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New Zealand Apprenticeships to boost skills & support jobs

Hon Steven Joyce

Minister for Tertiary Education, Skills & Employment
25 January 2013 Media Statement

New Zealand Apprenticeships to boost skills & support jobs

The Government is to boost the number of people in apprenticeships by combining all apprenticeships into a single nationwide scheme and providing new financial incentives for employers and workers to take up more apprenticeships, Tertiary Education, Skills and Employment Minister Steven Joyce says.

The new industry training initiatives were today announced by Prime Minister John Key in a speech to the North Harbour Club in Auckland.

“There is a big opportunity over the next few years – particularly with the rebuilding of Christchurch – to train more New Zealanders in vocational careers that will set them up well for their working lives,” Mr Joyce says.

“To give people the skills and qualifications they need, it is essential New Zealand has a responsive industry training system. The Government’s new package of initiatives is about increasing opportunities for in-work training for all Kiwis by expanding and improving our apprenticeship training system.”

The new initiatives include:

• From 1 January 2014, we are going to combine Modern Apprenticeships and other apprenticeship-type training under an expanded and improved scheme called New Zealand Apprenticeships. These new apprenticeships will provide the same level of support, and the same level of subsidy, for all apprentices, regardless of their age. Fewer than half the people doing apprenticeship-type training are actually funded as proper apprentices, through the Modern Apprenticeship scheme, and we are going to change that.

• Boosting overall funding for apprenticeships. The current top-up for Modern Apprentices will be redistributed across all apprentices, regardless of age, as an extension to their learning subsidy. In addition, overall subsidy payments will be increased by around $12 million in the first year, rising over time. Increased funding for apprenticeships will allow industry training organisations to invest in the quality of education for apprentices, lower fees for employers and encourage growth in the uptake of apprenticeships.

• Boosting the educational content of apprenticeships. At a minimum they will require a programme of at least 120 credits that results in a level four qualification.

• Setting clearer roles and performance expectations for ITOs, and giving employers other options if their ITOs don’t perform; and

• Lifting the profile of, and participation in, apprenticeships. We are going to give the first 10,000 new apprentices who enrol after 1 April this year $1,000 towards their tools and off-job course costs, or $2,000 if they are in priority construction trades. The same amount will also be paid to their employers.

• Increasing competition by allowing employers direct access to industry training funding.

The changes announced today are being funded from the money we have saved by tightening up the industry training system to remove tens of thousands of ‘phantom trainees’ under the previous Labour Government that were not earning any credits.

“We expect the changes to the apprenticeship system will drive a higher level of qualification completions in industry training so more workers, especially young people, are equipped with transferable and practical skills they can use throughout their working lives,” Mr Joyce says.

“By rebooting apprenticeships the Government estimates there will be an additional 14,000 new apprentices starting training over the next five years – over and above the 7000 who enrol every year.

“These changes are part of our comprehensive suite of vocational training reforms which are creating a simpler, more effective, vocational training system.

“Other initiatives include providing clear Vocational Pathways for young people interested in a vocational career, Trades Academies and Youth Guarantee places to ease transitions from secondary school to vocational training, and a major reduction in the number of qualifications at Levels One to Six to make the system easier to navigate for students and employers.

“Delivering Skilled and Safe Workplaces is a key plank of the Government’s Business Growth Agenda to lift productivity, deliver higher wages and living standards, and build a faster-growing and more competitive economy.”

ENDS

Questions and Answers

What is industry training?

Industry training is Government-subsidised workplace training that leads to qualifications on the New Zealand Qualifications Framework (NZQF). For example, apprenticeship training to become a plumber or builder is subsidised through industry training, as are shorter qualifications in industries that have not traditionally trained through apprenticeships, such as aged care or the transport industry.

Industry training is supported through industry training organisations (ITOs), which develop programmes leading to industry-relevant qualifications and arrange training for employees to complete these qualifications. Industry training includes the Modern Apprenticeship scheme, which provides additional support for young apprentices.

Why did the Government review industry training?

In the 10 years to 2010, Government funding for industry training trebled, but value for money has been poor – qualification completions and credit attainment have been very low. In 2008, 96,831 people being funded to participate in industry training did not achieve a single credit. In 2009 the same figure was 100,801.

Audits of ITOs in 2009 and 2010 also revealed that Government had been subsidising a significant number of trainees who were not eligible for funding under the existing funding rules.

In response to these issues, the funding rules were tightened and monitoring was increased. Qualification and credit attainment in industry training has improved as a result.

In 2011, the Government initiated a wider policy review of industry training to assess whether the current model was fit for purpose and providing the best value for money. The review found that although the system was not broken, there was room for significant improvement. One of the main findings of the review was that the current single funding rate for industry training does not appear to adequately support the theory learning required in apprenticeships, as indicated by the high ITO fees for employers of apprentices.

Why combine Modern Apprenticeships and other apprenticeships into a new single scheme, New Zealand Apprenticeships?

In short, to provide more opportunities and more support to more apprentices.

In future, all apprentices regardless of age will receive the same level of government support. This is a change to the current Modern Apprenticeship scheme, which provides additional support to apprentices who are aged 16 to 21 when they start their programme. There are many people over the age of 25 who are currently undertaking apprenticeships. From the beginning of 2014, there will be a single subsidy rate supporting apprentices of every age.

An apprenticeship will be defined as a Tertiary Education Commission-approved programme of study of at least 120 credits, which results in a Level 4 qualification on the New Zealand Qualifications Framework (NZQF). Most Modern Apprenticeship programmes are currently at least 120 credits at Level 4, although there are some Level 3 and shorter qualifications approved for Modern Apprenticeship funding.

Existing Modern Apprentices will continue to receive the same level of support for the next four years or until they finish their apprenticeship. The Government expects that most current Modern Apprenticeship programmes at Level 3 will likely be transitioned to Level 4 qualifications over time.

What will the funding arrangements be for New Zealand apprenticeships?

The current top-up rate for Modern Apprenticeships co-ordination will be redistributed across all apprenticeships, regardless of age, as an extension to their learning subsidy. In addition, overall subsidy payments will be increased by around $12 million in the first year, rising further over time. This equates to an approximately 20% increase in overall funding of apprenticeships and will enable a standard funding rate for every apprentice of $5,200 per STM (standard trainee measure). The actual amount paid to support each apprentice will depend on the credit load each year.

How will these changes affect Modern Apprenticeship Co-ordinators (MACs)?

Fees for apprenticeship co-ordination will now be paid as part of the overall apprenticeship training fee, rather than separately to co-ordinators. Current non-ITO co-ordinators will be able to contract to ITOs to provide co-ordination services for the ITOs, or participate in direct access funding arrangements for employers or group training schemes.

Co-ordination arrangements for existing modern apprentices will be maintained for up to four years until the completion of their apprenticeship, to avoid any disruption to their training.

Will there be any funding changes to non-apprenticeship industry training programmes?

Yes. It is proposed that the funding rate for non-apprentice based industry training will be increased to $3,200 per STM which equates to a 10% increase. This will be the first increase in funding support in five years. The estimated cost of this change is around $7.5 million per annum. The actual amount paid to support each trainee will depend on the credit load of that trainee.

What is meant by setting clearer roles and higher expectations of Industry Training Organisations?

While we now have performance expectations of industry training for the first time, those expectations are still quite low. More emphasis will be placed on completing qualifications, particularly for apprentices. To improve educational quality, NZQA will have a greater role in quality assurance and recognition of ITOs. To ensure the overall Vocational Education Training (VET) system works in a more effective way, the roles of ITOs will be more clearly defined relative to other stakeholders in vocational education.

Why is the apprenticeship re-boot needed?

The apprenticeship re-boot aims to raise the profile of apprenticeships and opportunities for careers in trades. A large number of apprenticeship-qualified people will be needed in coming years to meet the anticipated labour force needs for the Christchurch rebuild, on-going infrastructure development, and upgrading and increasing the housing stock.

Who will be eligible for the apprenticeship re-boot?

For the purposes of the re-boot, an apprentice is defined as an industry trainee training towards a Level 4 qualification of 120 credits or more. Apprentices and employers who are in receipt of other Government top-ups, such as Ministry of Social Development wage subsidies, are not eligible for the re-boot.

Which trades will be eligible for the higher re-boot subsidy?

Construction:

Carpentry, Painting, Decorating, Plastering, Steel fixing, Concreting, Plumbing, Gas fitting, Drain laying, Roofing, Scaffolding, Rigging, Joinery, Brick and block laying, Paving, Tiling, Masonry, Construction.

Infrastructure:

Plant operator, Road construction and maintenance, Bituminous surfacing, Foundation works, Pipe laying, Bridge construction and maintenance, Engineering (Highways), Quantity Surveying.

Engineering:

Boiler making, Welding, Sheet metal working, Diesel fitting, Fitting and turning, Civil engineering, Mechanical engineering, Fabrication.

Electro-technology: Electricity supply (electronics and communication), Instrumentation and control, Refrigeration and air conditioning, Electrical Engineering.

How much will the re-boot cost?

The re-boot is estimated to cost $28 million. This will be funded from money set aside in Budget 2012 to transition the industry training system. This funding originally came from underspends in the industry training baseline.

What is the total cost of this package?

The total cost over four years will be around $106 million, made up of around $12 million per annum for the increased apprenticeship funding, $7.5 million per annum for the increased industry training subsidy, and $28 million for the re-boot programme. All of the costs are being funded from industry training fund baselines and the industry training contingency established in Budget 2012.

How many more new apprentices will be achieved?

In 2013, it is estimated there will be 27,800 people enrolled in industry training programmes of 120 credits or greater at Level 4 (11,500 Modern Apprentices and 16,300 industry trainees). An estimated 7,000 apprentices start their programmes each year. Based on these figures, we are setting a target for ITOs to enrol 14,000 additional new apprentices over the next five years (2013 to 2017). The target for new enrolments is over and above the 7,000 who enrol every year.

The apprenticeship changes will make a significant contribution towards meeting the Government’s Better Public Services target of 55 per cent of 25 to 34 year olds gaining a Level 4 or above qualification.

Why is there a need to increase competition in industry training?

During consultation on the industry policy review, some employers were concerned about poor performance from some ITOs, and a lack of choice for employers if their ITO is not performing. Providing an option for employers to access industry training funding directly will assist in ensuring ITOs provide a quality service to employers.

How will employers be given direct access to industry training funding?

Employers with significant numbers of trainees, plus other organisations such as group training schemes or Modern Apprenticeship Co-ordinators (MACs), will be given the opportunity to access industry training funding directly. This will be piloted from 1 January 2014.

Any organisation taking up this option would be subject to similar requirements for the use of funding as ITOs – with funding being used for formal industry training programmes, and trainees being required to progress towards qualifications to be eligible for funding. To ensure quality assurance, any such organisations would need to contract an authorised ITO or tertiary provider to moderate assessments and register credits achieved with NZQA.

When will these industry training changes be implemented?

The apprenticeships re-boot initiative will commence from 1 April this year. The legislative changes and remaining funding changes are scheduled to commence from 1 January next year. The Government will establish an implementation advisory group made up of key stakeholders from industry, ITOs, and tertiary providers, to finalise the key operation details.

What will be the impact of all these changes?

Thousands more New Zealanders will qualify as apprentices, and will benefit from the higher subsidy rate that will be paid for apprenticeship qualifications compared to shorter industry training qualifications. Providing the same level of subsidy to all apprentices will increase overall funding for apprenticeships by around 20 per cent. This will allow ITOs to invest in the quality of education within apprenticeships. It will also encourage greater uptake of apprenticeships by businesses.

Boosting participation and achievement in fuller programme apprenticeships is important for realising the Better Public Services target for Level 4 and above. Industries who currently have substantial entry qualifications at Level 3 on the NZQF will need to consider whether to increase the standard of their training in order to create apprenticeship programmes at NZQF Level 4. Industries that make this change will be able to strengthen the skill levels of future new entrants to their industry, which will support innovation and productivity.

ENDS


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