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Steve Maharey: Training A Skilled Workforce

Hon Steve Maharey Speech Notes

Training A Skilled Workforce

Address to the Industry Training Federation Chief Executives Forum. Westpac Trust Stadium, Wellington.


A skilled workforce is vital to our economic growth, our standard of living, and our international competitiveness. While we have made some progress over the past 16 years or so, we still do not have the kind of integrated skills and employment strategy that is required.

New Zealand requires an industry training system that is closely aligned with industry and regional development, employment and wider compulsory and post compulsory education and training policies, and one the can very quickly respond to the challenges emerging in the labour market.

In short we need an integrated skills strategy, not just an industry training system.

In 1992 the then government passed the Industry Training Act. While the passage of that Act resulted in a number of positive developments ¡V and a greater sense of industry control and ownership of vocational education and training was one of those developments ¡V this Government inherited a system that was producing patchy results.

For example after the passage of the Industry Training Act the number of people in traditional apprenticeships actually declined, and the average age of those lucky enough to get an apprenticeship increased.

During the 1990s industry trainees actually became on average older. In December 1999 only 10% of trainees in structured training were aged 16-19 years, and only 24 per cent were 20 ¡V24. Two-thirds were aged 25 years and older. And in some industries, a high proportion was in the forty-plus age group.

That is why a first major initiative in the vocational education and training area was Modern Apprenticeships.
Modern Apprenticeships ¡V a progress report

I said last year that over the course of the first year ¡V the pilot phase ¡V we were aiming to generate 500 new modern apprenticeships, rising to 1,500 by July this year and 3,000 by July 2001.

That first target has been met. As I noted in answer to a question in the Parliament earlier this week, as at February this year we had 518 in place. Last month the Prime Minister and met with the 500th Modern Apprentice ¡V the apprentice is studying toward National Certificates in Telecommunications, her name is Gillian Anderson, and she is employed under a group training arrangement with the Electrical Training Company and presently placed with Downer Connect.

The piloting of Modern Apprenticeships was completed last year, and the first phase began on 1 January this year, involving building and construction, diary manufacturing, electricity and electrical, engineering, hospitality, printing, and telecommunications.

The second stage of the roll out is now underway and brings the programme into the agriculture, forestry and fisheries, community and social services, food and related products processing, and service industries.

We have made a great deal of progress and we have done it on the basis of partnership ¡V chief among those partnerships has been that with ITOs and with the Industry Training Federation. May I note in particular the contribution that the Federation has made, and continues to make to the Modern Apprenticeship Reference Group.

You should also be aware that this weekend I will be releasing the report on the formative evaluation of the Modern Apprenticeship pilots. I encourage you to read the report ¡V which provides, on balance, a very positive assessment ¡V and to come back to me on any of the issues it raises for you. I am aware that the issue of key or generic skills is one that is of particular interest to a number of ITOs ¡V that issue is traversed in some detail, and the evaluation report recommends that further work will be necessary. The Federation, and individual ITOs will be involved in this work.

The broader context ¡V Shaping the System

Of course industry training, or vocational education and training, are part of the broader post compulsory education and training system ¡V tertiary education and training for short. Let me make some comments now about the wider context of tertiary education and training.

In our first year in office we established a Commission to undertake a comprehensive review of issues in tertiary education, broadly defined. The Commission brings together individuals with considerable understanding of and experience in the tertiary education and training system, both as providers of tertiary education and training, and as consumers of the education, training and research outputs produced by that system.

The Commission has now produced two reports, the first report, Shaping a Shared Vision was published last year. And the second report, Shaping the System, was publicly released last week.

The Commission¡¦s first report argued that the challenge of ensuring all New Zealanders have access to lifelong learning in a knowledge economy and society would require new ways of organising, delivering and recognising tertiary education and training.

The report notes that current structures and policy instruments in tertiary education ¡V in particular in the university and polytechnic sector - rely largely on demand-driven bulk funding systems, with little opportunity for the exercise of discretion in the allocation of funding. Funding mechanisms for other parts of the system, including vocational education and training purchased by Industry Training Organisations, and second chance education funded through the Training Opportunities and Youth Training programmes, are both highly prescriptive and restricted.

In theory we have had a single post compulsory education and training system in which all of the elements have been equal partners of equal status. In reality some parts of the system have been relatively privileged while others have been the poor relations. Industry training has tended to fall into the latter category and this government is determined to address this issue.

We are committed to excellence, but as I have said on a number of occasions, it would be wrong to confuse excellence with privilege.

Clearly not all of the decisions taken by tertiary education and training providers operating within the competitive, demand driven environment have been misguided. There has been innovation, and the government is committed to encouraging that innovation.

And while demand driven funding for the university and polytechnic system has supported increased levels of participation, in a climate of constrained funding, it has contributed to financial difficulties for providers, it has promoted intense and sometimes quite destructive competition and the duplication of programmes, and it has threatened the quality of the provision of teaching and of research.

The Commission concluded in its first report, and reaffirmed in its second report, that there should be a more integrated and strategic approach to the funding and regulation of tertiary education and training.

The report contains 97 recommendations, but the essence of the report comes down to seeking answers to the question ¡V how do we better steer the system so that we do have a more integrated and strategic approach to tertiary education and training?

The Commission has recommended the establishment of a Tertiary Education Commission, with responsibility for policy advice and funding allocation for the whole tertiary education system, including community education, second chance education, and industry training. The Commission is of the view that a single coherent and comprehensive central structure would better enable it, on behalf of the government, to steer all forms of provision.

While the government has yet to consider its response to the Commission¡¦s report, I am encouraged to see that in making this recommendation the Commission emphasises that it would be essential that the distinctive interests and concerns of particular sectors within the tertiary education system are safeguarded and addressed ¡V particularly research, industry training, community education, second-chance education, and Maori education.

I am also attracted to the proposal that those sectors might continue to the staffing of any TEC by way of secondments and sabbaticals

Clearly one of the risks of bring all of the post compulsory education and training sector under the one crown agent is that some parts of the sector may do better than others ¡V if we have constrained funding, and we do, then one could be forgiven for assuming that funding decisions will constitute a zero-sum game. Let me state as clearly and as unequivocally as I can ¡V if we are to bring all the elements of tertiary education and training together, vocational education and training, and foundation education and training (sometimes referred to as second-chance education) will not be the orphans of the family (and nor will these two elements be allocated a single bed to share).

Having said that, while there are risks in change, the status quo is not an option. Vocational education and training has been a neglected sibling within the broader family of tertiary education and training. Those with an interest in vocational education and training to focus primarily on the importance of this function within the overall system.

The TEAC has recommended that the Skill New Zealand form part of their proposed Tertiary Education Commission. The government has an open mind on this issue. All I want to say at this point is that, ownership interests notwithstanding, government departments and agencies are vehicles for producing the outcomes that the government wants. Our primary focus should be on those outcomes, and how best to deliver them.

Can I also say that, if there is to be an Intermediary Body ¡V a Tertiary Education and Training Commission even ¡V that organisation has to be possessed of an enabling culture. Where public funds are involved there has to be accountability, but I would like to see that accountability exercised to support an outcomes focus, and underpinned by an ethos of partnership, not contractualism.

No doubt you will have other questions about the structure of any body tasked with operating at the interface between policymakers, providers, and end-users. Who will be on the Board of the Crown entity, what will be the balance between steering and accountability, and a research culture premised on partnership and innovation; what will be the respective roles as between any new entity and the Ministry of Education.

I simply want to emphasise that no decisions have been made on the detail at this point in time. We have the TEACs report, and it is in my assessment an excellent report, but the focus at the moment is on clarifying functions, and securing agreement on the broad parameters of the kind of institutional changes presaged in the report. As always, I would value your contribution, and I imagine that your submission on the TEACs Shaping the System report will go to a number of these issues of detail. Forwarding the submission will be simply the first stage in your on-going involvement in this process.

Industry training ¡V the challenge of skills for a knowledge economy

Let me now return specifically to industry, or vocational education and training.

In tandem with the TEAC and its work programme, as we signalled prior to the last election, and again on becoming government, we instituted last year a review of industry training.

In July last year officials from a number of departments and agencies were instructed to conduct a joint official review, the objective of which has been to improve the effectiveness of the industry training system to better ensure that New Zealanders, in business and as employees, have the skills they need to prosper. This includes ensuring that the system is capable of meeting the challenges of rising demands for skills and the increasing speed with which skill needs change. The full terms of reference for the review were publicly released in September last year.

To date the review has been associated with a very high level of stakeholder involvement. This has included meetings between stakeholders and officials to discuss interests in some depth, a meeting with Maori stakeholders, and regular contact with employers, the Industry Training Federation, and the New Zealand Council of Trade Unions. Interviews have also been conducted with firms, with Industry Training Organisations, and unions.

Let me once again record my thanks for the very important contribution that the Industry Training Federation has already made to the review. I am looking forward to reading your submission.

The review process has been a forward looking one, and this is reflected in the Public Consultation Document we released last month. Quite consciously we decided against zero-basing this exercise. We were faced with an industry training system, many of the defining features of which we were and are quite comfortable with ¡V Industry Training Organisations, competency based education and training, and a National Qualifications Framework.

We therefore decided that it would be inappropriate to pull out the plant to examine the roots ¡V even the most modest of gardeners will know what effect that will have on a plant. Instead - if I may continue to use the gardening analogy ¡V we decided how best to grow the plant and to examine the contribution of this particular plant within the context of the garden as a whole.

Looking ahead we must have an industry training system that:

„h Continues to raise the quantity and quality of skills held by the workforce

„h Responds rapidly to the changing skill needs of the economy

„h Equips more New Zealanders to successfully participate in the New Zealand workforce, and

„h Becomes more accessible and responsive to all groups in the workforce, including Maori, Pacific peoples, women and migrants

As you know the Public Consultation Document focuses on 6 areas in particular:

„h Improving access to and responsiveness to training

„h The funding of industry training

„h Developing the generic, transferable skills of New Zealand¡¦s workforce

„h Raising the level of foundation skills

„h Providing better information for decision-makers and planners

„h Exploring some of the implications for government agencies

I don't intend to traverse those issues in any great detail, but let me make a number of observations given some of the preliminary feedback I have received.

Firstly I would hope that my earlier comments have very clearly conveyed to you what I see as the strategic and policy drivers behind the Government's involvement and investment in vocational education and training.

It is about growing the economic base of this country.

Secondly, there is no intention of 'lumping' industry training in with foundation or so-called 'second chance' education. Industry training will not be used as a safety net to remedy the perceived failures of the schools sector. To the extent that there are failures ¡V and sometimes these are overstated ¡V they will be addressed through education policies, not remedied through vocational education and training interventions.

There is a tension between the equity and the efficiency dimensions to industry training, and there is a need to balance private and public good considerations.

At the lower end of the National Qualifications Framework accessing industry training ¡V particularly for groups that have typically shut out from participating in the past ¡V has an equity dimension. One of the reasons for moving to a National Qualifications Framework was to provide for competency based learning at the lower end, as distinct from the time-based learning that formerly dominated and which in terms of the current framework is located at levels 3 and 4.

At the same time it is clear that we do need to encourage higher absolute levels of participation at the upper end of the spectrum of vocational education and training qualifications.

And we need to ensure that training investment decisions are informed by emerging skill needs over the medium to long term, not just over the short-term. Industry has become far too accustomed to working within a short-term time frame, and the Governments concern is to encourage a more strategic and medium term orientation to training investments.

Thirdly, the Government will not be taking a heavy-handed approach in terms of regulating the number of ITOs. We want fewer, but we want sensible amalgamations that are driven by industry and which enhance the capacity of ITOs to serve the interests of industry, and widen and deepen the industry training strategy. We need to ensure that we get effective coverage by ITOs in those sectors where we don't have them presently ¡V the health sector comes to mind. There is an irony in the fact that enterprises in some industries complain that they are required to have relationships with multiple ITOs, and yet in other key sectors there is no ITO presence of any significance.

Conclusion ¡V towards best practice

The industry training system has matured over time, and one of the strengths of the system is that industry has become more involved in structured education and training ¡V we want to build on that industry ownership. The emphasis over the past decade has been on the development of the system and its infrastructure, and now is the time to address the problems that have emerged and to enhance the performance and effectiveness of the system.

The level of participation across industries is very uneven, And while the government has no intention of taking a compulsory approach, a more managed strategy will, we anticipate, lead to a system better adapted to meet the wide variety of industry and trainee needs.

We need to extend the services of Industry Training Organisations to the widest possible range of firms, while encouraging those ITOs to focus on high achievement rates and quality learning.

we need to move from an industry training system to an integrated skills strategy.

The release of this publication document is about encouraging that transformation. For without it we will not get that other transformation that is central to our mission as a government, and to this country¡¦s future.

Having a highly skilled workforce, capable of continuously learning and acquiring new skills, is key to increasing economic prosperity and social cohesion. People¡¦s knowledge and skills shape our economic prosperity, and play a large part in determining our income as a nation, and the incomes of the individuals, families, and firms within our national economy and society.

The government has made its choice clear ¡V the only path that will allow us to increase economic prosperity and social cohesion is that provided by an innovative and flexible economy. An efficient and responsive industry training system provides the most direct route for matching the skills demanded by an economy in the process of transformation.

What we do want to do is build on best practice. And there are two comments that I want to make in this regard.

The first is that it gives me very great pleasure to be able to formally launch the Industry Training Federation's good practice guide, "Leading Industry Training: Good Practice in Industry Training Organisations".

The guide is a mine of good practice ¡V indeed I would characterise much of it as best practice.

The fact of the guide having been produced says much about the maturity of Industry Training Organisations, and the maturity of the Federation. It says a great deal that many of the examples of good practice are about ways in which ITOs can productively engage with other stakeholders (industry, schools, providers etc.)

I commend the Federation for taking this initiative and in particular Paul Williams, and Nick Green.

The second comment I want to make is about a person who embodies best practice in his intellect, his personality, his capacity to get people to work together, his commitment to industry and to trainees, and his sense of mission. That person is Martin Eadie who is stepping down as Chairperson of the Industry Training Federation.

I like Martin Eadie a very great deal, and I respect him. He has been a superb advocate for and leader of ITOs and this Federation. His contribution to the process of developing good public policy has been an extremely important one.

It is a testament to his leadership of the Federation that there is now sufficient depth and maturity within the sector to enable someone to step into his shoes. No one can fill them, and it would be silly to even try.

Let me read a letter that I have been asked to hand deliver to Martin this afternoon:

So congratulations to the Federation, my personal best wishes to your out-going Chairperson, and in closing, let me once again invite you to continue the very productive conversation that we have been having now for some time.


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