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Lifting human capability speech, Steve Maharey

10 August 2000 Speech Notes
Steve Maharey, Minister For Employment

Lifting human capability – an invitation to partnership

Speech notes for an address to The Economist Conferences Roundtable with the New Zealand Government. ParkRoyal Hotel, Wellington.

1.0 INTRODUCTION AND OVERVIEW

I want to focus today on tertiary education and skills training, but you will be aware that as well as the tertiary education portfolio I have responsibility for Social Services and Employment, and for the Community and Voluntary sectors.

For those of you unfamiliar with the topography of the New Zealand public service, that means responsibility for the administration of the benefit/transfer payment system, and employment assistance through the Department of Work and Income, a range of interventions through the Department of Child Youth and Family, and Social Policy development, monitoring and evaluation through the Ministry of Social Policy.

While the Department of Work and Income is responsible for the delivery of employment products and services – labour market programmes, wage subsidies etc – employment policy, including the monitoring of the Department of Work and Income, is carried out through the Department of Labour, principally through the Labour Market Policy Group.

I will elaborate more fully on the tertiary education responsibilities in a moment, but as part of the scene setting at this point, let me note that this portfolio includes responsibility for tertiary education institutions (universities, polytechnics, wananga, and Private Training Establishments), for the quality and standards framework, through the New Zealand Qualifications Framework, for industry training, or as the Australians more correctly express it, vocational education and training, and for careers information and guidance services.

It is not by accident that I have these portfolios – they all cohere around one principal objective, and that is the objective of building our human capability.

Across my portfolios we use a very simple formula to capture that objective and challenge. In essence that formula is:

Capacity + opportunity = human capability

Let me un-pack this further as a strategic policy framework.


1.1 THE HUMAN CAPABILITY FRAMEWORK

New Zealand's prosperity relies on the capability of its people, and the successful use of their skills and abilities to generate income and promote a thriving economy. The Human Capability Framework provides a way of looking at the various elements in this process, and how they work together. It emphasises the need to consider the factors that influence labour market outcomes in an integrated way, not just taking one issue and trying to find a solution to it.

The framework consists of three elements - capacity, opportunity, and the process by which these are matched.

Capacity – this refers to people's skills, knowledge and attitudes. These are acquired through formal education and training, and through the influence of family/whanau ane community

Opportunities – places where people can utilise their capacity – their skills, knowledge and attitudes – to generate income and other rewards. Many of these opportunities are in the labour market in the form of paid work. However, the framework recognises that non-labour market opportunities are also important, and will utilise peoples' capacity in ways which contribute to society

Matching capacity with opportunities – the process of matching the capacity that people have to the opportunities created, and the risks for people and businesses in that matching process

The diagram of the framework shows the range of influences that affect human capability:


Increasing individual capacity and skills leads me to the challenges facing us in tertiary education, including vocational education and training.

2.0 TERTIARY EDUCATION

Let me place the challenges facing us in context:

The context is one of a relatively small trading nation in the South West Pacific.

The context is a trading nation that is part of a global economy.

The context is one of seeking a comparative advantage in that global economy by way of our comparative advantage – and that comes down to our ability to grow things, and the quality of the labour force that we deploy when we add value by dis-assembling sheep, assembling furniture, or exporting education.

The context is one of that allows us to see that our new economy is in fact the application of new technologies, new information, and new competencies to what it is that we know and do well, and have being doing well for some time.

That's not to say that there shouldn't be innovation or risk-taking outside of our traditional areas of comparative advantage – but we need to be wary of being carried away by the rhetoric of the new economy when what we require is a sense of the reality of what that means for this place at this time.

The context is one of a Government committed to a social security system that links the social spend to the economic spend and shifts the focus and the rationale for intervention from social welfare to social investment - that is about providing a hand-up not a hand-out, ensures that there are reciprocal rights and obligations, provides incentives from welfare into work (avoiding disincentives by way of poverty traps) and yet at the same time addresses issues of social exclusion – of poverty or of educational disadvantage. I want to return to issues of social assistance later in this speech.

It’s a context that is an inclusive one – I am not going to evoke Tony Blair or Peter Mandelson's notion of 'the big tent', but I am convinced that locating our project in this kind of context does provide a means of engaging with all sectors of society.

It also requires us to paint a bigger picture than we have so far – or at least to make the canvass somewhat more accessible to the audience than it has been.

I want tertiary institutions producing individuals with the personal capacity – knowledge, skills, capacity to inquire, to question – and I want to encourage the private sector and the public sector to provide the opportunities.

I sense that this commitment to lifting human capability is one that makes sense to the business community. It makes sense because it is good business, and it is good public policy. It is good for the economy, and good for society.

Let me comment on two issues:

 the directions the government would like to see the tertiary sector develop,
 the reform path presaged in the report of the Tertiary Education Advisory Commission released a week ago

2.1 THE DIRECTIONS GOVERNMENT WOULD LIKE TO SEE THE SECTOR DEVELOP

Let me start with a summary diagnosis of the state of the tertiary education sector before I discuss the kinds of interventions we believe are now necessary:


 The tertiary education system has been driven exclusively by institutional competition for students (EFTS)

 We have seen too much short-termism, and, in the absence of any agreed strategy for the tertiary sector or, decision making predicated on the interests of institutions

 This has resulted in inefficiencies through inappropriate duplication in course development and provision

 There are weaknesses in governance arrangements – the Crown's ownership interests poorly reflected in present arrangements

 We see variable levels of responsiveness to external stakeholders – and this too is linked in part to governance issues

 There has been a lack of opportunities to develop the 'critical mass' necessary for centres or networks of research excellence

 And increasingly we are reaping the results of a failure to recruit and retain top staff


What will remedying these weaknesses involve? Let me place the challenge in context.

The basis of our competitive advantage in the global economy will be innovation and ideas, skills and knowledge – the short-hand version of this is the oft cited knowledge economy, or as I prefer, the knowledge society.

A strong, capable, dynamic tertiary sector is an essential component of a knowledge society.

This poses challenges not only for individual students and institutions but also for business:

 There are resource implications.
 Institutional responsiveness will need to be quicker.
 Information communication technology offers new and challenging ways of delivery.
 Stakeholders increasingly want to be more involved in the decision-making.
 "Second-chance" and life-long learning moves from important to imperative.
 Upskilling will become so routine that it will be taken for granted.
 Participation will be the name of the game.

We are already a considerable distance down this path.

Around a quarter of a million students receive some form of tertiary education. The taxpayer is the major funding source.

It is my long-held conviction that to ensure the best use of the taxpayer's dollar, the tertiary sector has to act together in a more collaborative fashion.

Institutions must see themselves as each providing an essential element within an overall system, not simply as competitors whose status comes solely from gaining the greatest number of students.

While there are however examples of collaborative behaviour, such developments stand in very stark contrast to much of the institutional behaviour that has been the direct result of the model that we have had for much of the last decade.

That model has led the tertiary sector to the brink.

My objective is to secure our collective public investment in the tertiary education sector.

The 38 public tertiary institutions have between them combined assets worth approximately $4 billion – and these are public assets.

The sector caters to a large and growing proportion of the population every year – over 90% of the population will participate in tertiary education before reaching 25 years of age.

Presently the sector offers over 52,00 courses of study.

Almost half of the research and development staff in New Zealand is employed in our universities

The sector is estimated to bring in approximately $500 million per year in export earnings (and we have recently announced additional government funding designed to grow this figure significantly).

Times change however and there are new pressures on and challenges presented to our university sector.

We have to face up to the challenges of the new environment, such as:

 the internationalisation of education;
 the growing importance of knowledge to the economy; and
 changes in modes of delivery in response to new information technologies

Different governments have responded to these challenges in different ways. The previous government sought to depart from the tradition of education as a public good – it sought to make that tradition secondary to the imperatives of competition.

This was the wrong path.

It was not wrong to see education and research as the basis of our success in an increasingly knowledge based world – they are – but it was and is wrong to believe we should treat them like any other commodity.

What we need to do now is reassert a vision consistent with the view of education that we have held in this nation over the past century.

The 21st century will mean challenges for in our tertiary institutions. They will have to become more connected and involved in the society and economy. So much more will be expected of them and they will need to deliver on those expectations by working closely with a variety of constituencies.


2.2 ORIGINS OF THE TERTIARY EDUCATION ADVISORY COMMISSION

One of this Government’s first actions in the field of tertiary education was to set about establishing an eight-person Tertiary Education Advisory Commission. The purpose of the Commission is not to develop our tertiary education policy for us - both parties in this coalition Government have very clear, and complementary, ideas about the direction that our country’s tertiary education system needs to move in.

We want a sector characterised by diversity with excellence.

We want cooperation and collaboration between tertiary education providers.

And we see the need for our tertiary education policy to focus upon strategy, quality and access.

The Commission’s task, as first articulated in the draft Terms of Reference which we circulated this February, is to help develop a “widely-shared strategic direction” for tertiary education.

The fundamentals of the Government’s vision, which would inform that task, were finalised with the release of the Commission’s final terms of reference in April. “In order to become a world-leading knowledge society that provides all New Zealanders with opportunities for lifelong learning,” the Terms of Reference state, “New Zealand needs:

 a more co-operative and collaborative tertiary education sector;
 a commitment to excellence in teaching, scholarship and research;
 a greater sense of partnership between the key contributors to the sector, including individuals, local communities and industry;
 an environment where all those involved in teaching, scholarship and research are committed to contributing to the nation’s future direction;
 an environment where participation by all is encouraged, including by Pacific peoples, other ethnic groups, and people with disabilities;
 an environment where Maori requirements and aspirations for development are fully supported, and which gives recognition to the Treaty of Waitangi and its principles;
 a sector that fully supports regional and local communities; and
 a sector that comprises a range of well-managed institutions and providers that can work together across the whole system to meet the education and research needs of the nation.”

The Commission convened for the first time in May this year. We set them a daunting task, and I would like to take this opportunity to congratulate the Commission on this initial report. They have had limited secretariat support over this period, they have not had permanent accommodation until recently, they came to the task with diverse perspectives and many of them had never met before. Yet by mid-July they were able to present to me a framework for the strategic direction of tertiary education which will serve as the foundation for their future reports and for constructive input from the sector.

2.3 THE 'INTERIM' REPORT

In many ways, Shaping a Shared Vision is a teaser for the Commission’s first major report, which will be presented to me in December this year. The December report will focus on ‘the shape of the sector’. This will look at the contribution that each type of tertiary education provider should make to the tertiary education system as a whole.

The Commission has committed itself to three reports next year. The first will look at cooperation and collaboration, and the best ways to encourage this within the sector. The second 2001 report will look at how we can best ensure that tertiary education provision is aligned with the needs of society and the economy, both nationally and regionally, offering relevant and high-quality learning opportunities and research.

The third report for 2001 will be perhaps the most far-reaching and will represent the culmination of the first cycle of the Commission’s work. It will focus on the EFTS funding system and the other existing mechanisms for funding learning and research in tertiary education. And it will propose reforms to advance the Government’s aim for tertiary education, for implementation in the 2002 Budget.

I want to say, however, that the Commission has also agreed to work closely with the Ministry of Education to help develop a package of proposals for next year’s Budget that will prefigure those more extensive changes.

I would like now to turn to the Shaping a Shared Vision report itself and address the twelve ‘conclusions’ that the Commission has come to.

2.4 INCLUSIVE DEFINITIONS

The first two conclusions are about taking a broad and inclusive approach both to the knowledge society and to tertiary education.

The first conclusion reads,

A broad definition of the knowledge society should be adopted in the development of policy for tertiary education. This includes a recognition of the potentially valuable contribution of all forms of knowledge.

We are not a big country and we are not a rich country. We do not have European Commission money to finance our development as Ireland did, nor do we have North Sea oil like Norway.

We cannot match the best in the world if we try to resource every discipline equally. We need to identify the things that we are already good at, and reinforce those.

We also need to identify the kind of knowledge society that we are best-placed to become and build around that. This is a debate that goes beyond the tertiary education portfolio, but it is one that we as a nation need to have.

The point of the Commission’s advice isn’t to avoid making any strategic choices. We need to make strategic choices. In many ways, it is the act of choosing that is important, and actually getting behind some areas of research and economic development and backing them.

The Commission’s advice seems to be about not pre-judging what a knowledge society ‘should’ be. We are not going to be able to compete as a nation with the U.S. in information and communications technology, or even with Finland. That doesn’t mean we won’t have individual success stories – and one only needs to look at Tait Electronics to see that -, but essentially that bus has left. We have to find our own vehicle.

As for every country that will involve an approach that is niche-oriented, skills-based, innovative and uses new technology. But we have to decide as a nation how we are going to apply that approach to the distinctive attributes that are available to us as a nation.

I believe that, for New Zealand, this means our natural resources. We need to apply our skills, innovation and technology across a very broad range of areas where our geographical endowments give us an edge. That includes our primary production sector, where we can point to the very successful and sophisticated development of our wine industry. It means moving our tourism industry to an increasing emphasis on 'added-value' tourists. The work of moviemakers like Peter Jackson also seizes opportunities offered as a result of our beautiful landscape, but, crucially, allies them with cutting-edge New Zealand technology and expertise. These are all ingredients in what my friend Andrew West has called 'the gourmet economy'.

The Commission believes in an inclusive approach not only to the knowledge society but also to tertiary education:

The tertiary education system should be broadly defined to encompass all formal and non-formal learning outside the school system.

For many people tertiary education means what goes on in polytechnics, wananga, universities and colleges of education. If we’re being particularly expansive, we might include industry training and the teaching that goes on in private providers at equivalent levels of the Qualifications Framework.

However, I have always been very clear that I consider the post-school learning that occurs at levels 1 and 2 of the National Qualifications Framework to be utterly vital if we are to have a knowledge society for everybody, rather than just reinforcing inequalities of opportunity.

It is also imperative that there are multiple pathways that people, especially young people just out of school, can take to develop their capabilities, depending on their temperament and aptitudes. Not everybody should be herded into a university because a university education is not the right road for everybody. But the alternative doesn’t need to be – and must not be – a second class option. It has to be equally valid and high-quality, just emphasising different modes of learning.

People recognise that. That’s why this Government’s Modern Apprenticeships Programme is proving to be such a phenomenally popular proposition. We need every possible avenue of learning to be high-quality, accessible and integrated into an overall tertiary education strategy. That includes industry training, it includes adult and community education, and it includes all forms of second-chance learning.

It even includes all the business-based education that goes on every day in companies big and small. That’s not to say we want to start funding all training and development in the corporate sector, or even that we necessarily need to regulate or register it. But unless our conception of tertiary education is broad enough to recognise the role that all of these paths play, we risk giving ourselves only a partial picture of our nation’s learning needs and opportunities.

We could draw an analogy to the health system. We can’t afford to look only at what goes on in our large resource-intensive hospitals, crucial as these are. Nor can we just add in the general practitioners and leave it at that. We have to take account of the vast and complex community health networks and our preventative public health endeavours. Similarly we have to have an integrated picture of our tertiary education system. This seems to me to be the key point of the Commission’s sixth conclusion,

The tertiary education system should be viewed comprehensively and as a whole, and the various funding and regulatory arrangements within it should work together in a clear and coherent manner.
2.5 A FOCUS ON LEARNERS AND COMMUNITIES

I see the mission of tertiary education in the 21st century more than ever as a ‘nation-building’ one, and its key function in this is lifting capability. There are many dimensions to this role – lifting the capability of individuals, communities, businesses, Government and the research community.

The Commission captures these multiple functions of tertiary education as:

 inspiring and enabling individuals to develop their capabilities to the highest potential levels throughout life, so that they develop intellectually, are well-equipped to participate in the labour market, can contribute effectively to society and achieve personal fulfilment;
 preserving, advancing and disseminating knowledge and understanding, both for their own sake and in order to benefit the economy and society;
 serving the needs of an open, innovative, sustainable knowledge society and economy at the regional and national levels, including those of Maori, Pacific peoples, and the wider community;
 helping to build and maintain a healthy, inclusive and democratic society and promoting the tolerance and debate which underpin it;
 reducing social and ethnic inequalities; and
 reflecting and nurturing a distinctive national identity, including greater understanding of the Treaty of Waitangi.

If we are to create an environment in which tertiary education can do all that effectively, we are going to have to recognise tertiary education as an integral part of our society and all levels and all stages. Knowledge is changing at an incredible pace these days and both our society and our economy are increasingly dynamic. The days when we could consign tertiary education to a few years tacked on to the end of our school days are long gone.

The Fourth Labour Government spoke of lifelong learning and this has become something of a catchphrase ever since. It has to become more than a catchphrase. The Commission says,

The tertiary education system needs to be designed to respond to the challenge of lifelong learning in a knowledge society, and this may require new ways of organising, delivering and recognising tertiary education and learning.

Nobody should underestimate the scale of the task this sets us. More than any other finding of the Commission’s, this challenges us to re-examine our priorities and preconceptions regarding tertiary education.


2.6 A COMPREHENSIVE AND STRATEGIC APPROACH

As I’ve already stated, we are not a rich nation so we need to be strategic. As Ernest Rutherford once said, “We don’t have a lot of money to do this so we’re going to have to think.”

That means we can’t afford the waste that the competitive model of tertiary education has brought us. That includes the duplication of resources with every provider large and small feeling the need to develop its own programme in every area and deliver them unaided. It includes the waste of win/lose as some programmes and even providers succumb to the vagaries of the marketplace. And it includes the resources spent on advertising to maximise market share.

All of this has to stop.

Tertiary providers, public and private, need to start thinking in terms of an overall national system in which they play their part. There will be legislative changes to encourage this, and there will be funding incentive changes to encourage it as well. However, as much as anything else, it is about a change of mindset, and that change can start right now.

The Commission affirms the need for a clear strategic direction, one which should

be responsive to the needs of society and the economy and those of tertiary education providers themselves, and be able to evolve and adapt to sometimes rapid changes in those needs.

2.7 ACTIVE GOVERNMENT ENGAGEMENT

The Commission then goes on to set out some of the key elements that should give form to that strategic direction. It states,

There is a need for more active engagement by the Government with the tertiary education system.

I agree wholeheartedly with this. Indeed, I have been saying the same thing for some time. The promise of ‘more active engagement’ should not be seen as a threatening thing. As the Commission notes, it has to be accomplished in a manner consistent with the principle of autonomy.

But to those who ask, “why can’t you simply leave us alone?” I say, “because society has changed its mind”. Society has decided that we may have left research priorities predominantly in the hands of academics last century and that may have worked well on the whole. But times have changed.

Knowledge is now a very important item throughout our society. Research is now in many cases extraordinarily expensive. We want to know what's going on in our tertiary institutions, and we want to make sure that these huge storehouses of knowledge and expertise are focussed on the same problems as the rest of us. This is because we can no longer afford for them not to be. They're just too important for that.

But the question remains, what are the mechanisms by which more active engagement is best accomplished? The Commission states that it

will investigate the desirability of establishing an intermediary body or bodies for the tertiary education system, and the functions that such a body or bodies might undertake.

The Commission only states that it will look at this idea further. It is not recommending that intermediary bodies be set up at this stage. But I want to say that I have some sympathy with this idea. An intermediary body or bodies may be the ideal way to develop and evolve a clear strategic direction in concert with the sector. However, there are some risks with this idea that needs to be explored further. Nonetheless, the idea is definitely on the table.

2.8 CLEAR ROLES AND RESPONSIBILITIES

Rather more than that can be said about some other ideas. The Commission states quite clearly that,

There is a need for greater clarity of roles and responsibilities within the tertiary education system.

I am in total agreement with this. The previous Government tended to ignore the distinctive legislative definitions of ‘polytechnic’, ‘college of education’, ‘university’ and ‘wananga’ in favour of a generic concept of a ‘tertiary education institution’. That will end.

The ‘Shape of the Sector’ report will come back to me with clear recommendations on the appropriate roles for each of the institutional types, as well as the possible addition of new ones. It will also advise on the best ways to ensure a strong and effective role for private providers in supplementing and complementing the public sector, rather than competing with it. We will be looking to rationalise the number of private providers that receive public funding, focussing on durable and high-quality providers who fill an important niche.

Not only will there be a clear differentiation between provider types, but individual providers will need to look at what their strengths are and how they can best specialise to complement one another. The Commission says,

All publicly funded or regulated tertiary education providers should be required to define and produce an agreed public statement of their distinctive character and contribution to the tertiary education system as a whole.

I want to encourage providers to start working towards this immediately. It will give managers a clear foundation for building their institution's strategic focus. Government's involvement will ensure the mutual compatibility of each institution's mission, which will foster cooperation and collaboration. Furthermore, a mission that has Government backing means institutions will be funded to succeed in this mission, which will give staff and students a significant degree of security, something they do not have at present.

I will be writing to every tertiary institution and provider that receives EFTS-funding to ask them to begin defining their organisation’s unique mission.

 How does your contribution to the national tertiary education system mesh and interconnect with other providers?
 How could those connections be improved?
 How does each of your course offerings contribute to and reinforce your institutional mission?
 What community or communities do you serve, and how?
That dialogue is one that needs to start today and it needs to involve the people attending this Conference.

The formal method by which this mission will be articulated will be worked out over the next little while. It might be via the existing institutional charters or it may be a provider ‘profile’ which sits alongside them. However, it is my intention that by the 2002 academic year every provider that receives tuition funding will have an agreed public statement of their distinctive character and contribution to the tertiary education system as a whole.

2.9 AN INTEGRAL PART OF A KNOWLEDGE SOCIETY

The Commission’s final conclusion is about the need for active engagement between tertiary education providers, both individually and collectively, and

the research community, business, industry, whanau, hapu, iwi, Maori and the wider community outside the system.

I regard this as absolutely critical. Tertiary education providers, and universities in particular, need to be recognised, and need to start seeing themselves, as in many ways the most central institutions within a knowledge society.

There has been a tendency in the past for universities especially to be a bit insular. That can’t continue. We need to move to a knowledge society and a lifelong learning society. Tertiary education institutions aren’t over there in the corner anymore, but right smack in the middle of everything.

Our tertiary institutions are integral to a well-performing economy. They are also vital for strong and cohesive communities.

We will be looking to configure the tertiary education system with that as a central consideration.

Shaping a Shared Vision is not the final word on the tertiary education system; it was never intended to be. In many ways it is just the conversation starter. Those within, and outside of, the sector should engage with it, and use it as the basis of further engagement with the Commission.

But this Initial Report also sets the terms of the dialogue. The questions are now clearly the following:

 How should Government achieve more active engagement with the sector?
 How do we integrate policy across all aspects of the tertiary education system?
 How do we implement some kind of institutional mission or profile?
 What should be the clear role of each type of tertiary education provider?
 How do we orient the tertiary education system more towards lifelong learning?
 Should there be an intermediary body or bodies for tertiary education?
 And how can we make our tertiary education providers an integral part of our society and economy?

There may be some disquiet about institutional profiling and specialisation from some quarters.

There are some that refuse to accept that New Zealand universities are indeed public institutions. There are some that feel more comfortable with government distance and disinterest.

Academic independence, and the independent role of universities as the critics and conscience of society, must be protected. But there need be no tension between academic independence and public accountability.

Society has decided that we may have left research priorities predominantly in the hands of academics last century, and that may have worked well on the whole. But times have changed. Knowledge is now hugely important throughout our society. We want to know what's going on in our tertiary institutions, and to be assured that these huge storehouses of knowledge and expertise are focussed on the same problems as the rest of us.

We can no longer afford for them not to be.

They're just too important for that.

Institutions are going to be asked to look at what they do best and how they can reinforce those strengths. This will be a challenge for them. It will also be an opportunity, because we are saying that we don't expect each one to be all things to all people - they don't have to all adhere to the same mould.

It is an opportunity for innovation - a chance to build the best of the new on the foundation provided by the best of the old. That is my vision for tertiary education - it is a vision that allows us to preserve the tradition of education as a public good, and marry that tradition with the challenge of innovation.

3.0 VOCATIONAL EDUCATION AND TRAINING

Industry training is an essential component of the knowledge society. Individuals, by acquiring new vocational skills and developing their capabilities throughout their lives, benefit themselves as employees and their employers.

There has been a sharp increase over the last six months in industry training.

Industry training numbers are now at a record high, with just over 57,000 participating. That said, it is important that we focus on the quality of the training being undertaken, that participation levels at a given point in time are reflected in training completions, and that we ensure that training activity anticipates future labour market needs.

Not only has the expanding economy increased demand, there has been a continued expansion of industry training into industries which previously did not have systemic training arrangements.

One area of industry training in particular causes concern. One-quarter of all 16- and 17- year-olds and one-third of that age Maori are not in education or employment. Such a high percentage of school-leavers receiving little or no skills improvement is alarming.

This is the background to the government's announced Modern Apprenticeship programme - a move targeting the youth labour market. It will increase the opportunities for young people in particular to undertake training that will enable them to participate in and contribute to the knowledge society.

At present the number of apprentice-style trainees is roughly the same as it was in the 1980s but there has been a significant change in the age-level.

Only about 10% of trainees are aged under twenty.

Over 50% are aged 25 and older. Indeed nearly 20% are over 40. Clearly under the present system employers had gone for older, more experienced people.

While acknowledging the concern, ITOs found it difficult persuading employers to hire younger people. In passing it should be said, most employers are also parents.

The situation was a chicken and egg one. If school-leavers couldn't get work experience then they were unlikely to develop the skills and attitudes expected of them by employers.

If the trend continued we were on a path to polarised work force with a permanent under-class, unproductive and resource-costly. We were not prepared to sit back and allow such a significant segment of this generation of young people drift off into long-term unemployment or a low-skilled future.

We also were aware that industry leaders had been saying for some time that if government wanted more young people to be trained it would have to pay for it.

Apprenticeship is a tried and tested system for young people and existing workers to gain recognised and valued qualifications in a work environment. The small size of most New Zealand firms means that training arrangements must be flexible and oriented towards the realities of the workplace.

The key feature of the new scheme is that there will be 'co-ordinators' whose task will be to liase between employers and their apprentices. These people will help recruit and place apprentices and then support and counsel them through their training, both on-job and off-job. These people will both reduce the costs and risks to employers.

This apprenticeship scheme is what it says it is – modern.

Instead of being time-served, it will be standards-based and training will be linked to the National Qualifications Framework. That is, when apprentices reach the required competence they receive industry-recognised, nationwide certification.

Modern apprenticeships will complement, rather than replace, existing industry training and other tertiary education pathways.

They will be in new high technology areas as well as in the traditional trades.

The government is looking to industry, education and training providers - especially the polytechnics and ITOs - local authorities and iwi to develop partnerships around the delivery of this initiative.
I recently announced details of the Pilot phase for this new initiative, and an Apprenticeship Training Bill has been introduced and is to receive its First Reading shortly.

Twelve Modern Apprenticeship Co-ordinators have been selected as the first pilots, and these will cover 18 industry sectors. Industry Training Organisations, polytechnics, community providers and group training companies are all represented, and it is anticipated that at least 5000 Modern Apprenticeships will be in place by the end of the year.

The Government is also moving to address the issue of the school to work transition. At the level of the overall policy framework I am looking at the possibility of taking a paper to the Cabinet on an education and training leaving age strategy that would involve the Labour-Alliance Government making a commitment to a medium term goal of all young people being voluntarily in education, training or employment with a strong educational element, up to the age of 18.

As a very concrete and specific example of what this might entail Officials from the Department of Work and Income and the Canterbury Development Corporation are finalising a proposal that will see a world-first partnership between central and local government designed to ensure that no person under the age of 20 is outside employment, training, or further education.

I am also keen to move in the area of school to work transition. The Government signalled in the Budget the intention to introduce a Gateway Programme which will:

Allow secondary school students to participate in work-based learning, including assessment and recognition of that learning (in the form of unit standards)

Integrate work-based learning with the students' wider course of study, and

Test different arrangements for work-based learning, including different environments and different groups of students.

An announcement on piloting of this Gateway programme will be made shortly.

The Government intends carrying out a comprehensive review of industry training over the course of the next 12 months and I expect to make an announcement shortly on the terms of reference and the time-frame. Effective consultation with stakeholders and the wider public will be central to the success of the review.

Again these initiatives are about addressing the challenge of growing our human capability by addressing capacity and opportunity issues. Moreover there are very clear linkages between the tertiary and vocational education and training strategies and the Government's overall Employment Strategy.

4.0 THE EMPLOYMENT STRATEGY

I have suggested that the Human Capability Framework encourages coherence and integration in policy development, implementation, monitoring and evaluation.

For policy makers it demands that we test policy by posing questions such as:

 Does a particular policy intervention enhance individual capacity?
 Does it increase the opportunities that are available?
 Does it improve the matching between capacity and opportunities?
Let me illustrate the value of the framework by reference to the Government's employment policy objectives, and the Employment Strategy that underpins those objectives. Clearly a number of those who will engage with you today have portfolio responsibilities which, when form part of the Government's overall jobs strategy.

The Employment Strategy recognises that employment is a central means by which individuals and groups meet both their economic and their social goals.

It considers government’s role in employment in a broad sense, covering capacity building, opportunity creation and the linkages between them.

The Employment Strategy moves employment policy from being an adjunct to income maintenance policy and links it to economic development, education and training and broader social policy.

Priorities established include the movement of people into high skill and job rich industries, the promotion of sustainable regional development, the building of community capacity and targeted active labour market assistance.

The implementation of this strategy will ensure that employment outcomes are considered across a wide range of policy areas and that the labour market’s unique ability to link economic and social outcomes will be recognised and fostered.

The Employment Strategy identifies that there are two underlying objectives:

 Minimising disadvantage: to minimise the incidence of persistent disadvantage in the labour market and

 Maximising potential: to help ensure that all labour market participants have the opportunity to achieve their full potential (ie maximising the number of jobs and the level of earnings for all)

The Strategy recognises that minimising disadvantage and maximising potential is dependent on policies that support:

 Opportunities creation: policies and programmes that maximise employment opportunities through a steady growth in the demand for labour
 Capacity building: policies and programmes that encourage the development of skills that are valued in the labour market
 Matching; policies and programmes that facilitate a well-functioning labour market by minimising barriers to the matching of skills and jobs. This includes measures that facilitate participation in the labour market and assist adjustment to changed circumstances

The Strategy is shaped around a set of high level goals. These goals provide a link between the employment portfolio and associated sectors such as education, income maintenance policy, and economic development, as well as with the overarching strategic goals of the government as a whole.

The first three goals are primarily aimed at maximising potential overall, while the latter three are aimed at reducing disparities.

Ensuring macroeconomic policies enable sustained economic growth and its accompanying job creation

This goal acknowledges that sound economic performance is the main driver of job creation. This involves maintaining monetary settings that provide stable low inflation, together with a tax and government expenditure environment that provides a prudent and stable fiscal position to support monetary policy.

Promoting an 'employment rich' economy by removing barriers to employment growth

This goal also recognises the crucial importance of considering the ‘demand’ (or opportunity) side of the employment equation, but at a more micro level. Key issues here include barriers employers may experience in attempting to expand, as well as the conditions conducive to small and employment-rich business growth. This implies a focus on industry policies that facilitate business start-ups, promote investment, encourage innovation and minimise business compliance costs. A particular feature of this approach will be the link with the work of the Ministry of Economic Development around sustainable and regional development. The minimum code and regulatory arrangements provides the parameters within which this job growth will occur.

Maximising opportunities for those with care-giving responsibilities to participate in employment is a particular feature of this goal. There are particular issues that affect the participation in employment of mothers of young children and those caring for others. These include the quality of the jobs they have available to them and the adequacy of provisions to assist participation. Identification of barriers and of effective mechanisms to ensure access to employment will maximise the labour markets access to skill and the opportunity for increased participation in employment.

Developing a flexible, highly skilled workforce

Although it is not clear exactly what skills will be in demand in the future, it is clear that more skills are better than fewer skills. Strategies linked to this goal will need to consider not just young people entering the workforce, but also those already in employment. Lifelong learning will need to become the ‘norm’ if workplaces are to respond to changes driven by technological development and global expectations.
Developing strong communities

This goal acknowledges that communities can be a rich source of employment creation and a context within which participation can be encouraged. It also recognises that labour market disadvantage often has a locational dimension. The development of strong communities also has links to outcomes in the areas of health, education, welfare and social cohesion as well as more general participation in society.

Improving participation in employment for Maori and Pacific peoples.

This goal recognises that Mäori and Pacific people have relatively poor labour market experiences overall. The consequences of this extend beyond the labour market and feed directly into issues of poverty, educational achievement, health and social cohesion. Strategies developed to respond to this goal will include the targeting of specific interventions, the investigation of the causes of disparities and investment in development strategies for communities where these groups are significantly represented.

Improving participation in employment for people with disability and other groups at risk of long-term and persistent unemployment

There are particular sets of issues that affect participation in employment by those with disabilities. Specific barriers need to be identified and addressed and the most effective mechanisms for service delivery utilised. Similarly, there will remain numbers of individuals whose personal characteristics result in them facing a relatively high risk of long term unemployment.

The Government's employment objectives also require that we have the incentives right to ensure that people, wherever appropriate and possible, make the transition from welfare to independence through work. The Government's view is that getting the proper alignment between welfare and work involves shifting the focus of social assistance to a social investment, and opportunity based model.

5.0 SOCIAL ASSISTANCE AND BENEFIT REFORM

A significant proportion of the working aged population is in receipt of a benefit, even at a time of economic growth. Many are re-cycling through the system, having difficulty staying in sustainable paid employment. Some segments of the population experience social exclusion.

The Government is of the view that we should aim to have more people in sustainable employment, and that we should support social participation for those for whom employment is not an outcome (or not an outcome at this stage).

While there are multiple causes to these problems, the design and delivery of social assistance is one area where Government can make a difference.

The present system is difficult to understand, to access and to deliver.

Some people are unnecessarily locked into the system, are not encouraged to take opportunities or to develop their own capability, or are locked out of the system because they do not know how to get support that is available.
There are poverty traps so that some people are no better off if they earn income from.
There are particular problems for Maori and Pacific people in accessing assistance.

The Government's present work programme is informed by the need to develop a system that promotes human capability and supports people to be in paid employment, where this is possible. The future system should have smoother programme interfaces and should reward effort. It should be more responsive to local realities and should be more tailored to individual circumstances. An effective social assistance system will be more responsive to the needs of Maori and can play a significant role in closing gaps.

5.1 THE CONTEXT FOR SOCIAL ASSISTANCE DEVELOPMENT

The Speech from the Throne noted issues to be addressed in the area of social security, as society has become more diverse and the economy more open. The Speech specifically referred to reviewing aspects of the benefit system to ensure that there are not disincentives for people to re-enter the workforce.

Society is facing a number of problems, in terms of the working aged population:

 more people on benefit for longer periods, even at a time of economic growth;
 a significant proportion are re-cycling back through the system, having difficulty maintaining sustainable participation in paid employment; and
 we are experiencing social exclusion of segments of society, particularly the most vulnerable groups, including Maori, Pacific peoples, and the disabled.

At a high level our goal should be to have more working aged people in sustainable employment, and to support social participation for those for whom employment is not an outcome (or not an outcome at this stage).

There are multiple causes to these problems, related to factors as diverse as:

 the state of the economy (e.g. Unemployment beneficiary numbers largely mirror changes in GDP);
 changing social values (e.g. the value put on work participation);
 the design and delivery of social assistance programmes; and
 the extent to which other policy areas help prevent or reduce the impact of certain outcomes (e.g. morbidity, skills development etc).

The government can influence or control some of these factors more than others.

Improving social assistance design is one area where improvements can be made which will contribute to improved outcomes. The system could better support human capacity development and paid employment, especially for those at risk of long term unemployment, in low paid employment or with a marginal attachment to the labour market.

The current system has difficult interfaces which create barriers. The interaction of tax, benefit and supplementary programmes has created poverty traps, so that some people are no better off if they earn some income from employment. In some instances, they can be worse off.

Aspects of the system are dated. It was developed in the 1930’s to deal with a simpler society, where needs were more likely to be short term. The system has not responded well to the changing nature of employment and to fluctuating incomes – through more casual work, part time employment, seasonal work and contract work.

5.2 LOOKING TO THE FUTURE

The Government is seeking a social assistance system that is more effective in supporting better social outcomes. It should aim to promote security by focusing on the development of human capability and on supporting people, wherever possible, to be in paid employment, rather than passively paying benefits.

It should address barriers to participation in the economy and society rather than add to them, so there is improved reward for effort. It needs to be more responsive to local realities, should be more tailored to individual circumstances through the development of case management. Different parts of the system should work together and interfaces (e.g. benefit/tax and benefits/housing assistance interfaces) would be well designed and managed. It should support and be supported by effective delivery.

People should know what they are eligible for, and how to get, it with the system helping them through various stages so they can be confident that they will get what they need when they need it. This will contribute to reducing poverty.

The preferred end point is a simpler system underpinned by a core benefit so that unnecessary rules and differences in treatment are removed. Add-on payments oriented to encourage people to take up opportunities and the likes of post placement support and exit management could be part of an investment in human capacity. Effective child-care assistance (including out-of-school care) is an example of such an add-on.

Further policy work is required to develop policy options. There will be trade-offs between some aspects, for example, simplification on one hand and greater individualisation on the other. Policy options will also need to recognise fiscal constraints as well as delivery and implementation limitations.

The approach the Government is taking replaces the current emphasis on compulsion, with a focus on sustainable results though working with people to increase capacity and generate opportunities. There is more focus on skill development. There is more recognition of the need to be more responsive to the local environment, and to the particular needs of the individual – one size does not fit all.

6.0 CONCLUSION

I suggested at the outset that the common thread running through my portfolios was the imperative to grow our human capability.

We have a competitive advantage in this country – we have natural endowments, and we have people. But if we are to be successful in the global economy that success will rest on our ability to apply our human capability to those natural endowments, and add value to them.

All governments claim to be 'education' governments. This Government is different in that regard. But it is also different in inviting audiences like this to do two things – firstly to judge us on the basis of our performance in lifting human capability; and secondly in being an active player in that process.

The Government can influence capacity, and we can do something about matching capacity with opportunity.

But in the final analysis, opportunity creation requires an open and a growing economy. My commitment is to use the levers I have at my disposal to ensure that the Government plays its part in growing an open economy. I don't subscribe to the view that the best thing government can do is to do nothing, any more that I subscribe to the view that government has all the answers. Our experience over the last quarter of the 20th century testifies to the failure of both those approaches. An invitation to partnership suggests the pathway to a viable alternative.

Contact: Michael Gibbs, Press Secretary, (04) 471 9154 or (025) 270 9115.

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