the productive economy. These are the people who build and maintain our towns and infrastructure, who keep our manufacturing plants operating, who support our mining industry and who keep our transport fleets on the road, who underpin our leading tourism and hospitality industry and who are increasingly important and critical in many of the high technology pathways that will become more prominent in the future, but at a social level they are also quite transformative. Last week, I joined our Prime Minister on his annual one week stay in a remote indigenous community. This year, that occurred in the Torres Strait Islands at the northern most point of Australia. I was delighted to spend time there and to meet a small local business, K&M Plumbing, where somebody from mainland Australia had moved to Thursday Island a decade or so ago. In that time he had trained 3 local indigenous lads as skilled and trained plumbers who are now working alongside him. He has five apprentices that he currently employs as part of his plumbing business there on Thursday Island. The newest, a young woman, a young indigenous woman, in the plumbing sphere; perhaps the only indigenous woman in a plumbing apprenticeship in Australia I would hazard a guess. Those five indigenous apprentices complimented by the three indigenous young men who are skilled and qualified in their trade are a demonstration that this man will have left a transformative legacy on the social infrastructure and the employment and economic structure of Thursday Island in the Torres Strait. In an area with few qualifications and few skills, they now have skills to go on. That when he exits his business, we will see a truly indigenous run, indigenous owned and indigenous operated businesses running the plumbing services of the Torres Strait. It is a demonstration that apprenticeships, through the gift of employers who are willing to invest in them, have enormous benefits to individuals and to communities and can lift people out of poverty situations.
Without a strong, consistent supply of apprentices, Australia’s economic performance would be placed at risk. Apprentices provide, of course, that underpinning of the high skilled workers, as I said, as well as the proven earning and learning pathway for the individuals who undertake them. They apply to all manner of individuals, school students, school leavers, disengaged youth, the unemployed, mature aged workers, career changes, all of whom go on to use apprenticeships to achieve their skilling and employment goals in different ways. They provide employers with the means to develop their workforce in ways that meet their particular skill and business needs and, of course, deliver those flow on benefits to local communities.
In Australia, Small and Medium Enterprises are the engine room of our economy and apprentice employment. They make up 96 per cent of apprentice employers and employ 66 per cent of all apprentices. The history of apprenticeships, as you all know, stretches a long way back. In Australia, they have been intrinsic to skills development since European settlement. Apprenticeships have been intrinsic to skills development here since European settlement. The system of indentured, entry level training for young people has existed for centuries and, during that time has evolved to adapt to our changing social, economic and labour market environments. The social and economic context in which apprenticeships are delivered has shifted, particularly in the last 30 to 40 years. Originally, the apprenticeship model applied exclusively to skilled trade and craft occupations.
In 1985, the first major reform to apprenticeships took place following a Committee Inquiry into Labour Market Programs. This saw the introduction of traineeships, which extended the apprenticeship model to a wider range of occupations. Traineeships differ from apprenticeships in that they generally occur in non-trade occupations and they typically take between 6 and 24 months to complete. The number and range of apprenticeships offered has altered significantly, but in 2014 we saw some 347 different occupations in Australia with some form of apprentice of trainee model in place. Expectations from both students and employers have changed — so too have training delivery models — and these continue to evolve. The challenge in Australia is in ensuring our national system can meet the demands of a rapidly changing and modernising economy while delivering what employers need in a timely, flexible way. We need to ensure apprenticeships remain a highly regarded and sought after pathway into employment for individuals who face an ever increasing range of options to develop their skills.
We see great strengths in this system. There are many things that do work in relation to apprenticeships. It of course helps to deliver highly trained, highly skilled individuals and it is well regarded internationally and that is demonstrated by the presence of so many of you here today and this conference coming to Australia. Apprenticeships is something that sets us, and a few other economies, apart from many other countries of the world and it is a model that I know many developing countries are looking to emulate where they possibly can.
Apprentices get high quality, on the job training, and can earn while they learn in most occupations, as well as in traditional trades. Employers highlight that a key strength of apprenticeships is the work-integrated learning model. As I mentioned earlier, employers are able to train their apprentice in ways which suit their business needs. In addition to on the job training, apprentices undertake structured off the job training with a Registered Training Organisation. Completing apprentices get a nationally recognised qualification that can take them anywhere in Australia, and is also highly regarded overseas.
These strengths have underpinned the success of apprenticeships here in Australia, but there are signs improvements need to be made. The number of those starting an apprenticeship in Australia has fluctuated since 2007, and has been declining since 2012. In terms of boosting the status of apprenticeships, we support the Australian Apprenticeships Ambassadors program which highlights real life apprenticeship and traineeship stories. Our apprentices and our ambassadors have a key role to play. Apprentices should not be seen as inferior to university graduates and apprenticeships need to be promoted as a highly valued training pathway. More than 150 people have been appointed as apprenticeship ambassadors to share their stories and tomorrow, I believe, you will hear from a group of such ambassadors and world skills panellists during the session: beyond the classroom – promoting apprenticeships as viable career pathways to industry and society.
Our overall financial commitment to apprenticeships as a federal government is significant. In 2015/16 we will invest some $635 million in supporting apprenticeship arrangements. In addition, around $188 million will be expensed in payments under the trade support loan program. The challenge for our government, as for any government, is to ensure that every dollar is being well spent and well targeted to giving positive results to our apprentices and employers, particularly when we’re looking at workforce participation and youth employment and engagement.
It has never been more important to get more people and more businesses embracing the opportunities that apprenticeships have to offer. With an ageing population in Australia, workforce participation is projected to decline. This will create additional pressure on our economy. Apprenticeships can provide a platform for extending engagement in the workforce for those looking to maintain or change employment. Evidence suggests mature aged apprentices 45 and over are more likely to complete their apprenticeship. The unemployment rate for young people in Australia is just under 14%, double the national rate. Good by world standards, but unacceptable for us. Here in Ballarat, youth unemployment equally sits at around 14%.
Apprenticeships help young people get meaningful employment and to move more confidently from school to work. Not only do young apprentices, school leavers, gain specific skills relevant to a vocation, they also gain the cultural and values based knowledge and experience that helps set up a lifetime of working culture and success. At the end of many apprenticeships, people can enjoy a salary higher than many graduates get when they first leave university and our census data demonstrates that more Australian business owners come with a vocational qualification than hold a university qualification, thereby demonstrating that apprenticeships and vocational qualifications sit very much at the heart of an innovative, competitive and productive economy.
Around 13% of young people aged 15-19 who are in employment are currently undertaking an apprenticeship in Australia. It is a very strong base but it is one that we are determined to grow. School based apprenticeships provide one avenue to start an apprenticeship while finishing secondary education.
Overall, our government is committed to reforming training delivery and the Australian apprenticeships model to best support the needs of a contemporary workforce. I noted the comments in the introduction that vocational education is in some ways a neglected policy area. I suspect that in an Australian context, particularly over the last few months, there may be some who feel that the rate of attention that vocational education is receiving is reaching a rather intense level in terms of policy reform. But I’m not about to ease up in that regard because while we have many reforms underway already, I do want to make sure that we use the interest and the focus on vocational education at present from leaders, such as those at our national reform summit, to enhance all areas of vocational learning including apprenticeships. That’s why I want to establish, and will be establishing, a new apprenticeships reform advisory group to have a close look at how we can strengthen the Australian model of apprenticeships.
The advisory group consists of industry and government representatives that will help shape future reforms to the Australian apprenticeships system. The Advisory Group will review and consider evidence and industry views and provide their advice to the Australian Government later this year. It will look at three particular policy areas, in order to set out a path toward ensuring that the significant taxpayer investment in apprenticeships is targeted toward positive outcomes.
The first of those three areas I want this advisory group to look at will be how apprenticeships work and how we can make them work most effectively. As I mentioned earlier, the Australian Apprenticeship Incentives Programme is projected to provide incentive payments to nearly 80,000 employers, and has a budget allocation of $435.3 million. And yet, I regularly hear from employers that this incentives program does not provide enough incentive to take on an apprentice.
We have to ensure that this significant taxpayer incentive into apprenticeships is better leveraged – and that is a key task for the new Advisory Group I am announcing today. Past changes to apprenticeship incentives programmes have led to a complex system. As I mentioned earlier, the number of those starting an apprenticeship in Australia has been declining since 2012. Reflecting on the reasons for this is instructive when we devise the way toward a stronger apprenticeship system. The interplay between incentives and the number of apprentices in training is clear. In the 12 months after the previous Government discontinued the $1500 standard employer commencement incentive for existing worker apprentice and trainees in non-National Skills Needs List occupations, apprentice and trainee commencements halved from 126,200 in the June 2012 quarter before the cut, to 61,600 in the June quarter after the cut. Apprentices and trainees in-training dropped by more than 100,000 over the same period.
By first increasing and then removing these types of incentives, the previous government encouraged employers and apprentices to finish an apprenticeship earlier in a rush to benefit from the short term spike in funding. This then artificially inflated completion numbers over the same 12 month period and as a result there was a decline in completions between June 2013 and September 2013. It is very clear to me that incentive payments from governments can have a significant effect, but that any adjustments to incentives need to be carefully considered and modelled to ensure that it improves rather than impedes the number of apprentices in training, the quality and duration of that training and, of course, ultimate completion rates. My hope is that this advisory group will consider the best ways that incentive programs can be redesigned to best support employers and industry to take on additional apprenticeship commencements and to support them through to completion.
Linked to this is the second area of policy that I want this reform group to look at which is pre-apprenticeship programs. Employers have expressed concerns about people being unprepared for the apprenticeship they undertake. Research indicates targeted support for apprentices, particularly at the very start, can make a positive difference to outcomes. It is clear that more experience from a person undertaking an apprenticeship, makes for more informed apprentices. The better informed apprentices are about the nature of their apprenticeship, the work involved in the trade they’re undertaking and their future career paths, the more likely they are to get the apprenticeship and to complete it.
Stakeholders have raised concerns with previous approaches, including the absence of a national standard and framework for them has seen these models fail in the past. For pre-apprenticeship programs to be successful, industry needs to get on board. We must ensure that just as with the apprenticeship, there is a real work experience aspect to any pre-apprenticeship models that ensures the experience is of value and is reflective of reality. I look forward to working with industry and the reform group delivering models for pre-apprenticeship training that can give people that necessary real experience in future.
The final policy area that I hope the working group will look at is alternative apprenticeship delivery models. Exploring flexibility in the training system and the benefits of alternative models for the structure and delivery of apprenticeships. We must be honest and recognise that industrial relations decisions and wage rate decisions in recent years have increased the cost of employing apprentices and a number of industry sectors have highlighted those costs to me as a disincentive for taking on new apprentices. I’m grateful for the input of many industry bodies, including Master Builders and NECA, who are thinking innovatively about alternative apprenticeship delivery models. A range of factors have limited the spread of flexible training arrangements throughout industry. Challenges include cultural resistance to change by some training organisations, and perceived regulatory complexity of the system.
Research indicates some large employers and Registered Training Organisations can customise training to their business needs. This flexibility needs to be available to all businesses. We need to identify and consider models with potential to promote more flexibility in the system. Responsibility for apprenticeships is currently shared between federal, state and territory governments. State and territory Ministers with the responsibility of skills and training have agreed to consider a shift in responsibility for vocational education and training to the federal government. Employers and apprentices have indicated that inconsistency across jurisdictions makes it difficult to engage with the apprenticeships system. As I have said, we are working with states and territories on this to provide clarity and consistency for all stakeholders, but I do hope that consideration of the power sharing arrangements between our levels of government can enhance that even further.
So in closing, ladies and gentlemen, as a government we remain very committed to Australia’s national skill development, to training and employment programs and to an apprenticeship model that is world leading. We recognise for our well regarded apprenticeship model to continue to be world leading and well regarded in all corners of the globe, we need to continue to reform it to keep those key attributes in place. Those key attributes, of course, are about the workplace experience, the on the job learning coupled with recognised qualifications and of course complimented by the highest quality of training. We appreciated the need to optimise the apprenticeship impact and to get the architecture of it right to ultimately support our continued economic growth. We also know that we can learn much from everybody else around the world and so it is a delight to have all of you here in Australia at present and to have a discussion such as this occurring, just as the working group that I’m establishing will commence its deliberations because I have no doubt that the different views and experiences of the people in this room and the different understandings that have occurred in other parts of the world in enhancing apprenticeship models can be lessons for Australia, just as I trust our experiences can be lessons for the rest of the world. So, thank you very much for your time and attention today, good luck with your discussions here, I look forward to having some one on one meetings with some of the significant international guests here about their experiences of the apprenticeship system and I look forward to hearing the overall outcomes of your conference deliberations. Should time permit, I am more than happy to take questions, but it may be that I’ve already taken you over time already. So, thank you very much for your patience and for listening and for, more importantly, your participation today.