1. CEET 14 th Annual National Conference Issues for the VET sector in the context of the National Workforce Development Strategy 29 October 2010 Robin Shreeve CEO, Skills Australia

3. Skills Australia – activities and initiatives Skilled Occupation List (SOL) March 2009

4. The challenges ahead: how is Australia faring? Productivity? Sustainability? Participation? Social inclusion? How can the Australian VET system best provide the workforce capability required for a productive, sustainable and inclusive future?

5. Process for the development of Australian Workforce Futures Australian Workforce Development Strategy Workforce and education trends Modelling and projections Planning for an uncertain future 3 Scenarios (Shell Group) Analysis historic data Workforce Futures - Overview and background papers Where are we headed? Where do we want to be? How do we get there? Access Economics Consultation with industry, providers, states/territories and peak bodies

6. Possible futures: workforce growth to 2025 Access Economics modelling Projected total employment growth rates 1 Source: 1 Access Economics Pty Ltd for Skills Australia, Economic modelling of skills demand (Oct 2009) Number of people in the Australian workforce in 2025 (based on the three scenarios): Open Doors: 15.3 million Low Trust Globalisation: 13.7 million Flags: 12.5 million ------------------------ Current: 10.7 million

7. Workforce participation levels Australia Comparison of OECD countries: people aged 15+ Source: 1 OECD, Online OECD employment data base statistics for 2008, people aged 15 and over (accessed Feb 2010) Groups to target ► Men of prime working age (25 to 64 years) --- 10 th lowest of OECD countries ► Women (aged 25 to 34 years) --- 10 th lowest of OECD countries ► Older Australians (55 to 64) --- below NZ, Canada and the US

8. Supply and demand Access Economics modelling THE THREE SCENARIOS Open DoorsLow-trust Globalisation Flags By 2015Demand770 000Demand646 000Demand540 000 Supply533 000Supply524 000Supply506 000 BALANCE-237 000BALANCE-122 000BALANCE- 34 000 By 2025Demand828 000Demand645 000Demand500 000 Supply659 000Supply620 000Supply556 000 BALANCE-169 000BALANCE-25 000BALANCE+56 000 The projected supply of students less the projected labour market demand 1 Skilled migration plays a significant role in supplementing the supply of qualifications, and if domestic supply remains at current levels, these deficits may be made up through Australia’s skilled migrant intake. Source: 1 Access Economics Pty Ltd for Skills Australia, Economic modelling of skills demand (Oct 2009)

9. Modelling findings 2025 A shortfall in the supply of qualifications – most pronounced up to 2015, reducing by 2025. Demand is greatest at diploma and above levels under each scenario with strongest demand for graduates at bachelor level. Skilled migration will contribute to the supply of qualifications.

10. Key findings and recommendations ► Forecasting for all occupations is both impossible and impractical. Our focus should be on ‘specialised occupations’ which we can and should plan for. The 80/20 rule applies. ► The current capacity of our tertiary education system will need to increase by 3% p.a, to deliver the qualifications and skills Australia needs. ► Workforce participation needs to rise from 65% to 69% to provide the workers and skills we need plus improve social inclusion. ► Numeracy and literacy are a major barrier to increased participation and a national plan with targets and funding is needed. ► Enterprises need to make better use of the skills of their employees. While some employers are concerned about future skills shortages, at the same time 30% of workers say their skills are not being effectively utilised.

11. It’s not just skills: it’s how well they’re used People (numbers in ‘000 and %) with a non-school qualification employed at a lower level 1 In 2005 and 2007, 37 per cent and 40 per cent of employers respectively reported that the current skill level of their staff was above what was required in terms of organisational needs. 1 Source: 1 Skills Australia, Workforce Futures Background Paper Two (Oct 2009)

12. The challenges ahead... ► Australian productivity has been negligible ► Have had recent periods of negative growth ► Innovation levels are lagging ► Challenge is to keep abreast of rapid changes in the labour market, new occupations and ways of working ► Requires new ways of working flexibly with learners – especially those from disadvantaged backgrounds and on the margins of the workforce ► LLN training, mentoring, case management and partnering with other service providers (especially adult and community education sector) will be an increasing focus if participation is to grow ► What type of VET products are best for the future? Are training packages flexible enough? Or do we need looser concept of skills?

13. An opportunity to be grasped Skills Australia’s targets for increased tertiary enrolments – 3% per annum for next 15 years Skills Australia’s targets for increased workforce participation – 65% to 69% COAG growth targets – halve number of people without certificate 3; double number of people with a Diploma or above Issues will move from the supply to the demand side

14. Is VET up to the challenge? A lot to be proud of: Australia has a very well developed VET system, which enjoys a high degree of confidence…..

15. Positives and achievements of the system National System Industry led, competency based Strong recognition of Institute and TAFE brands Strong performance amongst disadvantaged groups Strong connections to industry and engagement with employers Formation of large public providers the size of universities Wider choice of provider – but TAFE still dominant

16. Negatives for system Flat lining enrolments Declining funding contributions from many states and territories Declining $/AHC ratios Poor completion rates - apprenticeships Quality of system called into question by improper activities of some providers with international students Lack of transparency about outcomes Ageing and often casualised workforce

18. NCVER Projections of State and Territory Completion Rates Course completion (all) Course Completion (FT Under 25 – no previous VET qual) Module (all)Module (FT under 25- no previous VET qualification) NSW40.74979.378 Vic22.430.677.576.4 Qld19.627.781.477.3 SA27.739.287.484.5 WA24.436.874.777.7 Tas19.533.179.980.3 NT1117.972.877.6 ACT4158.980.479.4 Australia27.134.779.177.5

20. YearWhole course success rate Retention rate Achievement rate 2006/0775.385.687.9 2007/0878.887.889.8 2008/0979.288.389.6 Qualification Success, Retention and Achievement rates in English FE Colleges

21. Governments find Apprenticeship attractive –but do employers, employees and students?

22. Inconsistency Focus on quality of workplace learning overdue Unclear responsibility for support: AACs; S/Ts; providers; employers? Re-engineering apprenticeships for lifelong learning Fragmented leadership Regulatory culture Completions low- are they an attractive option? Complexity A more attractive option for employers and learners?

23. Source : NCVER (2010) Apprenticeships and trainees 2009 annual, supporting data, state and territory tables Apprenticeships – an attractive learning pathway?

24. Measuring outcomes, rather than inputs 0 10000 20000 30000 40000 50000 60000 70000 80000 90000 2002- 2003 2003- 2004 2004- 2005 2005- 2006 2006- 2007 2007- 2008 2008- 2009 Commenced Completed Possible reasons for non-completion? 3 Changed jobsLost job Low wagesNot liking the type of work Problems with the workplace or the employer Trade apprentice commencements and completions 1 Sources: 1 NCVER Apprentices collection, unpublished data 2 Ball, K & John, D (2005), Apprentice and Trainee completion rates; NCVER (2009) Apprentices and Trainees Annual 2009. There is a break in series between the 1999 cohort and the 2003 cohort, so figures are not directly comparable 3 Snell, D & Hart, A, (200*) ‘Reasons for Non-completion and Dissatisfaction Among Apprentices and Trainees: A Regional Case Study’ and NCVER Apprenticeship completion rates however are falling (as a proportion) 2 For those who commenced in: 1995: 54% completed 1999: 48% completed 2003: 44.2% competed

25. Revitalising the apprenticeship model Skills Australia proposes the following areas as essential reforms for revitalisation of the apprenticeship system and making it an attractive option for a vocational outcome ► Quality and flexibility ► Shifting from a regulatory to a learner-centred culture ► Overcoming fragmented leadership ► Competency-based progression

26. Source: Proposed apprenticeship structure, BCP Consulting A new qualification pathway for apprenticeships?

27. Government funding for TAFE has flat-lined Public VET funding relative to other sectors 1 Source: 1 Peter Noonan Consulting (March 2010), Investment in VET (Report to the Board of Skills Australia), unpublished Skills Australia has raised concerns about Government funding for VET in recent years… compared to funding for schools and higher education.

28. VET operating revenue - by stream Source: Peter Noonan Consulting (March 2010), Investment in VET (Report to the Board of Skills Australia), unpublished

29. Trends in funding and resource allocation Entitlement models – funding follows the individual student (Victoria and SA) Entitlement model “last nail in the coffin of an industry led system” – John Hart, Restaurant and Catering Association “Firstness” – public subsidy to first qualification only at a particular level Enterprise responsive stream – like Enterprise Based PPP “Dead weight” – enterprises using public funding to support training they would have done anyway

31. Who should pay for growth- what’s a fair balance? ► Governments ► Overall contribution growing ► Shifts in respective shares ► Individuals ► Whom/what should be subsidised? ► Scope for increased contribution? ► Enterprises ► Scope to leverage increased contribution? ► Fees for service growing ► Risky dependence on international education revenue?

32. Quality Inadequate regulation – bureaucratic but ineffective. (Overseas students). Lots of audits. Being addressed through new National VET Regulator Lack of transparency about outcomes (collected but not made public) Inadequate external moderation or validation of assessments

33. New remit.... Assisting with better utilisation of skills Innovation in industry Sustaining the green agenda

34. VET in a new Tertiary Sector More “Duals” Uncouple institutions from sectors Polytechnics Degrees in TAFE Distraction from core business of Foundation, Trade and Technician Training Accentuate division between Institution and Workplace Learning

35. Lifting VET’s reputation providers leading from the front ► Quality and delivery of outcomes – from ‘compliance focus’ to excellence ► Using data and intelligence ► Key performance indicators that focus on outcomes and outputs (completions and student destinations) rather than volume and activity (ASCH and enrolments) ► Transparency (and accountability) ► Linkages between sectors ► Investment levels and market design ► Governance arrangements

36. Creating a future direction for VET: three pillars

37. Opportunities for Higher proportion of workplace and work-based delivery Better support for innovation in enterprises Better support for more effective skills utilisation

38. CEET 14 th Annual National Conference Thank you Robin Shreeve CEO, Skills Australia