The federal government has announced a range of skills and training reforms to increase productivity and improve competition across the economy.
Industry Minister Ian Macfarlane said skills, training and vocational education and training (VET) reform are at the heart of the government's economic plan for Australia.
He said the government's focus is on delivering skilled workers to business while ensuring that apprentices and trainees are job ready.
"The era of training for training’s sake is over. A skilled and productive workforce is essential to compete in the current global economic environment. The reality is that if we are to prosper we need to be more productive and innovative," Macfarlane said.
Speaking at the National Skills Summit in Canberra yesterday, he said that in recent years the skills and training system has become complex and bogged down in red tape.
Mcfarlane said its excessive complexity and duplication has created a disincentive for participation for employers and students, which means Australia is not taking full advantage of opportunities to build its most productive workforce.
"The changes we make under this Government are a once in a generation chance to put skills and training in the hands of industry and employers and to make the system more effective, more efficient and more responsive to the needs of business," he said.
There around three million students in VET, he said, and only 1.5 million of those are government-subsidised training places.
"While there are around three million students in VET each year, the Australian Bureau of Statistics (ABS) says 4.6 million learners in work-related training outside of the nationally recognised VET system," Macfarlane said.
"Our own survey of employers tells us that some eighty per cent are satisfied, but what of the employers who don’t use VET? One of the first things I did when I took over VET was to establish a taskforce to look at the system and improve it."
At the inaugural COAG Industry and Skills Council meeting in April Ministers agreed to six reform objectives with three priority areas for immediate action. One priority was to ensure industry is involved in policy development and oversight of the performance of the VET sector and, to streamline governance arrangements.
"We have reduced the multitude of committees and subcommittees that were often overlapping and duplicating each other," Macfarlane said.
"This is why I have announced the creation of an industry-led advisory group to help the government deliver the broad reform agenda. Industry will chair the committee; and they will have the majority say over decisions.
"Another of the priorities identified by Ministers in April was to reduce the burden on the VET sector arising from the constant updates to training packages.
"We have cut the red tape and eliminated fees imposed on training providers when minor changes are made to training packages. We will reduce the release of training package updates to once a year. The plan is to consult you on these additional reforms shortly."
In many industries, apprenticeships provide the best pathway for skills development. Almost 100,000 employers—62 per cent of whom are small business owners—currently employ around 400,000 apprentices and trainees nationally. That’s 3.5 per cent of the Australian workforce.
Between 2003 and 2013, more than 1.6 million apprentices and trainees completed their training and brought valuable new skills to the workforce. But even with these impressive numbers and despite the strong support of industry and employers, the apprenticeships system faces serious challenges.
Apprentice attrition is high and completion rates low – more than 30 per cent of apprentices withdraw in the first year and just over 50 per cent finish their training. This represents a wasted investment for employers, government and individuals who do not complete, while impacting the long-term supply of skilled workers.
"These trends must be reversed. Employers, particularly small business owners, need better support to recruit, train and retain apprentices," Macfarlane said.
"The system as a whole needs to be simplified, streamlined and made more flexible to help industry re-engage with apprenticeships and get on with the job of training a skilled workforce."
To make this happen, the government has introduced Trade Support Loans for apprentices to encourage more young people to take up a trade and complete their qualification.
"I am pleased to say this legislation passed the House of Representatives last night. Up to $20,000 will be available to apprentices studying in skills needs areas," he said.
"The loans target occupations on the National Skills Needs List such as plumbers, diesel mechanics and electricians. We want apprentices to start their training, but most importantly we want them to finish it.
"A 20 per cent discount will be applied on the amount borrowed on completion and apprentices won’t make any repayments until they’re earning more than $50,000."
Building on the introduction of these loans, the government is close to finalising reform of Australian Apprenticeships Support Services, which is delivered through the national network of Australian Apprenticeships Centres.
"I anticipate we will approach the market in late 2014 to contract providers to deliver next generation support services, due to commence from July 1, 2015," Macfarlane said. The government has also allocated $5 million to extend mentoring projects to give apprentices further support and guidance.
Reducing costs for business is a key theme of the reform agenda. The third key priority agreed by Ministers in April was to re-examine the standards for providers and regulators. Macfarlane said the standards against which training providers are judged should make it clear what is expected of them. About 80 per cent of providers audited by ASQA are non-compliant. Given 20 days to fix things up – the figure drops to 25 per cent non-compliance.
The VET Reform Taskforce and key stakeholders have developed a revised draft set of standards. "Today I am releasing these draft standards for your comment and further input," he said.
"The new draft standards will support quality and provide clarity around marketing of training courses, subcontracting arrangements and compliance. When you look at them, you will see that the new draft standards remove several of the more contentious reforms. For example, the new draft does not propose a change from registered training organisation to licensed training organisation.
"The proposed requirement for an Accountable Education Officer has been removed. This doesn’t mean that we are placing a lesser emphasis on quality.
"The requirement for all training providers to become incorporated has been removed to enable small and medium sized providers to continue with their existing organisational structures."
The government has also clarified the role of the Australian Skills Quality Authority and how it regulates training providers against the standards.
"As you know, the former COAG Standing Council sought a review of ASQA’s efficiency and effectiveness, known as the ASQA process review. Today I am releasing that review," Macfarlane said.
"The purpose of the review was to inform Ministers about the operation of ASQA before they considered any increase in ASQA’s fees. ASQA hasn’t started a process to raise its fees for 2014-15 and that’s because, at least for the foreseeable future, that isn’t going to happen.
"And I’ll be looking at options for a different way of funding ASQA that better reflects what we want to get out of VET regulation.
"We have agreed to adopt the recommendations of the Review of RTO VET Data Reporting Requirements and will work in partnership with State and Territory Governments to streamline data reporting requirements."
In relation to VET funding, Macfarlane said it has to be well-targeted to avoid duplication and disruption to the fee-for-service market.
The Commonwealth will spend approximately $1.4 billion next financial year on its own VET programs. This is in addition to the $1.8 billion in funding the Commonwealth will provide to States and Territories over the same period.
Macfarlane said the new industry-led advisory committee will be instrumental in developing phase two of the reforms.
"In conjunction with the VET sector, we will deliver a system that delivers the skilled workers that business needs to enhance productivity and capitalise on the industries of the future," he said.