SENATE

COMMONWEALTH OF AUSTRALIA







Official Committee Hansard



SENATE

EMPLOYMENT, WORKPLACE RELATIONS AND EDUCATION

REFERENCES COMMITTEE





Reference: Current and future skills needs



WEDNESDAY, 7 MAY 2003

SYDNEY









BY AUTHORITY OF THE SENATE

INTERNET



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SENATE

EMPLOYMENT, WORKPLACE RELATIONS AND EDUCATION

REFERENCES COMMITTEE

Wednesday, 7 May 2003



Members: Senator George Campbell (Chair), Senator Tierney (Deputy Chair), Senators Barnett, Carr,

Crossin and Stott Despoja

Substitute members:

Senator Murray to replace Senator Stott Despoja for matters relating to the Workplace Relations portfolio

Senator Allison to replace Senator Stott Despoja for matters relating to the Training portfolio and Schools

portfolio

Senator Cherry to replace Senator Stott Despoja for matters relating to the Employment portfolio

Participating members: Senators Abetz, Boswell, Buckland, Chapman, Cherry, Collins, Coonan, Denman,

Eggleston, Chris Evans, Faulkner, Ferguson, Ferris, Forshaw, Harradine, Harris, Hutchins, Johnston,

Knowles, Lees, Lightfoot, Ludwig, Mason, McGauran, McLucas, Murphy, Nettle, Payne, Santoro, Sherry,

Stephens, Watson and Webber

Senators in attendance: Senators Barnett, George Campbell and Stephens

Terms of reference for the inquiry:

To inquire into and report on:

a) areas of skills shortage and labour demand in different areas and locations, with particular emphasis on projecting

future skills requirements;

b) the effectiveness of current Commonwealth, state and territory education, training and employment policies, and

programs and mechanisms for meeting current and future skills needs, and any recommended improvements;

c) the effectiveness of industry strategies to meet current and emerging skill needs;

d) the performance and capacity of Job Network to match skills availability with labour-market needs on a regional

basis and the need for improvements;

e) strategies to anticipate the vocational education and training needs flowing from industry restructuring and

redundancies, and any recommended improvements; and

f) consultation arrangements with industry, unions and the community on labour-market trends and skills demand in

particular, and any recommended appropriate changes.

WITNESSES

BLANDTHORN, Mr Ian, National Assistant Secretary, Shop Distributive and Allied Employees

Association ...................................................................................................................................................... 899

BRADLEY, Mr Phillip John, Assistant General Secretary, Post School Education, New South

Wales Teachers Federation ........................................................................................................................... 899

BUCHANAN, Dr John Duncan Anselan, (Private capacity) ..................................................................... 899

COCHINEAS, Mrs Lisette Pamela, Manager, Corporate Projects and Education, Smart Internet

Technology Cooperative Research Centre................................................................................................... 929

ELENIUS, Ms Elizabeth, Communications Manager, Australian Photonics Cooperative

Research Centre ............................................................................................................................................. 929

EVANS, Mr Bert, Chairman, New South Wales Board of Vocational Education and Training............ 899

FINDLAY, Mr John Gilchrist, Chief Executive Officer, Zing Technologies Pty Ltd.............................. 929

GODWIN, Ms Louise, President, TAFE New South Wales Managers Association Inc. ......................... 899

GOODWIN, Mr Paul Geoffrey, Chief Executive Officer, GROW Employment Council Inc. ............... 899

HEDLEY, Mr Michel, National ICT Workforce Manager, Australian Information Industry

Association ...................................................................................................................................................... 899

JONES, Dr Peter Douglas (Private capacity) .............................................................................................. 929

MANGRAI, Ms Cheri, Manager, Finance and Administration, Australian Technology Park

Precinct Management Ltd............................................................................................................................. 929

MONTGOMERY, Mr Stephen James, General Manager, Australian Technology Park Precinct

Management Ltd ............................................................................................................................................ 929

MOSS, Ms Julie, Deputy National Chair, Australian Council for Private Education and Training ..... 887

ROWE, Miss Jacinta Maree, Director, J2S Pty Ltd ................................................................................... 899

SIDOTI, Mr Eric, Senior Consultant, Dusseldorp Skills Forum............................................................... 872

SMITH, Mr Timothy Fitz-John, National Executive Officer, Australian Council for Private

Education and Training................................................................................................................................. 887

SMITH, Professor Andrew, Acting Director, Centre for Enhancing Learning and Teaching,

Charles Sturt University................................................................................................................................ 899

SPIERINGS, Dr John, Research Strategist, Dusseldorp Skills Forum..................................................... 872

STEIN, Professor Irene, Clinical Services Consultant, Baptist Community Service, and Professor

of Nursing, School of Nursing and Midwifery, Victoria University .......................................................... 899

TONER, Dr Phillip, Senior Research Fellow, Australian Expert Group in Industry Studies,

University of Western Sydney....................................................................................................................... 899

WHITTINGHAM, Ms Karen Maree, Public Officer, Treasurer, Founder, Australian Vocational

Education and Training Research Association............................................................................................ 929

WINDRIDGE, Mr David John, Director, Australian Council for Private Education and

Training........................................................................................................................................................... 887

Wednesday, 7 May 2003 Senate—References EWRE 871





Committee met at 11.31 a.m.



CHAIR—I declare open this public hearing of the Senate Employment, Workplace Relations

and Education References Committee. On 23 October 2002 the Senate referred to the committee

an inquiry into current and future skills needs. While knowledge and skills are the key to a

secure and prosperous future for individuals, communities and the nation, there are concerns

about the low level of public and private investment in the development of our skills base. There

is concern about the low number of highly skilled full-time jobs which are being created and the

number which are being lost, especially in some regional areas.



Questions arise as to whether current training policies and programs adequately support the

development of a high skills base and a culture and practice of lifelong learning. Unemployment

remains unacceptably high, particularly in some regions and communities, yet many employers

claim to have difficulty in recruiting appropriately skilled people. At the same time there are

many training providers, employers and communities exploring innovative approaches to

identifying and meeting their current and future skills needs. The committee would like to learn

from these successful models.



The committee has also identified other concerns, including the effectiveness of current

training incentives and training policies, whether skills programs can support a flexible labour

market, the capacity of Job Network and other parts of the employment system to match skills

availability with labour market needs and the adequacy of current consultation arrangements.

The committee looks forward to consulting a wide range of industry representatives; training

providers; and government, union and community representatives.









EMPLOYMENT, WORKPLACE RELATIONS & EDUCATION

EWRE 872 Senate—References Wednesday, 7 May 2003









[11.33 a.m.]



SIDOTI, Mr Eric, Senior Consultant, Dusseldorp Skills Forum



SPIERINGS, Dr John, Research Strategist, Dusseldorp Skills Forum



CHAIR—Welcome. Before we commence taking evidence today, I state for the record that all

witnesses appearing before the committee are protected by parliamentary privilege with respect

to the evidence provided. Parliamentary privilege refers to special rights and immunities

attached to the parliament or its members and others necessary for the discharge of

parliamentary functions without obstruction and fear of prosecution. Any act by any person

which operates to the disadvantage of a witness on account of evidence given before the Senate

or any of its committees is treated as a breach of privilege. The committee prefers all evidence to

be given in public, although the committee will also consider any request for all or part of your

evidence to be given in camera. I point out that such evidence may subsequently be made public

by order of the Senate. The committee has before it your submission, numbered 44. Are there

any changes you wish to make to the submission?



Mr Sidoti—No.



CHAIR—I now invite you to make a brief opening statement.



Mr Sidoti—Thank you very much for the opportunity to meet with you and discuss our

submission. We do not intend to make a lengthy statement. The submission is before you and we

are happy to elaborate on any questions you might have in relation to it. The three areas in the

submission that we would simply highlight pertain most directly, I think, to part (b) of your

terms of reference—that is, the effectiveness of current government training and employment

policies. In that context we emphasise the work we have done over recent years in promoting,

and looking at what happens in forming, a national commitment to young people. This looks at

integrated arrangements through the communities and ensuring that the links between education,

training and employment are coherent, easily accessible and deliver appropriate outcomes.



The reason for stressing that in our submission is that we believe it is absolutely fundamental

to modernise our system in a way which ensures that the foundations are there for skills

formation and for the capability to address skill shortages both now and into the future. The

implications of not raising the minimum educational standards in this country are such that they

extend well beyond the impact on individual wellbeing and have a direct flow-on effect for the

national economy. We elaborate on that in our submission and in other documents that we have

provided to the committee.



The second area relates to the new apprenticeship and training system per se. In this respect

there are three points we would like to make. The first point is the need for clarity of purpose,

particularly with respect to new apprenticeships and the system. Related to that are the measures

that we put in place to ensure that the system is delivering on the stated purpose and objectives.

The second point that we raised in the submission, drawing on work that we commissioned from

others, is the notion of skills formation—whether the system is a system about skills formation



EMPLOYMENT, WORKPLACE RELATIONS & EDUCATION

Wednesday, 7 May 2003 Senate—References EWRE 873





and entry level into the labour market or whether it is in fact operating as a form of labour

market program in itself. We think there are a range of questions around that, pertaining to

clarity as well. The third point is the operation of the system. Our direct research is more limited

in this area, but we have done some work and have commissioned some work from ACIRRT and

others, particularly with respect to the notion of employer engagement and employer

contribution to the training system. In brief, those are the areas canvassed in our submission, and

we are here for the discussion.



Senator BARNETT—Thank you for your submission. It is quite comprehensive; we

appreciate it. Low school retention rates and training rates of young people are issues,

particularly in Tasmania and also around Australia. I note that the retention rate in Australia is 80

per cent compared to 84 per cent in France, 88 per cent in Canada and the USA, 91 per cent in

Germany and 94 per cent in Japan. Do you have a view on that in terms of a funding proposal to

address those retention rates, and could you expand on that for us?



Mr Sidoti—I will open and then hand over to John. We have a very strong view of what is

required to address the system. For a long time, successive governments around the country have

committed to a target of 90 per cent completion of either year 12 or the vocational equivalent. So

far that target has been very elusive. We have worked with eight communities in three states over

the last three to four years and have done a significant body of research around the issue. We are

of the view that that 90 per cent target is quite attainable. In our view, what it requires is a much

more coherent set of arrangements which link at the local level. We have done it through

community partnerships, but there are other methods. The broad group of educational services,

principally the schools, TAFE and universities where they operate, employment services,

principally through Job Network and Centrelink, youth services, employers and local

government need to be able to work together much more coherently than has been the

experience to date.



Through working with the communities, we have been able to put in place some simple

arrangements, such as common exiting procedures, personal plans and the operation of what we

call ‘transition brokers’, which is basically more intensive support for those who are anticipating

leaving school early—before completing year 12. This fairly simple set of arrangements has

delivered quite dramatic results. For example, we did some studies earlier this year in schools

where transition brokers operate. There are 17 transition brokers in schools in Victoria, and I

think the figures are showing—and John will correct me—a significantly increased school

retention rate, a tripling of those involved in training and a reduction in unemployment rates. So

it can be done.



In terms of the expenditure required, we commissioned Applied Economics to do a fairly

detailed cost-benefit study based on existing commitments. The two questions were:

‘Governments have made certain commitments, what would it cost to implement those

commitments?’ and ‘Would the investment be worth it?’ Their study proposed a five-year phase-

in—and I think we referred to this in the papers—essentially suggesting that in the first year you

would be looking at a joint national expenditure of around $160 million extra, rising to about

$765 million in a full year’s implementation, to be shared on a 60-40 split between the

Commonwealth and the states.



Senator BARNETT—Over what period of time?



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EWRE 874 Senate—References Wednesday, 7 May 2003





Mr Sidoti—We would phase it in over five years, with a 20 per cent increase in the cohort

being involved in each successive year. For full implementation you would be looking at around

$750 million, which includes a labour market component.



Senator BARNETT—That is the total for federal and state with a 60-40 break-up?



Mr Sidoti—Exactly. Applied Economics based that on what they found after looking at the

programs that we are involved in and making some historical reference to Commonwealth and

state programs. Did you want to add to that?



Dr Spierings—Not really, except to say that we have made a submission to the Treasurer for

this year’s budget round. A good part of that is summarised into the submission we have made.

The other important point is that the study that was commissioned by us and completed by

Applied Economics was taken by the Business Council as a starting point for looking at what the

macroeconomic impact of trying to lift the active participation rate from around 80 per cent to 90

per cent over the five years would be. They took the program out and modelled it up to 20-20.

They used the Monash macroeconomic model, which is a widely respected model from the

Centre of Policy Studies at Monash University, and basically found a positive impact on GDP if

no change occurred. It was a positive impact in terms of a 0.3 per cent increase in GDP

equivalent to an extra $1.8 billion to the bottom line in today’s values, which is significant. This

research is pointing to the economic value of this argument. We have known about the good

social values that might lie behind this and the values for parents, young people and employers,

but we can now put a dollar value to measures of this sort and I think that is important in the

policy process.



Senator BARNETT—You have included that in your budget submission to the Treasurer?



Dr Spierings—Yes, we have.



Mr Sidoti—We understand the Business Council have made their own budget submission

drawing on the research they commissioned. The important point from our perspective on this is,

firstly, that that active participation rate of 90 per cent is achievable. It is achievable in the

comparatively short term—that is, within five to six years—and the economic investment that is

required, even in a tough fiscal environment, is quite modest in the first couple of years because

of the phased-in approach. Yet both ours and the Business Council’s studies show that in

economic terms it will be self-sustaining in the sense that a capture of about 25 per cent return to

the government means that it will become cost neutral by 2011. In that sense, it is difficult for us

to see the arguments against such a modest investment when there is such confidence that it will

deliver returns.



Dr Spierings—The proposals had a wide process of consultation with not just with the

Business Council but the other peak industry associations in the business community.



Senator BARNETT—What has been the response of the Business Council and, say, the other

peak associations?



Dr Spierings—The Business Council put out a series of reports in January this year that

looked at the broader macroeconomic modelling that I mentioned. They did a survey of what



EMPLOYMENT, WORKPLACE RELATIONS & EDUCATION

Wednesday, 7 May 2003 Senate—References EWRE 875





was currently existing in terms of transition programs and efforts in this area—that is, they

looked at the initiatives that have been undertaken at Commonwealth and state levels and

basically carried out an audit—and came up with the conclusion that there is pretty mixed

progress. They could clearly point to progress in some areas but to either just holding the line or

going backwards in others. They also jointly with us looked at what the short-term outcomes

were for early school leavers in the current economic climate, and we did some historical

research around that as well. That was a package of reports that the Business Council released. It

is on the Business Council’s list of major priorities for the next five years. They have established

a high-level task force to look at this issue along with higher education and Australia’s progress

in terms of VET.



Mr Sidoti—In broad terms, in those we have spoken with in industry—whether it was the

Business Council, the Australian Chamber of Commerce and Industry or the Australian Industry

Group—there is broad support. The level of specific support for our proposal varies slightly, but

it is mainly around issues of expenditure rather than the directions proposed. It is worth adding

that we have also spoken with other stakeholders, such as the ACTU, the Australian Education

Union, youth networks, state governments and a range of other players across the field—



Dr Spierings—School principals.



Mr Sidoti—And school principals as well, and we are meeting with them again this Friday to

look at it in more detail. Again, we find strong support wherever we go. It is a package of

proposals that we believe would be extremely well received were it to be backed.



Senator BARNETT—I will come back to the point you made about partnering in a minute. I

want to drill down into this with another question. Your paper Honouring our commitment talks

about the high levels of numeracy, maths and literacy skills of 15-year-olds in Australia but how

does that fit with the same students not being able to access TAFE or not achieving when they

do? Can you explain that?



Dr Spierings—Yes. One of the chief findings of the PISA study was that, while Australia on

average does very well—I think we were ranked second or third on most of those indicators—

we have a very long tail. We have a group that are achieving quite highly, a second group that

are achieving quite well above the average but then we have a very long tail at the bottom end of

the range. That means we have variable outcomes for young people in terms of both their

immediate educational future and their longer term employment prospects.



Senator BARNETT—So it is those on the tail that are entering TAFE and then struggling.



Dr Spierings—Yes. You also have to remember our actual level of school completion, as

opposed to school retention. For those young people that actually completed school nationally it

is 67 per cent, which is not high. We get to the 80 per cent figure by taking into account those

young people that go on to complete an equivalent qualification through TAFE or an

apprenticeship.



Senator BARNETT—I see. That is helpful and thank you for that. You have put forward a

model for a partnership between TAFE and business and private enterprise. Do you think





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government or the private sector should fund that? How would this partnership model work? Mr

Sidoti, I think you referred to it earlier.



Mr Sidoti—Yes, I did. We are convinced there is an important role for government, including

an important role in resourcing the partnership and activity on the ground, which is consistent

with government’s responsibilities in education and training, so we do not for a minute suggest

that it is a shifting of funding or responsibilities. However, what we do say—and this is what our

experience suggests—is that by working through community partnerships you are actually able

to leverage government input through much stronger community support. For example, in these

communities we have direct support coming from employers, even from small businesses, which

are notoriously hard to capture in terms of direct support for such things. On the Central Coast,

for example, at least one of the transition works is being funded by a business. Elsewhere we

know that local government has become quite a key player, as have community organisations

and agencies. We have schools combining in different ways to free resources from their own

budgets so as to contribute to the overall program. So it is really about the way that the resources

become packaged, rather than there being a reduction. That is why we say in our submission that

in our discussions with state governments we have come from a starting point of saying that if

governments really see this as a cost-saving exercise it is a road to nowhere—because it should

not be; to deliver you have to invest.



Senator BARNETT—I am particularly interested in small business. How can we target and

deliver the goods, the training and services, to small business owners? They often miss out as

they are too busy doing their bit, running their own business, and do not have the ability to get

out. Do you have any suggestions as to how we can better service the small business sector?

Eighty per cent of the small business sector are micro businesses, which have five employees or

fewer. It is tough for those guys and we have to try to deliver services to them. I am interested in

your thoughts on this.



Dr Spierings—That is a crucial question. I was in Gippsland earlier this week at a conference

and one of the key issues that came up was the scale of business in communities like

Gippsland’s, where two-thirds of businesses turn over less than $50,000 a year. They were being

talked about as ‘nanobusinesses’. They were quite small, like a nanosecond. In terms of the

training effort, how you engage them is really going to be significant and I guess we fall back on

the old structures that we have in place and whose utility we need to maximise. I refer to group

training, which is there as an opportunity to actually consolidate the training effort amongst

those small businesses and minimise their risks or collectivise the risks.



There are questions about the extent to which, and the variability with which, group training is

able to meet its mission. The range of providers and the level of performance varies across the

country. But I think we have an important resource there in group training that we need to

support. It is a key mechanism that small business can use to participate actively in the training

effort and I think we need to look at that further into the future.



Senator BARNETT—A bit of feedback that I get from small business is that the government

offered training, whether it be TAFE or whatever, is not appropriate to their needs. They go

through the group training, which in Tasmania is Northern Group Training, a big organisation

that you would be aware of down there. They alleged and expressed concern that TAFE and the

government offered service were quarantined and that they did not have access to provide



EMPLOYMENT, WORKPLACE RELATIONS & EDUCATION

Wednesday, 7 May 2003 Senate—References EWRE 877





training to certain industry groups. That is a problem they have and they feel as though they are

being ostracised. I am interested in your response to that view that they are being ostracised and

why there is a need to quarantine certain training opportunities through TAFE or whoever to the

government. How can we focus those training services to small business?



Dr Spierings—We certainly do have an issue in relation to what employers are taking in

terms of training and the extent to which the national system and recognised training are actually

being used by employers. There have been a number of studies from the NCVER, particularly in

the manufacturing area, that have queried the extent to which the training packages are actually

appropriate for the range of needs of employers.



Having said that, employers have been leading the way in the development of training

packages. The training package development has not been led so much by TAFE or by

government; it has been very much industry focused and led. We need to look at why the take-up

of recognised training is not as strong as it could be. That is a big question, and I would assume

it is one of the key questions that needs to be looked at in ANTA’s review of its future strategy.



Mr Sidoti—As you would have gathered, I am not sure that we have a definitive answer on

how to resolve the issue of small employers and appropriate training. In the work that we

commissioned from ACIRRT, the Australian Centre for Industrial Relations Research and

Training, they had some fairly strong views around the need for structures that allow for some

collectivisation of funding and resources that can be used flexibly at community and local levels

to address some of these issues. I think they looked to the French model to have a funding

system to support those sorts of flexible deliveries and resources for specialised training. So it

would possibly be worth having a talk to them about that.



Senator BARNETT—I would like to ask one other question with regard to your proposal for

a levy. I will say up front that you will be struggling to convince me of the merits of a levy,

based on the past experiences we have had in Australia, but give it a go and tell me your reasons

why you think such a levy could work, as you have suggested in your paper.



Dr Spierings—We have said that a levy should be back on the agenda. We have said that the

evaluation of the training guarantee that was made should really be looked at—



CHAIR—Was this a DEETYA evaluation?



Dr Spierings—Yes, this was a government commissioned evaluation. From memory, the

training guarantee was suspended before the evaluation had been completed. So the on the

ground results as to the effectiveness of the training guarantee were either unknown or unclear at

the time at which the guarantee was suspended. One important conclusion drawn from that

evaluation was that the training effort continued during the recession of the early 1990s largely

because of the training guarantee. The level of training, the commitment to training and the

resources put into training did not drop off, and the guarantee was important in keeping that in

place.



When we look at what has happened subsequently, and the recent statistical data that has come

out from the joint ANTA-ABS study released last month, you can see that we still have 1.3 per





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cent of payroll being directed towards training. In fact, for employers providing structured

training, that has fallen from 1.7 per cent to 1.5 per cent without the guarantee.



Senator BARNETT—Is that 1.3 per cent of total payroll at the moment?



Dr Spierings—Yes.



Senator BARNETT—Is that across the board?



Dr Spierings—That is across the board.



Senator BARNETT—I would like to know what it is for big business and small business and

for different industry sectors. Do you have that broken down?



Dr Spierings—I have not done an analysis.



Senator BARNETT—Has anybody done that, to your knowledge?



Dr Spierings—We will need to delve into the ABS data. I would presume that we could cut

the data in order to get it, but we would require a tabulation from the ABS to do it. It has been

released for only a few weeks so I have not been able to do that. In terms of what happens

overseas and if you also look at a range of industries where levies currently operate in

Australia—for example, in the construction industry there are different sorts of levies—you can

see that they have been quite effective. So it is horses for courses. We need to learn some of the

lessons out of the training guarantee levy, such as the one size fits all approach is not going to be

appropriate.



Senator BARNETT—So you do agree with that.



Dr Spierings—I do agree with that, but I do think that we need to look at stronger incentives,

a carrot and stick approach, in terms of commitment to training. Clearly the data is telling us that

there is variable performance and that there are key sectors where we need to lift our game.



Mr Sidoti—There is one other point to add that is relevant to the levy argument—that is, the

work that ACIRRT did for us is based in part on a premise that through the investment, whether

it is through a levy or otherwise, that employers make, the greater the investment the greater the

incentive to actually utilise the skills being delivered. Part of their argument suggests that, in

building the case for a higher skilled type of industry, investment in training from employers in

itself operates as a form of incentive to the utilisation of the skills available. We thought that was

a pretty interesting argument that had some merit. As John suggested, our basic premise in this is

that people have been a little too ready to dismiss the lessons from the training guarantee and

that maybe it is time to look at those lessons and how they could be applied perhaps a little more

sensibly in another round.



Senator BARNETT—Thank you.



Senator STEPHENS—Thank you for your submission and the accompanying documents. I

have found them very useful, and in fact as we have been going around to the different hearings I



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Wednesday, 7 May 2003 Senate—References EWRE 879





have come back to your submission to interpret the kinds of messages we have been getting. I

found that the submission tried to take a very strategic approach to the future. We have had some

submissions that have been a bit about going back to the future. I would like to take you to an

issue I am interested in terms of your proposal here. You started your discussion with transition

arrangements and improving transition support. The issue I am interested in relates to your

suggestion for the establishment of an office for education and employment transition, which

sounds rather like the Australian Quality Framework. Have you thought beyond that concept to

how that office and ANTA might work together, how much overlap there is likely to be and is it

your view that ANTA in its strategic review process now should be more focused on transition

issues? Have you had that discussion with ANTA?



Mr Sidoti—The proposal for such an office, which is included in our submission, was

originally brought to us by Applied Economics as part of the cost-benefit study that we

commissioned from them. I have to say that when they initially raised it with us we were a little

sceptical. But upon further debate and consultation with people, including the Applied

Economics people, we came to the view that there is a real place for such an office, not so much

as an AQF type of arrangement but as a complement to the mechanism we are proposing, which

is essentially to have bilateral agreements between the Commonwealth and the states to

implement these proposal.



Essentially, such an office, in our view, would be quite functional in its responsibility for

ensuring that, having entered into such bilateral agreements, those agreements are then actually

acted upon, measured and accounted for. So in a sense it is part of the transparency process, but

it is also part of the quality improvement process. We would see it as not having a funding role at

all; we would see it as having a monitoring role of the actual agreements. It would also have a

role in looking at best practice and looking for some policy input and improvement upon the

findings that they get, because obviously it would be a repository of a lot of information which is

not currently centrally available or analysed in the way that we think is important in this

transitions area. We have come to view that there is in fact a very sound basis for having such an

office or function.



In terms of its relationship to ANTA, we were asked about this in consultations as well. To be

perfectly honest, we are not entirely sure how that would work in practice. We would see them

as having complementary roles. Under ANTA’s current arrangements there is a reservation that

the direct experience of ANTA in the transitions area linking the post-compulsory area and

schools is more limited and, therefore, would require an increased emphasis on this area, with

the expertise that comes with that. But that is not out of the question. So we are a bit silent on

whether it is an expansion of ANTA or a separate office. Our inclination is to have it separate at

this point in time. The most critical thing is that it has a very clear functional responsibility. So

we see it as part of the package with the bilateral agreements and the office’s role. The final part

of that package in terms of transparency is that we propose that the annual report that would be

part of those agreements be tabled in both the federal and respective state parliaments. One of

the key areas in this whole field, for us, is access to intelligible information. We have a hell of a

job trying to unpack what is actually going on from the current research and data that is

available. We are keen to look at processes that actually improve that state of play.



Senator STEPHENS—The last part of my question was: what does ANTA think about this?







EMPLOYMENT, WORKPLACE RELATIONS & EDUCATION

EWRE 880 Senate—References Wednesday, 7 May 2003





Mr Sidoti—We are not entirely sure. In the consultation phase we had some discussions with

ANTA, and they raised a similar question about their responsibility. We have also been more

recently involved in a roundtable about the most recent strategic review draft with ANTA. This

was not canvassed specifically in that context, because it was a broader group of people, so we

are not entirely sure how ANTA feel about it. In terms of ANTA and the area more generally

comes this question of clarity. There is a suggestion that the training system needs to give higher

priority to the training of older workers, and we obviously recognise the need to do that. The

question which is a little bit moot is what this means for young people and whether there is a

continuing priority for young people—and, if so, what that priority is and how it is going to be

manifest in the structures, programs and resources available. For example, is the New

Apprenticeships system actually serving the entry level needs of young people or is it a

reskilling project for older workers? In those areas, we think the current lack of clarity makes a

definitive answer to your question about where such an office should sit a little bit more difficult.



Senator STEPHENS—I went back to your conflicting objectives of the New Apprenticeships

program and Dr Curtain’s review. I found his arguments quite compelling in many respects. You

have noted that about a third of young people have difficulties transitioning from school to work.

The paper indicates that there are longer-term compounding difficulties for young people who

drop out—there is an exponential rate of disadvantage in many respects. Can you comment on

how you think the current mix of education, training, job placement and support is failing? We

acknowledge that is not serving young people well. Why is it failing? Why is what we have got

now not working?



Dr Spierings—Oh dear—how long have we got? I think there are a number of different

elements here. One is that we have got a changed labour market scenario for young people with

the decline of full-time work and the rise of part-time and casual employment. Let us put an

increasing emphasis on education pathways for young people as the route to more sustainable

employment over the longer term. In that process we would probably have a number of young

people in our schooling systems who are there reluctantly and who otherwise, in another era,

would actually be in the labour market or in some form of apprenticeship or training.



I think that, in terms of where young people are at, some of our institutions maybe have not

responded as appropriately as they might to that changed labour market situation. The majority

of young people are in educational institutions that are increasingly captured by higher education

as a bridge to further learning and learning engagement, which means that their curriculum, their

testing structures and their qualifications are skewed towards that pathway. Alongside that, we

have seen the rise of VET in Schools to try and help compensate that and to provide a range of

alternatives, but that still has not addressed the fact that we have 15 per cent of young people

who are not in full-time employment or full-time study.



Compounding that, I think that we have jurisdictional issues here. We are talking about

transition, and we have conflicting areas of jurisdiction between the Commonwealth and the

states. The states are primarily responsible for educational outcomes, with joint responsibility

around training outcomes and Commonwealth responsibility around employment outcomes. Our

systems are not very well joined up. We do not recognise the points of travel and the destinations

that young people are moving to to cross over those jurisdictions. For example, in the new round

of contracts for the Job Network, the links with schools, the links with career counselling and job

search training that might take place and the links with the Job Pathways program are not made



EMPLOYMENT, WORKPLACE RELATIONS & EDUCATION

Wednesday, 7 May 2003 Senate—References EWRE 881





explicit. As far as I understand, there was no negotiation around that. In Queensland and South

Australia, the state governments have moved to raise the school leaving age but there has been

no discussion with the Commonwealth about the implications in terms of the effect on the Youth

Allowance and the sort of price signals that are being sent to young people about where they

ought to be and the decisions they ought to take. At that level we have a range of joined up

administrative issues that have been very difficult to resolve within our federal system.



I think the lack of lead ministers has also been a key issue here. At the Commonwealth level,

we probably have four or five ministers that could take leadership on this issue. When the Prime

Minister commissioned the Youth Pathways report from David Eldridge and his task force, it

reported to two ministers—the Minister for Family and Community Services and the Minister

for Children and Youth Affairs. In addition to the Minister for Family and Community Services,

there is the Minister for Education, Science and Training and the Minister for Employment and

Workplace Relations. It is very difficult to see, out of that cluster of portfolios, who takes the

lead and who is responsible for coordinating the on the ground effort, the policy leadership and

the negotiation that is required with the states in order to achieve the best outcomes and the best

dividends for the dollars being invested. I think we also have a gap, as we have demonstrated in

the Applied Economics report, between what we are currently investing and what it will take to

actually achieve the take-up of places that are required if we are to get to that 90 per cent goal.

We have a shortfall of around $2.3 billion between education and training, apprenticeship

incentives, real intensive support for young people and labour market support.



Finally, in terms of the relationship we have with young people, I think that we do not support

young people over the long term. One of the key things that Eric pointed to earlier was the work

that has been going on in those 17 Victorian schools, where better outcomes have been achieved.

Two of the key things there have been the intensive nature of that support, and that support being

there for the long term. We often provide crisis support—quick interventions, ensuring that

access to an immediate destination can be negotiated. But when that falls through—when the

circumstances of young people change and their destinations change—we do not provide

structured support over the long term to help them make the best and most informed decisions.

So there is a complex web of issues in there that we have to untangle and approach methodically.

The stakeholders are telling us that the proposals that we put on the table are a way to get

through that maze in terms of the funding, jurisdictional and relationship issues.



Senator STEPHENS—It is a big challenge, isn’t it? I turn to the comments you made about

Job Network and the latest round of contracts. Have you had an opportunity to look at the

implications of that, other than the lack of linkages that you have identified? Do you think that

the new contracts address the needs of young people or go some way toward supporting young

people?



Dr Spierings—That is something that we have been in discussions with the department about

to try to retrofit, if you like, some elements of what has been put in place. I think that, clearly,

there is recognition that there are some gaps here. We have a policy obstacle at a key point:

students enrolled at school cannot be registered as job seekers, which means that they have to

drop out of school in order to begin the search for work in a structured way. We need to

overcome that blockage. I can understand why that signal is there. It is there because there is a

policy preference to encourage young people to stay within a system of learning. But significant

groups of young people are leaving school without turning up at Centrelink and without



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following the trail to the Job Network. We know that. Two progressive evaluations of the first

iterations of the Job Network have pointed to young people as being a difficult group in terms of

access to Job Network services.



In the new structure within the Job Network the resource-rich end of the Job Network is really

there for people who have had an extensive period of unemployment. Young people are not

going to qualify. Of course, that is a general, bald statement; it does not mean that this applies to

every young person. Clearly, there could be some young people who will get access to that

resource-rich end. But, effectively, the job seeker identification instrument is structured in a way

that means that most young people will not get access to that resource-rich end unless they have

experienced a period of unemployment.



The contrast with that is that, long term, we know that. All the detailed work coming from the

longitudinal survey on Australian youth tells us that, without having a full-time job in that first

year out of school, they are much more prone to the risk of long-term unemployment by their

mid-20s. Yet we are putting structural barriers in the way of ensuring that does not happen. We

are not using the resource that is there in the best way. It is not an early intervention approach; it

is a filtering, rationing approach of resources. Again, I can see, in a context of scarce resources,

why you would want to do that. But I would say that, in terms of young people looking for that

entry level opportunity, we should be maximising opportunity, not creating barriers.



CHAIR—I want to come back to the training levy issue and deal with this issue of

freeloaders, as they are commonly referred to. It seems to me to be a fundamental issue in the

whole training effort, irrespective of whether you look at a universal training levy or look at it in

terms of industry specific training levies, as apply in the building industry. There are those who

say that targeting may be a better way to go in terms of the outcomes you are trying to achieve. It

has been argued by some people who have put submissions in to this committee that the real

skills shortages are in the manufacturing and trades areas, not in the more general economy.

Therefore, you ought to try to target resources to those areas.



There seems to be an expectation in everybody who has appeared before us that somehow or

other it is a government responsibility and it should be dealt with by a carrot approach—in other

words, by the tax system or by giving greater incentives to companies. There is no acceptance

that somehow or other there is a requirement by the companies themselves to put some

investment into the training agenda. I wonder how you deal with that issue. Maybe it is a matter

of matching the carrot and the stick together, by saying that, if you are prepared to put in, there is

a top-up or additional assistance from government. But if you are not going to make a

contribution, there is no co-payment from the government. Maybe you have to tailor, more

effectively, the carrot and the stick and try and drive the agenda that way. There certainly has to

be someway of getting industry to make a contribution themselves to provide the skilled work

force for themselves for the future. That effort seems to be very poor at the moment.



Mr Sidoti—I agree that it is highly varied. One of the things that we will be releasing in the

next short while is a look at training rates across a number of different industries. This is a paper

that is in the process of being completed by Dr Phil Toner at the University of Western Sydney.

Phil has looked at the training rates across a number of different trade areas. We can draw a

contrast by looking at the occupations where the bulk of apprentices and trainees are being

employed at the moment.



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I will run some numbers past you. If we look at the period of the late 1980s, from 1987

through to 1992, the early 1990s and contrast that with the rest of the 1990s right through to the

beginning of 2001, in the metals area there was a decline in the training rate of 19 per cent, in

electrical of 24 per cent, in building of 15 per cent, in printing of 25 per cent, in vehicle of seven

per cent. There was a rise in food of five per cent, given the rise of the hospitality industry and

catering and so on. Overall there was a decline in the trade training rate of 16.3 per cent.



The contrast that we need to draw is the effort that is taking place in areas like sales. At the

moment trainees constitute 27 per cent of all the workers in the sales occupations in the ASCO

code. That is an extraordinary proportion of people who are in intermediate skill level jobs, as

measured by ASCO, who are in receipt of public invested dollars. You could look at a range of

other categories, including production workers, factory workers, transport workers where there

has been a phenomenal rise in the proportion of employees in those occupations who are, in fact,

trainees and apprentices.



I think it comes back to two questions. Firstly, where do we want to see our public training

dollars being invested? How do we prioritise and how do we get a mutual commitment from

employers to the training effort? I think we need to look very closely at what has happened in

terms of the traineeship question and there has clearly been a wide expansion of traineeships and

the price signals are very much there for employers to take on trainees as opposed to apprentices

and those price signals have been set by government, significantly around the range of state and

Commonwealth incentives.



Clearly we have not done enough on the other side to look at trying to maximise employer

contributions in those key areas. If you look at the electrical area, which is a core skill area for

information technology and a whole range of emerging industries for elaborately processed

manufactures, we are facing a national shortage in the not-too-distant future. Already we know

that employers are very concerned about this issue. I think we need a national approach that says

that there needs to be a stronger commitment from employers, that government will, in

conjunction with employers, establish levy arrangements in those areas and make sure that the

costs are shared between the general community and the industries where, for their own good,

there needs to be a replenishment of the stock of skills.



CHAIR—We have had one novel suggestion that perhaps we ought to look at providing the

incentives direct to the apprentices rather than to the provider. That gives the apprentice much

more flexibility in how they use the incentive. I do not know whether or not that is viable but it

is a suggestion that was put on the table.



Dr Spierings—It is like a training voucher.



CHAIR—Yes, it is a voucher type of approach.



Mr Sidoti—I am not aware of the proposal but the initial question would be—



CHAIR—It is in one of the submissions. People have made a submission and put it on the

table.







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EWRE 884 Senate—References Wednesday, 7 May 2003





Mr Sidoti—I suppose that one of the initial questions would be about the fact that there is a

recurring issue in terms of the actual provision of training in apprenticeship type places. To me,

it is not clear how putting the incentive or the payment in the hands of the apprentice or the

individual is going to create the place. That would need to be resolved, fundamentally.



CHAIR—They would buy the place, presumably. It would give them some impact in the

marketplace.



Mr Sidoti—It would depend where they purchase it from—whether they purchase it from an

individual employer.



CHAIR—Or they may purchase it from a group training centre.



Senator BARNETT—Whoever is providing it.



Dr Spierings—It comes back to the questions that Eric raised about clarity of purpose and the

reasons as to why government is investing dollars in this area. From our perspective, it comes

back to the stock of skills nationally and by industry, particularly in those industries in which we

think there is going to be reasonable growth and economic opportunity. I think that, in terms of

public dollars, those particular industries need to be supported, but it is also in terms of looking

at the range of workers and their access to training. We would say that, in the context of scarce

resources, young people making their first steps into the labour market must have priority,

because they are the ones that we rely on in terms of expanding the range of skills, primarily—of

growing the cake, rather than reallocating it, which is essentially what we are doing with existing

workers.



In terms of the productivity dividends and the participation dividends, we would say that a

voucher approach that relies on a supply-driven system needs to be matched with what is on the

demand side. In a market approach, there is always going to be the opportunity for some gaps,

some slippage, and not necessarily creative tension between those two forces.



CHAIR—It seems to me, on looking at the totality of the system that exists, that we have

essentially got all the elements in place, but there is a huge disconnection between certain parts

of it and a huge number of barriers in the system. We were talking today with representatives of

the University of Western Sydney, where they have a joint campus with TAFE and the schools,

about the question of the different funding pots and the impediments that that puts up. Because

of the way in which the funding arrangements work, they get penalised for awarding academic

credits.



One of the elements in this which you refer to in your submission is the operation of the VET

system. I am interested in your argument that we can get the retention rate up to 90 per cent.

There is a lot of argument out there that says that that is not the way to go and that, in fact, we

ought to be looking at getting more young people at year 10 out into the workplace as

apprentices and lowering the entry bar at that point. There are some very good examples of how

the VET system is working because there are partnerships with industry that are taking on young

people. We have been told the completion rates for apprenticeships are very high and the drop-

out rates are negligible in those circumstances. In other areas, the VET system appears to be a





EMPLOYMENT, WORKPLACE RELATIONS & EDUCATION

Wednesday, 7 May 2003 Senate—References EWRE 885





disaster and is not working at all. Part of that has to do with career advice and so forth. It seems

to me that that scenario needs considerable attention.



One of the arguments that was put to the committee, for example, is that there is a disjunction

between young people staying in the school system to year 12 and then accessing an

apprenticeship. We have heard the complaint consistently from employers saying, ‘They have

low literacy and numeracy skills. They are not adequate for our purposes. They do not meet the

standard we want. They have not got the self skills’ et cetera. When the committee talked with

the teachers out of the high schools, they said that one of the reasons is that maths is only

compulsory to the first semester in year 10. It might be two years before a person goes for a test

as an apprentice and over that two-year period they may not have visited a mathematics issue.

They become rusty; they lose their skills et cetera. I wonder sometimes if we do not spend too

much time worrying about building the pillars and the monuments around the place and the

theories and not enough time looking at what is actually happening in practice and how to

strengthen the practice in the system.



Yesterday, after the committee spent the whole day talking to a range of people involved in

this area, at 10 to six last night I finally understood that training packages are not training

packages. We spent some time arguing about this. As I understand it now, training packages are

an assessment of the skills you are required to have at a particular level and they have no

connection with what training is required to get to that level of skill. No wonder the system is

confusing and complex, if the language itself is so disjointed. I am sorry, I am getting a little

frustrated with this whole process.



Dr Spierings—What you have just said is entirely consistent with what we are proposing. We

need to stress and clarify that when we talk about 90 per cent, we are not talking about 90 per

cent school retention, we are talking about 90 per cent engagement, whether that is in school or

through apprenticeships and traineeships and so forth. In fact, we know full well, exactly as you

are saying, that for a certain number of young people being in school is not the best place to

be—it simply is not. They do not want to be there and they are not learning there. That means

that there is a consequent responsibility to provide genuine opportunity and access for those

young people and that is really where the issue comes into play.



We have been working with these regions to effectively try to make sense out of the chaos that

you have just described. It is predicated upon relationships, long-term engagement, more

intensive support for those young people who need it and actually linking the young person to

the opportunity that is available. It delivers, and it is exactly for all those reasons about which

you have spoken. It is about better careers information and support. It is about personal support.

It is about schools actually providing opportunities and diversity of programs that respond to a

greater range of kids and their needs. It is about an apprenticeship system that actually says, ‘We

want young people in here.’ It is about employers as well saying, ‘We are prepared to give young

people a shot and we are prepared to invest.’ You have spoken about all of the complexities, and

that is why we are actually working with regions to try and make it workable and viable—it is

exactly about the practice. The governments have to respond. Policy makers and employers have

to respond. Communities can only take it so far and that is the frustration. They can work their

guts out and there will be a certain point at which those barriers are insurmountable unless the

policy flexibilities are in place to allow them to go ahead with it. The discrepancy between

funding arrangements for schools and TAFE is one that comes up repeatedly.



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EWRE 886 Senate—References Wednesday, 7 May 2003





CHAIR—It seems to me that that is a good starting point. We ought to be able to find a way

of getting governments to work together more effectively in terms of how the school system,

TAFE system and the higher education system interface—



Mr Sidoti—Yes.



CHAIR—and the capacity to overlap in that area. This whole issue of articulation is very

important in terms of people not having to make that fork in the road judgment at the age of 16,

17 or 18 about where they are going to be at the age of 65.



Mr Sidoti—I would make one other point. There is also a non-structural issue involved in

this—that is, the question of confidence. One of the things that has been shown to us time and

time again, with both organisations and individuals, is that there needs to be a certain confidence

in being able to employ, regarding the quality of the person and the type of person you are

employing. We have had a long background in structured workplace learning, which enables

young people to have some structured exposure—as opposed to work experience—in the

workplace. One of the things you see from that is a reasonably high attrition into employment.

We had a similar experience with a not-for-profit labour hire company. We worked with people

on the Central Coast to set that up. Over the five years of its operation, 30 per cent of all people

who came through that program ended up in full-time employment. One of the issues there was

the fact that, because the employers were able to meet these people and work with them, they

were confident about employing them—a lot of the concomitant risks were removed.



CHAIR—We had examples given to us regarding apprentices in Newcastle the other day. One

kid was released from his school every Wednesday to work with the local electrician and was

finally put on as an apprentice because he went down there and actually gained the experience.

We also had an example of one kid who wanted to be an apprentice carpenter and who could not

get any assistance from the careers adviser, who was not interested in assisting him to become an

apprentice carpenter but who wanted him to go on to university. The kid did not want to go to

university. It seems that all of those blockages in the system lead to it not working as effectively

as it could. Thank you both very much, and keep up the good work.



Senator STEPHENS—Dr Spierings, when will the paper that you referred to be released?



Dr Spierings—In the next few weeks. I will arrange for you to get an advance copy.









EMPLOYMENT, WORKPLACE RELATIONS & EDUCATION

Wednesday, 7 May 2003 Senate—References EWRE 887









[12.33 p.m.]



MOSS, Ms Julie, Deputy National Chair, Australian Council for Private Education and

Training



SMITH, Mr Timothy Fitz-John, National Executive Officer, Australian Council for Private

Education and Training



WINDRIDGE, Mr David John, Director, Australian Council for Private Education and

Training.



CHAIR—Welcome. The committee has before it submission No. 8. Are there any changes

that you wish to make to the submission?



Mr Smith—No, Senator.



CHAIR—The committee prefers all evidence to be given in public. However, the committee

will consider any request for all or part of evidence to be given in camera. I point out that such

evidence may subsequently be made public by order of the Senate. I now invite you to make a

brief opening statement.



Mr Smith—Thank you, Chair, for the invitation to the Australian Council for Private

Education and Training to appear before the committee today. I appreciate the opportunity to

make a short statement. I have copies of that statement to give to members of the committee. As

the largest of the industry associations in the post-compulsory education and training sector,

ACPET represents 500 members who offer annually in excess of 3,000 accredited courses, from

certificates to postgraduate degrees, to over 80,000 Australian and overseas students.



Our members provide teaching and administrative jobs to approximately 7,000 Australians in

urban, regional and country towns across Australia. This sector has a $350 million gross turnover

and the multiplier effect of our economic activity impacts on a wide range of other service

providers. I am the National Executive Officer of ACPET and my colleagues today are Ms Julie

Moss and Mr David Windridge. Ms Moss is our Deputy National Chair. She is Managing

Director of the Photography Studies College in Melbourne and a member of the Victorian

Qualifications Authority. Mr Windridge is National Treasurer of ACPET and the CEO of MEGT

Ltd, one of Australia’s largest group training companies. MEGT operates nationally with main

offices in Melbourne and Sydney. MEGT is also a registered training organisation, a new

apprenticeship centre and a member of the Job Network.



We draw attention to the size and scope of the private training industry in this country, which

delivers up to 45 per cent of accredited training, 70 per cent of which is on a fee-for-service

basis. The vast majority of our members are small businesses and small businesses, as the

committee would be well aware, are the employers of most people in this country. We suggest

that the key issue for the committee is to ensure that Australian VET students are treated equally

and fairly, especially by providing access to publicly sponsored deferred payment loan schemes.

The sole criterion for determining eligibility to access such schemes should be that the students



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EWRE 888 Senate—References Wednesday, 7 May 2003





concerned are enrolled in approved institutions offering fully accredited courses. VET private

providers meet this test.



We also suggest that particular attention might be given to removing barriers for students

enrolled in institution based training. Many of these students are sole parents or mature age, for

whom apprentice based training is impractical or unattainable. Their only avenue for vocational

training is full-time fee paying courses at TAFE institutes or VET providers. This is particularly

so in hairdressing. The imminent abolition of a Student Financial Supplement Scheme makes it

imperative that other VET students have access to publicly sponsored deferred payment and loan

schemes, irrespective of their choice of provider. Australian students enrolled in VET private

providers come from state and private schools, where they have been supported in whole or in

part by governments. While there is some dispute about the quantum of that support, there is no

dispute that such support should be provided.



However, when these students have moved to the VET sector, which is a substantial part of the

national qualifications framework set down by the federal and state governments, they become

significantly disadvantaged. They cannot access HECS or PELS and may be required to pay

substantial tuition fees up-front. The fact that they are prepared to do this, and do so in

increasing numbers, demonstrates the confidence that students have in the private sector.

Students and VET private providers make a major financial contribution to their own tertiary

educations and to the nation’s future. It is desirable that the government and the parliament

recognise this and ensure that all Australian VET students are treated equally and fairly.



We further suggest that a separate issue for the committee’s attention is the need to remove the

confusion and uncertainty surrounding so-called user choice government funded training

programs. The current concept of user choice is too narrow and only serves the interests of

industry and employers. There is limited interest in individuals or students. User choice should

be extended to serve the interests of Australian citizens and students in particular, with the right

to choose their education and training provider. We thank the committee for the opportunity to

appear and give evidence.



CHAIR—Thank you, Mr Smith.



Senator STEPHENS—Thank you for your submission, which provides a very different

perspective to many of the other submissions that we have received. The series of

recommendations are quite specific and very valuable for us to explore. The first one I would

like to talk to you about is recommendation 3, which is your proposal about a VET graduate

education loans scheme for qualifications above certificate 3 and below certificate 5. Have you

explored that proposal with ANTA at all?



Mr Smith—Yes, we have been having discussions, as have the previous witnesses, with

ANTA as part of the development of their national strategy for the next seven years. We have

certainly put that point to them strongly. Ultimately, it is a decision for government and, because

vocational education and training is administered by state and territory jurisdictions, it will need

the cooperation of states and territories and, of course, the Commonwealth government to make

it work. The reason that HECS and PELS work so well in an administrative sense for higher

education is that the repayments are through the tax department. Of course, higher education is

funded directly by the Commonwealth and that is straightforward. In VET it is not so



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straightforward; it will take a large degree of cooperation and goodwill on behalf of all parties.

We are talking to ANTA about that because the ANTA board advises all the jurisdictions.



Senator STEPHENS—My understanding is that PELS has not got a huge take-up rate. Have

you done any financial modelling or surveying of your member organisations about the extent to

which you think your students might take up a scheme like this?



Mr Smith—Yes. PELS is certainly a very limited scheme. It applied until only very recently

to postgraduate students in public universities where they were paying fees up front. The

parliament legislated last year to extend the access to PELS to four private providers. That is

why there is not a big take-up rate, because many people involved in postgraduate work are not

eligible to participate in or to have access to PELS. We are waiting to see what is in the

Commonwealth budget next week and we are optimistic or hopeful that the Commonwealth

government will move to either extend or replace PELS with another form of broadly based

income contingent deferred payment loans scheme. That, of course, is a higher education

arrangement but that still leaves VET students, particularly students of private providers, out in

the cold. That is why we are proposing that the committee give consideration with a view to

recommending to the Commonwealth and state governments that there be a phased introduction

of a student loans scheme for students in VET.



Senator STEPHENS—The second part of my question was whether or not you had actually

tried to quantify or identify how that would affect your member organisations. To what extent do

you have any evidence to help us understand the impact of that for your organisations?



Ms Moss—At the moment it is anecdotal and the ACPET board has made a decision to

investigate that at a more formal level. There is anecdotal information of unmet demand. If there

were some support available, more people would be prepared to pay for their own education and

training. At this stage this is only coming from the number of people who go to private providers

and then make the decision that they cannot study there because they cannot afford it, but they

are very interested in it. That really goes to the fact that in our sector generally there are no

statistics to help us understand the extent of education and training that is going on that

individuals are paying for. We have actually talked to ANTA about that and it is something that

we have raised for their next national strategy. There is an important need to quantify the amount

of education and training that is going on that is not government funded in any way, shape or

form because there are no statistics on that at all. If we are going to understand current and

future skill needs, it is important to understand how much education and training currently is

being undertaken by individuals that is not even on the radar scale.



CHAIR—You said that more people would be prepared to pay for education if there were

some support for it. What did you mean by that?



Ms Moss—This was when I was talking anecdotally. With regard to the providers that we

know around Australia, people who apply to those providers for the sorts of courses they offer

are often interested in niche areas such as art and design, where the government funded effort, if

you like, is quite low comparatively. They are also often areas that train people to end up as

small business operators. They are not necessarily putting people into large organisations, so the

focus of the courses is often to ensure people end up being able to manage their own small

businesses. It is something that does not really fit into the mainstream, if you like, or the current



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funding. But we are aware anecdotally from these providers across Australia that typically

people who are very interested apply and would like to train in those organisations but often just

cannot afford it. The only place they can get support from at the moment is some banks which

will offer some sort of loan scheme to tertiary students, but they are quite limited in what they

can offer.



Mr Smith—Senator Stephens’ question related to the modelling we had done in terms of our

proposal for a VET graduate student loans scheme. It is certainly true, as Ms Moss says, that

most of the evidence here is anecdotal, but we did tender significant evidence to this committee

at the time it was inquiring into the amendment to the higher education act. The evidence that we

tendered went to the higher education sector. There was a very clear indication from our

members that if PELS in that form were extended then there would be a great take-up by

students. We have no reason to believe that the position in VET would be any different.



Senator STEPHENS—Coming back to your submission, you made the point that you are

addressing the second term of reference of the inquiry, which is about the effectiveness of

Commonwealth, state and territory arrangements. In your submission you have highlighted a

number of inconsistencies and differences. In our hearings around Australia we have had

evidence about this—indeed, even this morning we had a discussion. We were at Nirimba

campus and we were talking to them about both articulating issues and funding issues and the

penalties that are involved. To what extent do you have those same kinds of issues in your

sector? Could you elaborate a little more on the specific inconsistencies that you have talked

about in terms of how the AQTF is being undermined by them?



Mr Smith—Could you refer to a specific example?



Senator STEPHENS—You have mentioned several here. You talked about the specification

for nationally approved apprenticeship and traineeship qualifications, the hours, the funding

levels, the qualifications eligible for funding, and the auditing approaches to RTOs. You have

raised a whole series of issues in your submission. Perhaps you would like to elaborate on those.



Mr Smith—Fundamentally, as the previous witnesses said, we work in a federal system with

eight jurisdictions—nine, in effect. The Australian Quality Training Framework is a quality

assurance system which has been agreed to by all ministers, and there are certain standards

associated with that. The difficulty is that the implementation or the auditing of those standards

rests with individual jurisdictions, and it is a big country, as you all know. The approach to

auditing the AQTF standards in Perth, for instance, may well be very different to that in Hobart

or Sydney. There are different dynamics operating. We are a great supporter of the AQTF and

believe that there must be a national quality assurance system. We have been very supportive of

ANTA and getting that to be as effective a system as we can.



Private providers have special needs that public providers do not face by definition. The

biggest difficulty we have is that, as we see it, the introduction of the AQTF is carrying with it

major cost issues for our members in that the jurisdictions are imposing different levels of

requirements or extent of auditing. They look at issues, such as a change to or extension of the

scope of registration, which are costing our members resources. They are problems that I think

need to be addressed. We have retained at our expense a consultant, Mr Peter Kellock, who at

this time is talking with our members with a view to assessing the extent and nature of the cost



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of compliance with the AQTF so that we can then go back to ANTA and talk with them about

that. ANTA are aware of the survey and the project and are very keen to see the outcomes.



Mr Windridge—Can I just add a little bit to that. As a group training company across a

number of states and as a new apprenticeship centre within Victoria, it is our observation that the

inconsistencies within the system which seem quite subtle on the surface really have quite

significant impacts underneath. An example is where we, as a registered training organisation,

win a client in the retail industry and we are looking at training some of their existing workers.

The client may use the Commonwealth government incentives to fund that training for their

existing workers. In some states we have to run it as a front-line management course because

they are ineligible for the Commonwealth incentives if we run it as a retail traineeship. In other

states, we have to run the same course as a retail traineeship. So we go to a national employer

and say, ‘We can train your staff nationally to a consistent Australian standard but in this state it

has to be this traineeship package and in that state it has to be a different traineeship package.’

Then we have to convince them that we are actually putting the same things within the course.

We have to say then that despite the fact that they are named differently we are actually going to

deliver the same training and try and show them how they work together.



It is difficult at that level, where you have got some fairly subtle rule interpretations from state

to state and within the federal government, but the impact can be quite significant on the ground.

Also, those rules change over time. As Tim pointed out before, those things depend very much

on things such as where we are in the electoral cycle—whether it is state or federal

government—what the budget parameters are and what the incentives are. Are we focusing on

employment or on training? For instance, with the Victorian budget just this week, there have

been some significant changes made to the system. That impacts only in Victoria, but now we

have to try and work out—if we are dealing with a national client—the impact in New South

Wales. I guess it is an inherent problem within the federal system and clearly we have no answer

to that. It is not within our parameters to solve that.



Senator STEPHENS—Fair enough. I have just one final issue. We have had quite interesting

discussions, particularly yesterday when we talked with the TAFE Teachers Association about

the issue of teacher education and qualifications. An earlier witness during the day mentioned

the looming skills shortage of TAFE teachers and the appropriateness of a certificate IV as the

minimum qualification for trainers. Where does your organisation stand on this issue in terms of

minimum qualifications of your trainers and teachers?



Mr Windridge—My concern with that is it is the piece of paper which determines the

appropriateness of the training qualification, not the quality of the trainer and thus the trainee

experience. I have some concerns, whether we call it a certificate IV or a certificate III—

whatever it is, we are governed by the piece of paper as opposed to whether the clients are

getting what is necessary. For instance, I take people who have been managers in industry and

employ them as trainers. They have current industry experience and they are relevant and

focused and have been training within industry, yet we as an organisation are criticised if we do

not put them through a certificate IV course straight away. I have some concerns about that.



Basically, our trainers are very young and they are straight out of industry. I talk to TAFE

directors and their work force is at the other end of working life. Most of them are getting

towards retirement age. So their industry experience is probably less current but their teachers



EMPLOYMENT, WORKPLACE RELATIONS & EDUCATION

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have had longer to get the cert IV qualification and things like that. From my perspective, I do

not see that having a cert IV makes you a great trainer or not a great trainer.



Senator STEPHENS—One of the issues that is raised with us quite often is that the public

providers, the TAFEs and schools, require an educational qualification and therefore are

sometimes not competitive in the tender processes when they are having to pay a higher salary

rate to their trainers than private or community providers might have to do. I am more interested

in whether or not, in terms of your quality assurance and compliance discussions that you were

just talking about, the issue of the generic competencies that we are trying to develop in young

people and the employability skills are able to be addressed by people who have industry

experience without having some kind of an educational framework or background in which to

have a point of reference. The other issue is: in terms of the new cert IV, has your organisation,

as an industry organisation, participated in the development of the new requirements of that

certificate?



Ms Moss—As to the first part of your question, I am familiar with that argument regarding

the TAFE teachers.



Senator STEPHENS—And school teachers as well.



Ms Moss—Yes. With respect to the TAFE teacher argument—again, this is anecdotal—and

the so-called sessional rate, I think you will generally find that many of the commercial colleges

in Australia are paying a much higher rate than the TAFE teachers are being paid. So I think that

argument needs a bit more interrogation before it is believed.



I do believe that people who have a lot of industry experience can also be great teachers. I do

not necessarily think that the cert IV is the indicator of that. In my organisation we are

passionate about finding that combination, and it can be done. I have people who knock on my

door and say they have been in photography for many years and they really want to give

something back. They know what it is like to be a young person learning and they feel they have

something to offer. Obviously I have to put them through a cert IV but that is not the marker. It is

about the person; it is about who they are and whether they have the ability to facilitate and share

information and nurture a spark in somebody. I think that is the important point.



At the same time our education and training sector is such a diverse sector. Even in the private

sector, having regard to the trainers that David is talking about, for them the cert IV may well be

a very useful tool. In my own organisation, because it covers photography, the arts et cetera,

people have masters qualifications and often PhDs. Some of those masters qualifications are in

education, and they are not very happy about having to do a cert IV. They see that as not being

relevant to them. Indeed, I was part of a group in Victoria a few years ago which was looking at

developing graduate certificate and diploma qualifications because we saw those as being more

useful and relevant to the people that were there. So I think the issue is quite diverse.



I do not know whether that has answered your question, Senator, but these issues are

considered by our organisation a lot. In some pockets a cert IV is seen to be okay for those very

much engaged in workplace training activities. But ACPET is an organisation that also has as

part of its membership a lot of commercial colleges, and the emphasis is not always so much on

the workplace. So that qualification is not so relevant to the people training in those



EMPLOYMENT, WORKPLACE RELATIONS & EDUCATION

Wednesday, 7 May 2003 Senate—References EWRE 893





organisations. With respect to the second part of your question about input, the answer is yes, we

are having some input into that. Tim might want to answer that.



Mr Smith—We have been involved in all the iterations of the AQTF from when it was to

have been called the ARF, the Australian Recognition Framework, so we are quite happy with it.



Ms Moss—But over the changes to teacher training I think you have been involved with that.

We have representation on that too with Tony Zalewski.



Mr Smith—Yes. You also referred, Senator, to the evidence given by the TAFE Teachers

Association and the complaint—and it is a bit of a tired complaint—that they are unable to

compete effectively because they are required by awards to pay higher remuneration. As Ms

Moss points out, in many cases that is not the fact. Also, if that argument is used, it needs to be

borne in mind that private providers, when they compete for government tenders, have to carry a

whole lot of conditions that public providers, by virtue of the fact that they receive public

appropriations and have massive infrastructure, do not carry, so it is a swings and roundabouts

situation.



Senator STEPHENS—For the record, Mr Smith, can I say that the teachers association were

not saying that yesterday. That is an issue that has been raised in roundtable discussions. They

see a real challenge in a skills shortage of TAFE teachers coming very soon as there is a

retirement age threshold. I suppose I did not phrase my question very well, but it is a looming

issue for TAFE. I wonder if it is a looming issue for you. Perhaps the answer to the question is

that you are using younger teachers and it is not going to be that situation for you.



Mr Smith—Yes, and sessional or casual staff are actually working in industry.



Senator STEPHENS—I do not want to divert the conversation beyond where you really want

to go.



CHAIR—What percentage of your teaching personnel would be part time or casual working

in an industry?



Mr Smith—I have two CEOs of large organisations with me and I will take the test of them

contradicting me. I would say that of our trainers and teachers over 90 per cent would be on a

casual or sessional or part-time basis. That does not mean that they might not have worked in the

same institution for many years alongside their industry job.



Mr Windridge—My organisation is absolutely the opposite. We have 100 per cent full-time

employees. We take them out of industry and they work with us for a period of time, so I can

contradict him in that regard.



Ms Moss—That is typical. It is very diverse.



Mr Windridge—It does vary a great deal. In fact my financial controller looks at the local

TAFE colleges who are making heavy use of sessional trainers and at their hourly rate and says,

‘David, shift your staff over there because we will be better off financially if we use the same

sessional rate as the TAFE colleges.’



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Ms Moss—It is complex and diverse.



Mr Windridge—Yes.



Senator STEPHENS—But in terms of our future skill shortages we are really trying to think

about how we can make sure that we have an infrastructure in place that can actually meet some

of those skill needs.



Senator BARNETT—Thank you very much for your submission, which is comprehensive.

The recommendations are noted and I think they are worth pursuing by having a good look at

them. The fact that you deliver up to 45 per cent of accredited training and that 70 per cent is on

a fee-for-service basis is quite remarkable and significant. I have five questions. I will mention

them quickly and then I will come back to the first one. They relate to small business and how

we can better target small business, and to your loan scheme, and I would like your views on the

voucher and the flexibility that might offer. That issue has been put to the committee and I would

like to flesh that out with you. There is the levy that has been used in the past and has been

proposed again by Dusseldorp and some others. There is the fact that in many states the state

governments quarantine to TAFE and the government providers certain training. In Tasmania,

Northern Group Training complained significantly about the fact that the government

quarantines certain sectors for TAFE. I would like your views as to whether that is fair.



Perhaps we could start with small business. How can we better service small business? We

hear—I certainly do—from small business that it is a one-size-fits-all arrangement and that the

training that is available on offer, particularly through TAFE and the government training areas,

is not appropriate. Noting what you said, Mr Smith, that over 50 per cent of the private sector

work force is in small business, it is a vital sector for Australia, particularly in rural and regional

areas. How can we better service the small business sector?



Mr Smith—If I had my way, I would have preferred to have dealt with your last question

first, because state governments quarantine a whole lot of activity to TAFE, and we think that is

outrageous. But we can come back to that.



Senator BARNETT—I am happy if you want to take that first. If you are red hot on that one,

go for it. It does not worry me in which order you take it.



Mr Smith—Let me give you one example and I will not labour the point. It is the issue of

interstate licensing. We really have a problem across the Murray, because, by government

agreement, there is institution based training in the hairdressing industry. Someone who

completes, say, a classroom based program, not an apprenticeship program, in Victoria is fully

qualified to be a hairdresser in a salon anywhere in Victoria or elsewhere in Australia but they

cannot do that in New South Wales unless they go back into an apprenticeship. That is because

the licensing arrangements in New South Wales say that to practise as a hairdresser in New

South Wales you need to have done an apprenticeship, and the apprenticeships are generally only

available through TAFE. That is a problem; it is an inhibition on employment in this country. We

think it is inimical to national competition policy, but that is another issue.



Senator BARNETT—It is not another issue, in a way. You highlighted a glaring example of

the bureaucracy blocking the system and the current arrangements not working very well.



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Wednesday, 7 May 2003 Senate—References EWRE 895





Mr Smith—It is a control of entry.



Senator BARNETT—Is there anything you can do in terms of national competition policy or

some other mechanism?



Mr Smith—We have raised the matter. We have had discussions with senior executives of the

Department of Education and Training in New South Wales. We have raised the matter with the

former education minister, Minister Watkins, who I think understood what we were saying but

said that, at the end of the day, it was not his problem because the responsibility is with his

colleague the Minister for Industrial Relations. We approached the Minister for Industrial

Relations and were told that a legislative review is on. That was 15 months ago. In the

meantime, the difficulty for some of my members who are fully qualified hairdressers, in

Victoria particularly, is that when those students come out—and they have paid fees up front to

do their courses—and then go to get a job in Sydney, they are told that they cannot practise

because they cannot obtain a licence unless they go back to New South Wales TAFE and do an

apprenticeship. It is absurd.



Senator BARNETT—In many other professions mutual recognition applies and it is

recognised.



Mr Smith—And the National Training Framework talks about mutual recognition, and the

MINCO ministers, including the New South Wales minister, are signatory to that. Yet when you

come to talk about actually being able to get mutual recognition to work in practice it is a joke. It

does not work across the River Murray.



Senator BARNETT—You mentioned the MINCO ministers’ meeting. It is discussed at those

meetings. What about ANTA and other mechanisms to force a resolution?



Mr Smith—ANTA is certainly aware of it and, in fact, convened a roundtable on the issue,

but to remove this problem the New South Wales parliament has to act to change the legislation,

and there seems to be a disinclination to do that.



Ms Moss—For many years one of our directors on ACPET has followed this through. She is

in hairdressing and has followed it through on behalf of the sector. She calls it her ‘old chestnut’

and wheels it out at every opportunity. She has just gone to London but she left a message for me

before she went to say that there is no user choice in New South Wales in hairdressing. The other

thing she said was that students from her college in Melbourne can get recognition to work

internationally but they cannot get recognition to work in New South Wales.



Senator BARNETT—That is embarrassing.



Ms Moss—That is embarrassing.



Mr Smith—It is a reason that ACPET has entered into an arrangement with City and Guilds,

the long established United Kingdom award granting body, to be their Australian agent. We are

proposing to our members that they consider offering the international vocational qualification,

the IVQ, of City and Guilds as a way of being able to achieve international recognition. But the

irony is that the IVQ is recognised in New South Wales. Someone from Melbourne could do an



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EWRE 896 Senate—References Wednesday, 7 May 2003





IVQ and then possibly go and be licensed in New South Wales. It is an issue that really needs to

be addressed. If it is something that this committee could take up, we would be most grateful.



Senator BARNETT—I am very interested in pursuing this, and I think others will be as well.

I appreciate your evidence. You mention hairdressing. I know, from what I have heard, that there

are other examples as well. I think you have said in your submission that there is an unfair

advantage to the government funded training programs. Can you pull together at some point

some further examples of this anomaly around the country?



Mr Windridge—I can certainly pick up some of that. My organisation is more Victorian than

anything else, although we try and operate at a national level, which is somewhat difficult.

Within Victoria, under user choice each of the private providers that is recognised by the

government is given what is called an entitlement to train up to a certain number. Each year that

number varies according to, supposedly, your performance. But in the latest year, which started

at 1 January this year, we were informed at the end of March—three months into the year—what

our entitlement was going to be. The entitlement was basically that if you had achieved

everything that you set out to do in your agreement with the government—so if you met your

performance agreement in the last period—you had a 13 per cent reduction in your entitlement.

If you had fallen short—say, you got somewhere between 90 and 100 per cent—you got 70 per

cent of your actual results. If you got less than 90 per cent of what you had set out do you got 50

per cent. That came three months into the year, to a private provider running a business.



TAFE colleges know what their entitlements are before the year starts and they are out and

running. They know what they can do; but we are told that after. Some people had actually

already filled their entire allocation when they found out what their allocation was. To run a

business is extremely difficult at that point, when you have staff commitments and apprentice or

trainee commitments—young people that you have made commitments to. You might be talking

to an employer and trying to bring the employer on, and you say: ‘This system really works for

you. It’s going to work; it’s going to value-add to your employees.’ Then all of a sudden you

have to say, ‘Hold on, perhaps we’ll put a hold on that for nine months because I have used my

entitlement now and I can’t do it.’ So that is one thing.



Once again within Victoria, from our perspective as a retail trainer, in the last eight years there

has been no increase in the payment regime—we get the same now as we got eight years ago. In

that time, every other sector that is involved in delivering retail training has had an hourly rate

increase except for the private providers. Why? I cannot understand it. Why should a TAFE

college get an increase in the hourly rate? Why should an ACE provider get an increase in the

hourly rate? Why should a VQA, say, now increase our registration fee, because there have been

cost adjustments, when our hourly rate of payment that we receive from the government has not

increased?



Senator BARNETT—You make some good points there; thank you.



Mr Smith—These difficulties are not confined to Victoria. You probably would have heard in

evidence about the problems of the so-called user choice program that operates in Queensland,

New South Wales and South Australia. I know Minister Brendan Nelson is very concerned at the

lack of a consistent approach across the jurisdictions and is seeking to talk with peak bodies

about this. We just would like to ask the committee to call on ANTA and the various jurisdictions



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Wednesday, 7 May 2003 Senate—References EWRE 897





to see if there can be, as David said, more attention given to the interests of young people. There

are a lot of politics going on with user choice in this country. I say that not from an organisation

that is interested in chasing government dollars—quite on the contrary. The frustrations, the

difficulties and the inhibitions put in the way mean that, increasingly, my members are dropping

out of that area. But, at the most, only 30 per cent of them were interested in government funded

training programs.



There are three ways in which training is funded in this country: the Commonwealth and state

governments put in money through ANTA; employers put in money, mainly at the first

qualification level, for an apprenticeship or traineeship; and students and/or their parents make a

major contribution. Ms Moss points out quite correctly that there is very little published data in

this area. Governments have not shown a lot of interest in collecting data on the extent of the

delivery of accredited training by private providers, but the Queensland government has, and

they are to be complimented on it. In conjunction with us they have just commissioned a report

which is being done by independent accountants Hall Chadwick of Brisbane. Minister Foley is

about to release the information formally. In a 15 per cent sample of registered training

organisations in Queensland, the number of students who undertook training during the 2002

training year—and the full number has been extrapolated from the sample—was over 230,000.

The comparable figure for TAFE Queensland was around 300,000. That is the best evidence I

have to date that private providers deliver up to 45 per cent of training. In terms of the training

being delivered via government funding versus fee-for-service, the real information is that the

training output, based on and extrapolated from those responses, is 70 per cent fee for service—

that is, the students, their parents or their employers are paying up front. So government makes a

big contribution, as the previous witness has said, but so do the students.



Senator BARNETT—We are a bit tight on time so I will leave those other questions on

notice, but could I finish with one about the loan scheme, which touches on your last point about

students or the user paying directly? If the loan scheme applies to the tertiary sector and

HECS—and that is your recommendation 6—and you are saying that you want to roll that out in

terms of VET as well, it seems that if you accept it for HECS and there is some sort of

philosophical or policy agreement, why shouldn’t it apply? What are the arguments for and

against?



Mr Smith—Why shouldn’t HECS apply?



Senator BARNETT—Yes. Why shouldn’t your loan scheme—I think you call it the VET

loan scheme—apply for higher VET?



Mr Smith—We have proposed what we call a VET graduate loan scheme, which would

essentially be for students to access a government organised, income contingent, deferred

payment loan scheme, similar to what higher education students can access at the current time.



Senator BARNETT—I accept that. My question is: what response have you had to that

recommendation or proposal that you have put forward? It seems to be a consistent and sensible

one if you accept that HECS applies across the board for tertiary students.



Mr Smith—There has been great support from our members. Our members believe that if it

were available students would be able to choose their provider. They would be able, within rules



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set down by government, to pick the course that they think is best suited to them and that offers

them the best opportunity to gain employment. We are not saying that that loan scheme should

apply at the apprenticeship or traineeship level—at the first point of entry—because, by

definition, to be an apprentice or trainee you have to be employed and therefore you will have an

income. We are talking about people such as the hairdressers, as I was talking about before, who

are at the first point of entry and who are paying fees to do a classroom based course which is

accredited—



Senator BARNETT—And for the associate diploma?



Mr Smith—or people who go on to do other programs, yes.



Senator BARNETT—So the higher-level qualifications?



Mr Smith—Yes.



Senator BARNETT—Point taken. I had better leave it there in light of the time.



CHAIR—Mr Smith, I have one final question. What percentage of accredited training that

your company is involved in is domestic and what percentage is for overseas students?



Mr Smith—It would be pretty much fifty-fifty. We have 500 members and approximately half

of those are involved in the international education market, which as you will well appreciate is

a booming industry for this country. There is a great skills development need there too for that

industry, not for the teachers but for the people who work in both public and private providers

about student enrolment measures, how you look after overseas students and all those sorts of

things. In the area of vocational education and training, which is this committee’s specific

interest, the most recent figures from Australian Education International, a government agency

of DEST, indicate that 70 per cent of the international onshore education delivered to overseas

students in Australia is done by private providers. Less than 30 per cent is done by TAFE.



CHAIR—Thank you.



Proceedings suspended from 1.23 p.m. to 2.04 p.m.









EMPLOYMENT, WORKPLACE RELATIONS & EDUCATION

Wednesday, 7 May 2003 Senate—References EWRE 899









BLANDTHORN, Mr Ian, National Assistant Secretary, Shop Distributive and Allied

Employees Association



BRADLEY, Mr Phillip John, Assistant General Secretary, Post School Education, New

South Wales Teachers Federation



BUCHANAN, Dr John Duncan Anselan, (Private capacity)



EVANS, Mr Bert, Chairman, New South Wales Board of Vocational Education and

Training



GODWIN, Ms Louise, President, TAFE New South Wales Managers Association Inc.



GOODWIN, Mr Paul Geoffrey, Chief Executive Officer, GROW Employment Council Inc.



HEDLEY, Mr Michel, National ICT Workforce Manager, Australian Information Industry

Association



ROWE, Miss Jacinta Maree, Director, J2S Pty Ltd



SMITH, Professor Andrew, Acting Director, Centre for Enhancing Learning and Teaching,

Charles Sturt University



STEIN, Professor Irene, Clinical Services Consultant, Baptist Community Service, and

Professor of Nursing, School of Nursing and Midwifery, Victoria University



TONER, Dr Phillip, Senior Research Fellow, Australian Expert Group in Industry Studies,

University of Western Sydney



CHAIR—As part of its inquiry into current and future skills needs, the Senate Employment,

Workplace Relations and Education References Committee is conducting a series of roundtable

meetings with people involved in various ways with identifying or responding to the skills needs

of industries, communities and individuals. The committee is also holding more formal public

hearings with those who have made submissions to the inquiry. The committee wants to discuss

or explore what it expects will be a wide diversity of views from the community on current skills

formation policies and programs and to hear about suggestions for change. The purpose of these

roundtable discussions is to allow the committee to consult a broader range of people than is

possible through the more formal hearing process, including those who do not wish to make

formal submissions.



Although these roundtable discussions are meant to be informal, we are bound to observe one

important rule of the Senate with regard to privilege. This discussion is privileged, and you are

protected from legal proceedings with regard to what you may say. Hansard will produce a

verbatim transcript of evidence which will be provided to participants and will also be available

on the committee’s Internet site as official documentation of the committee’s proceedings. This

recording is not intended to inhibit informal discussion, and we can go in camera if you want to



EMPLOYMENT, WORKPLACE RELATIONS & EDUCATION

EWRE 900 Senate—References Wednesday, 7 May 2003





put something to the committee in confidence. I point out, however, that such evidence is often

difficult to report in an inquiry of this nature and that, in any event, the Senate may order the

release of such evidence. Many of you have provided the committee with some brief written

information about yourselves, the organisations or interests that you represent and the key issues

in relation to your current and future skills needs, for which we thank you. Does anyone have

anything to add about the capacity in which they are appearing today?



Dr Buchanan—I work at the Australian Centre for Industrial Relations Research and Training

at the University of Sydney.



Mr Evans—I am Chairman of the Board of Vocational Education and Training, which is an

advisory body to the minister. I am also Chairman of the Vocational Training Accreditation

Board.



Miss Rowe—I work for a company called J2S Pty Ltd and in that capacity we work for a

number of RTOs in New South Wales and Queensland.



Ms Godwin—I represent the TAFE New South Wales Managers Association, an organisation

that represents TAFE managers from practitioner level through to senior management in TAFE

New South Wales.



Mr Hedley—I represent the Australian Information Industry Association, the peak industry

association representing the IT industry in Australia.



Mr Bradley—As well as representing the Post School Education Unit of the New South

Wales Teachers Federation, four years ago I was a head teacher of civil engineering in TAFE.



CHAIR—I thank the witnesses for coming this afternoon. I will pose a number of questions

to get proceedings under way. Feel free not to be inhibited by the questions I put but to raise any

issue that you want to put on the table and which you think is relevant to the terms of inquiry of

the committee.



The first issue I would ask you to address in these discussions is whether current training

packages develop the employability skills that employers claim to need—in other words, what

are described as soft skills—and what is the right mix between both the soft and the technical

skills. Secondly, what is the relative importance of Commonwealth and state incentives in

promoting training? Are those targeted effectively—in other words, are we getting the best bang

for the dollar that is being spent? What is the capacity of our current training policies and

programs to respond to what are demonstrated as emerging skill needs? Thirdly, what shortfalls

exist in our current approach to identifying current and, in particular, future skill needs? What

are your suggestions for overcoming these? Is our labour market data qualitative enough for

accurate forecasting in this area?



The fourth issue is the extent to which Job Network and labour market programs can assist in

meeting skill needs and the role that Job Network plays, if any, in identifying and responding to

skill needs, particularly on a regional basis. Fifthly, what is the effectiveness of current

consultation arrangements—for example, the ITABs—and what, if any, alternatives are there to

this form of consultation? The sixth issue is industry investment and training of their work force.



EMPLOYMENT, WORKPLACE RELATIONS & EDUCATION

Wednesday, 7 May 2003 Senate—References EWRE 901





Should we adopt a carrot or a stick approach? Should we continue with incentive packages, or

should we be looking at alternatives such as training levies? What are the relative merits of

industry specific type training levies, which exist in some industries, vis a vis universal type

training levies, which we have had in the past?



Those are half a dozen key points that we have been canvassing throughout this inquiry. You

may try to address them in your contributions, but we are particularly keen to hear what issues

you think are pertinent to this inquiry and will contribute to the expansion of the skill needs of

the community.



Dr Buchanan—I have been actively researching training reform since the early 1990s. We do

it from a workplace perspective, primarily a labour market perspective. As a multidisciplinary

centre we have historians, sociologists and economists as well as IR specialists. What has struck

us as we have looked at it over the years is that policy has been very weak in engaging with

practice on the ground and that has got worse since the shift to a national training market.



I think the committee has to confront the fact that there is a fundamental design flaw in the

policies underpinning skill formation in Australia today. That design flaw is that somehow you

can have a market where there are natural suppliers and natural demanders. Skills are not formed

like that; skills are not something that are just out there for sale and to be allocated by the price

mechanism. Skills are nurtured in what we call skill ecosystems and we have written that up in a

report we prepared for Bert Evans’s committee.



My fundamental concern with policy today is that it has evolved into what we call a new

model of business welfare. The latest data that has come out has revealed the following: there

has been an astronomical growth in the number of traineeships. They have increased by a quarter

of a million since 1996. A quarter of a million represents a huge shift. We cannot think of a

labour market intervention that is of equal scale. Just a fortnight ago ANTA released data on

employer training expenditure. There was a lot of publicity at the time that employers were

spending a lot more on training. Of course you would expect them to spend a lot more on

training; there are a lot more people employed, there has been inflation and there have been a lot

of government subsidies.



The key variable to watch is the one that was monitored in the early 1990s: employer training

expenditure as a proportion of payroll. On page 18 of the ABS catalogue it shows that that has

been stagnant at 1.3 per cent since 1996. So you have had an increase of a quarter of a million

trainees, a huge influx of employment based training and stagnant employer training

expenditure. What is worse is that, among those employers providing structured training, their

contribution to the training effort has dropped from 1.7 per cent of payroll to 1.5 per cent. I

simply say that whilst there is the rhetoric of a national training market being put in place, the

reality is that there is massive cost shifting going on where employers are accessing cheap labour

with government support.



Prof. Smith—Can I comment on John’s comments. I do not want to disagree with John but I

think there is another perspective we can take, particularly on employer training expenditure.



Senator BARNETT—You should feel free to disagree.





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EWRE 902 Senate—References Wednesday, 7 May 2003





Prof. Smith—I think I will have to disagree with John otherwise what is the point of being in

the same room with him. He is quite right when he says it is at 1.3 per cent and that has

remained fairly static for quite a long period of time. The difficulty with those figures is that they

tend to be rather incomparable with the figures that were collected in the rest of the 1990s.



Dr Buchanan—Can I just correct that. The ABS made sure that the 2001-02 data was directly

comparable with the 1996 data. That is an ABS number.



Prof. Smith—If you look internationally, though—and I have been doing some work recently

on international comparisons of employer expenditure—the most comparable data comes from

Europe through the continuous vocational training survey. If you were to look at that 1.3 per

cent, which is actually a very comparable figure, and compare it with the figure that is collected

by the EU, it comes out as a middle- to upper-end figure. My view is that our problem with

employer training and the provision of employer training is not so much to do with the total

amount of expenditure on it—I think that is fairly comparable with a lot of other countries that

have a structure that is similar to Australia’s industrial structure—but much more to do with the

kind of training that is provided and the distribution of training across the work force.



In response to your last question about employer levies and incentives and so on, my feeling is

that it is very easy in the face of seemingly lower figures to reach for the levy lever and say that

we need to have a stick with which to beat employers to increase their expenditure on training.

My research would tend to show that, in fact, training levies do not tend to work terribly well in

those countries that have implemented them, and that it is far more effective to have policies that

are much more around the context of training, which influence the kind of training that

employers provide and the distribution of that training across the work force. I think we should

always be looking at policies to improve employer commitments and investment in training.

Those policies should be more about issues to do with the structure of training and the

partnerships that employers have with providers of training, particularly with TAFE and so on.

Policies are now being pursued at the state level in Australia with some interesting results.



However, my feeling is that we lack national leadership in that kind of area and a national

perspective, and I think that is very much a role for a body like ANTA to take on board. I would

say that, if we are serious about improving employer investment in training, we ought to look at

much more contextual factors rather than simply looking at an expenditure figure. I do not think

expenditure gives us much of an idea about the kind and quality of training that happens.



Mr Blandthorn—Senator, I come back to some of the questions that you posed at the

beginning of this discussion, and in the process of responding to those, I will make some

comments in respect of what the previous two speakers from this side of the table have said.

With respect to training packages, I think the question that really should be asked is whether they

meet the needs of employers and of the individuals undertaking the training. A training package,

in my view, should do both those things. I can only speak with any real knowledge of the

industry that I come from, but let me say that I think the training packages that have been

developed in my industry certainly do meet the needs of both employees and employers. I think

that is evidenced by the fact that there has been a very substantial growth in the take-up of

training, particularly in the retail industry.









EMPLOYMENT, WORKPLACE RELATIONS & EDUCATION

Wednesday, 7 May 2003 Senate—References EWRE 903





I have taken on board what John Buchanan has said, and there is no doubt that government

incentives have stimulated employers to embrace training. I do not necessarily think that is a bad

thing provided that, at the end of the day, the outcome is a quality product. I think the question

we should be asking is whether the incentives are leading to a quality product. I would say, by

and large, with respect to my industry the answer is yes, but along with every other industry one

can point to the fact there are rorts in the system. Perhaps part of the problem there goes back to

the way incentives are made available; that incentives are made available at various points in the

process before a person has completed the training. The Senate might take note of the fact that

some changes were announced in the Victorian budget yesterday which, effectively, have

changed the structure of state based incentives so that they are provided essentially as an end-on

process or end-on contribution to employers, but they are not made available unless there is a

quality training product at the end.



I think one of the reasons why training packages in the retail industry have been successful is

because of the existence of ITABs. I think this is an issue that the Senate must take on board.

The initiatives being taken by ANTA, in my view, at the present time are going to lead to a

substantial downgrading of the role of ITABs at both the national and state level. That is already

taking place. I think the end result of that will be that the capacity for industry to have input into

the system will be greatly weakened. So I think there is a real danger that in the future the

quality of training packages and their acceptability to industry and to the people working in the

industry may well be reduced, because ANTA is effectively putting in place a process that is

going to lead in practice to reduced industry involvement in the development of training

products.



Mr Evans—I wanted to say a couple of words about the incentives. You asked about state and

federal incentives. There is no question that the Commonwealth incentives have driven this huge

growth in traineeships. The growth has been explosive, but nationally the occupations with the

greatest growth are clerical, sales and service workers—down the bottom end of the scale—

where numbers in training grew by 260 per cent in the five years to December 2002. These make

up one-third of all apprentices and trainees and traditional apprentices make up another 32 per

cent, but that figure of 32 per cent for traditional apprentices has dropped from a figure of 55 per

cent.



The situation we have is that the Commonwealth incentives do not discriminate regarding the

availability of employer incentives. They are equally available to manufacturing and automotive

industries, which I have a lot to do with, where there are clearly skill shortages, and to industries

where there are no shortages. I will give just one simple illustration of that. It concerns

electricians, which we are nationally short of. The crude training rate for electricians in 2001 was

11 per cent but in the low skill occupation of process meat workers the figure was 23 per cent.

You will see it is skewed to the bottom end of the scale. They are certainly driving demand but

are not strategic in their allocation.



This does put strains on the states; there is no question. People welcome training, but the states

have to provide the resources to cope because the federal funding from ANTA has not kept pace

with this huge explosion in demand. One of the figures I suggest has to be put starkly on the

table is that in New South Wales 61 per cent of the training for trainees—as distinct from

apprentices—occurs wholly on the job. In New South Wales, there are 79,600 trainees; 48,670 of

those receive training wholly on the job. It is a very hard area for anybody to police. RTOs have



EMPLOYMENT, WORKPLACE RELATIONS & EDUCATION

EWRE 904 Senate—References Wednesday, 7 May 2003





the responsibilities in that area, but I have to say to you that in my role on the accreditation

board, with this explosion of growth it is very hard to ensure that all of the training that occurs

on the job is good quality training. If this system is not about good quality training, we are all

wasting our time. It has to be about good quality training for the people who participate in it.



Senator BARNETT—You do not think it is for that 61 per cent?



Mr Evans—I did not say that. I simply said we have to make sure that that training is of good

quality. It is hard to be sure. A lot of it that I have seen is good quality and some that I have seen

is not, but it is very hard for anybody to sit before a Senate inquiry and say confidently that most

or the bulk of that training is of good quality. The fact is that nobody really knows.



Dr Buchanan—Kaye Schofield has done reviews of three VET systems and found very

serious problems in the quality control systems at site level; she has done a lot of work. I think

your concerns are well founded.



CHAIR—Mr Evans, in your capacity on the accreditation board, we have had raised with us

by the trainers themselves that there is a need in a couple of areas to look much more closely at

the qualifications of trainers and assessors and to have some measurement of their quality, even

to the extent of working in licensing arrangements for people who are doing that type of work.

There is a huge question mark being raised as to whether or not people who are in those

positions have the skills to be able to make the assessments or to deliver the training.



Prof. Stein—In aged care, the variance between RTOs is vast. You get some that are truly

committed to what they are doing and others that just want to take your money.



Mr Bradley—Could I comment also on the teacher qualifications. From a New South Wales

Teachers Federation perspective, we have been very concerned about AQTF standard 7—the fact

that it does not necessarily require any qualifications, certainly not the full qualifications that

permanent teachers in TAFE have, at a university level. Certificate IV is a good starting point for

those who do not have qualifications, but there is a provision that says that the trainer may be

under the supervision of someone who has that, and that supervision does not necessarily mean

that that person is present during the training process itself. I have severe reservations about a

system that would allow such inadequate supervision, in my mind. It is certainly something that

we would not tolerate in TAFE. We are looking at maintaining a standard much higher than that

across the TAFE system in Australia. That is an essential part of the whole quality process.



We are also looking at our part-time casuals. Most of them have great industry currency and

experience that they bring to the TAFE system. We are looking at ensuring that they all have a

minimum requirement as well in terms of certificate IV—a much higher bar than is provided in

most other areas. In general terms, for the quality of skills development, you must have financial

investment. That is something we have been suffering under severely right across the VET

system, not only in TAFE, which has certainly suffered more severely than other areas because

there has been a drift of funding from the public provider to private provision.



Additional money may well have been able to maintain standards, but I am sure we have all

seen the ANTA costing figures. They show that between 1997 and 2001, the most recent figures,

public investment across Australia per student hour has fallen by 63 per cent in real terms, from



EMPLOYMENT, WORKPLACE RELATIONS & EDUCATION

Wednesday, 7 May 2003 Senate—References EWRE 905





$1,484 to $1,242. In our view this is education on the cheap. The investment in such an essential

aspect of schools development and education across Australia in the VET sector is intolerable in

my view. It is a very poor attitude to have, in terms of education being treated more as a cost

than a sound investment in our future, as it should be treated.



CHAIR—Miss Rowe, you were indicating agreement and disagreement at one stage during

those comments. Would you like to say something?



Miss Rowe—Yes. I have a fairly strong disagreement in that it would appear from my

perspective, as a trainer-assessor in the workplace for a number of RTOs across a number of

industries—hospitality, business administration, frontline management, some community

services, call centres and retail—that there is little happening in TAFE. TAFE has to comply to

the same AQTF standards as private RTOs. So I have an issue there.



Senator BARNETT—Could you expand on that. What do you mean? What are they doing

with them? Just clarify what you are saying.



Miss Rowe—At the moment VETAB are doing audits across a number of private RTOs and

some TAFE institutes. Every TAFE institute has a different set of rules and there is no

commonality across the TAFE sector. At the moment they are all doing their own stuff. In the

private RTO sector we get a lot of complaints from industry bodies: ‘TAFE can’t provide this.’ I

do not want to bag TAFE completely, because they do some really fantastic stuff, but, as a

private RTO, I find that pretty much the first question that you get from an employer talking

about traineeships is, ‘How many days a week do I have to have this person off the job? When

do we have to start?’ It has to be semester based, so it is not actually meeting industry needs for a

lot of them. This is for on-the-job trainees. With the AQTF standards, TAFE is in a different

bucket to the rest of us.



Ms Godwin—I would have to respectfully disagree. TAFE NSW and its member institutes are

subjected to exactly the same AQTF standards. They are national standards—that is the reason

they exist. There are the same standards for all RTOs. Those TAFE NSW institutes have been

subjected to either AQTF audits or another bar raising exercise, ISO accreditation, which I think

nearly all TAFE institutes now have. Have we all gone through that now?



Mr Bradley—The big majority have at least.



Ms Godwin—There are many standards within ISO that are commensurate with AQTF and

require us to meet very significant standards and resource those to a very high level. That applies

not only to teacher qualifications at the entry level—hence the cert IV discussion—but to the

ongoing professional development of our educators and our trainers, well beyond those very

basic and minimum standards of cert IV to full degree level and often well beyond that. It is

done in an ongoing way so that people who are in the system for some years are regularly

involved in professional development to maintain currency and standards in their delivery, hence

the quality of the outcomes.



From the perspective of TAFE NSW Managers Association, the unfortunate anecdotes around

the supposed lack of responsiveness of the TAFE service really refer to an old story now, and

one that is increasingly not accurate but which holds true because it is a good story from a



EMPLOYMENT, WORKPLACE RELATIONS & EDUCATION

EWRE 906 Senate—References Wednesday, 7 May 2003





particular angle. The issue is that quite often we are asked to respond to something which, from a

quality point of view, the organisation would not respect. So we often do not respond to requests

from employers who wish us to conduct training in a way that would be substandard or below

the quality that we would wish to hang our TAFE tag on. Sometimes a lack of responsiveness is

an unwillingness to enter into arrangements that are not quality or reasonable.



Mr Evans—I would like to buy into this debate, simply because I am the chairman of

VETAB, which has been referred to. I have to say that, in shorthand terms, the complaints that

come to my board are not coming about services delivered in TAFE. The problems we have are

in services delivered in some—certainly not all—private RTOs. From my own experience of

TAFE, going back a long while, I agree with the last comments about these being good stories.

The TAFE of today is a totally different body from the TAFE of 10 years ago. Ten years ago it

was unresponsive and inflexible. But today, when I go to factories, I have great difficulty seeing

who is a foreman and who is a TAFE employee. TAFE are doing so much training on the job. I

think it is a great institution. I am not knocking all private providers. I have been to some

outstanding private providers, in the regional areas and in the city, that do great jobs. I have to

speak strongly in support of what TAFE is doing in flexible delivery. The last survey I saw of

employer satisfaction with TAFE training showed more than 80 per cent reaching a high level of

satisfaction.



Ms Godwin—If I could respond also to the use of the title of private provider. With this

explosion in traineeships and other training that is fully supported by government incentives, you

can map the rise in the number of trainees and workplace delivery of traineeships with the rise of

otherwise labelled private RTOs. I would argue, from a TAFE manager’s point of view, that

many of the RTOs are not private providers at all; they are just otherwise government funded

organisations whose main core business is government funded, just as TAFE NSW is.



Mr Blandthorn—Firstly, I want to come back to a comment that Bert Evans made, which I

agree with. Essentially, it was on the issue that revolved around quality. I think that is a

fundamental issue for this committee—whether the output from the training system, whether it

be a public or a private RTO, is a quality output. There is a lot of anecdotal evidence at least. As

Mr Buchanan said, Kaye Schofield has done a number of research projects which attest to the

same point—that there is a clear linkage very often between fully on-the-job training and lack of

a quality outcome. That should not be surprising given that it is so difficult to supervise and

monitor fully on-the-job training and given also that there is a reluctance in many of the state

jurisdictions to undertake effective audits, particularly of fully on-the-job training. Even when

those audits are undertaken, quite often they are kept confidential so there is no industry

confidence in the quality of the audit.



If there is one fundamental flaw in training packages it is that ANTA and the states have

persistently refused requests from industry to write into training packages provisions relating to

the mode of delivery. I have been involved in the development of quite a number of training

packages. Almost without exception, in industry—and it does not really matter whether I am

talking about employers or unions because, generally on this issue or at least in the industries

that I am involved with, we are of a constant view—there is a desire to write into the training

package something relating to the preferred mode of delivery. The constant response that we

have had from ANTA and the states is that you cannot do that. If you cannot write in the industry

preferred mode of delivery it is hardly surprising that at the end of the day there might be



EMPLOYMENT, WORKPLACE RELATIONS & EDUCATION

Wednesday, 7 May 2003 Senate—References EWRE 907





questions about the quality of the outcome if industry does not have confidence in the mode of

delivery.



The second issue that I want to briefly comment on is TAFE. It seems to me that, while I do

not conceptually have a problem with the concept of user choice, in practice user choice has

become a euphemism for a lot of people to make a lot of money out of the training system. I

acknowledge that there are a lot of good private RTOs out there, but I also think that there are a

number of people who are in the training system purely and simply to try to take as much money

out of it that they can as quickly as they can. That is a fundamental problem with the system. It is

particularly a problem for TAFE where you have infrastructure, staffing and other costs built into

the system in a way that you may not necessarily have with RTOs. In real life you are constantly

seeing the TAFE system being undercut by RTOs offering a cheaper product to employers who,

in many cases, are not aware of the difference in the quality of training that might be offered.

Having said this, quite often there are good private RTOs out there—so this is not a criticism of

all private RTOs—but there are too many examples of private RTOs undercutting the TAFE

system and then offering a fully on-the-job mode of delivery, and the outcome is not a quality

outcome. This is something that has to be addressed.



Senator BARNETT—When you say that it is not a quality outcome, are they meeting the

AQTF standards—the national quality standards—or aren’t they?



Mr Blandthorn—The fundamental issue is whether the AQTF sets the benchmark that

industry is happy with. The AQTF is a very big step forward from the old ARF. Having said that,

one can be compliant with every single part of the AQTF, but the outcome may still not meet

industry expectations.



Senator BARNETT—But they do meet the standards?



Mr Blandthorn—I am not arguing whether they meet the standards; I am raising the question

as to whether the standards are appropriate.



Senator BARNETT—Okay.



CHAIR—I will give Miss Rowe the opportunity to respond. Do not feel that you have to

respond for every RTO, Miss Rowe. I do not want to put you in that invidious position—that you

are the defender of the faith.



Miss Rowe—Thank you very much. I certainly cannot speak for every RTO but I speak on

behalf of several of them. For those of us who are interested in learning outcomes and skill

development in our trainees, we are embracing the AQTF. It might not be perfect, but it is a

whole lot better than what we have had. One thing that I would like to respond to is whether it is

a national process. We have national standards with AQTF. We do not have a national auditing

process with AQTF. Every state VETAB equivalent is interpreting it differently.



I have involvement with RTOs in Queensland, Victoria and New South Wales. Each of those

RTOs has been audited with different rules, different guidelines and different processes. It is a

pain in the neck that, although there is a national RTO, it has to be audited in every state. We do





EMPLOYMENT, WORKPLACE RELATIONS & EDUCATION

EWRE 908 Senate—References Wednesday, 7 May 2003





not have a national auditing process under AQTF; there are common standards but not a national

system. That is a problem. It is a huge administrative cost for non-public RTOs.



I have talked about public versus private RTOs. Yes, a lot of RTOs do principally operate on

public funding and provide public programs through traineeships, CTP, Work for the Dole and

whatever sorts of programs; however, there is an expectation that those RTOs also have a

balance of funding and income. In New South Wales last year, the states pulled funding on CTP.

They took 70 per cent of funds from RTOs. A whole lot of RTOs folded because all their moneys

had been put into providing those programs. Suddenly the money was gone, to the tune of

several million dollars, and companies folded. That is a problem in itself. What is a quality

outcome at the end of a traineeship? A lot of university graduates say when they graduate,

‘We’ve got a piece of paper and we’re supposedly competent at what we do, but we are not

necessarily able to get a job and work.’ Having a piece of paper as an outcome does not mean

that you have a quality product—that is, a skilled worker.



Working on the job and learning on the job successfully requires support and a system that is

set up properly and adequately with good assessors. The key to any on-the-job training is good

assessors. RTOs are not funded to do training; TAFE is funded to do training. RTOs are funded

to monitor that learning is occurring on the job and to assess that learning. That is all they are

funded for. The sum of $1,500, paid on average to an RTO for a 12-month traineeship, is squat.

You cannot make a lot of money out of it if you do it well and you are actually interested in

learning outcomes. Yes, there are a whole lot of RTOs and a whole lot of other groups who are

out there to make money, but good quality RTOs are embracing AQTF and providing on-the-job

training. Mr Evans has just told us that the training for 61 per cent of traineeships in New South

Wales is provided fully on the job. How many of those traineeships are provided by non-TAFE

trainers? I would suggest that it would be a significant proportion of them. How much of the

public funding goes to the private RTOs compared with that which goes to TAFE? Less than two

per cent.



Mr Evans—I want to follow up on something Miss Rowe quite rightly pointed out, and it

goes to my fundamental question about funding and incentives. There were cutbacks in some of

the programs in New South Wales in CTP because the traineeship program has been overspent

by millions. It is demand driven; anybody can fill in a form. There are another 100 trainees, and

other programs are suffering. It is a major concern in New South Wales that we must look at.

There cannot be an unlimited number of people registered as trainees and getting state

incentives. The state does not have the money to do it, so other programs have to suffer. It is true

that the states and territories have the constitutional responsibility for delivery of education and

training, and states do make a significant contribution, but it is the Commonwealth that holds the

purse strings. The Commonwealth decides the new agenda, and it decides the form of incentives

for existing workers, which the states are appalled about. The Commonwealth is controlling the

purse strings but it has not kept pace through the ANTA agreement with the explosion that has

occurred. It is our view that the Commonwealth has the responsibility of skilling Australia. It

extends right across the portfolios: education and training, employment, workplace relations,

industrial, regional development, immigration portfolios and so on. This demand has been driven

essentially by incentives, as a number of speakers have said. The Commonwealth simply has to

put more resources into the training sector.









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CHAIR—What about the issue Miss Rowe raised about the differentiation between the states

and the reassessment processes? Why are those issues still there? Why can they not be

overcome?



Mr Evans—I wish I knew. We had a situation where my board decided to deregister an

organisation for not complying. On the verge of deregistration they said, ‘No thanks. We do not

want to operate in New South Wales any further. We’ll go to another state,’ which must remain

nameless—you know my reputation for tact. They got registered in the other state. We wrote to

the state and said, ‘This is what’s going to happen.’ The other state did not reply to our letters.

When we finally heard about it, we said we wanted to be part of the audit process. The other

state said, ‘Not unless the RTO agrees.’ Of course, the RTO did not agree. They audited two

courses of a scope of about 80 courses, then wrote to us and said that the RTO is now operating

in New South Wales under mutual recognition. We said, ‘They’re not.’ I am not sure which

tribunal or court it will end up before but, as a board, we are not going to allow that. Miss Rowe

is right to say that there are different standards. The operation of a national system can only be

successful if the states cooperate. We had the thumbs up about it given to us in the strongest

possible manner, and it is something we are not happy with. We want our auditing process to be

the strongest we can possibly make it, and we want all the other states to have the same

standards. I can understand Miss Rowe and others having differences, but I want her to know

that she is not alone. We are agitated as well.



Miss Rowe—I went through a VETAB audit last week. It was incredibly professional, well

organised and well structured. The feedback was instantaneous and very good. I do not have a

problem with the auditing process here. I think it is great. It is really good that they are as

thorough as they are. It is just incredibly frustrating that, like everything else in Australia, we do

not have a national system.



CHAIR—Dr Toner, do you want to say anything?



Dr Toner—I want to take up some of Bert’s earlier comments. Forty-four per cent of trainees

are in lower skilled labourer, elementary, sales and service occupations. Clearly, this is an area

where there are no skill shortages as such. There is lots of employment growth but no skill

shortages. It gets to the issue of the strategic targeting of scarce education funds. At the same

time, there has been this enormous growth in these very low skill areas where the level of

training is probably oversupplied. There has been an enormous reduction in the higher level

apprenticeship training areas. Particularly over the last 10 years, the training rate in the metal

area has declined by 19 per cent, in the electrical area it has declined by 24 per cent, in the

building area it has declined by 15 per cent, in the printing area it has declined by 25 per cent

and in the vehicle area it has declined by seven per cent. Other training, which is mainly in the

hairdressing area, has declined by 26 per cent. This has led to an overall decline of 16 per cent in

total apprentices in training Australia wide. This really gets to the issue of the absence of any

strategic targeting of scarce education funds to meet strategic skill shortages.



CHAIR—Is this in part driven by the fact that there is a focus on the incentives towards short-

termism rather than the longer term training programs that apprentices are required to undertake?



Dr Toner—I think that is right. It is the fact that the incentives are not sufficient to overcome

the growing impediments to the employment of apprentices—which really goes to the



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EWRE 910 Senate—References Wednesday, 7 May 2003





restructuring within the economy, which is presenting higher and higher impediments to

employer investment in longer term, higher level apprenticeship training. It is partly due to

things such as the withdrawal of the public sector from training as a result of the privatisation

and corporatisation of utilities. It is to do with the enormous growth in the level of competition,

which has reduced the financial capacity of employers to invest in longer term training.



There is a whole series of other factors as well, which include reduced firm size as a result of

the outsourcing of work and the enormous growth in the number of small firms. As we all know,

small firms in general have a much lower propensity to invest in training. Another factor is the

growth of labour hire companies as more and more firms source their trades and maintenance

labour through labour hire firms. Labour hire firms basically do not invest in apprenticeship

training for a whole range of reasons. The current training system is not addressing these

structural impediments to overcoming these strategic skill shortages.



CHAIR—Given what you have just said, is there an argument for looking at doing something

specific to bolster the group training schemes to provide better capacity to train apprentices and

to specifically target programs at the skills area?



Dr Toner—There is a whole series of initiatives that should be undertaken. There probably

should be increased funding for group training, but that should be very much tied to the issue of

quality—that is, ensuring that, if there is an expansion, quality outcomes are met. There should

be a differentiation in the structure of incentives in recognition of the fact that most

apprenticeships are of a four-year duration and most traineeships are of a one- to two-year

duration but that there is the same level of subsidy. There possibly needs to be a recognition

through differential payments for strategic skill shortages. Interestingly enough, the federal

Department of Employment and Workplace Relations produces national and state skills shortage

lists and consistently over the last several years those national skills shortages lists have

identified strategic shortages in a broad range of trades such as metal, electrical, vehicle and

some cooking areas. In a sense, the federal government has already got its targets lined up in

terms of where the strategic skill shortages are in the VET area. The national skills shortages

lists certainly do not identify any of the occupations which comprise the bulk of traineeships.



Prof. Smith—I think the issue about the strategic targeting of new apprenticeship funds is

very important. It is clear that the system has reached a point where it is struggling to cope with

the massive open-ended demand that is coming through for new apprenticeships. As many

people have pointed out, there seems to be no overall strategy behind the allocation of those

funds, and I think we have come to the point where that has to take place. What is disappointing

is that we had a mechanism—albeit a flawed mechanism—through the ITABs, for instance. I

think one could say that ITABs, if they did not at the time, were able to express the needs of

industry to the VET system very effectively. With the effective demise of the state ITABs and

now the reorganisation of the national ITABs into about eight sector councils, we are losing a lot

of expertise that could have focused on the issue of how we represent the strategic training needs

of industry to the VET system.



My problem is that I think the way in which the national ITABs are being reorganised is along

the lines of the sector skills councils in the UK. Eight national ITABs and the 80 or 90 sector

skills councils that are going to exist in the UK that will be extremely well funded are very

incomparable. We need to look to alternative models for the ways in which those national ITABs



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ought to be constructed, with particular emphasis on having effective links at the state level

between industry and the VET system. One model we might look at is the New Zealand industry

training organisations, which have been very successful in that economy—although it is much

smaller than ours—in not only articulating the needs of industry to the VET system there but

also playing a role in funding those needs. So industry has a role in the funding of that. That

might be a model that Australian policy makers could look to.



Mr Goodwin—GROW Employment Council tends to take a fairly local and regional

approach to regional development. Within the area of Sydney, we are the area consultative

committee for Sydney. Essentially, we have found at a local level that there is a strong need to

start earlier. I think the matching of skills and industry needs is one of the most important issues

for any region’s growth. For example, the manufacturing industry out of Liverpool has

recognised that you have to start almost at the school level with both the children and the parents

to change attitudes to industries that are becoming less attractive. I do not quite know how to

resolve that issue, but we are looking in some of our project work to start at that school level and

to even provide a manufacturing business mentoring program for those children—together with

their parents—so they can learn about the manufacturing industry and we can assist them to

understand that it is not as they perceive it to be. I have other examples of the importance of

looking locally rather than globally at these skills issues.



Our understanding of the opportunities for the future within Australia lies with looking at a

regional level and trying to understand industry’s needs for the future and then, from within that

region and other surrounding regions, effectively matching up those skills so that industry can

grow. Also, the changing nature of industry needs to be recognised. If Australia can recognise

that certain industries are changing in their skill requirements, if this can be more effectively

communicated to the training institutions and if the training institutions can respond fairly

quickly to fast-tracking changes within the skills needs to their courses—and if there can be

recognition for past qualifications—there could be a more speedy transition of the current skills

to the new skills required for new industries. That is just a broad starting point.



Dr Buchanan—I would like to build on the discussion as it has evolved. It seems that the

issues have been identified as quality and this mismatch between supply and demand. To me,

this highlights the inadequacy of current institutional capacity to look after both of those

issues—that is, both quality and supply and demand. If the committee are trying to look forward,

I think they have to think about what framework we should be establishing or nurturing. I can

help you there, because we did a big study for the Victorian government on the future skills

needs for Victorian manufacturing at the end of 2001. The report was released last year.



We were basically asked to advise on how many fitters, how many toolmakers, how many

skilled process workers and how many technicians they were going to need. We adopted a quite

elaborate methodology involving statistical and qualitative methods—and I can give you the full

details if you want—and it involved doing over 120 face-to-face interviews with people at work

site level. Almost to a person, they told us the key issue was not trying to map out how many

toolmakers or technicians we needed; what was hitting them at work site level was the

incapacity to have coherent systems of on-the-job training. Also, they were underresourced from

head office because profit margins were so tight because there was such a competitive

environment. Companies that had formerly been ANTA award winners were now walking away

from their training practices because of their commercial environment.



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We found four dynamics at work. Firstly, using Dick Dusseldorp’s famous phrase, employers

are now akin to farmers eating their seeds—that is, they are living off the skills that have been

built up by a previous generation of government policy and employers; they are now, in a sense,

sweating their labour assets. Secondly, there has been a breakdown in coherent systems of on-

and off-the-job training because people just do not have the time to be released for the off-the-

job training. We found this in biotechnology as much as we found it in chemicals and plastics. In

fact, RMIT has one of the world’s leading courses in biotechnology, but numbers have been

dwindling because none of the companies can release its staff to go to it and the hours are so

long—because it is a new growth area—that they cannot go in their own time.



Thirdly, we found that new organisational forms such as labour hire were undermining the

capacity of companies to contribute to skill formation. I am not into labour hire bashing here; we

interviewed a labour hire company that wanted to take on apprentices but found that their clients

would not let the apprentices on site. They said, ‘If we’re paying for labour, we want skilled

labour.’ This labour hire company sent in their apprentices as trades assistants, which was

basically subterfuge to keep some training rates up. Finally—this is the fourth issue and I think it

is the most important one—big business now adopts a completely different system of training. I

will name names here: the Business Council of Australia’s membership and the big public sector

utilities have essentially turned their backs on the apprenticeship system. We have data in the

Victorian report which shows that the proportion of workplaces with 100 or more apprentices

has dropped from around one-third to around 15 per cent. There is not a crisis in the four-year

apprenticeship system—that is, it is not something about the system; it is something about the

big companies.



I am not saying that the Business Council of Australia has got together and said, ‘Let’s pull the

pin on the apprenticeship system.’ What has happened is that there has been a fundamental shift

in business conditions and those conditions in manufacturing are marked by chronic excess

capacity. In the world car industry today, for example, you can produce a third more cars than

you could sell. In telecommunications, they are currently using about 12 per cent of capacity. We

have seen that with One.Tel going belly up. There is immense competitive pressure. It is very

difficult for employers in that environment to figure out a long-term training policy. That is not

the first thing on their minds. For me, the whole issue of capacity is important.



How do you develop the institutional forums that allow you to get the skills you need for the

future that can also engage with current realities? For me, the critical issue you have to look to

here is brokerage. You were asking questions about group training. I think that is critical. Some

of the best successes we found are in the group training domain, where you allow the risks of

training to be shared across a group of employers so that no one employer has to stick their head

up and say, ‘I’m going to save the training system.’ They get together and they say, ‘Collectively,

we have fragments of jobs we can move people around to.’ That is a great model.



The problem is that there have been some people within the Australian National Training

Authority who have been out to undermine quality standards in the group training system. With

group trainers, there are rogues. Elsa Underhill has produced an important paper which has gone

through the workers compensation statistics in Victoria and shown that group training companies

have a lot worse record on workers compensation. If you do not control the rogues you simply

get another problem.







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I am not saying group training is the answer but there is the kernel of an idea there. Brokerage

and new institutional capacity gives you the ability to get more training than would otherwise

occur, gives you a network that you can draw on for monitoring quality and in the longer term

the intelligence you can get from field officers in group training companies is very intimate

intelligence on where skills demand is rising and falling. If you could pool the information that

is in the group training networks and in the Job Network and use it far more effectively than it is

currently used then you would find the way forward for how you get beyond the ideology of the

training market that we have at the moment. The ideology of the training market is that supply

and demand will solve the problem. It patently is not doing that.



Governments and progressive employers and other agents are going to have to ask: ‘How do

we put intermediary structures in place?’ Here, you have to think a bit laterally. I would have a

big workshop. I would get the labour hire companies along, because they have a huge amount of

labour market intelligence which does not feed into the formulation of policy; I would get all the

group training companies in there; I would get the Job Network in there. I would get them in

there and say, ‘How do we centralise the information that is actually sitting with your field

officers so that we can actually allocate funds?’



In this sense, you might then end up using things like GROW. From where I sit as a researcher

who has been looking at labour market change for the last 15 years, the best study on the labour

market I have ever seen came out of GROW. They did an analysis of where skills needs were

rising and falling. It was coordinated by Mark Cole and it was done at relatively modest cost

when you look at the money that goes into the training system. If you had a network of GROWs

working in that kind of forum I was telling you about then I think you would be 90 per cent of

the way to solving your quality and matching labour supply and demand problems.



CHAIR—There is a question on that I will want to go back to.



Mr Hedley—The issue about having information to predict where future skills needs are

coming up is very important, particularly for an industry such as ours, which is computing and

communications. It is really essential. It is vital that industry has a role in saying what is coming

up over the horizon. It is also very useful to us particularly having people from university look a

bit further out than our industry people tend to do. That is the central part.



We are now in our fourth ITAB restructure in eight years. The same issues keep coming up.

One of the things, for example, that has happened with the current structure is that ANTA

stopped providing one line funding and provided project based funding. That meant immediately

that any ability for our ITAB to do strategic planning just disappeared. It went out the window.

With the same hand, they also withdrew any money to do with marketing, so we lacked the

ability to engage with industry as well as having any funds available to do any strategic

planning. Virtually, we just became a training package shop.



That is our fear with what is happening with the new skills council. Not only did ANTA try to

split our industry across two of the new councils, but they have taken a long time to understand

the enabling impact of our technologies on all the other skills councils coming up. More

importantly, we are worried about the quantum and the allocation of funding that is going to

happen with the skills council. We are now trying to spread that across about eight industries.

Our council will be for about 25 per cent of the training that is coming out of those. It is a worry



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EWRE 914 Senate—References Wednesday, 7 May 2003





in an industry such as ours, which is providing essential skills not just for our industry and the

customers of our industry but also for people in their social and personal lives. The identification

of these skills is not going to rely on industry people putting in that sort of information. We are

seeing no signs that that is going to change with the new skills council. We fundamentally

believe that it is supposed to save money.



On the other hand, we recognise that there is some value in pushing a number of industries

together to get a different perspective on how particularly our industry and our technologies are

being used by our customers, by governments or whoever it may be. We are trying to get more

of an applied sense. That leads me to make another comment. With regard to the first question

about what the current training packages are like, we have participated in putting those training

packages together. I am pleased to say that we are increasingly having a considerable number of

soft skills in our training packages, certainly in terms of personal communications skills and

teamwork. But, also, we are particularly anxious to provide an understanding of how business

works, how a contract is made and how customers work. Those sorts of things need to be

increasingly incorporated into training packages. We have worked with a couple of business

ITABs, for example, that have allowed us to have those combination training packages. At the

same time, particularly for people reskilling, having fairly pure technical training packages is

still fairly vital. They tend to have those business skills and those personal skills. They are

upskilling.



As one final point, in terms of your question about the importance of the Commonwealth and

state, in our industry it is vital that individuals take responsibility for their own training. After

all, who knows what the direction is? The employers do not necessarily have the best tools to

decide what is going to come up. Quite often it is the individuals who understand what things are

coming up. For example, for people wanting to reskill or change careers, the Commonwealth

self-education tax benefit does not apply to people changing careers. It is fine if you are

upgrading your skills in your current career. We find that with the changing nature of the work

force that is going on, without that ability to award individuals for making a career change,

which quite often is a very difficult time in their lives, and particularly for older workers, those

incentives are definitely needed. That is a bit of a smorgasbord across some of those issues that

you have raised.



Mr Bradley—I want to clarify one of the comments that was made before in terms of private

RTO provision and funding. I have the most recent figure available from the NCVER. It says

that, in terms of total operating expenses, non-TAFE provision is 7.3 per cent. I know that there

is adult community education et cetera but I want to make it clear that there is no perception that

TAFE has 98 per cent of the funding. That is certainly not the case.



Senator BARNETT—What does TAFE have?



Mr Bradley—I think that it is about 82 per cent at the moment, but those figures are freely

available through the NCVER statistics. There has been exponential growth in private provision.

Some time ago, non-TAFE provision was two per cent. It has doubled or increased by 50 per

cent every year over the last several years. I have a few general observations. In terms of training

packages, the Teachers Federation has found from feedback from its membership that training

packages are totally inadequate in those terms. They tend to be more like assessment guidelines.

We have had great difficulty in that those packages are providing the information that our



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Wednesday, 7 May 2003 Senate—References EWRE 915





professional university-qualified educators would like to have in terms of giving them the

guidance that they would like for delivering the educational process. So that has been one of our

main criticisms. Often the training packages are very narrowly focused. They do not have a

broad perspective and they do not provide sufficient emphasis on the opportunity for

innovation—for the analysis and synthesis of all the different skills that are picked up during that

education process. There was talk some time ago of an innovation component in all training

packages, but as far as I know not much has progressed in that regard. There is a great need for

the approach in training packages to be more of a holistic nature rather than a fragmented one.



On the question of the effectiveness of the current consultation processes, we are very

concerned that there is totally inadequate representation from the educationists and teachers

across Australia. For some time we have been trying to get at least one representative on the

ANTA board, and we have not succeeded in achieving that. There are other problems across the

whole consultative process not just in terms of the need for teacher representatives but also small

businesses are often left out in the interests of simplicity and going for a big business employer.

That is a clear problem, as is the issue of some sort of feedback from the students, who are

actually the learners in this process. There seems to be very little feedback from that group as to

their comments on the whole process.



The last observation I wish to make is on industry investment. From my experience on the

VET Advisory Committee—a board of studies committee in New South Wales that looks at the

curriculum frameworks in the VET in Schools courses—that has probably been the most

controversial issue on that committee. There have been enormous problems across New South

Wales, and I understand the problem occurs in other states. It is compulsory under those

frameworks for our students to get work placement. Many students enrol and then find down the

track that there is no effort being made by local employers to actually provide any work

placements, even though in some instances those very same employers are the ones screening

out the fact that there are inadequate skills provisions in their area or a lack of qualified or

trained people to fill the jobs that they are looking to fill. There has been an amazing problem,

particularly in rural communities. The ability for disadvantaged and disabled people to get

access to those work placements is extreme. I think there is certainly a need for industry to play

a much stronger role in work placements in that area.



CHAIR—Can I raise one question in relation to what John Buchanan raised, and there may be

some general comment. It relates to the point that John was making about the inability of

industry these days to provide the resources itself to train people—the lean and mean exercise. It

is a question of whether or not some of the incentives that are being provided by government at

both levels ought not be targeted at, say, some of the group training companies to put

infrastructure in place, such as skill centres—call them what you like—to look at taking the

apprentices in the first one or two years of their training. The big argument is that they are

counterproductive: there is no productivity and they are a drag on the corporation. Would that at

least give them the basic skills to get them job ready and to a stage where they can then go out

into the workplace and at least contribute to the productivity of the company at that point in

time? There seems to be a willingness for a company to take on third- and fourth-year

apprentices but a great reluctance to put investment into the first and second years. We have

heard some examples such as the Hunter Valley Training Company, which has facilities where

they train the apprentices in their own institution and out on the job in those early stages. Would

it be a better investment in some of these area to put these skills centres in place, which could go





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across as many industries as you want, to at least deliver that initial training in an environment

where students would get the range of training that is going to equip them to go into the

workplace?



Dr Toner—There is an NCVER evaluation of the pre-apprenticeship schemes that were

operating in the 1980s. That report has not been released yet, but from my understanding those

programs have been very favourably evaluated in terms of their outcomes and cost benefits.

Those schemes mostly operated in TAFE. They did the equivalent of the first year of the

theoretical off-the-job training. The TAFE colleges also undertook off-the-job training,

particularly in the construction area—for example, through getting Department of Housing

contracts to build public housing.



CHAIR—The building and construction industry do have skill centres in a number of states

and that is the model that I was looking at. There are some very good examples of the VET

system around the country; there are some very poor examples as well. Where VET seems to be

working effectively is where there are industry links.



Dr Toner—Yes.



Dr Buchanan—I agree.



CHAIR—And there is a direct relationship between the high schools and the industry or the

enterprise where they are taking the apprentices on, giving them a period in the workplace,

demonstrating what it is like to work in a workplace et cetera. The interesting statistic on that is

that the TAFE colleges tell us that the drop-out rate for those people who have come through the

VET system, who take up an apprenticeship, is almost negligible. They go on to completion. So

it seems to be an important element in the process.



Dr Toner—Yes, that is exactly right. In terms of the actual wages for these people, with

HunterNet, for example, that is paid by the group training scheme. In the 1980s most of the kids

received the equivalent of TEAS, the Tertiary Education Allowance Scheme. So there are

different ways for this to operate. For group training schemes to significantly increase their role

in pre-apprenticeship would require a very significant increase in funding, in particular, to pay

the wages for the full first year of fees of these pre-apprentices.



CHAIR—Professor Stein has been trying to say something.



Prof. Stein—I would like to provide some commentary on the aged care industry in terms of

the VET sector. I want to preface it by saying that, within the aged care industry, there is huge

tension between what people see as licensed or regulated workers and unlicensed or unregulated

workers. That has not been particularly helpful in terms of furthering educational opportunities

for people who want to do the vocational education pathway as a career.



At the moment in New South Wales, there is funding available for certificate III level

programs in that sector but none for certificate IV level traineeship programs. I think that is

something that should be addressed in the future and perhaps some of the emphasis should be

taken off some lower level certificates, perhaps certificate II level and even certificate I level

programs.



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I would like to endorse the usefulness of TAFE in the sector. They have been really helpful to

our organisation, particularly, in helping us get programs accredited both vocationally and non-

vocationally. But I have not found the unions particularly helpful in furthering education within

aged care, particularly at certificate IV level. I think that has been a really negative thing in terms

of expanding the scope of practice for people who do choose to take a vocational education route

as a career pathway.



Senator STEPHENS—Professor Stein, how is the community in the aged care sector

responding to both that issue of licensing requirements of staff and, of course, the nature of your

work force?



Prof. Stein—The nature of the work force is a really dynamic one. It is probably 85 per cent

casualised, and of that 85 per cent, 95 per cent are women. So there are some generic factors

inbuilt into that profile. We have tried desperately to have a very organised response to the issues

that the work force profile, and particularly the client profile, has had. We are finding increasing

difficulty in retaining people once they have achieved a qualification. The public sector pays far

higher salaries, for example. In some states of Australia, just in the nurses’ award, there is up to a

23 per cent differential between those working in aged care in the private sector and those

working in aged care in the public sector. So there are tremendous tensions within that.



I do not think anybody has an answer. People are honestly striving to find an answer, but as

yet it has not been possible. One of the things that has been possible is to change the role of the

people working within aged care that do have vocational qualifications by enhancing their role

and giving them a greater capacity to practise at a higher level. That is really where we have

come to blows with the unions.



Ms Godwin—I wanted to make an additional comment regarding pre-apprenticeship

programs. Some of the reported success of those programs is due to the industry relationships

they were supported by—and that was particularly important—and the integration of

employability skills in those programs. The development of employability skills, from a TAFE

manager’s and TAFE trainer’s point of view, leads to higher retention once the participant is in

full employment. So with the relationship between employability skills—which was one of the

issues raised earlier with regard to training packages—it is still fundamentally important that

they be increasingly embedded into training package competencies and that they be increasingly

resourced as a training and learning opportunity for students and participants in the work force.



I would like to come back to one point about the funding and the very obvious and real matter

of the share of the pie that TAFE appears to retain. It is important to remember that TAFE is not

only involved in training package qualification development in the traineeship and

apprenticeship area. It also has a significant responsibility and role to play in the regional

development of generic and pre-entry level qualification skills—which usually, resource-wise,

requires heavier resource investment than straight-up skills development—in preparation for our

less advantaged employed work force to participate in training. Traineeships and apprenticeships

are about the advantaged employed. With the never to be employed, in some cases, or difficult to

be employed, in most cases, areas of access and equity require a significant amount of funding,

which is somewhat the responsibility of TAFE. We do not find private RTOs or other RTOs keen

to take up those responsibilities. I just wanted to make that point about the apparent disparity in

TAFE funding.



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Mr Evans—The point you raised fits in with what I said earlier. The Commonwealth’s

incentives do not discriminate, and I think they ought to discriminate. Commonwealth incentives

clearly are driving this huge demand, but they are not strategic—and that was the point you were

making—and I think that they ought to be. One of the reasons I am here today is to say that. We

have got to make sure that we are not carried away with judging the outcome of this system by

the numbers. You hear the figure of 300,000 every day, and then there is applause. That is not the

test; the test is how well that training is done and the quality of the outcomes. If these schemes

become simply wage subsidy schemes, the whole system will have been a failure. I have said

this repeatedly to the ANTA board and I am being listened to well. Everybody who is involved in

the situation will be judged to be failures. If this becomes a wage subsidisation scheme, the

whole system will collapse, as it did in the eighties.



Senator BARNETT—I would like to throw in four questions and comments. Ms Godwin has

partly touched on funding. This morning we received a submission from the Council for Private

Education and Training, where they said that 45 per cent of accredited training in this country is

provided by the private training industry, 70 per cent of which is on a fee for service basis. I am

throwing that over to you for a response on the basis of what we heard earlier about whether it is

two per cent or 7.3 per cent of funding that actually goes to the private training sector and

whether it is 83 per cent or whatever for TAFE in New South Wales and around the country.

Whatever those percentages are, there seems to be a bit of an anomaly there. I am wondering

what your thoughts are on whether there should be a more level playing field.



Secondly, with respect to mutual recognition—and Mr Evans touched on it earlier with regard

to the problems of states dealing with states—we had a submission this morning that talked

about hairdressers who were accredited in Victoria and were on the border but who could not

practise their hairdressing in New South Wales. I am sure Mr Evans is fully aware of it, but that

was said publicly on the record, so I would like to hear a response on that. We have this

philosophy of mutual recognition, but it does not seem to be working all that well in some

respects. In Tasmania, for example, we had an RTO called NGT, Northern Group Training, who

said that TAFE was specifically quarantined in terms of the services and training that they were

providing. The RTOs were not allowed to provide that particular training in that sector. The issue

is one of a level playing field.



Thirdly, I would like a response to the loans scheme idea that has been put forward—that is, a

VET loan scheme for higher VET qualifications. There is a view, perhaps, from Dr Buchanan’s

side about the philosophy of command and control and whether we want to go down that line or

whether we go down a line of more flexibility where the end users have a greater say in the type

of training that they receive. The fourth issue is small business. I have a background in small

business, and I get a lot of feedback from small business that it is ‘take it or lump it’, and it is not

designed for small business. Eighty per cent of all small businesses are actually micro businesses

of five employees or fewer. How adequately are they being serviced? How meritorious is the

training for those people who make up 50 per cent of the private sector work force in this

country? There are a few areas there. I know you probably cannot cover all of that, but I would

be interested in some responses.



Mr Evans—I would not mind going first. In relation to the hairdressers and the states, these

cross-border issues are very real. We find them all the time throughout our travels. They are not

easy to solve, and they ought to be. A national system ought to work—as it is said to be working.



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Wednesday, 7 May 2003 Senate—References EWRE 919





Here in New South Wales, for instance, we have 600 RTOs operating under so-called mutual

recognition, whereas mutual recognition, as our lawyers keep reminding us, is simply a

statement of ministers contained in a paper pamphlet. It has no legal basis, which makes it

extraordinarily difficult for the states to do. New South Wales has been pursuing model clauses

to give us some basis to do it. It is a very confusing thing for the RTOs. It is extremely confusing

to work out where mutual recognition applies and where it does not. I have given you one classic

case where we have rejected it, but it is there. I have to say in relation to this mutual recognition,

national systems and so on—and I have said this publicly before—I admire Queensland. They

are forthright. They simply say, ‘We’ll recognise you, but you won’t be allowed to operate unless

you have an office in Queensland.’



Miss Rowe—And, even if you do have an office in Queensland, unless you are Queensland

based, you cannot get in. If you are an RTO with mutual recognition, you can have an office up

there but, unless you are actually a Queensland RTO, you can be registered and have an office

and staff but you cannot have any trainees, because of user choice. It is a closed shop. It is a

wonderful system!



Mr Evans—At least they are very honest about it.



Senator BARNETT—So you are really saying that mutual recognition is simply not

working?



Mr Evans—It is not working as well as it should.



Senator BARNETT—How can it work? How can we fix the problems? What are the

answers?



Mr Evans—I suppose the only way for it to work is to have model clauses which each state

legislates, and have a legislative requirement to do it. As I say, in relation to our board, where we

have very clear responsibilities under the New South Wales parliament, it is very hard to operate

under a system of mutual recognition that has no legal basis.



Mr Blandthorn—Can I make a comment on that mutual recognition issue seeing that, if we

use the hairdressing example, a number of those people are actually my members. I have had

fairly close involvement in this particular issue. The issue, as you point out, is a real one. But the

fundamental problem here is the interaction of the training system with licensing systems that

operate outside of the training system. I do not think there is any solution to this problem until

you somehow find a way of bringing those two totally separate structures together. While the

licensing board can effectively second-guess a training system, you will never overcome your

mutual recognition problem.



I will raise two other issues quickly. In response to your loans issue, one thing that needs to be

taken into account is that basically we are talking here not about people who are working as

lawyers and doctors and, with due respect to some people around this table, academics but about

people who in many cases are working in trades or in semiskilled—for the want of a better

term—‘occupations’ where the wages are pretty low. So to impose a loans system on those sorts

of people would be an imposition far greater than we would have in terms of the HECS system

as it currently stands applying to university graduates.



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EWRE 920 Senate—References Wednesday, 7 May 2003





The third issue I will raise quickly is one that we have not talked about, and that is existing

workers. In a sense, it is particularly pertinent to the issue you raised about small business. There

are lots of people with skills out there who cannot get them recognised because there is no

effective process anywhere in the VET system to allow for recognition of existing skills. Some

companies have started to try and put existing workers on to traineeships as one way of

recognising existing skills. In my view, that is better than nothing, but it is hardly a satisfactory

way of dealing with the issue. We need a proper structure in this country that recognises

workers’ existing skills because that is the only way we are going to give existing workers—

many of whom may be displaced workers—the opportunity to gain advancement in their

employment or to regain employment if they are out of the work force.



Dr Buchanan— I would like it on the record that I have never supported a command and

control view of life or the economy, and I would like to get that clear in the senator’s mind. First

of all, on the loans scheme, I totally endorse the arguments that were put there. Let us not forget

whom we are talking about who is using the VET system and what it is like in those lower

echelons of the labour market. We often talk about jobs that require less than three to four weeks

on-the-job training and they are in the lower parts of the occupational strata. So to talk about

having a loans scheme there would be very inequitable.



Secondly, you asked for comments about private providers. It is important to recognise that

private providers have always been there. I draw your committee’s attention to the Beattie report

that was released in 1968. They went around to a whole lot of what we today would call ‘private

providers’. They went around to the Qantas jet base and apprenticeship training there. There was

a list at the end of the document of the places that they visited. Private providers have always

been in the system. Employers have real functional needs; they do not eradicate training

altogether. My opening point was that training expenditure is not increasing. I am not saying that

they do not do any training; I am just saying that they have had the opportunity and they have

been ruling the roost as far as training policy goes, but they are not coming to the table as far as

money goes.



Senator BARNETT—Only expenditure as a percentage of payroll, 1.3 per cent.



Mr Evans—Yes. That is an ABS statistic on page 18 of the latest catalogue. I simply say that I

recognise that and I think it is an important thing. But you cannot drive a training system off that

model. Skills are a social product and they are a public good. The people who invest in them do

not necessarily get the returns. That is why you need institutional forms that can pool the risk.



Senator BARNETT—And you do not describe that as command and control?



Mr Evans—Not at all because—this is feeding into your point about small business—a lot of

small business people are interested in participating in the training system but they are terrified

about being stuck with an apprenticeship for four years or a trainee for two years. Given the

uncertainty of the business outlook, I do not blame them. The beauty of quality group training

companies is that they allow that employer to access a training system without taking on the full

risk; in fact, the risk is shared. If you are looking at one institution that has really penetrated deep

into the small business sector, you cannot really go past the Group Training Network. If you are

interested in that sector, that is the institutional form you should be looking to. As far as mutual





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Wednesday, 7 May 2003 Senate—References EWRE 921





recognition goes, I just defer to people who know more about that than Bert Evans. I am sorry; I

just do not have anything to contribute on that point.



Mr Hedley— I would point out that not all industries have apprenticeship schemes or

traineeship schemes. Our industry is one that definitely does not have apprenticeship schemes

nor is it a great user of traineeships—basically because our entry point is too high for traineeship

schemes and, to a certain extent, our employers prefer to pay through a wage rather than muck

around with the incentive schemes. We have done the figures on those and you really do not

come out a winner in picking up those incentives, as far as we are concerned. Ideas like group

training companies do not work in our industry. I cannot see how you could have a software

engineer apprentice or a trainee working for one company one day and the competing company

the next day; it just would not work.



CHAIR—That is a very valid point that you make. Up until about six months ago I would

have supported your view. But in the automotive industry in this country you have design

engineers working for all four automotive companies and who appear to be able to operate the

Chinese walls very effectively. The companies seem to be satisfied with the operations that are in

place. Up until six months ago, I would have said, ‘That’s nonsense,’ but that is exactly what is

happening. If you go into the design centre of Ford or Holden, there is a list of names just above

the telephone of design engineers whom they can ring up and say, ‘We want you in tomorrow.

We want a bit of design work done,’ and they are able to work within the Chinese walls

operation.



Mr Hedley—With respect, it is very hard to work at a small company level with that

arrangement, particularly in the software industry, when you are competing for the same clients

and often for the same contracts. It just does not work. A small business—and I suppose this

harks back to the discussion on provisional workplaces—really needs to see the return on the

investment in training. To a certain extent, under the current system, that is not always pointed

out to them. They cannot necessarily do the maths. Really, when it gets down to it, once you do

point out that there is a return on investment then small companies do it. But I just think that the

way the traineeship information and system is presented to them, it is just too dense, too

difficult, and they have not got the time to do that sort of work. They are too busy filling out

BAS forms and things like that.



On the workplace side, we have really looked at that particularly hard—the transition from

study to work—and we fundamentally believe that work placements is a very good solution. One

of the things that shook us up was that a New South Wales board of study showed that about 50

per cent of the school students had an unfortunate experience with their work placements. In

other words, they did not find it particularly attractive. We thought that work placements would

encourage school students to think about working in IT, for example, but we are finding that the

work placements were actually turning them off.



When we looked at it, we realised that employers, particularly small business employers, are

not around to train people; they are in another business circumstance. So, to a certain extent, we

have switched our opinion on this and believe that simulated work placements, such as you were

talking about earlier, do seem to provide higher satisfaction in terms of learning outcomes. But

we believe that schemes like a day in the office or an awareness of what work is like would be

the other bookend to envelope those experiences. We have found, talking to, say, TAFE teachers,



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that both the return to work for TAFE teachers and also work placements or work experience

programs certainly help learning outcomes all around, particularly for school students. It makes

them understand why they are studying and what they are doing at school.



Mr Goodwin—If I am allowed to draw a fairly long bow on the mutual recognition front,

there are three groups that GROW has been aware of that would provide access for good future

skills, including women returning to the work force and mature age workers. But for the third,

the skilled migrants and refugee group, there is evidence that the qualifications and employment

options are downgraded after their arrival in Australia. This is a common experience that

constitutes a loss of skills and expertise to the Australian labour market and contributes to the

social disaffection and disappointment of this large population group.



This happens at three levels. The first is at a government level. Because skilled migrants are

assessed against their ability to exist independently, the federal government does not offer any

social security support, and yet there are some who are largely unaware that they will face this

upon arrival. The second and probably more important is at the industry level. Those skilled

migrants have many years of work experience and up-to-date technical training and

qualifications, but there is still a reluctance of Australian industry to acknowledge overseas work

experience. At the third level, for registered training authorities and professional associations,

there is much the same level of concern as with industry. We have reported an incidence of

institutions not being forthcoming, for much the same reasons as industry, in their recognition of

the qualifications, particularly the academic qualifications, of skilled migrants.



Prof. Smith—On the issue of the group training companies and the kind of intermediary

bodies that work in the training market, I think group training companies have certainly been

terribly successful over the last few years. However, in terms of operating as a body that, if you

like, brokers the needs of industry to the VET system, I am not sure that group training

companies would be the best way to go for that. It seems to me that, since group training

companies are players in that system, it would at least be a conflict of interest for them. There

are arguments for a neutral body, which is why I argued about the way in which the ITAB

structures have been dismantled and the need for some sort of more neutral body to take that

place, to act as a broker in the system. I think we really need to look at reinstating something like

that, particularly at the state level.



On the issue of the fees, I agree with the points that have been put forward. HECS for VET is

not a reality, given the kind of occupations that VET is targeted at. I think there are real problems

in the fundamental differences in the way in which the different sectors of education are funded.

If we are looking for seamless transitions between the various sectors—and in a sense we are

getting it de facto with VET in schools and with a number of TAFE graduates going into

university and vice versa—then we really need to address the differences in funding

arrangements, particularly between VET and higher education, for people to be able to pursue

that sort of qualifications path over a lifetime.



In Victoria, the experiment with dual-sector institutions has been only partially successful. I

think a lot of that is down to the fact that the two parts of essentially the same institution are

funded in such radically different ways that it makes it very difficult for those groups of teachers

in each institution to work together to get nested and seamless sorts of qualifications for







EMPLOYMENT, WORKPLACE RELATIONS & EDUCATION

Wednesday, 7 May 2003 Senate—References EWRE 923





students. I do not have the answer to it but certainly something needs to be done about this very

large disjuncture in the way we fund sectors.



CHAIR—Articulation between the three systems is an issue we have discussed in a number

of areas. The Western Australian government has now issued a consultancy and someone is now

looking at that particular issue. But some of the research we have had done tends to demonstrate

that the biggest impediment is the funding bucket because of the fear that if you spill some out of

yours and into the other system then you are going to have a deficiency and they will have an

overflow. It is a real problem. Today we have been out at Nirimba and they were also saying that

it is one of the major problems for them—these funding impediments that exist between the

three systems, and how you overcome them.



It seems to me that a number of institutional things like that which ought be able to be broken

down have been talked about in other areas as well, but getting people to address them seems to

be much more difficult. A lot of the argument we have heard suggests that we need a lot more

targeting and flexibility in the system, both in terms of what we are providing and how we

provide it, taking into account the needs of various industry sectors. All that we see tends to be

directed at uniformity across the system and similar approaches being adopted by every sector.

There seems to be a clash between what people are saying is needed and what is actually being

delivered or what is coming out of the whole training system. I do not know how we are going to

change that mind-set.



Miss Rowe—Carefully. There are lots of egos in there, which is part of the problem—some

staff there.



CHAIR—We may need a WMD.



Miss Rowe—Going back to training packages, as an implementer of training packages I think

they are a very useful guide across a number of industries. Some are better than others but all of

them are better than nothing. The interpretation and application of the training packages into

workplaces is very dependent on the individual trainer/assessor and the RTO or TAFE or

whoever the implementer is. Therein lies an inherent problem, because each of us interprets it

slightly differently.



Adapting training packages into workplaces, customising the content to a number of different

workplaces, is always a challenge. For example, I have frontline managers doing work in law

firms, in financial companies, in hi-fi stores, in women’s clothing companies, in bookshops, in

an ITAB—across a whole range of industries, from a small company where there are only three

employees up to a company where there are 4½ thousand. It is the same training package, the

same content, but the actual needs of the learners and the needs of the organisation are very

different across those industries.



Training packages in and of themselves are a very useful tool. It is how you implement them

that is fraught with difficulty. Training packages work well if they are used in a competency

based model. They do not work well if you try and put them into a curriculum because that

curriculum is about training, and competency based practice is about whether you can actually

do the job and here is some theory to underpin that process. One of the biggest problems with

training packages is they are often endorsed as a training package: this is what you need to do,



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EWRE 924 Senate—References Wednesday, 7 May 2003





these are your units of competency and your performance criteria that you have to meet. Okay,

great, let’s implement it. Where are the resources to support them? Oops, we forgot that.



I am doing some work with the community services national ITAB at the moment and have

just done a research tour around Australia looking at hospitals and health care settings and at

trying to implement the health training package. Right across the country, the biggest problem is

that we do not have assessment tools, we do not have learning resources. If we had them, we

would uptake the training package. But we do not have them and we do not have the resources to

develop them, therefore we cannot implement it. So there is a health training package sitting

there ready to go. It is a great package. There is lots of diversity in it. There is some really good

stuff in it. But there is very little uptake because we do not have the resources.



South Australia and the ACT are the only two places that have endorsed it. The state based

bodies there have endorsed the traineeships. The uptake is much better there, obviously because

there is some funding and supporting structure. If there was consistency across the country we

would have a lot better system. We could go in and say to a national company—Mayne Health

or Ramsays or someone—or the state government bodies: ‘Okay, let’s implement this across the

country. Here is a training package, go for it.’ Aged care would be a whole lot better supported if

the non hands-on clinical staff could be given some proper training and recognition for their

processes.



With the recognition of skills issue, not being able to recognise skills as they are without a

process, we do have recognition of prior learning process in place but it is not funded well. I

think you can get $400 from the New South Wales state government for doing a recognition of

prior learning process and giving somebody a qualification. But there is a huge amount of work

that needs to go into that. The funding is such that most organisations just say, ‘It is too hard, just

do the course.’ It is cheaper in the long run for the organisations. While there is a system there, it

could be much better utilised if it were funded a little better. What we are doing is forcing people

to go through a training program when they do not need to. All we need to do is assess their

competence.



In relation to the VET loan scheme, I would put it in the bin, I am sorry. Having been through

university too many times and having had to pay HECS, at this level we are talking really low-

level stuff and we are talking about people who are being paid—for a lot of them—$7 an hour.

And their wages do not go up very much when they get in there.



I am also very interested in the MicroBusiness Network. I have just retired as the New South

Wales state manager of the MicroBusiness Network. Certainly there is high interest in

traineeships and any other learning, but there is no opportunity. The traineeship scheme and

federal incentives really do make a big difference to the opportunity for taking on trainees.

Because of the nature of the work, often businesses are at a point where they are big enough to

need some help but not big enough to actually be able to afford somebody full time. So putting

on a trainee is a really good idea and a lot of them will take that up.



Unfortunately—this goes back to your comments, Mr Evans—the standard of the delivery of

training by RTOs on the job is not supported adequately and is done very poorly. Therefore, the

people in micro businesses who are excited about taking on trainees get shafted by an RTO, and





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Wednesday, 7 May 2003 Senate—References EWRE 925





they just lose it. Then it becomes, ‘Traineeships and trainees are bad news,’ but, in fact, it is the

system that supports them.



Senator BARNETT—How do we address that problem? Isn’t it on-the-job training for the

micro businesses—that is really the only way that they can do it, or the main way that they do it?



Miss Rowe—For micro businesses, it is.



Senator BARNETT—How can we address the concerns that you have mentioned?



Mr Evans—That is the major issue. As Miss Rowe said, so much of it takes place. It depends

on the RTOs. We have seen RTOs who go in, who are very thorough and do it all. We have been

to other places where people in small business do not know their trainees—they have never seen

them before, and they have never seen the RTO. So it is a mixed bag across there.



Miss Rowe—One of the things we could do to address some of the problems with RTOs is to

cap the number of trainees that they can have. I go in and pick up the pieces in small businesses.

What I see is that the RTOs that are huge and have thousands of trainees cannot deliver the

service. They just cannot do it—it is not possible to do it when you have huge numbers. When

you have smaller numbers and your trainer to trainee ratio is much lower, you have an

opportunity for your trainers or assessors to go and see the people. You get to know the

employers. That is particularly for the small business sector. I am certainly not speaking on

behalf of all RTOs because a lot of RTOs would impale me for that. That is okay—I can cope

with that.



Senator BARNETT—You are a good person.



Dr Buchanan—Does that not highlight the need, though? Often micro businesses are not in

the business of training—they are in the business of surviving a tough commercial environment,

but they need support. They basically need an intermediary.



Miss Rowe—Yes.



Dr Buchanan—I take the comments from the IT person that maybe the group training or

group apprenticeship model is not appropriate. But maybe you do need a regional or sectoral

skills centre where you can have that skills training—and that becomes like a focal or nodal

point within a group of employers. That goes to my original point. I think there is an institutional

gap, and it is that brokerage gap that is the big missing link at the moment, and that is because of

the ideology of the training market. There has to be recognition by this committee that, when

you are walking around with a kind of market model in your head, it gets in the way of thinking

through what it means to have a coherent institutional system.



At this point, I will throw a quote back to Senator Barnett. The famous anthropologist Karl

Polanyi made the point that laissez faire has to be planned. What we have seen is that ANTA has

effectively constructed a market, and it just does not work. There is nothing spontaneous about

the training market we have. If you want to keep the language in the market, let us make the

market work better. The current model is just not delivering.





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EWRE 926 Senate—References Wednesday, 7 May 2003





Dr Toner—The outcomes are a direct result of the structure of incentives, shall we say, for

example, in the financial system—the fact that there is no discrimination. Someone who

undertakes one year’s training gets the same level of incentive—or the employer—as someone

undertaking four years of training. A rational economic man would take on four trainees in the

space of four years and accrue—in a sense, the outcomes we have are a direct result of the

structural incentives.



Senator BARNETT—I think you said earlier today—I cannot remember whether it was you

or Dr Buchanan—that from 10 years ago to now there has been a vast improvement.



Mr Evans—It was me, talking about TAFE. The description of TAFE 10 years ago is still in

many people’s minds—unfavourably. It is a different situation today in TAFE. That is what I say.



Senator BARNETT—It is all year round.



Mr Bradley—Yes—50 weeks of the year, all hours of the day and night—Sundays included.

It has certainly moved enormously in the area of flexible delivery and also in recognition of prior

learning.



Senator BARNETT—Why do you think that was? Was that not to meet the needs of the

businesses?



Mr Evans—Competition certainly had a major impact on TAFE—there is no question. But

TAFE has responded to it—that is the point I keep making.



Senator BARNETT—Thanks for confirming that.



Ms Godwin—I would agree that that is in some part in response to competition, but it is also

in response to opportunities presented by the introduction of training packages. I take Miss

Rowe’s point about the apparent conflict between curriculum based delivery, which seems to be

cumbersome, and training packages, which seem to be more flexible. There is a path in the

middle somewhere. Training packages only tell you about standards to be met and the

performance measures of those standards; they do not give you any clues as to delivery or the

way in which they need to be assessed. As educators, we would argue that this is a very good

thing, because it leaves it to the educator to contextualise the learning and the assessment to the

learners’ needs. Full flexibility, when it is available, is a very fine thing left in the hands of well

qualified and well trained deliverers.



I would add, though, that there might be some path for the development of minimum

descriptions of assessment standards, and that might be valuable for a national sector. Those

standards might assist the mutual recognition challenge. I think one of the problems with the

mutual recognition challenge is inherent mistrust around different systems’ capabilities in the

quality of delivery and assessment. The fact that this is left open because of the training package

construct does not assist in that inherent mistrust. There may be some path in the middle, but

certainly training packages have provided a great deal of flexibility and opportunity for trainers

and educators to meet the needs of learners in a very meaningful way.







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Wednesday, 7 May 2003 Senate—References EWRE 927





CHAIR—It does raise the question, Ms Godwin—and it was raised by people in the private

training area earlier—of what you do to assess your trainers and assessors in the system to

ensure that they are meeting the standards necessary to deliver the training packages. I just

cannot understand why we have to have a system that says, ‘Here are training packages which

have no training in them.’ We know what they are: at the end of the day, they are a set of values,

standards or measurements you have to have to qualify for a particular area. But if you do not

have a set of standards you have to meet to get to that level, how do you assess it? What value do

you put on the assessment?



We have had examples given to us by apprentice electricians in Queensland, where they had

finished their apprenticeships and then were required to do an extra six months training because

they had not met the standards of the licensing board. Someone said they were not required to in

the terms of their apprenticeship. But everyone knows that for an electrician, trying to operate

without a licence in this country means that you may as well not have started your

apprenticeship in the first place. I assume that the training is aimed at them achieving their

licence—if it is not delivering that then there is a gap somewhere in the process. Maybe it is that

the trainers or the assessors are not at a level where they are capable of making those values—I

do not know. Maybe it is because there is too much flexibility in the types of training programs

that are being delivered, because of the nature of the training packages. With the whole language

of the system, it is no wonder small business gets confused.



Ms Godwin—Yes, I would agree.



CHAIR—We are certainly confused when it comes to trying to understand it. The language is

a real misnomer.



Ms Godwin—Which is why a curriculum based approach might assist, because developing

even a more modest approach to a curriculum would provide the shell for assessment and

delivery standards that would bring some level of consistency and support.



Miss Rowe—The only problem is that the whole VET sector is based on competency. Our

training packages were all written based on competency: are you competent or are you not

competent? That is one debate. In the ANTA national road show that has just happened, that

came out several times in those forums as well. Do we have agreement? No, we do not have

national agreement. Are we doing competency or not and what is competent anyway?



Mutual recognition operates at two levels. One is mutually recognising qualifications issued

by other organisations. If it is a national qualification with the VETAB and ANTA stamps on it,

then you have to recognise it. That is not happening nationally and that is part of our problem. If

I hold a certificate IV or a certificate III, say, in hospitality operations, I should be able to take

that piece of paper and get recognition for that anywhere in this country in any institution. I

cannot do that. It varies state by state, institution by institution. Some institutions, some TAFEs

and some RTOs are saying, ‘No, we can’t do that.’ That is a funding thing. If I recognise

somebody’s qualification, then I do not get as much funding as an RTO for the rest of their

qualification. Some of it is taken away from me. It might only be $500 out of $1,500, but that is

a third. I then have X number of months during which I have to fund training and assessment out

of $1,000 instead of $1,500—that is a big difference.





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Dr Buchanan—A lot of the problems here are the guiding principles in forming policy, and I

would like to return to this concept of competition. It is assumed that competition is a good thing

here, and it has shaken TAFE up. Let’s not forget the realities. As I understand it in New South

Wales today, 70 per cent of TAFE teachers are casuals and a lot of them are not very happy about

it. Let’s not say we are in an exciting new world of a dynamic new TAFE system. What we are in

is a pretty troubled new world and a TAFE that is going to have chronic labour supply problems

a few years out once a lot of people realise that the incentive structures are just not there to

become TAFE teachers.



Competition to me is a good servant but a bad master. The problem is it has been the

designing principle and because of that you have had all these institutional anomalies that have

been raised this afternoon. If the concept was brokerage and effective institutions that allowed

employers to engage with the skills formation system, you would have quite a different set of

outcomes and quite a different set of debates. But the policy has been driven by an ideology that

actually gets in the way of getting employers to engage in a simple and effective way to become

competitive. So by turning the unit of training into something that is to be competitive, you

actually undermine the capacity of training to allow others to become competitive. In a sense,

you have to have a dynamic system which engages with employer need but, in itself, it has to be

designed around principles of brokerage and facilitation and not an ideology of competition.



Prof. Smith—I want to echo what John has said. I think the problem is that articulation of

employer needs. We have not done ourselves a service in the VET system by breaking down

bodies that may not have operated as effectively as they could have done, but they were indeed a

vehicle for that articulation of needs at that place. I think it is that level of independent

intermediary bodies that we need to really look at to make the market that we do have work.



CHAIR—We have to conclude at that point because we have to get set up for another

roundtable with the emerging industries. Thank you all very much for coming this afternoon and

for your contribution. It has been more than useful to the committee’s work.



Proceedings suspended from 4.03 p.m. to 4.21 p.m.









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Wednesday, 7 May 2003 Senate—References EWRE 929









COCHINEAS, Mrs Lisette Pamela, Manager, Corporate Projects and Education, Smart

Internet Technology Cooperative Research Centre



ELENIUS, Ms Elizabeth, Communications Manager, Australian Photonics Cooperative

Research Centre



FINDLAY, Mr John Gilchrist, Chief Executive Officer, Zing Technologies Pty Ltd



JONES, Dr Peter Douglas (Private capacity)



MANGRAI, Ms Cheri, Manager, Finance and Administration, Australian Technology Park

Precinct Management Ltd



MONTGOMERY, Mr Stephen James, General Manager, Australian Technology Park

Precinct Management Ltd



WHITTINGHAM, Ms Karen Maree, Public Officer, Treasurer, Founder, Australian

Vocational Education and Training Research Association



CHAIR—I welcome you all to this hearing into current and future skills needs. The Senate

Employment, Workplace Relations and Education References Committee is conducting a series

of roundtable meetings with people involved in various ways in identifying and responding to

the skills needs of industries, communities and individuals. The committee is also holding more

formal public hearings with those who have made submissions to the inquiry. The committee

wants to discuss or explore what it expects will be a wide diversity of views from the community

on current skill formation policies and programs and to hear about suggestions for change. The

purpose of these roundtable discussions is to allow the committee to consult as broad a range of

people as possible through the more formal hearing process, including those who do not wish to

make formal submissions. This is the second of our Sydney roundtables, in which the committee

would like to focus on skills needs of emerging industries and technologies.



Although these roundtable discussions are meant to be informal, we are bound to observe one

important rule of the Senate with regard to privilege. This discussion is privileged and you are

protected from legal proceedings with regard to what you may say. Hansard will produce a

verbatim transcript of evidence, which will be provided to participants and available also on the

committee’s Internet site as official documentation of the committee’s proceedings. This

recording is not intended to inhibit informal discussion and we can go in camera if you want to

put something to the committee in confidence. I point out, however, that such evidence is often

difficult to report in an inquiry of this nature and, in any event, the Senate may order the release

of such evidence.



Many of you have provided the committee with some brief written information about

yourselves or the organisation or interests that you represent and your key issues in relation to

current and future skills needs, for which we thank you. I had a series of questions which I have

posed to other roundtables we have had. However, given that the focus of this roundtable is

specifically on emerging technologies and the incubation type activities that are occurring in the



EMPLOYMENT, WORKPLACE RELATIONS & EDUCATION

EWRE 930 Senate—References Wednesday, 7 May 2003





technology park, we would like to explore with you what you see as being the skills needs or

skills gaps that might exist in terms of the work undertaken by companies in the park area and in

the system. We would like to explore whether the current training system is capable of meeting

those needs or whether we need to look beyond that to some other specific activity which

government should undertake in order to ensure that those skills are there in the development or

innovation phase of the emerging technologies. If we focus on that end of the training market,

that might be most productive from your point of view. Who would like to make some opening

comments in order to lead the debate?



Ms Elenius—I will. I am the Communications Manager for the Australian Photonics

Cooperative Research Centre, which has been running since 1992. I have had quite an intimate

involvement in our relationships with the education sector, and particularly our relationship with

the VET sector, through the TAFE Industry Partnership Centre located at the ATP. Photonics is

an emerging technology. It embraces a range of disciplines within education from physics to

chemistry to electrical, mechanical and software engineering. It is the view of our CEO, and

therefore the view of our centre, that the VET sector is an integral part of the innovation system

in Australia. I think our CRC is still the only CRC to have a TAFE group as a full partner. We

really value the participation of TAFE New South Wales. Our centre is geographically

dispersed. We have centres in Melbourne, Canberra and Sydney. We have 28 industry partners

and five universities, as well as DSTO and TAFE. We are one of the biggest CRCs. Whilst the

education objectives of the CRC program are more focused on postgraduate training, when our

industry sector in Australia was undergoing dramatic growth at a rate of about 200 per cent per

annum, up to about 2001, we could see a looming skills gap, particularly in the technical support

area, in the emerging companies that were spinning off from the CRC. Therefore, it was timely

that we had a relationship with TAFE New South Wales, initially through the memorandum of

understanding and then through our TAFE agreement.



As a consequence of our relationship with TAFE we have learned quite a bit about the VET

system. We have learned that it is extremely complicated and, in terms of emerging industries,

very difficult to interact with. That is not to say we have not had tremendous interaction with

individual TAFE institutes and colleges. I single out Lidcombe TAFE and Southern Sydney

Institute TAFE in particular. They have been even brave and courageous in the support that they

have given to developing, at the expense of TAFE New South Wales and without any support

from the national system, whole courses in photonics to meet the emerging needs. The

disappointing thing is that we had the crash. The job market, from creating 500 new jobs over a

period of about four years—mostly spinning out of the CRC but not entirely—has shrunk

dramatically, particularly with the withdrawal of the multinationals from Australia. That has

been a national tragedy, particularly the withdrawal of the company that bought our first spin-

off, JDS Uniphase. We potentially could have lost a jewel in the crown of Australian photonics.



So it has been a little bit tricky. We raised a lot of expectations. But, as I said, what we have

learnt is that it is a very complicated system. It relies on industry representatives being able to

participate in the ITABs. In a fast-growing, emerging industry sector of mostly start-ups and

small businesses that is too hard an ask. There simply are not the resources in those dynamic

start-ups to be able to participate in those ITABs. So the ITABs are there to serve the big

multinationals, Telstra and the big business sector. It is very difficult to penetrate through that

system.







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Wednesday, 7 May 2003 Senate—References EWRE 931





But, having done that and having worked so hard over all those years to raise awareness of

photonics, we have had the attention of ANTA and then we have had the processes of getting

competencies enshrined. A competency in photonics may be hot today but we will have moved

on from there tomorrow. So the whole idea of enshrining things and having this really formal

system may not be the best way to go about it for emerging industries. I am only speaking for

photonics, but I rather suspect that is a generic problem.



The other observation I would like to make is that photonics—and I suspect most of the IT

sector—should not be put in one basket. At the moment we are asked to interact with the IT

ITAB and in Lidcombe the courses are sitting firmly within the telecommunications course

programs that they offer. So photonics and probably most other IT skills can potentially support

a range of industries. In photonics I can name the construction industry. Building developers

have no idea what the future communications needs are for major developments; they do not

have a clue. I do not know where they went to school. I live in an area two kilometres from the

CBD which does not even have access to ADSL. It is a brand new Lend Lease development sold

a pup by Telstra. I should not have said that, probably.



CHAIR—It is on the record!



Ms Elenius—That is fine. The construction industry is one area where I think some training in

photonics would go down well. The electricity transmission industry is another one. We have

sensing technology. The defence industry is another one, with signal processing. There is the

automotive industry. Thirty per cent of the information transmission in cars is done by optical

fibre. The list can go on—the aircraft industry and so on. It is our view that it is not terribly

useful to have whole courses in photonics. Modules would be more sensible—or even breaking

up those modules into smaller components and then diffusing that knowledge which is

developed in a range of TAFEs. I can name the New South Wales ones. Mount Druitt is another

one. CIT in Canberra has developed, with our assistance, a strong photonics offering, again I

think in telecommunications, and we are working with the VET sector in Victoria. So we have a

terrific base start in photonics educational offerings in the VET sector, and, with a little bit of

tweaking, those educational resources could be deployed in a range of industry sectors.



Looking at how the VET sector can better serve emerging industries, one of the suggestions I

had was that a new program be developed, within the education department, that serves

emerging industries. Rather than have this other, very cumbersome system, we could have a very

dynamic and responsive program that can give funds to colleges like Lidcombe, who have been

very entrepreneurial, to develop these kinds of programs without the need for huge commitment

from the industry players who are so overstretched. I cannot tell you how overstretched they are,

both in boom times and in the quiet times when they are in survival mode.



The other thing is to work out how to diffuse photonics across industry sectors. A third

initiative that we recently developed with TAFE New South Wales has been the integration of

photonics in a program that provides photonics education for high school education students

through TAFE. They can do that for the higher school certificate and also be accredited with that

when they go into a TAFE course after they have finished. Those are the general points I would

like to make.









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EWRE 932 Senate—References Wednesday, 7 May 2003





Mr Montgomery—Thank you, Senators, for the opportunity of addressing you. I see a very

different view of life than, say, most of our resident partners at the park, in that my view

generally is much more commercial. The place has to run commercially, otherwise the place

does not exist. My observations are more to do with the life skills of SMEs and other businesses.

Very briefly—if you do not mind me being somewhat superficial—in many cases we take for

granted skills sets, in things like networking, business training, interface with governments,

marketing, international trade, e-government, e-commerce and e-everything really.

Notwithstanding the fact that we live with a fairly proficient group of people, particularly

technically, we are very lacking. I suspect this runs right out into the bigger world as well. We

see too many organisations who are excellent in every other sense but who are on the edge

constantly because they just cannot get their act together on these issues. Simplistically

speaking, a series of government initiatives in creating comprehensive, easily accessible

databases would be extremely valuable to a whole range of people who do not have time to go

off and retrain. If they were lacking in some skills sets, they could go in and quickly find what

they need or get what they want.



The only other comment I wanted to make was that it surprises me how often I come across

older people—and by that I mean people my age and older—who have missed the natural IT

training that came through in the education facilities for younger people. They are actually IT

illiterate—and I am talking about people who are in high positions in many organisations. It has

got to the stage where they are embarrassed to actually admit it. So they have a wife, a family

member or an appropriate PA who runs around and solves their problems for them. They cannot

operate a computer. I am talking in some cases about people who are operating in universities. It

is a bit like illiteracy in general. I think there is a need to address that within the broad industry

itself and to make provision for people to be trained in a dignified way.



Dr Jones—I was living here in the park for three years, setting up the Australian Centre for

Advanced Computing and Communications. I spent most of my life overseas, in England and

America, setting up high-tech companies. There are just three simple points I would make. The

first is about the recognition of emerging industries. There are a lot of companies here, but you

need to recognise what is an emerging industry, because you cannot go off teaching everybody

everything. For that purpose, you may need to use the professional societies, the academies, the

CRCs—professional people who would take a look at or measure what this emergence is, even

defining what the emerging industry is, its global potential and what it is going to mean to

Australia in terms of creation of wealth and employment.



The second area, then, would be the implementation of the courses. Whilst we were here, we

were tremendously helped by the presence of TAFE—in fact, Karen here was heading up TAFE

in the park, and we were talking to her. We were hopeful of creating many jobs in regional areas

of New South Wales. So in having an office of TAFE in such things as technology parks, with

that feedback and interaction, they are the kinds of courses you might develop. I think that a new

area of development is what I would call digital interactive multimedia, which we probably

know about. Its courses are in sound or television, where you are interactive in your teaching. It

can be done fairly quickly, and it is not too costly, with the right people—we could really get

going there.



The third area that I think is important is to measure the nature of the emergent industry—

finding it, seeing how it goes and knowing what number of jobs it will create, the import



EMPLOYMENT, WORKPLACE RELATIONS & EDUCATION

Wednesday, 7 May 2003 Senate—References EWRE 933





replacements, the export opportunities, how efficient and effective the courses are and what they

are doing. That is perhaps a rather large overview. I have lived in the park here and probably

seen 100 companies come through here, and I have seen them in America and England

particularly. Those are the three areas I wanted to mention: identification, definition of the

emergent industry, and the implementation of the courses, whatever they might be, particularly

those that are interactive with the TAFE system. Almost as important as anything else is a

measurement of how they are doing so you get feedback on this system.



CHAIR—Thank you, Peter. Karen, maybe you want to tell us how receptive TAFE has been

or how easy it has been to implement all these interrelationships.



Ms Whittingham—The hat that I wear today is the hat of the Australian Vocational Education

and Training Research Association. I must say, at the outset, that we have been lucky or

advantageous in the sense that NCVER put some funding towards the identification of the role

of vocational education and training in the commercialisation and innovation area. I was

personally very lucky to be the recipient of some of that funding. We undertook a research

project to look at the relationship between the vocational education and training system and the

cooperative research centre program, which, as you know, is Australia’s largest initiative to bring

together publicly funded R&D with the commercial imperative of driving the economy.



The results of that research were published last week and are available on the NCVER website

but, fundamentally, they draw us to a couple of things. The first is that there is no systemic

operational fundamental process for the national innovation system to communicate with the

vocational education and training system. Where there is communication at the TAFE college

level, that communication is extremely successful and beneficial to both parties. In the context of

one company in the study, Kadence Photonics found a very quick manufacturing and production

solution through its relationship with TAFE that would have cost them somewhere between a

quarter of a million dollars and half a million dollars if they had invested that back in through the

R&D system. So there are significant advantages for the Australian economy for the Australian

vocational education and training system to take a leading role in the commercialisation of

Australia’s publicly funded R&D effort. I would go so far as to say that you could ask the

question as to whether or not we are in fact getting the best return for our public sector research

effort by excluding, or not inviting to the party, the vocational education and training system in a

very significant and considered way.



The second finding of this particular study was that those relationships are very difficult

because, as you know, predicting skills and predicting emerging industries is often a very

difficult thing to do and is subject to the vagaries of the venture capital market, technology and

other social trends and so on. The ability of the vocational education and training system to

predict or anticipate the skill needs of emerging industries and the difficulty in doing that is

increased because it is not connected at the front end.



The fundamentals of the other research that is going on, and not just the study that we are

involved in here, are that there are ways for training systems internationally to be involved with

research and development. I can refer you to some of those sources and some very brilliant

Australian researchers through AVETRA if you are interested. I am not sure if you are aware but

Australia through AVETRA has the strongest cohort of researchers in vocational education and

training of anywhere in the world. So our capacity to understand these issues in a considered



EMPLOYMENT, WORKPLACE RELATIONS & EDUCATION

EWRE 934 Senate—References Wednesday, 7 May 2003





way is better, in my view, than anywhere else in the OECD and in the States and so on. We have

got a very good pool of researchers. We are short of research funds, just as everyone is always

short of funds for inquiry, but our capacity to come up with some good solutions is quite solid.

There is some good research out there but the research in Australia is leading the rest of the

world. So we need further research in this area.



The other issue is a systemic issue and it is attributable to the fact that the system is set up for

responding to and listening to industries that can represent themselves which are going through

gradual innovation and which are making incremental changes. These industries are looking for

new products in existing markets, or for new markets for their existing products rather than the

completely novel and unique. The listening posts for the system are not in place. We were very

lucky in New South Wales with TAFE because we had a listening post, if you like, here at the

technology park. In Victoria there are some listening posts at the TAFE institutes and the

Western Australians have some very good places where we can pick these things up. However,

there needs to be a recognition that this needs to be a concerted effort. As the economy evolves it

will be no news to anyone here to learn that there is going to be a staple diet of the new, of

emerging industries, of photonics, nanotechnology and biotechnology. To have a system

predicated on gradual innovation and building better cars or making our existing industries more

efficient does not really allow us the flexibility in the economy to be able to undertake the

support needs to get those new sources of economic growth up in the economy. Research shows

that we need to support the staple diet of the new. I will leave it to you to work with the agencies

in your report to find the mechanisms for those sorts of things. If we could do something

systemically to give the system a capacity to listen to the new and emerging industries, we

would be serving the Australian economy quite well.



The final finding is at a company level and it has to do with the quite unique qualification

demands of emerging industries. Emerging industries have a couple of interesting features. One

of these is that they are at the top end. They require people who have strong generic skills and a

capacity to learn new things in new ways very quickly. Their version of entry level is somebody

with a trade qualification and five years experience. They do not have a need for trainees or

apprentices and they require skilled graduates at AQF 5 or 6, if not at associate degree level. I

urge the inquiry to take that issue up and to bring up the basic skill level of Australian workers to

deal with the staple diet of the new.



Other research work is going on. I commend the work being done by Fran Ferrier at Monash

University and the Centre for the Economics of Education and Training. It is an ANTA funded

centre. They are an outstanding group of researchers. They have been servicing the vocational

education and training sector now for six or maybe seven years. They have excellent research

and their work on building intellectual capacity would be a reference work that I would

recommend. On behalf of AVETRA, I thank you for the opportunity to speak to you today.



Mrs Cochineas—I come from a slightly different perspective because I am trying to bridge

the gap between the corporate world and the academic world. The gaps that strike me as most

apparent are gaps in entrepreneurialism and IP. We are taking a slightly different perspective

from the other people at the table, but the level of IP knowledge and entrepreneurialism at the

researcher level in universities and corporate partners strikes me as incredibly lacking

considering the need for it in those areas.







EMPLOYMENT, WORKPLACE RELATIONS & EDUCATION

Wednesday, 7 May 2003 Senate—References EWRE 935





I agree with a number of people who have been speaking here today. It strikes me that there is

no forum to discuss the needs of emerging technologies with the VET sector that I have come

across. Please correct me if I am wrong. They are the few opening comments that I wanted to

make.



CHAIR—I might pursue the discussion a little bit further, but I will make a couple of points

initially about the issues that you raised, Mr Montgomery. We completed a report a couple of

months ago on small business—what drives small business to employ more people. We dealt

with the issues you raised about entrepreneurial skills et cetera fairly extensively in that report.

There are some 29 recommendations, so I encourage you to get a copy of that report and read

it—and then Margaret and I can share the royalties!



Mr Montgomery—It is good to hear that.



CHAIR—We have looked at the issue extensively and it is a fairly detailed report. We have

had some very good feedback from the small business community. The people that you were

talking about very much fit into that small business cohort. One of the two issues raised out of

what both Elizabeth and Karen said is that it seems that the current system that is in place is in

many respects not capable of dealing with the needs of emerging industries because it does not

have that flexibility in the system, such as the training packages, the competency type training et

cetera if there are going to be rapidly changing skills and shifts in the dynamics of these areas. It

seems to me that part of the problem that you experience is that a lot of what is driven out of

CRCs is very much university focused, so there has been a disconnection from the rest of the

education system.



Is it true to say that the emerging industries need a mix of new skills—which means virtually

developing a totally new platform, whether that is done through the higher education system, the

VET system or a combination of both—and a variation on existing skills? Presumably, skills that

are required by the emerging industries already exist but they need to be varied or upgraded. I

have come out of the manufacturing sector. I used to build ships for a living a long time ago. I

have seen the technology evolve in that industry but when I look at the biotechnology industry it

quite often reminds me of a period that I spent within a flour mill, in miniature. The production

techniques are very similar, although you are dealing with much smaller versions and much

more sophisticated equipment, IT interfacing and so forth. A lot of those skills need to be

upgraded and varied. What does that mean in terms of the infrastructure that is required to meet

the needs of the emerging industry to provide that flexibility? Could you tell us more about how

AVETRA operates? I presume that it is looking much more at the research side of it. What

practical programs have you put in place to address those needs?



Ms Whittingham—AVETRA is an independent body of researchers in Australia. It represents

the body of work that researchers do and it represents the research agenda from an independent

perspective. It is not funded by the state or federal governments in any way. It is a wholly

independently operated organisation. If we get the opportunity to promote individual pieces of

work or research and if we get the opportunity to speak out at particular venues or organisations’

forums, we take that opportunity on behalf of our members. There is a body of work, of research,

in the area that you are talking about on generic skills and competencies. In my opinion, and

from reading some of the research, there is a capability within the system as it exists to deal with

the flexibility of the system. Emerging industries differ a little bit in that it is about not just the



EMPLOYMENT, WORKPLACE RELATIONS & EDUCATION

EWRE 936 Senate—References Wednesday, 7 May 2003





skill or the competency of the new body of knowledge—that is, photonics or biotechnology—

but also the ability to adapt that to and understand that within related areas.



For example, where we forecast over a five- to 10-year period 5,000 or 10,000 new workers

directly in photonics, another 30,000 workers will be required in the associated industries in the

supply chain. I think that was the point being made about manufacturing. That means that the

kind of solution Elizabeth was talking about where you want modularised solutions with

packages instead of course outcomes or full diplomas for a photonics engineer is only part of the

package.



In the case of photonics, the company study will tell you that they want not just photonics

technicians, but software development. IT and networking; electrical and mechanical

engineering; sales and marketing management; office administration; human resources;

accounting and finance; workplace training and assessment. They are all the fundamentals that

make a company tick. However, they believe that they need those skills at a higher order than the

entry level and the AQF 1 to 3 that the VET system is preoccupied with. They will say, ‘We will

take a BA in communications as our receptionist as the minimum standard of entry’, or ‘Our

factory manager won’t be a trainee. We are actually looking for an electrical engineer or a fitter

and turner’—as was the case with one photonics company—‘that we can adapt and mould into

our industry.’ The nature of the relationship of the emerging skill needs is one of development

and the ability to cross-transfer that knowledge and skill. If you are focused at AQF 1, 2 or 3,

you are not really teaching people those higher order cognitive skills. The system is very

behavioural, if you like, rather than cognitive.



CHAIR—What was raised with us yesterday was that more and more employers—and

perhaps this is much more relevant in the emerging industries—are looking for a mix and match

of some of the skills that the TAFE or VET systems are able to provide mixed with some of the

skills which can perhaps be provided from the higher education system. That means you have to

provide for articulation across or between the systems in both directions. There is some work

going on on that at the moment. The Western Australian government is consulting on that issue

now. Some joint campuses are now operating and we visited one this morning out at Western

Sydney. However, there is no systemic approach to articulation across the systems and there is a

range of reasons for that, including the way in which the systems are funded. That seems to

address the issues you are talking about. You really do need a mixture of both systems. You

cannot be satisfied with one or the other; it is a question of what can be provided in both.



Ms Whittingham—Articulation arrangements are fundamental and important but we need to

be very clear that the preferred articulation is from university into VET, not the other way

around. Student mobility studies and research about those companies will show that the skill mix

for postgraduate, undergraduate, graduate and VET diploma entry level changes as the company

evolves. If it is an R&D company it is predominantly full of postgraduates. As it moves towards

commercialisation and niche manufacturing, you might have nine niche manufacturers all of

whom have 10 to 15 per cent of their employees with VET qualifications. As you move to mass

manufacturing, 70 per cent of one company will have VET qualifications. The large

organisations have the most VET qualifications; small operations, of which there are many, have

a number of VET level workers. The skill needs of a company change as it evolves and it is very

much the case that there is a mix of required skills for these companies to be competitive in the

global marketplace.



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Wednesday, 7 May 2003 Senate—References EWRE 937





CHAIR—What is the capacity of the companies to identify the skills they need? Is it a

question of sitting down and saying, ‘I have half a dozen bags of tea; which one will I have

today?’



Ms Elenius—One of the hardest problems Karen had in her study was to get the companies to

articulate what they wanted. One point I did not make in my introductory remarks, which our

CEO wanted me to reinforce, was that Australia is very good and does leading edge research. We

are very good at innovation. But when it comes to manufacturing, we are getting worse and

worse. The VET sector represents an untapped goldmine of manufacturing skills. We are always

talking about the skills needed for photonics, but it is more the knowledge that is needed. Whilst

there are already courses developed in photonics, and probably they should be diffused more

broadly across the country, it is the knowledge that is now enshrined in those courses and

modules that needs to be got across, particularly to the manufacturing areas within TAFE so their

awareness is raised about photonics.



We make widgets. I know that is an unfashionable view at the moment. There is a prevailing

view that Australia does not need to make things, we only need to use them. We are in the

business of wanting to make product that we will then ship to the rest of the world. We need to

fill that gap between the innovation created by our research institutions and getting product made

ready for shipping. We are not good at that. The biggest impediment in our area has been to learn

how to manufacture. As Karen said, the connection with the VET sector in terms of Kadence

Photonics has been extraordinary. With our industry, we are just emerging from the cottage

industry stage. We are like electronics was 30 years ago. We have dextrous migrant women,

largely, hand-assembling. That is going, in an effort to drive the costs down sufficient for our

products to be brought by telcos and systems integrators. To get the costs down, we need

automation. We need the knowledge of photonics within the VET sector in the manufacturing

areas. That is a really important point to get across. Telecommunications are more skills based.

They need skills in handling, measuring and doing what they do with optical communications. It

is a matter of knowledge across the sectors.



CHAIR—I would disagree with you, Ms Elenius. I think we are very good at manufacturing

in this country and that has been demonstrated by recent figures. We are also very good at

generating ideas. However, we are not very good at translating those ideas into products. That is

where the failure in the system is. It has a lot to do with our entrepreneurial skills as opposed to

our innovation skills and our capacity to make things.



Ms Elenius—I agree with that. We have learned our commercialisation on the hop. I do not

know whether we would ever have been able to learn through a business course; I don’t think

that would have worked. Learning on the hop for us was the right—



CHAIR—Learning by doing means you never forget the lessons.



Ms Elenius—It is absolutely the way to go.



Mr Findlay—Our experience is that there is a huge disconnect between the young people

who arrive on the planet knowledge age ready and are able to use the tools around them, and

their teachers many of whom were raised at the tail end of the industrial age or at the beginning

of the information age. A salutary story is told by Vygotsky and Luria who did research in



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EWRE 938 Senate—References Wednesday, 7 May 2003





Uzbekistan at the turn of the century. They looked at the difference in cognitive skills between

the peasants and the people working on the collectives. When they asked a peasant to sort out the

differences between an axe, a block of wood, a saw and a hammer, the peasant put the axe and

the block of wood together. However, someone who had been to school sorted them according to

the fact that they were tools. They could not do deductive thinking either. In relation to the

deductive thinking, they were asked: if it takes an hour to go to the next town which is one mile

away, how long would it take to go to the town after that? A peasant would respond: ‘That was a

silly question. Who would bother going to the next town?’



The point I am making is that the way a lot of our teachers and managers think is too

culturally separated from the kids who are arriving on the planet today. The research of Tony

Downes into the amount of time that students spend using computers in the classroom, not for

learning but for child minding, shows that it is about half an hour a week on average. That study

took place last year. At home students spend an average of five hours a week using computers.

My company manufactures knowledge creation technologies. We package into software

processes for how you learn and make decisions and we sell those to schools, universities and

consultants. We package up some of our best brains and teachers and export them around the

world. We are also involved quite heavily in helping several of our education systems,

particularly that in Victoria—and more recently the one in South Australia—undertake cultural

change across that education system. We work very closely with teachers and students at one end

of the scale. However, at the other end of the scale we work with corporates. We see what is

going on because we work intimately with them. There is a huge cultural disconnect and that is a

fundamental problem.



Before the Internet bust, there were two million knowledge jobs created in America last year.

An OECD report states what has happened in Europe. We are already starting to see what I call

wisdom age products. These involve the wise application of knowledge. These products are

coming out of places like the Rocky Mountains Institute in Snowmass. The institute says that the

only way to reduce energy consumption in a building is to get the architect and all the suppliers

of the different bits of equipment together and lock them in a room and don’t let them out until

you have saved 85 per cent of the energy costs of that building. Dr Newman at the University of

Western Sydney has developed an ethical response cycle about how you make choices between

four different kinds of equally valid decisions. These are the sorts of things we are starting to see

emerging, at least at the high level inside organisations and in the learning system itself. Frankly,

universities are stuck in the past. They are still in the knowledge telling business rather than in

the knowledge creation business helping the learner to create their own knowledge, or the

manager shifting to being a leader. Those are the fundamentals I believe we have in our system.



Ms Whittingham—Ambri is a publicly listed company that was spun out of the molecular

engineering and technology cooperative research centre and that company made exactly that

point. It identified that it really did not need virtuosos or specialists and that it had difficulty

using the workers from the universities in turning those PhD graduates—or knowledge workers

for want of a better description—into people and infusing in them teamwork and leadership

skills. Your point about articulation is an unsung issue. With the little practical solution which

you mentioned earlier, it could serve both systems quite well. There is a need to take those

knowledge workers and knowledge creators who are coming from universities and to infuse in

them project management, leadership, teambuilding and communication skills. Those are skills







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Wednesday, 7 May 2003 Senate—References EWRE 939





across the research studies that have been raised as gaps that are to be found in postgraduates

and undergraduates.



Mr Findlay—Karen left the park recently, but over the last three or four years we ran a

program with careers advisers from schools from across New South Wales. They would come to

the park thinking that their mental approach to what careers advising was all about was about

encouraging people to go into something where you learned a complete unit of skill. They were

surprised to come here and discover that most of the tenants at the park, all these leading edge

industries, were looking for the ability to work in teams, to solve and identify problems and to

think flexibly and creatively. They were really surprised that those were the skills that were

needed right across the board. Even though Mayer identified these skills over 10 years ago as the

core competencies which would be needed in the future, there are a lot of schools out there

which still think that they have to teach how to work in teams separately rather than that is the

way you teach. Working in teams is the process of learning rather than something you learn

separately. That is still not understood.



CHAIR—It is interesting that you make the point about the Mayer competencies because

when I caught up with the buzz words about the need for self-skills, that is what the Mayer

competencies brought about 10 years ago. They have become revitalised. Your point was

interesting and it is also inherent in what has been said so far. I attended a conference in the

United States at MIT in 1994. Someone gave a lecture there that demonstrated that, despite all

the investment in computer technology, productivity growth in the United States was a

continuous line; there had not been a flicker in it. He argued that that had occurred because no-

one had yet learned how to use and manage the technology effectively. What was happening was

that the technology was being adapted to fit all methods of production and ways of doing things.

It would not be until you started to adapt the way of doing things to the application of the

technology that you would get any qualitative leap in productivity. He went back and

demonstrated what happened when we moved from steam to electricity. It took something like

40 years before they started to remodel buildings to make the electricity much more efficient. I

talked to him a couple of years ago and he said that they are now just starting to see some

adaptation of the way in which production is organised and managed to meet the emerging

technologies so that they are starting to get the benefit of the technologies. You are saying that it

has needed a period of time to shift the mindset in terms of how we think about the way in which

we do things. We still see factories in terms of these huge buildings with four doors. In many

areas today, factories are nothing more than a few computers linked together. That is linking or

networking individuals.



Mr Findlay—I concur. I spend a lot of time in America and Europe. One of the reasons why

Australia at the moment has survived several severe economic recessions while the rest of the

world has had severe problems is that we are becoming far more creative than we realise and far

more capable in a lot of areas. In the value added manufacturing sector, and particularly in foods

and things like that, we perform particularly well. I see people participating in workshops in all

those countries and I can say that the Australians are really flexible and able to move quite

rapidly into the new whereas the Germans have the biggest problems. Germany is rapidly

becoming a serious economic basket case. America has the same problem with a high degree of

inflexibility. They have packaged up the old methods into the technology. The problem we have

in schools is that teachers are trying to use the technology for industrial aged teaching processes

rather than in a constructivist, self-managed and self-created learning processes.





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EWRE 940 Senate—References Wednesday, 7 May 2003





Ms Elenius—You wanted some skills to be identified. In our industry there is a need for more

people trained in the skill of setting up and working in clean rooms. In emerging industries, this

is going to be a generic skill that could run across photonics into biotechnology and a whole

range of industries. When we were setting up our clean rooms in the ATP, it was quite difficult to

find people with that kind of expertise. I do not think that that is something that would be of any

interest to the higher education or university sector, but it is perhaps a novel area that the VET

sector could get into.



CHAIR—You raise an interesting issue. I visited a small metal manufacturing company in

Newcastle about 18 months ago that makes decompression chambers for the US navy. The

owner there had a better clean room than some hospitals have—and he is only a small metal

manufacturer. But it was because of the nature of the product he was producing that he was

required to have a clean room. He had it set up and well managed.



Ms Whittingham—It would be fair to say that there is some way to go when we look at skills

in emerging industries. There is a critical need to do some research, but can I suggest that, in

conjunction with any new research on skill needs in new industries—and in order to take up the

issue of getting our voice heard—some research be done on the return on investment to the

Australian economy of investing in emerging industries. I am not aware—and I am reasonably

across the portfolio of research work—of any significant study or defined work in Australia that

has looked at the return of the investment into public sector funding of R&D, that is, the flow

and commercialisation and commercial returns of that to the Australian economy.



Index, which was one of the first spin-off companies of the CRC, was bought out by JDS

Uniphase. There is anecdotal evidence—and it is quite strong anecdotal evidence—that, in its

first year of operation in Australia, JDS Uniphase paid enough tax to cover all the investment

made by the Commonwealth government in the photonics industry to get that industry going—

and that does not include revenue from the other 13 companies and the future revenues derived

from that industry. If there were a piece of work that could be done to bolster the need for

Australia’s investment in and awareness of emerging industries, it would be research on the

return on investment and the commercialisation of Australia’s publicly funded R&D.



That being said, we make choices all the time in this country—and in the vocational education

and training system—about things that cost us a lot of money. It costs us a lot of money to

establish a new industry in Australia through the Cooperative Research Centre program or

through other programs. It also costs us a lot of money to keep doing the same thing. Can I

suggest it might be a wise time to look at some of the choices we make? We are going to spend a

lot of money anyway.



Ms Elenius—Can I also make a plea; this arose through the electronics industry action

agenda. The Bureau of Statistics categorisation and measurement of various industry sectors is

archaic. They cannot do that kind of study until they amend their industry categories which are

way back with the Ark and, I am sure, do not take account of any of the economic activity that

photonics has generated in the last five to 10 years.



CHAIR—I understand that point only too well. I have been arguing vigorously about the way

in which the manufacturing sector has been divided up into the manufacturing services and that a

substantial part of the sector is now counted as part of the services sector when in fact it is still



EMPLOYMENT, WORKPLACE RELATIONS & EDUCATION

Wednesday, 7 May 2003 Senate—References EWRE 941





manufacturing. The organisation has changed but the nature of the work is still the same. You

cannot get that out in the statistics.



Ms Whittingham—There are wonderful researchers who will find you a way around that

problem in this country.



CHAIR—Thank you all very much for coming along this afternoon. Thank you Stephen and

Cheri for organising the venue and thank you, Karen, for helping us with the concepts. I think it

has been worthwhile. It is a pity we did not have more time to talk about it but I think we all

understand the issues you are raising. I will ask Margaret to liaise with you and perhaps you can

help us to develop some of these things further so that we can feed them through the report. It is

obviously an area of substantial importance. I am continuously following up the issue of

investment in new technologies, so any help I can get is more than welcome.



Mr Montgomery—It has been an absolute pleasure to have this committee at the ATP. I have

mentioned to Margaret in our discussions that I am more than happy to sponsor these types of

things in so far as it is suitable to the committee.



CHAIR—Thank you.



Committee adjourned at 5.21 p.m.









EMPLOYMENT, WORKPLACE RELATIONS & EDUCATION