Industry Training – Government and Business in Partnership

Speech to the Forest Industries Training Inaugural Celebration of Training Champions Awards

Sheraton Hotel, Rotorua. 25 May 2000.

Introduction

I'm delighted to be here today at this prize-giving and awards function. It is an opportunity to recognise excellence in achievement.

It is an opportunity for me to publicly acknowledge the commitment of the forestry industry to industry training and to the concept of continuous skills acquisition.

And it is an opportunity to commend this industry for supporting one of the country's high performing Industry Training Organisations.

Forest Industries Training is a leading Industry Training Organisation, and I would like to express my personal thanks to John Blakey and his staff, not just for the work that they do on behalf of those gathered here this evening, but also for the leadership role that they take within the broader ITO and industry training community.

This evening's function is about celebrating your achievements as an industry and the personal achievements of the recipients of awards.

It is also about recognising that while the achievements are very much important personal milestones, they also reflect the support and assistance that the recipients undoubtedly have received from their employers, their families and their friends. I know that they will take considerable pride in the achievement of those whom we recognise today. Their individual achievements should be a matter of pride for you all.

I want to see other industries recognising achievement, and high achievement in particular.

The award recipients have proven their individual capability, and what I want to do is to encourage industry as a whole to work to improve the human capability of the present workforce as a whole, and society as a whole to own the responsibility for growing the capability of the workforce of the future.

Capability is about improving capacity, providing opportunities, and matching the two. And in a personal sense that is what we see here today – capability that has resulted from a matching of capacity and opportunity. Indeed that is what industry training and ITOs are really all about. And at the level of the national economy, growing our human capability will be an important element in growing the size of the New Zealand economy.

Sensationalist pessimism

Let me make some comments about the economy, and in particular the prospects over the near term.

Even some of the more considered and rational business commentary in the past week or so has painted a picture of an economy at risk. The dollar has been down in recent days, but as the Prime Minister said on Monday at her post Cabinet Press Conference, a longer-term view of the dollar is required, not just day to day or week to week.

For my part I am very firmly of the view that some of the Government's political opponents have been keen to talk the economy down – suggesting that if the wheels on the economic car hadn't fallen off completely, then they were dangerously loose. I have no difficulty at all with business expressing its considered concerns about any aspect of Government policy – be that on employment relations, or ACC or the pace of tariff reform.

But I take the strongest exception when, in attempting to exercise leverage on these issues, some in business and in the business press decide to talk the economy down and suggest that the fall in the value of the dollar is a reflection of the Government's intentions in the area of labour relations and ACC reform.

What's the real story?

The Reserve Bank released its Monetary Policy Statement last week. The MPS projections have:

 Economic growth totalling 15 percent over the next four years – estimated at 4.3 percent for the current year, and 4.6 per cent next year

 Business investment projected to increase by 25 percent over the next three years – projected to increase by 6.6 percent this year, and 13.1 percent in 2001

 Exports projected to increase by 19 percent over the next three years

 Labour productivity to increase by 2.3 percent this year, and to go on increasing over the next 4 years (and it is interesting to note that labour productivity stood still in 1999)

 The Reserve Bank is projecting an increase in employment, a reduction in unemployment (with the official rate going below 6 percent over the next three years), and stable prices (annual inflation staying below 2 percent).

These are not the Government's projections, they are the projections of an independent central bank, and I might add, a Bank that if it has a tendency to err, will err on the side of caution in advancing its projections.

I am not saying that we should accept those projections as setting the limits on the possible. I would like to think that we can do better employment growth, and better on reducing unemployment.

But the key point that I am making is this:

The outlook for the economy is a strong one, and the Labour-Alliance Government is committed to doing all that it can to see that the kinds of projections I have just summarised are realised through robust and sustainable economic growth over the near term.

I want to see your industry positioned to realise its potential – and as you all know, that potential is immense.

The Forestry Industry – a commitment to industry training

In an average year the industry generates some $2.3 billion in export earnings.

The industry directly employs some 23,000 people, and indirect employment levels are estimated to be up to 5.8 times this figure.

The industry is adept at adding value to its primary produce – about two-thirds of all pine logs harvested in New Zealand are further processed in this country.

I know that the industry has set itself some challenging growth targets – I understand that one target would have the New Zealand industry growing to the point where it rivals Sweden's forestry industry in size by 2025.

I want to emphasise to you tonight that the Labour-Alliance Government is committed to a partnership with this industry to realise that potential.

Let me outline what I hope that I can contribute to that partnership as the Minister responsible for industry training.

I want to work with you to build on what you have already achieved:

 You have had an ITO in this industry since December 1993 when the Forestry Industry Training and Education Council of New Zealand (FITEC) gained formal recognition under the terms of the Industry Training Act. The ITO was re-recognised in December 1998.

 Your ITO works with some 1400 employers, and offers a variety of programmes, including National Certificates in the areas of Forestry, Forest Health Protection, Wood Panels Manufacturing, Solid Wood Processing, Pulp and Paper and Biosecurity at levels 2 to 5 on the National Qualifications Framework.

 I understand that the ITO has re-packaged the industry's qualifications structure to fit with industry needs. This repackaging has split the large National Certificate in Forestry into a series of smaller ones, in order to make trainee achievement of qualifications more realistic.

 I am also delighted to note that, since 1999, there has been responsiveness shown to trainees who enter the sector with low previous qualifications. In 2000, training at level 2, as a part of this more responsive qualifications structure, will allow these trainees to “get up to speed” for more advanced training.

 Training Numbers have grown markedly since Forestry Industries Training's inception as an ITO in late 1993. Since 1998 over 7000 trainees have participated each year in Industry Training in Forestry; this year there are over 8000 in Forestry industry training.

Today the industry offers a variety of programmes and I am delighted that training has been widened and deepened within the industry. I am particularly delighted that the recipients of the awards today represent not just different branches of the industry, but different levels of achievement on the National Qualifications Framework.

Extent of Government Funding

To date, the Government has funded FITEC/Forest Industries Training to the tune of $19.5 million. The vast majority of this has been through the mechanism of the Industry Training Fund.

The rise in funding year by year reflects the rise in trainee numbers achieved by Forest Industries Training.

Approximately half the cost of industry training in the forestry sector is funded by Government, and approximately half by industry. In dollar terms this is a very equal partnership between Government and the industry.

But even with this level of investment by industry and Government, and even with more people in training in this industry than at any time in the past, we are facing growing skill shortages.

Skill shortages

I understand that this has meant that some forests have had to be locked up until enough skilled workers are available to maintain them.

There is a severe shortage of skilled silviculture workers on the East Coast, for instance, and there may be shortages of similar seriousness elsewhere in New Zealand.

There is also a shortage of technical skills in processing, such as in the sawmill and wood products manufacture sector. Qualified Saw Doctors are difficult to recruit, for example.

This problem is also being exacerbated by an increase in the amount of available forest coming into harvest every ten years. Clearly the numbers of skilled workers are not increasing enough to accommodate this. While the industry is, as we know, pioneering technological advances – and as such, has as much right to be considered part of the new economy as information technology – work in the industry, particularly in isolated locations or difficult terrain remains “people-intensive”.

I sense that the answer will not be a straightforward one. These days people talk about finding joined-up solutions to what are joined-up problems. This is a joined-up problem.

But there has to be an answer. And the answer will not reside in Government commissioning some kind of talk-fest – the time has come for action, and I would value your suggestions on how Government and the industry might in partnership address the issue of skill shortages in the industry.

I want to know where the roadblocks are:

 Do we have problems with providers?

 Do we need to do more to focus providers on the training needs of the industry?

 What can Government Department's and agencies like the Department of Work and Income and Skill New Zealand do? What should they be doing more of?

One part of the solution will rest in developing industry training that better meets the needs of industry and the community.

I have been very much encouraged by the strong interest all sectors of the forestry industry have shown in Modern Apprenticeships; I know that many believe it will considerably ease the skill shortage. I sense that it will be one part of the answer.

Modern Apprenticeships

I want to increase the opportunities - for young people in particular - to undertake the kind of training and achieve the quality of performance that we are celebrating here today. That is one of the reasons why the Government is introducing a Modern Apprenticeship Scheme.

Due to significant labour market challenges in the last decade, employers have tended to train older, experienced people as apprentices rather than take the risk of employing and training a young person straight from school.

The need of New Zealand as a whole to have young people accessing high quality, work-based education was therefore not being fully met by employers.

The Modern Apprenticeships policy seeks to address this by reducing the costs and risks to employers of employing and training a young person (aged 16-21).

New Apprenticeship Coordinators, contracted by Skill New Zealand, will reduce the costs and risks to employers by:

 Screening potential apprentices;
 Arranging their employment placement(s);
 Managing their training;
 Providing a mentor to support the apprentice; and
 Ensuring that the training is high quality and that it is completed.

Coordinators could be ITOs, community trusts, iwi organisations, or education providers. This provides an opportunity to support community and regional development initiatives.

I want to emphasise to this audience that Modern apprenticeships will complement, rather than replace, existing industry training and other tertiary education pathways.

Modern Apprenticeships will incorporate many features of traditional apprenticeships - for example they will involve systematic employment-based learning with mentoring support. However, they will be in new high technology areas as well as in the traditional trades.

Apprentices will complete industry-recognised, national qualifications at levels 3 and 4. The apprentice’s individual training plan will include a range of generic skills that are needed to foster the flexibility and innovation needed for success in the rapidly changing, internationalised work environment.

Skill New Zealand will implement the Modern Apprenticeships. During 2000, Skill NZ will trial the scheme with a small range of Apprenticeship Coordinators in order to identify the best operating mechanisms prior to expanding the scheme in 2001 and beyond. This pilot phase will be evaluated early next year to inform further development of the scheme.

The aim is to establish 500 apprenticeships by the beginning of 2001 expanding to about 3,000 by the beginning of 2002.

Your ITO has a particularly impressive track-record in demonstrating a high level of responsiveness to Mäori. I understand that about 31% of your trainees are Mäori. I very much hope that you can achieve similar or better Mäori participation rates in Modern Apprenticeships.

I am going to rely on people like you to play a role in this new initiative, not just from the point of participating in it as an industry, but also providing me with your ongoing assessments on what's working, what's not, and why. This initiative will not realise its potential unless we can harness the incredible stock of knowledge that is represented by the people in this room, and by your industry.

Obviously, ITOs will have a very significant role in supporting Modern Apprenticeships and ensuring their success, by acting as apprenticeship coordinators and by developing effective partnerships with other organisations in order to facilitate Modern Apprenticeships.

I am aware that there are already some arrangements supported by ITOs, including your own, that share some of the features of Modern Apprenticeships.

Let me say to you 'well done' and thank you for taking a leadership role. I very much hope that your industry will continue to provide leadership, that you will embrace this new initiative and play a significant role, if not in the piloting in the second part of this year (and I do not know as this point which industries will be involved in the pilots), then in the roll-out of the programme in 2001.

And, in conclusion, let me again congratulate those who are about to receive awards – you are a credit to your industry, to your craft and trade, and to your communities. You should be proud. For my part I am proud to be here today to celebrate your achievement.

Thank you

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