Thank you for the invitation to give the opening address at the conference today.

The Labour-Alliance government has made industry training a very high priority. My attendance here today signals the importance which we give to it.

We see industry training playing a critical role in transforming our economy. Our vision for the economy sees us working our way back to a ranking among the top half of developed nations.

Prosperous economies in the 21st century will be those which are driven by knowledge, skill, technology, innovation, productivity, and entrepreneurship. New Zealand won't prosper on low levels of achievement. We need more educated and skilled New Zealanders for our country to ride the knowledge wave.

Our government has taken many steps in many policy areas to lay the basis for an upmarket and inclusive economy which delivers higher living standards. Those policies stretch across education, social policy generally, science and research, and business growth and economic development initiatives, including support for venture capital. Our industry training initiatives are part of this broader programme.

Without a larger skilled workforce, this country will not reach its full potential. Right now, skills shortages are impeding our country's ability to grow. That's why industry training is so critical.

Industry Training - a progress report

Last month Steve Maharey released the Skill New Zealand report, Industry Training 2000. It reports impressive results, and I thank all who have contributed to that success.

The report shows that more New Zealanders than ever before are involved in systematic industry training linked to nationally recognised qualifications. The workplace is becoming very important as a place of learning.

During the year 2000, more than 81,000 people participated in training purchased through the Industry Training Fund.

Trainee numbers increased by eleven per cent over the previous year. And industry training is now occurring in a much wider range of occupations, skills, and industries than before.

Maori and Pacific peoples accounted for nearly a quarter of those participating. It is a pleasure to see their participation rates nearly double in five years.

Participation by women has increased too, although it remains short of being at satisfactory levels. In 1996, only thirteen per cent of all trainees were women. That increased to twenty two percent in 2000.

I come today to report on the progress we have made to date and to foreshadow announcements yet to come. Steve Maharey, our minister in this area, has been exceptionally busy over the past nineteen months. He has new funding, and new programmes, to his credit, and more initiatives to come arising out of reviews into both industry training and the broader tertiary education and skills sector.

More than one and a half million National Qualifications Framework credits and over 6,000 National Certificates were achieved last year. Over half those who achieved these results had no, or few, previous formal qualifications.

For many, these results were their first experience of educational success, and we believe they are a powerful motivation to keep learning.

Getting these results and the increased level or participation would not be possible without the strong commitment of industry.

More than 22,000 employers from many industries were involved in industry training in 2000. Together, industry and government form a funding partnership. Last year industry contributed $27 million of the cash cost of industry training, or around one third of the total cost. Government invested $65 million through the Industry Training Fund.

The result is the emergence of a robust and dynamic training culture, which is underpinned by a clear strategy to upskill the workforce and which spans most areas of the economy.

Placing Skills Training In Its Broader Context

The government last year commissioned a far reaching review of tertiary education and training. The Tertiary Education Advisory Commission, appointed to carry out the task, developed a broad definition of tertiary education. It includes learning at all levels within public tertiary institutions, programmes provided by private and government training establishments, business-based education, industry training, and all life-long learning beyond the compulsory school system.

The government has accepted that broad definition and its implication for the government's advisory and funding organisations.

In May we announced that we would adopt the recommendation of the Tertiary Education Advisory Commission to establish a new body, the Tertiary Education Commission (TEC), to oversee the whole education and training sector.

The Industry Training Federation has welcomed the establishment of the TEC and the integration of the industry training strategy within the broader tertiary system. Your support of these changes is appreciated.

We are now moving to implement the decisions.

A Transition TEC is being established to set up the necessary structures and systems for the Commission to be ready to operate as soon as its legislation is passed early in 2002.

An announcement on the Chair and Deputy Chair of the Transition TEC will be made soon.

We agree with the Industry Training Federation that it is important in establishing the TEC to ensure that the expertise, networks, and institutional knowledge of Skill New Zealand is not lost. Skill New Zealand's clear focus on outcomes and its responsiveness to local skill needs must carry over to the new system.

Next week Steve Maharey will be releasing TEAC's third report. It makes a major contribution to the development of a Tertiary Education Strategy for New Zealand. Following its release there will be public consultation on the further development of that strategy. We believe New Zealand needs a more strategic approach to tertiary education if we are to achieve our vision of a more prosperous society.

Strategies for the knowledge society must include lifting the skills of those who, for one reason or another, have not succeeded in the traditional education system.

We need to build stronger bridges and effective pathways into tertiary education, and that means addressing basic skill and literacy levels. In May the government released a major adult literacy strategy and budgeted $18 million extra over four years for literacy programmes and developing the capability of the sector.

Included in those plans is the establishment of a $500,000 Workplace Literacy Fund, for workplaces offering training with a substantial workplace literacy component. The Fund has been allocated across a range of ITOs, employers, industries, and geographical areas. We thank all concerned for their positive support for these initiatives.

The Industry Training Review

In March this year, I released the discussion document, "Skills for a Knowledge Economy", for public consultation. Following full consideration of the submissions, the government has made its decisions on the outcome. Steve Maharey will announce them next week.

Our aim for the review was not to start from first principles, but to look at how the industry training system was actually operating. We looked at what was working well, and the lessons which could be learned from that, and we identified where there were problems in the system and how to resolve them.

The way forward is evolutionary. We do believe that the changes to be announced will help increase the volume of training occurring in New Zealand and extend training to individuals and industries which currently do not engage in it.

Today I am announcing on behalf of Steve the first decision arising out of the Industry Training Review.

In Skills for a Knowledge Economy we raised the possibility of a relaxation on the current restriction on funding, through the Industry Training Fund, above level 4 on the National Qualifications Framework.

We said then, that in determining its priorities for training expenditure, the government needs to balance the needs of those with low skill levels, or those who have difficulty accessing training at all, with the need of industry to develop more advanced skills.

We noted that government assistance for more advanced industry training would allow assistance for higher level managerial and technical training and provide workers with better learning pathways.

We observed that the restriction on funding has inhibited the development of pathways to upper level qualifications.

But we noted that removing the restriction, given the present capped funding arrangements, would risk relatively less funding being available for lower level training, where, it can be argued, the need for government assistance is greater.

The issue is one of balance.

The discussion paper asked whether government funding should be available for training above level 4, and about the balance to be achieved for government contributions for training above and below that level.

Of the forty one responses to this question, thirty one wanted the restriction removed, and a further five gave qualified support to its removal. You can do the arithmetic yourselves - that leaves five which opposed any lifting of the current restriction.

A variety of arguments were presented in favour of lifting the current restriction.

The Industry Training Federation, in its submission, argued that lifting the level 4 cap would constitute the next logical step in the progression of the industry training strategy and that increased levels of training above level 4 are necessary for achieving international competitiveness. The view of the Federation, along with a number of others, was that the level 4 cap currently acts as a barrier to optimal skill investment.

In addition, many submissions noted that the efficiency and the effectiveness of industry training meant that encouraging participation at higher levels of the framework was a relatively good educational investment.

Despite general support for the removal of the restriction, some concern was expressed that such a move should not divert training funding away from the low-skilled to the more highly-skilled.

The Council of Trade Unions acknowledged the logic of removing the restriction, but on the question of balance, opposed any suggestion that "funding for above level 4 should be at the cost of funding up to level 4".

The Board of Skill New Zealand, in their submission, also supported the logic of removing the restriction, but urged caution in light of the difficulties of estimating the demand for training at the higher levels. Their submission recommended that, in the event the government decided to relax the restriction, that relaxation should limit the amount of training volume at higher levels to no more than ten per cent of each ITO's total volume of training in any one year.

What we have decided to do is to test the impact of opening up funding at higher levels on the framework by removing the restriction for a trial period from 1 January 2001. I understand that ITOs were to be advised this week of the change in policy and I am delighted to be able to announce the change officially at this conference.

Each ITO will be restricted to spending no more than ten per cent of its industry training fund allocation on training above level 4.

Skill New Zealand will review this ten per cent cap in cases where the ITO reaches the maximum and will have the discretion to extend additional subsidies within an overall limit of no more than ten per cent of the total fund being allocated to training above level 4.

Let me emphasise that this is a trial, and it will be monitored very closely.

There were a number of Cabinet decisions on this issue which I am sharing with you both in the interests of openness and to give a clear sense of the importance that we placed on the balance that I spoke of earlier:

The Cabinet

- noted that, while relaxing the level 4 funding restriction may risk training resources being diverted from the low-skilled to the higher-skilled, allowing some extension beyond level 4 is important for advancing the new goals for the industry training system

- directed officials from the Ministry of Education and the Department of Labour, in consultation with Skill New Zealand, to report back to government by April 2003 on the impact of the trial removal of the restriction above level 4 of the National Qualifications Framework, and, in particular, on the risks to the polytechnic sector and the risks of under-investment in education and training at lower levels of the framework.

Clearly the impact of this change will be assessed before there are any decisions on making the change a permanent one, and/or further lifting the existing restriction.

Funding

The government is deeply committed to industry training and to vocational education and training in general. This year's budget made that clear.

The Industry Training Fund has been increased by $8 million in 2001/2002 and by $16 million for 2002/2003 and thereafter. Of the $8 million extra this year, up to $1 million will be used for the development costs for a new technology project, which will increase employees' access to industry training through the use of new technologies, such as computer-based learning.

I want now to report on two new initiatives taken by the Labour Alliance government with which ITOs have involvement. Modern Apprenticeships and the Gateway Programme.

Modern Apprenticeships

In March last year, I launched the Modern Apprenticeships initiative.

It was a direct response to the barriers to access to industry training faced by young people aged 16 to 21.

1214 Modern Apprentices are now in training. Around twenty per cent are Maori. Apprenticeship training has long been valued by Maoridom, with many recalling the Maori trade training systems began after the Second World War.

Another major expansion of the Modern Apprenticeships Programme began at the start of this month.

Bright lime green newspaper advertisements and billboards are making themselves obvious throughout the country.

Skill New Zealand's National Office says that the 0800 number has been put to good use with many calls coming from parents seeking careers for their children and from prospective employers.

The Modern Apprenticeships initiative has boosted the profile of industry training hugely and attracted new interest in technical and trade careers.

Modern Apprentices are now working in twenty four industries, particularly in those facing skill shortages.

I have met young people in the programme who are incredibly positive about the opportunity it offers them for good jobs.

I thank the many ITOs which are involved with Modern Apprenticeships, whether as co-ordinators themselves or in supporting the work of others who are carrying out the co-ordinator role.

I especially commend the important contribution of the Industry Training Federation to the development of the policy, to the implementation process, and through involvement in the Modern Apprenticeship Reference Group.

I understand that Steve Maharey has just received a first draft of a Modern Apprenticeship Code of Practice, which the Reference Group discussed at each stage of its development.

Pathways into Industry Training: Gateway

The Gateway Programme is about building links between school and businesses by enabling schools to offer their students workplace learning opportunities.

It develops students' vocational skills while they are still at school, giving them first hand experience of what the workplace is like and the opportunity to begin training for the qualifications needed in today's job market.

There are now twenty four decile 1 - 5 schools delivering Gateway pilots in conjunction with Skill New Zealand.

Many have a high proportion of Maori and Pacific students.

Students are getting a head-start on their chosen careers, which may well lead to further training opportunities through Modern Apprenticeships and other training for them.

For example, two college graduates from the Bay of Islands successfully made the transition from Gateway into Modern Apprenticeships recently. The two completed a forestry course while at school under Gateway and are now new Modern Apprentices in the industry.

Conclusion

Our government takes enormous pride in the work we have begun to boost industry training.

We came into government with a set of manifesto commitments, and we came into government committed to the principles and the practice of partnership.

I trust that in terms of our relationship with the ITO sector, we have demonstrated both. And we thank all in the industry training sector for your commitment to upskilling the workforce and modernising our economy.

This year is a very important year for tertiary education and training policy and initiatives. So was last year, and so will be the coming years.

None of us will rest until we see the skills base for an advanced economy in place. What is more, the pace of technological change will require that base to be continually upskilled and renewed.

I hope that through our initiatives and with your support, many more young New Zealanders and adult New Zealanders seeking new opportunities will find through industry training the pathway to good jobs and careers.

I wish you all a successful conference.

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