Hunter Valley Training Company

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This is a submission by the Hunter Valley Training Company (HVTC) to the State
Development Committee Inquiry into Rural and Regional Skills Shortages. HVTC is well
qualified to provide comment, as it is currently the largest employer of apprentices in
NSW with 1250 employees providing labour to 800 companies.

The submission provides comment on those areas where we have expertise.

Key Issue 1: The Forecast supply and demand for skills in NSW over the next 20

•   Skills shortages in NSW are not industry or trade specific and affect all trades,
    however the extent of shortages is not consistent across all industries. Shortages are
    regionally based, and are often linked to the industries historically associated with the
    region. For example, the Hunter and Wollongong regions are experiencing similar
    shortages in the Engineering trades, whilst the North Coast of NSW is experiencing
    shortages in the construction industries, and those industries that have grown to
    support the aging demographic migrating to the region.
•   HVTC believes these shortages cannot be resolved through the normal operations of
    the labour market. Recently Hunter-V-Tec (our Newcastle Division) received over
    1000 applications for 120 apprenticeship positions. Many of these people however,
    some of whom already have skills, are looking for work but are unable to gain
    apprenticeships, despite skills shortages. The reason is that industry is not employing
    apprentices – despite the availability of labour.
•   HVTC expects that trade related skills will be in high demand over the next 20 years,
    due to the retirement of the “baby boomer” generation, many of whom are cross
    trained and multi skilled in many facets of trade and are currently completing the
    work of two or three ab initio apprentices. Of note is that many of these tradesmen
    will not work past 60, due to their current high disposable income which will remove
    the necessity to work beyond that age.
•   In regional and rural areas, there is a lack of access to training centres for those who
    have gained apprenticeships. For example HVTC apprentices in some trades in Port
    Macquarie and other regional areas are often required to travel to the Hunter to
    complete their off the job training. This is a strong disincentive to the commencement
    of an apprenticeship in regional areas.
•   TAFE will not accept students into a trade course who do not have an employment
    contract. It is possible that a model, similar to that of the University structure, where
    people can learn a trade, or complete the off the job component of an apprenticeship

    without employment, may assist in providing effective and equitable training
    opportunities across the state.
•   Increased monetary incentives or decreased fees associated with hiring an apprentice
    for regional and rural employers may increase the take up of apprentices in these
    areas, as the costs of hiring an apprentice can often be substantial within the first two
    years. The seasonal dependence of rural NSW is the primary issue affecting the
    uptake of apprenticeships, and substantial data on this shows that no rural area in
    NSW lasts 4 years without a major climatic event. This seasonality is an inhibitor to
    the employment of an apprentice to whom they are committed for four years.
•   In trades and trade related industries, labour mobility is decreased due to the age of
    apprentices – 16 and 17 year olds do not have licences. Consequently workers stay
    within or close to the industry in which they are employed. HVTC actively manages
    our apprentices through the four years of their apprenticeship to encourage continuity
    of employment, and in 2005 experienced less than 1% loss in apprentices. The
    completion rates for Group Training companies are higher than other employment
    relationships. This is due to the extensive recruitment and selection and pastoral care
    the company engages in to ensure a match between the host employer and apprentice.

Key Issue 2: Demand for VET if participation rates were to be increased

•   Currently, HVTC employs 1250 apprentices and trainees. Despite advertising as an
    Equal Opportunity Employer and undertaking other strategies to attract female
    apprentices, a very small proportion of applicants for traditional trades are female.
    HVTC expects that increases in training provision will be required for trades based
    training as current skills shortages lie in these areas.
•   HVTC generally experiences little interest by mature workers in either becoming an
    apprentice or retraining through our RTO’s. Training wages, where applicable, are
    often insufficient to support an adult worker and their family. This is exacerbated by
    the lack of adult apprentice pay provisions in many awards. Additionally, these
    people are not paid whilst under training.

Key Issue 3: Managing the cost of VET and increasing its effectiveness

•   The basic skills required for trades during the next 20 years will remain essentially
    the same, despite the changing nature of work. Group Training arrangements provide
    a process of monitoring the apprentice throughout their apprenticeship and discussing
    and resolving and conflict or issues that may arise. This template helps with human
    interrelations where the structure of the training or work may not promote this.
•   HVTC believes that further work is required to present New Apprenticeships as an
    attractive option for both young people and employers. The NSW State Government
    Outcome Based Funding is assisting in targeting those areas where skills shortages
    exist, however this is not paralleled in DEST funding. Increased funding and
    incentives to provide training and to employ New Apprentices in NSW regional and
    rural areas may assist employers.
•   It is the opinion of HVTC that Training Packages are generally up to date in reflecting
    the current needs of industry, providing a mixture of generic skills development and

    tailored training to the particular workplace. HVTC RTO trainers are also field
    officers who are better able to monitor and assess the competencies of students than
    through the use of log books.
•   HVTC finds that the current feedback being provided by TAFE regarding apprentice
    results is unsatisfactory. There is very often a substantial delay between the
    completion of competency units and the receipt of results. The provision of more
    frequent feedback to employers can assist in assessing the skills and knowledge being
    gained by students. It will also allow employers to make more timely decisions on the
    careers of their apprentices.
•   HVTC RTO’S have experienced high completion rates on their courses. This is in
    part due to the selection of a higher quality applicant due to aptitude testing and
    interviews occurring before acceptance on courses.
•   Completion rates differ for Indigenous students according to the competencies
    offered. In courses conducted by our Company, Building and Construction and
    Horticulture have much higher completion rates than courses delivered in other
    traditional trades.
•   HVTC recommends changes to the funding arrangements for RTO courses. Currently
    the provision of 100% of course funding is dependent upon students completing the
    time component of the course. Often a successful result is not the completion of the
    course but the provision of an employment outcome. RTO overheads do not change
    once the course has started, and it is a disincentive for an RTO to release students as
    the training becomes uneconomical if they do not complete the course. In practice
    however many students leave our courses as they are offered employment and this
    results in a financial loss being incurred.
•   Problems can occur regarding the completion of pre vocational courses. Many of
    these do not commence until after school is completed in November of each year, and
    if the delivery is to a Certificate 1 level will not complete until March the following
    year. This does not align with TAFE commencement dates (February) and results in
    high participant drop out rates. Again, the result is a loss of funding for the RTO.

Key Issue 4: Factors affecting the take-up of VET

•   HVTC believes that the introduction of a competency based pay system may
    encourage interest in and take-up of VET, as there is potential for high achievers to
    move through their training and hence pay levels quicker. Whilst this will place more
    pressure on RTOs it could substantially decrease the length of apprenticeships.
•   Trade related industries experience little casualisation of the workforce, as currently
    there are no provisions for part time apprenticeships in NSW. This does not offer any
    flexibility to potential apprentices who require it.
•   The provision of apprentice rotation programs by Group Training companies enables
    apprentices to achieve more meaningful employment outcomes – resulting in higher
    job satisfaction levels and an increased takeup of VET.
•   There are many issues preventing young people from undertaking education and
    training - specifically high fees and a lack of income whilst undergoing training.
    However, when training courses are linked to positive employment outcomes through
    prior discussion and involvement of industry, HVTC has found an overwhelming

    response to training programs being offered by our RTO’S. All training courses
    advertised by our Company are oversubscribed with applicants due to the delivery of
    a job at the end of the training.
•   There is insufficient flexibility in the current delivery of public VET and it does not
    meet the needs of employers. Particular issues are:
             o zero flexibility in course starting dates – TAFE generally only offers a
                February      course     commencement        date,   whereas   apprentices
                commencements are required at any point of the year. Consequently,
                industry is forced to either comply with TAFE or seek private providers (if
                User Choice is an option).
             o TAFE does not complete on the job competency monitoring. This would
                allow industry to provide more on the job delivery, however TAFE is
                opposed to providing anything other than institution based delivery of
             o There is limited dialogue between TAFE and industry to tailor training
                modules to suit employers needs. Private RTOs are successful at this and
                are a model for TAFE.
•   In its current form, User Choice has not increased the flexibility of the VET system.
    While it has given a limited number of additional options for employers, the tight
    restrictions on who, where and what can be provided has not greatly affected the
    overall lack of flexibility in the VET system.

Key Issue 5: Capacity of training system to provide training required over the next
20 years.

•   HVTC believes that the current system has the capacity to be flexible in the approach
    to training – our training packages are designed to do this - however they are not
    being flexibly implemented in the public VET system.
•   HVTC RTO’S offer a number of flexible options for training o meet industry’s needs,
            o accelerated trade training,
            o rolling course commencements,
            o on-the job monitoring and assessment,
            o pre-assessment of the customer’s business in order to best tailor a training
                package to their on the job requirements, and
            o the provision of timely student results complete with up to date progress
                reports of the student.
•   Private RTO’S operate under the same standards and requirements as public RTO’s.
    Industry is saying to the Hunter Valley Training Company, however, that TAFE is not
    meeting their demands. As industry becomes more competitive, it requires training
    delivery that is specifically tailored to its needs, and the proliferation of private RTOs
    indicates that they are leading the uptake of this.

Peter Shinnick
General Manager
Hunter Valley Training Company

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