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Championing The Knowledge Economy - Maharey

Hon Steve Maharey

Address to the New Zealand Forestry Industry annual conference. Waipuna Hotel, Mt Wellington.

Introduction – our place in the knowledge economy

I have 15 minutes today – sandwiched as I am between Grant and Andrew – and in that 15 minutes I want to talk to you about the Government's vision for industry training, its policies and its initiatives. I am fully conscious of the fact that John Blakey is the MC for this session, and of the consequences of taking too much time.

So let me start with a number of observations that in my opinion taken together demonstrate the importance of training for this industry, and the contribution that that training, and this industry can make to a knowledge economy.

I want to start off-shore.

On the 23 and 24 of March this year the European Council held a special meeting in Lisbon to agree on a new strategic goal for the Union,

" in order to strengthen employment, economic reform and social cohesion as part of a knowledge-based economy. "

Unpacking this project, it is informed by a strategic goal, and an overall strategy:

The strategic goal is to become the most competitive and dynamic knowledge-based economy in the world, capable of sustainable economic growth, more and better jobs and greater social cohesion.

The overall strategy is aimed at:

 Preparing the transition to a knowledge-based economy and society by better policies for an information society and R&D, as well as by stepping up the process of structural reform for competitiveness and innovation and by completing the internal market

 Modernising the European social model, investing in people and combating social exclusion

 Sustaining the healthy economic outlook and favourable growth prospects by applying an appropriate macro-economic policy mix.

What is being proposed here would seem to resonate with the kinds of challenges facing the New Zealand economy and society.

My second observation brings the issues into the New Zealand context, and the challenge that was recently posed by the NZ Manufacturers Federation. The question asked by that organisation is,

"What Business is New Zealand Inc in?"

Their answer –

"The vision and strategies must reflect:

 A knowledge economy (there it is again) transformed by reducing commodity dependence

 Accelerating growth of high value added exports of goods 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"

Now let me personalise the vision - a New Zealand businessman whom I hold in the highest regard captured the essence of this earlier this year when he said,

"Prospering in a globalised economy is about competing globally. But it is also about simultaneously ensuring that New Zealanders and New Zealand owned and controlled organisations 'own' and exploit to the hilt distinctive sources of competitive behaviour. We must be partisan to ensure the economic surplus is created here and retained here …

The harsh competitiveness of the globalised economy makes it more essential, not less essential, that we have an inner strength. Tap any New Zealander and you must know that he or she is a New Zealander. And this requires is to know what makes us different, to be proud of that difference and to be determined to pursue that difference"

Does anyone here know who that business person is – its Hugh Fletcher. He knows a bit about your industry. In one sense he is saying that we need to compete in a globalised world, but on the basis of what we do well, and always having a sense of 'place'.

Let me tell you about an event that I attended this year that gave me a real sense of 'place' and pride, and which said to me in volumes – 'you are on the right track'.

That was a function organised by this industry and held in May this year in Rotorua. It was a function to mark that fact that employees in this industry had satisfied the requirements for a variety of national qualifications. I have to tell you that I was deeply moved by that function.

At one level it was about the industry walking the talk – demonstrating a commitment to higher skills and higher levels of value added. And at the personal level it was about individuals – many of whom had never achieved much in the way of formal educational achievement – standing in front of their workmates, their family and whanau, their friends, and having their achievement celebrated.

That event gave me a real sense of place.

So having set the scene – having I hope made the connection between the global, the national, and the personal, where are we going with industry training?

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 delighted at the leadership role this industry has taken in the piloting of Modern Apprenticeships.

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 I know that Jon Blakey has been an important contributor to that 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, and I released the terms of reference for that review in Auckland last week. I am grateful for the supportive comments I have already received from this industry

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. This year we have over 63,000 participating in subsidised training. 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. Again this is something that your industry has quite properly raised with me – the danger of confusing quantity with quality.

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.

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 released last week were subject to discussions with ITOs, 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, if I can use an analogy that this industry well understands, 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;
 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 Māori 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 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 coordinated. 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 coordination 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.


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.
Your industry has already taken a leadership role. I encourage you to continue in that role.

Thank you.

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