Speech To The Australian Council For Private Education And Training (ACPET), Pullman Hotel, Melbourne, Friday, 28 August 2015

Thank you for the invitation to join you again this year – it hardly seems like a full twelve months have passed since I last spoke with you!

Your Chair, Martin Cass reflected in the Conference website that:

“Arguably the education sector has never before been in the midst of such concurrent change, scrutiny, threat and opportunity.”

That is certainly true so I suspect it has felt like a hectic twelve months to each of you as well.

Rather than doing a chronological recap and commentary on those twelve months this year, I would like to discuss these threats and opportunities in the context of your theme for this year’s meeting: “Inspiring Ideas – building a better private sector through innovation, diversity and quality.”

Innovation

Only this week we have seen public media reports of the significant impact that emerging and ever-evolving technology will have on how we work and, therefore, how we train the workers of the future.  It is abundantly clear that innovation will be key to how we teach, how students access education and training and how businesses utilise the innovative capacities of their workforce to grow and succeed.

Most of you would be aware that the Foundation for Young Australians at the beginning of this week released their report, The New Work Order: Ensuring young Australians have skills and experience for jobs of the future, not the past”.

This report shows that approximately 71 per cent of young Australians currently in VET courses are preparing for occupations where at least two-thirds of the jobs will be automated over coming decades.

CEO, Jan Owen, said:

“We need to provide our young people with a different set of skills – to allow them to navigate their way through a diverse employment journey that will include around five career changes and an average of 17 different jobs.  We must start thinking differently about how we back young people for the jobs and careers of the future, so they don’t get stuck in the past.”

I couldn’t agree more.  Before too many young people in training start wondering if they should drop out because their course won’t be worthwhile, I should say that I believe the challenge is to build into our course content and our teaching methods an increased focus on critical thinking and problem-solving and digital literacy and utilisation.

What we actually need for innovation is learners who, to use a very old phrase now, are “self-empowered” learners.  What we should be ensuring is that they graduate from your courses able to assess their need for further knowledge and skills and know-how to gain these.  The automation that will disrupt so many current jobs will be accompanied by globalisation and an increased focus on collaboration that can open new doors to these very workers, new jobs, new careers, even new small businesses, if they are equipped to take them up.

I note that Rachel Botsman yesterday delivered an address to you regarding the future of education and training in a collaborative economy, so clearly you are already looking at these very issues.

Labor federally is also very aware and focussed on developing policies to ensure the nation is prepared for these changes.

In his Budget Reply speech, Bill Shorten outlined significant policies to support the extension of science, technology, engineering and maths skills across the education sector. 

In an address to the Australian Workplace Practitioners Network in March this year I discussed with them the importance of emerging literacies, alongside the importance of language, literacy and numeracy as we traditionally defined them.  I said at that time:

“The world of work, and indeed, the ability to participate in civic and community life is increasingly requiring a population with new literacies – including in financial and digital knowledge and skills.

Our personal and work life is increasingly complex and people will require better understanding of the financial sector to be a more informed consumer.  It is critically important to developing this literacy that people have a solid grounding in both literacy and numeracy from which to build their expertise in financial literacy.

This more complex world also encompasses a more digital life – for work and play, for solitary reading and family skype catch-ups, for shopping and submitting health claims.  Each of you could easily add to this list to reflect your own daily life I am sure.

Like financial literacy, being digitally literate is increasingly a requirement for full and meaningful engagement in economic, social and civic activities.”

These developments demand of us all that we ensure all of our education and training enables the next generation to have the underlying knowledge and skills they will need in all employment sectors to, not only manage change, but to grasp it and utilise its benefits.

In a Matter of Public Importance debate in the Parliament in June on “The Government’s Failure to Plan for the Jobs of the New Economy”, I referred the House to the critically important environmental scans that are done each year by Industry Skills Councils (who have sadly been defunded by the Federal Government) and I particularly quoted from the most recent scan released by Innovation and Business Skills Australia which said:

“The impact of technology broadens each year as it is felt in all aspects of business operations, all sizes of business and all industries. Customer service is being enhanced through data analytics which are providing complex analyses of consumer behaviours, paper based printing is being subsumed by mobile electronic options, finance and business services are operating anywhere and anytime using cloud based applications on a wide variety of devices. Nationally and internationally, convergence and collaboration are occurring in the workplace and between and within industries, suppliers and clients.”

This is no small challenge for each of you and it points us also to the importance of dedicated and well-trained professionals driving the VET sector, capable, themselves, of adapting and deploying innovation to meet these challenges.

Diversity

The interesting thing about your second point of consideration at this year’s conference is that there is no shortage of diversity in the VET sector – of courses, students and providers!

The Productivity Commission Report on Government Services 2015 gives an accurate description of this diversity:

“Diversity of the VET system

Vocational education and training (VET) programs range from a single module or unit of competency (which can involve fewer than 10 contact hours) to associate degrees (which can involve up to four years of study). … The types of training range from formal classroom learning to workplace-based learning, and can include flexible, self-paced learning and/or online training, often in combination. Also included are apprenticeships/traineeships (referred to as Australian Apprenticeships), which combine employment and competency-based training, including both formalised training and on-the-job training. The availability of distance education has increased, with off-campus options such as correspondence, Internet study and interactive teleconferencing.

The types of training organisation include: institutions specialising in VET delivery, such as government owned technical and further education (TAFE) institutes, agricultural colleges and private training businesses; adult community education (ACE) providers; secondary schools and colleges; universities; industry and community bodies with a registered training organisation (RTO) arm; and businesses, organisations and government agencies that have RTO status to train their own staff. Group Training Organisations may be RTOs and some RTOs may also be Australian Apprenticeship Centres (formerly New Apprenticeship Centres). Schools and universities provide dual award courses that may combine traditional studies with VET, with an award from both the VET provider and the secondary school or university.

In addition to formal VET delivered by an RTO, many people undertake on-the-job training in the workplace or attend training courses that do not lead to a recognised VET qualification.”

The very nature of this diversity poses its own challenges for our consideration.

Often the most vulnerable groups in our communities are the ones most directly affected by unemployment, and importantly, long-term unemployment.

It doesn’t take any great detailed examination of unemployment data to tell us that young people, people with a language other than English as their first language, our indigenous Australians, workers retrenched after decades in the same job without qualification upgrades, recently arrived migrants and refugees – are those most detached from work and most in need of skills qualifications.

There is more than sufficient evidence now available to us to make it clear that unqualified entry-level jobs are fast disappearing, so getting a start in work more than ever requires some form of formal training, preferably with a strong work relevant component to it.

As these unemployed people put so much hope and trust into the training they receive it is our duty to ensure it is maximised in its content and reputation so they are well placed to graduate to work.

I am sure all of you have seen the extensive media reporting on very predatory behaviours by some RTOs and brokers on the VET market. The manipulation of very vulnerable people for a simple profit motive with no care or responsibility for the outcomes for that student cannot be allowed to persist.

I want to recognise the important improvements that the Federal Government and the national regulator have taken to address marketing and recruitment practices such as these.

I also want to pay tribute to the work of your own organisation on these matters.  I know that you share these concerns as shonky practices and providers damage your share of the market and that you feel the flow on from reputational damage to private providers.

The development and implementation of your Code of Ethics is an exemplary achievement and I particularly acknowledge that this code deals directly with this responsibility to students in its Student Services section:

“Members will ensure that all students/trainees/clients are given appropriate orientation, and are given reliable and up-to-date advice on accommodation, counselling, in course placements, remedial education and welfare facilities having regard to the cultural and special needs of disabled students/trainees/clients and those from different backgrounds.

Members will monitor the progress of students/trainees/clients and ensure individualised support and counselling for those having difficulties with a course.”

With a sector that is so diverse we must be vigilant to ensure that exploitation does not become a feature of the experience of these vulnerable groups.

It is also very important to understand the critical role that foundation skills play in this effort – they are a significant aspect of an individuals’ ‘human capital’ – their educational attainment and achievement, their ability to enter and engage in the labour market, further develop their skills and value to an employer, increase their level of wages and their standard of living. 

A 2014 study by the Productivity Commission – Literacy and Numeracy Skills and Labour Market Outcomes in Australia - into the relevance of literacy and numeracy on employment prospects demonstrated that ‘there is a positive association between education and employment’ and that increases in literacy and numeracy increased the employment prospects for both men and women.

Increasing literacy and numeracy levels is important, not only to individuals, but is imperative for our society and for our economy. Foundation skills contribute to the development of other aspects of human capital, including non-cognitive skills desired in the work place such as perseverance and leadership.

Across the nation we have industries in transition such as manufacturing, we have industries with emerging growth pressures such as aged care, we have new skill demands across all workplaces with the continual introduction of new technologies.

The task of skilling and upskilling our population through higher levels of literacy and numeracy and by growing the investment in vocational education and training is more important than ever. OECD studies show that in advanced economies, jobs growth in the 21st century will be predominantly in the occupational areas requiring certificate or diploma level qualifications, those most often acquired through vocational education. 

For these reasons it was very disappointing to see the current government abandon the Workplace English Language and Literacy program and make cuts to the Skills for Education and Employment program.

QUALITY

Your Code of Ethics also extensively addresses the third pillar of your conference discussion this year – quality.

I note that yesterday Mark Raven facilitated a session in relation to the English Language teaching sector titled “Why bother with quality assurance – surely accreditation is enough?”

Whilst I wasn’t able to attend the session I think the question applies with equal significance to the entire VET sector.

Governments and regulators can take all actions available to them but I believe that, at the end of the day, the issue of quality relies on what happens in the learning spaces directly with the student – whether that is a classroom, a workplace or online delivery forum.

To achieve this quality direct delivery the entire organisation must reflect a commitment to best professional practice with student outcomes as the priority.

The twelve commitments encapsulated in the Quality section of your Code of Ethics deals directly with this and, I believe, provides a very solid foundation for ensuring quality practices.

But more significantly it is followed by Point 11:

“Members recognise that in pursuing excellence in tertiary education and training, self‐assessing quality is more than a determination of compliance against standards. Self-assessment needs to be a continuous improvement process that involves managers, staff, learners, employers, subcontractors and other partners.”

This clearly answers the question posed by Mark Raven and it is greatly encouraging to see you as members of ACPET commit through this Code to taking responsibility for high quality above and beyond only meeting the requirements of funders and regulators.

As we are meeting in Victoria I would also like to acknowledge the important commitment made by Victorian Minister, Steve Herbert, in addressing your conference yesterday to the support of professional development – this goes directly to the heart of the quality effort I am describing.

I would like to explain to you some more recent policy announcements I have made with Labor leader, Bill Shorten and discuss how I believe it impacts on you.

Labor Leader Bill Shorten and I announced in June Labor’s plan to deliver a strong public sector TAFE into the future by developing a comprehensive National Priority Plan that defines the unique role of TAFE as our public provider and delivers on this by working with the states and territories to provide ongoing guaranteed TAFE funding.

It is our view that TAFE must remain an essential part of Australia’s skills and training sector as it has a broader social responsibility as a public provider to deliver government policies focused on servicing our regions, industries in transition and disadvantaged groups.

As the Australian economy changes, the jobs of the future will change.  Our trades will involve more technology-based skills and workers will need training in these skills to be more effective in the workplace and to remain competitive in the employment market.  New trades and professions will emerge and require quality training programs and upskilling courses. Whilst I acknowledge many in the private sector take great pride in doing this type of work too, I don’t believe it is viable to rely on the private sector to carry the costs or change their model to deliver government priorities.

Whilst private and not-for-profit provides will often be responsive it is only TAFE that can be directed by Government and this needs to be part of the available resources to government. 

There are challenges in the way the vocational educational sector is funded which has led to the decline of the TAFE sector nationally.  Over the last year it has become clear that there has been a failure in the market and we have seen the proliferation of opportunistic and sub-standard training providers costing the taxpayers and students millions of dollars.

Vocational students need to have access to good quality training but it is Labor’s view that we need a better system in place to ensure TAFE’s viability and strength into the future. The fundamentals of an effective market are clearly missing and no amount of regulation, as important as it is, will change this.  Labor believes the market must find stability through a predominant public provider, complemented by a quality private sector.

Under Labor’s plan for TAFE, a Shorten Labor Government will work with Premiers and Chief Ministers on a comprehensive National Priority Plan that defines the unique role of TAFE.  We will work with the states and territories to rebalance the contestable and non-contestable funding model to ensure it delivers the outcomes that are intended.  Labor believes there is a place for contestable funding but we must get the balance right.

Finally, I would like to address some of the issues around funding of the sector, the federation and potential changes indicated by the COAG process, acknowledging that you have just heard from Peter Noonan on this topic and the focus of some of your other speeches and workshops on the VET Fee-Help area.

The Mitchell Institute has this year released two complementary papers, “Financing tertiary education in Australia – the reform imperative and rethinking student entitlements”, by Prof Peter Noonan and Sarah Pilcher and the subsequent paper, “Feasibility and design of a tertiary education entitlement in Australia”, written by Dr Timothy Higgins and Prof Bruce Chapman.

The Noonan/Pilcher paper, released in February this year, proposed one foundational aspect of the matrix should be “a fairer and simpler financing framework, across the different levels of government and tertiary education, that supports a tertiary education student entitlement for young Australians.”  The proposal would see an entitlement for Australians aged between 18-24 and would be composed of a combination of public subsidies (by State/Territory and/or Commonwealth governments) and a student contribution through an income contingent loan.

The report considers three funding models and indicates a preference for the third option which separates responsibility between the levels of government based on the level of qualification with the Commonwealth assuming responsibility for all sub-degree and degree level qualifications regardless of which sector they are delivered in.  The States and Territories would assume responsibility for everything else up to Certificate IV level qualification.  However, it also proposes that the Commonwealth make income contingent loans available for all qualification above (and including) Certificate III level.

The Higgins/Chapman report explores the potential cost of the extension of income contingent loans to Certificate III and IV level courses based on the measurement of the subsidy ratios that would be created given the lower graduating incomes (indeed often lifetime earnings of graduates, particularly women).

The report specifically outlines a range of risks in this model which include the “potential for intentional income manipulation in order to avoid repayments, generous loan conditions that might influence student choices and/or course providers charging excessive fees and providing poor education services”.

While both of these reports are valuable and important to the national discussion of the VET sector I do not believe that it is wise to further such considerations without a full consideration of the current state of use of VET FEE-HELP.  Given its massive growth over recent years, much of it in the private sector, it should not be extended further without consideration of all these issues.

Both reports envisage a model where government subsidy comprises part of the funding model and it is true on evidence to date that such an arrangement, with a tie to course cost controls, can act as a break on unsustainable growth in the use of income contingent loans.  However, it appears that a significant number of providers have bypassed this by moving into the full fee paying space where it is clear that course costs have skyrocketed and the evidence would appear to prove that the students in this market are not price sensitive as they are not well-informed on the value of the course, the reality of the debt they are undertaking or the alternatives available from the “competition”.

It is also most important that a better consideration of the impacts of funding mechanisms on the quality of VET provision occurs before decisions are made on complete restructuring of the arrangements in this sector, including as part of the recently announced COAG consideration of the VET sector balance of responsibilities between the two levels of government.

As I said earlier, Federal government changes over recent months to standards and regulation are welcome but a more sophisticated analysis of the market is necessary and must consider the movement between government and non-government subsidised training that can result from the decision to move more funding responsibility to the student.

Whilst taxpayer funding of subsidies of all types in the sector is critical for ensuring the outcomes of training match both the individual’s aspirations and the national skill needs, I would argue there is an equal responsibility on government to ensure students undertaking full fee-paying options using both upfront payments and income contingent loans are also able to meet their aspirations.  This part of the market also has a direct impact on the national skills task.

And so we reach the point where I started, the VET market is large, complex and critically important but sadly the public coverage of its opportunities and challenges is most often simplistic and fails to identify the pivotal role that the sector plays in participation, productivity and innovation in our economy. 

Your conference is directly addressing many of these challenges and I look forward to the outcomes - I thank you for your efforts in this task and for the opportunity to discuss these current issues with you today.