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Building a skilled workforce for the 21st century

Hon Steve Maharey
27 September 2000 Speech Notes

Building a skilled workforce for the 21st century

Steve Maharey Address to the Employers and Manufacturers Association Northern Industry Training Conference. Waipuna Hotel, Mt Wellington, Auckland.

Introduction

Thank you for the invitation to address your Conference today. The Government has only been in office for just over ten months but I have already had a good deal of contact with the EMA and its members.

I particularly enjoyed meeting with the EMA's Education Committee earlier this year, and, while I don't inquire as to whether or not they are members, I am sure that a number of the employers that I have visited in Auckland regarding the Modern Apprenticeship Programme will have been members of the organisation.

Can I also say how valuable the EMA's survey of employer capacity and intentions has been. It is no comfort to know that there are skill shortages, but it is important to have quantitative data to back up the anecdotal reports one receives.

Implementing policies – the record thus far

This Government came to power with both the Coalition partners having clearly signalled their intentions. In the main there was a large measure of commonality between the Labour and the Alliance manifestos. Labour's Policy, set out in 21st Century Skills, was very detailed. In Government we have set about implementing that policy.

I won't rehearse the detail of 21st Century Skills. I imagine that a number of you in this audience will be familiar with it. The policy was widely canvassed with key stakeholders as we developed it over time.

Since the election, as it has become clear that this Government, may I say unlike a number of others in the recent past, is determined to implement its programme. That being the case there has been as much interest in the manifesto after the election, as before.

This Government has been about restoring trust in the institution of government, and I would hope that all sections of the community, whether they support a particular policy or oppose it, will acknowledge that this Government deserves credit for taking giant strides to restore a sense of the democratic mandate.

In 21st Century Skills we said that we would introduce a Modern Apprenticeship programme, and we have. I am happy to discuss this further with you.

The specific features of the new initiative were announced in March, pilots are now underway that will see at least 500 Modern Apprentices in place before the end of the year, the legislation has been introduced and is now before the Education and Science Select Committee, and an invitation has gone out inviting proposals for apprenticeship coordination services for the first tranche of the national rollout next year.

I am pleased with the support that this policy has received, and I am extremely grateful for it. That reflects in part the fact that this policy has been developed and is being progressively implemented with the active involvement of key stakeholders.

I indicated early on in the process that I would value the on-going involvement of the Employers Federation, the Industry Training Federation, the NZ Council of Trade Unions, the Association of Polytechnics, and representatives of private providers, and invited these groups to establish a Modern Apprenticeship Reference Group (MARG). I instructed my Officials to involve this Group in decisions around pilot planning and implementation.

The Reference Group has added a great deal of value, and given the nature of this audience I would like to publicly acknowledge the contribution that Marilyn Davies from the Employers Federation has made to the work of the Group.

In 21st Century Skills we said that we would introduce a Gateway Programme, and we have announced a piloting strategy that will see schools and business being assisted to develop work-based education initiatives for students in the senior secondary school. This is one element of a suite of policies designed to effect a smooth transition from school to work.

In 21st Century Skills we also committed ourselves to a review of the Industry Training Strategy and the Industry Training Act. I want to spend the better part of my time with you today talking about that Review, which will be conducted over the coming year. I am taking this opportunity to release the Terms of Reference for the Review today.

The vision thing – placing industry training in a strategic context

Let me place the review in the context of where we need to take the economy.

It is important that we have an industry training system that is able to respond to the changing needs of the workforce, and of enterprises. The skills of our workforce are a key source of growth in New Zealanders incomes, employment opportunities and social well-being.

This is at the core of the Government's vision for the economy.
It is a vision that resonates with the strategic objectives that peak business organisations such as the Manufacturers' Federation have been promoting to Government.

The Federation has posed the question – 'What kind of Business is NZ Inc in?', and have suggested that the business plan for NZ Inc must reflect:

"a knowledge economy transformed by reducing commodity dependence
accelerating growth of high value added exports of good and services providing more and better paying jobs for our children, here

a reducing gap between New Zealand and the 25 richest countries, enabling new Zealanders to afford first rate health, education, and social services."

The Federation has also suggested that, if there is to be an effective partnership between Government and business, we in Government need to make our contribution. For the Federation that contribution is clear from their statement of what is required in a 'working partnership':

"Business and industry need certainty and sense of purpose and need them now

We need consistent and pragmatic strategies to deliver sustained, accelerated growth, and we need them now

We can work together towards a boutique economy and a knowledge society that can afford the social outcomes that New Zealanders expect."

For my part I see the Manufacturers Federation contribution as timely and important.

For my part I see what I am announcing today as one element of the Government's response to that invitation to partnership.

In a rapidly changing economic environment characterised by an acceleration in the rate of technological change and globalisation of trade and labour markets, an effective industry training strategy is central to providing the means for individuals to obtain the skills they need to remain in rewarding employment, and for enterprises to remain competitive.

The Government takes this very seriously. It is a critical element of the regional development strategy, of the educational environment, and adult learning in particular.

As I have already noted, we have taken action to assist young people gain access to work-based training. Modern Apprenticeships have already begun. These complement existing industry training provision, and foster stronger opportunities for young people entering the work environment. Gateway is aimed at supporting better work-based learning opportunities for senior school students.

The Industry Training Strategy – progress to date

The 1992 Industry Training Act established a new era for industry training in New Zealand. The Act, and the National Qualifications Framework (NQF), represented a shift from government management of training, to industry-led training arrangements, and from a time-served training model to one based on competency.

Both these developments were seen as critical to meeting the needs for higher levels and more flexible skills in an open economy.

Since then the Skill New Zealand strategy has become well established in many industries, but is still quite new in others.

The NQF and Industry Training Organisations are an integral part of the training scene for much of the New Zealand workforce. Between 1992 and 2000, the numbers of workers receiving subsidised industry training increased nearly fourfold to over 63,000.

While those numbers are impressive, I am not going to attempt to make what was a problem in Opposition now a virtue in Government.

Numbers in training represents 'stock's of training at a given point in time – they don't provide us a indication of the numbers who are progressing on to complete qualifications, nor, notwithstanding the contributions of ITOs and the National Qualifications Framework, do they capture the quality of the training in terms of its contribution to the national economy.

The Industry Training Strategy is one founded around the idea of being industry driven. The fact that it has done so well is, therefore, attributed to the investment and enthusiasm of industry.

However, this does not mean we can rest on our laurels. Changing skill needs, and changing workforce composition, will increase the amount of training required.

Industry needs to focus on what will be required in the future, not just what is required now. This review will look at the Government’s role in allowing this to happen.

The Industry Training Review – an invitation to partnership

The Review will focus on developing partnerships – both in the policy changes it makes, and in the way it is carried out.

The key focus of the new Government is to build on what exists, but also to encourage a stronger partnership approach to training.

Industry training is one area that benefits all who are involved – the Government, the employer, and the employee. We should be able to work together to the benefit of all of us, and that is what I hope to see at the heart of the review – for example, how can we allow and assist ITOs to work with each other as well as with employers and employees, to make the system as flexible, seamless and efficient as possible.

In recognition of the partnerships required to make industry training work, the Review itself is to be conducted in close work with stakeholders. The Terms of Reference I am releasing today have been subject to discussion with ITO, employer, and employee groups, as well as TEAC and relevant Government agencies. Informal consultation will continue with the above groups and with Mäori and Pacific groups throughout the development of the policy, and there will be a formal opportunity for organisations to comment on a discussion document in early 2001.

The discussion document will set out a timeframe for working through the issues. The intention is to allow a good amount of time for consultation. However, there are a small number of issues that present immediate problems and will have to be resolved in the first part of 2001. Officials will focus on ensuring that these more immediate issues are well covered in informal consultation.

There are some issues that will need to be considered, either due to current pressures on the system, or to allow for future growth and change of industry training and the demands placed on it.

The focus of the Review

Whilst the Review process is only just beginning, preliminary feedback from the sector has indicated a number of issues that I expect the review to consider.

Stakeholders generally felt that the Industry Training Strategy has worked well and has advanced, and in a number of respects achieved, the objectives set for it in 1992. Indeed the Strategy has a number of positive features that should be strengthened, or built upon.

That being the case, in the words of one of my valued advisors, the review will not be of the kind that pulls out the plant to examine the roots – the Government has no desire to truncate the growth where that growth is occurring.

Stakeholders have however identified issues that do constitute key obstacles to having a fully effective system of industry training. Those obstacles include:

 The restriction of industry training funding to below level 4 of the NQF;
 The lack of a strategy to address critical skill shortages in particular industries specifically, and to respond to deficiencies in literacy and numeracy generally;
 The increasing pressure on the Industry Training Fund presented by the rapid growth in the demand for training;
 The costs on employers (particularly of small firms) in dealing with the industry training system, particularly where they need to work with several different ITOs;
 The relationship between the Industry Training sector and other parts of the tertiary education sector, in terms of qualifications recognition and funding. In terms of the latter there is the perception of some inequity as between Industry Training Fund (ITF) funding and EFTS funding; and,
 The limited articulation and means of progression between the industry training pathway and other pathways in the tertiary sector.

Officials will also need to consider the uneven coverage of ITOs and of training, the distribution of women, Mäori and Pacific peoples in industry training, the capacity of some ITOs and some providers.

Overall, the review will have the objectives of ensuring that New Zealand’s industry training strategy:
 enables industry across the entire economy to meet the challenges of rising demand for skills and the increasing speed of change in skill needs;
 contributes to higher productivity, improved international competitiveness and higher incomes;
 provides equity of access to industry training; and,
 contributes to closing the education and employment gaps for Mäori and Pacific people.

The review will not revisit every element of the Industry Training sector.

There are some things that this review will not do.

It will not revisit some of the basic mechanisms behind our current (largely successful) system.

We do not intend to reconsider the need for a National Qualifications System, or for Industry Training Organisations.

The focus is on refining these basic elements of the system, addressing any current blockages to having the most effective industry training system possible, and looking forward to potential blocks in the future that we can avoid with action now.

There are a number of other policy developments that will need to be co-ordinated with, of which TEAC is the most important.

This work will need to co-ordinate with other policy areas. In particular, the Tertiary Education Advisory Commission has a broad mandate to investigate the tertiary education sector, which has clear implications for the Industry Training sector. There will need to be close co-ordination between the two work areas.

The Review team will also need to take into account regional development and the work of Industry New Zealand, regional and national work aimed at closing the gaps for Mäori and Pacific peoples, and work developing New Zealand’s innovation systems.

Conclusion

In conclusion, we need to take a partnership approach to refining one of the most important parts of our economy, an area that links the needs of employees, employers, and the wider economy, and that will be critical to responding to the opportunities presented by globalisation, technological change, as well as to helping those who are at risk of being marginalised by those same pressures.

This Review is a once in a generation kind of review. I encourage you to participate in it. The Review will only be effective in identifying strengths and weaknesses, and strategies for building on the former and ameliorating the latter if stakeholders like you accept this particular invitation to partnership.

Thank you.

ENDS

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