1. Developing the next national workforce development strategy – what it might mean for ACPET members? ACPET 2012 National Conference Philip Bullock Chair, AWPA 30 August 2012 The Changing Tertiary Education Sector

2. What I will cover today Australian Workforce and Productivity Agency – its role and background Creating a National Workforce Development Strategy The role of vocational education and training Implications for ACPET members 2

3. Australian Workforce and Productivity Agency

4. The Australian Workforce and Productivity Agency Board membership Back row (L to R): Dr John Edwards, Heather Ridout, Keith Spence Middle row: Prof. Gerald Burke, Peter Anderson, Ged Kearney Front row: Marie Persson, Philip Bullock (Chair), Dr Michael Keating AC Expert Board – members from industry, academia, economics, representation of employees, education and training 4

5. 5 Priorities Sectoral skills & workforce Development needs PolicyResearch National Workforce Development Fund 5

6. Foundations for the Future – June 2009 Australian Workforce Futures: a national workforce development strategy – March 2010 Annual advice to Department of Immigration on Skilled Occupation List for General Skilled Migration program – 2010, 2011, 2012 Skills for prosperity: a road map for vocational education and training – May 2011 Energy efficiency in commercial and residential buildings: Jobs and Skills Implications – May 2011 2011 interim report on resources sector skill needs – July 2011 Defence Industry Workforce Strategy – January 2012 Better use of skills, better outcomes – May 2012 Future Focus: Australia’s skills and workforce development needs – July 2012 Key advice to Government to date 6

7. National Workforce Development Strategy Helping to better plan Australia’s skills need for the next 15 years

8. Why have a workforce development strategy? The 2010 workforce development strategy Australian Workforce Futures projected (for example): the size and composition of the workforce needed to 2025 what qualifications were required and our capacity to deliver what was holding us back and a series of policy responses. e.g. Increase in tertiary enrolments of 3% per annum, focus on specialised skills, emphasis on skills utilisation, improving language and literacy, targeting increase in participation to 69% The 2012 strategy will incorporate updated workforce and qualifications data The 2012 strategy is not an aggregation of state and sector plans It addresses national issues It is complementary to and informed by state and sector plans It will recommend high level approaches that will have a positive impact on meeting skills and workforce development needs 8

9. Workforce and education trends Modelling and projections Planning for an uncertain future 4 Scenarios – probable future worlds Analysis historic data Australia’s skills and workforce development needs – Discussion Paper Where are we now? Where are we headed? Where do we want to be? How do we get there? Access Economics Consultation with industry, providers, States/Territories and peak bodies Our approach: long term view in uncertain times 2025 9

10. The Discussion Paper: Future Focus: Australia’s Skills and workforce development needs, explores 3 key areas:Future Focus: Australia’s Skills and workforce development needs, – Where are we now? – What might the future hold? – How do we get there?

11. Where are we now?

12. Innovation – middle of pack Source: www.blobalinnovationindex.orgwww.blobalinnovationindex.org Variable participation Source: Labour Force, January 2012, ABS Cat no. 6202.0 Table 1. Trend series Declining competiveness Source: http://www3.weforum.org/docs/WEF_GCR_CountryProfilHighlights_2011-12.pdfhttp://www3.weforum.org/docs/WEF_GCR_CountryProfilHighlights_2011-12.pdf Weak productivity Source: ABS National Accounts 2010/2011 (5204.0)

13. Variable unemployment in Sydney metro area South Perth (C) Freemantle (C) Inner Source: DEEWR Small Area Labour Markets, December quarter 2011 7.0% to 9.9% 5.3% to 6.9% 4.0% to 5.2% 2.9% to 3.9% 0% to 2.8% SYDNEY Unemployment rate 15.0% and over 10.0% to 14.9% 13

14. Education matters to participation Young workers In January 2012, 26.8% of teenagers of working age were neither working nor engaged in full-time learning. Indigenous people For Indigenous Australians with a Diploma or higher level qualification, employment levels are reduce to 4.5% below the general population (with equivalent qualifications) (2). Source: 1.ABS 6227.0 Education and Work, Australia, May 2011 (aged 15-64 years) 2.Australian Government, 2011, Closing the Gap: Prime Minister’s Report 2011 14

15. Getting the skills mix right Demand Side Supply Side Migration Older and novice workers Low and unskilled workers SustainabilityGlobalisation The changing nature of work ‘Higher-level skills are increasingly demanded by the knowledge-based economy’ 1 Source: 1. Froy, F, Giguère, S, Hofer, A, eds, 2009, Designing Local Skills Strategies, Local Economic and Employment Development (LEED), OECD Publishing. 15

16. What might the future hold?

17. Resource prices fall, a more balanced economy Risky world – multiple shocks Uncertainty to 2015 with low growth and knowledge- based recovery Sustained prosperity and a restructured economy 1. The Long Boom 2. Smart Recovery 3. Terms of Trade Shock 4. Ring of Fire The scenarios 17

18. Comparing the scenarios Ageing population Importance of Asia Technology (but speed of adaptation varies) Sustainability challenges Commonalities Migration Fiscal capacity Labour force participation Industry structure Key differences 18

19. Modelling Parameters Summary assumptions by scenario Source: ABS, Deloitte Access Economics Variable (average 2011-2025 unless stated) History Long Boom Smart Recovery ToT shockRing of fire (avg 2001- 11) Terms of trade (level in 2025 for forecasts) 87.588856773.2 Net migration (persons)176,000235,000191,000187,000128,000 Population growth (%)1.54%1.58%1.32%1.28%0.99% Labour force participation rate (level in 2025 for forecasts) 64.80%69.20%66.90%67.30%63.60% Unemployment rate5.30%5.00%5.30%5.00%6.60% Employment growth2.32%1.99%1.52%1.59%0.75% Productivity growth0.72%1.86%1.30%1.61%0.59% Output growth3.06%3.89%2.85%3.23%1.35% Output per capita growth1.50%2.26%1.51%1.93%0.39% Nominal GNI per capita growth5.34%4.28%3.54%3.15%2.06% Real GNI per capita growth2.46%1.69%0.93%0.57%-0.55% 19

20. Projected employment growth Source: ABS, Deloitte Access Economics In May 2012, Australian workforce approx 11.5M Projected workforce size in 2025 is between: – 12.7M in Ring of Fire (lowest growth scenario) and – 15.1M in Long Boom (highest growth scenario) Projected job openings (new and replacement jobs) in 2025: – 4.3M in Ring of Fire to – 6.4M in Long Boom Highest growth occupations (all scenarios) – Professionals – Community & personal service workers – Managers Health care and social assistance strongest employment growth in all scenarios 20

21. Education qualifications forecasts Source: Deloitte Access Economics (2012) ‘Economic modelling of skills demand and supply’ - derived from tables 5.18 to 5.21 Long Boom Smart Recovery Terms of Trade Shock Ring of Fire Proportion with post school qualifications 75.4%70.3%73.7%65.0% Annual number of additional qualifications required to 2025 833,600656,300742,800419,000 In 2011 the share of employed persons with a post-school qualification was 59.8% 21

22. Qualifications demand Source: Deloitte Access Economics (2012) ‘Economic modelling of skills demand and supply’ - derived from tables 5.6 -5.9 Qualification Long Boom Smart Recovery Terms of Trade Shock Ring of Fire Postgraduate5.24.14.62.1 Undergraduate3.93.13.41.6 Adv diploma / Diploma2.72.12.31.1 Certificate III / IV4.32.93.51.4 Certificate I / II-3.8-2.4-3.5-1.1 Total post school quals3.82.83.21.4 Cert III and above4.03.03.41.5 Annual change in employed persons by highest level qualification, 2011-2025 (%) 22

23. Projected occupational employment growth by scenario Average annual growthLong BoomSmart Recovery Terms of Trade Shock Ring of Fire Managers2.5%2.0% 1.3% Professionals3.1%2.6%2.7%1.6% Technicians & trade workers 1.3%0.9%0.5%0.2% Community & personal service workers 2.9%2.4%2.9%1.6% Clerical & administrative workers 1.4%0.9%1.0%0.1% Sales workers1.2%1.0%1.1%0.3% Machinery operators & drivers 0.9%0.3% -0.2% Labourers1.0%0.6%0.5%-0.1% Source: Deloitte Access Economics (2012) ‘Economic modelling of skills demand and supply’ - derived from tables 5.1 -5.5 23

24. Projected qualification supply less demand (based on labour force) annual average 5 years to 2025 QualificationLong BoomSmart Recovery Terms of Trade Shock Ring of Fire Postgraduate -71,180-43,579-57,939-725 Undergraduate -106,109-65,394-90,628-2,458 Adv. Diploma/ Diploma -61,180-49,539-55,818-23,290 Certificate III/IV 9,00438,11122,90959,311 Certificate I/II 64,23666,65765,49364,351 Total-165, 229-54,745-115,98297,189 Source: Deloitte Access Economics (2012) ‘Economic modelling of skills demand and supply’ - derived from table 6 24

25. Some key messages Modelling based on new scenarios for Australia to 2025 shows that industry need for higher level skills is set to continue. Changing industry structure, higher consumer expectations and the different skills required for the Asian century are driving the need for higher skills. Necessary improvements in productivity require better use of skills in the workplace and improved leadership and management skills. Participation is uneven, with low skills a major factor in lower participation. Limited labour force mobility is an issue. 25

26. How do we get there?

27. Our vision Australia’s growth potential is realised through a highly skilled and adaptable workforce where skills are used effectively to meet the increasingly complex needs of industry and individuals are able to fulfil their potential. To do this we need to ensure that:  The skills needs for workplaces are being met and we have workplaces where skills are being used effectively.  We address Australia’s productivity needs by enhancing a workforce development approach.  The education and training system is forward looking and meets the skills needs of industry.  As many people as possible are participating in learning and work.  Skills and workforce development responses are tailored to meet specific industry and regional needs. 27

28. Implications for Private Providers

29. Private provision is increasing In 2011, compared to 2010 : students enrolled at ‘other registered providers’ increased by 56.4% Numbers at TAFE and ‘other government providers’ and ‘community education providers’ declined by 6.7% and 1.3% respectively Hours of delivery at FYTEs increased at ‘other registered providers’ by 60.7% and ‘community education providers’ by 4.5%, while they declined by 2.3% at ‘TAFE and other government providers’ Over one-quarter (25.6%) of public VET students were enrolled with ‘other registered providers’ Almost half (48.1%) of students enrolled at ‘community education providers’ and 97.1% of students enrolled at ‘other registered providers’ were enrolled in AQF qualifications 29 Source: NCVER, Students & Courses: Australian VET statistics, July 2011

30. A boom for private providers? Since 2008 in Victoria – number of private providers has grown from 225 to 528; TAFE market share has dived from 75% to 49%; and private provider share increased from 14% to 40%. There are concerns at the growth in occupations that traditionally have little vocational benefit. The most obvious is a surge in fitness instructor courses where enrolments have jumped 1000 per cent since 2008 to 4100. “Growth in private provider provision is too big, too fast. This will outstrip the capacity of VET regulators to monitor the quality of provision, and it could lead to similar problems that we experienced in the international VET student market”. (Vocational expert Leesa Wheelahan from the LH Martin Institute at the Uni of Melbourne). Source: http://www.theaustralian.com.au/higher-education/boom-for-private-providers/story-e6frgcjx- 1226116237059http://www.theaustralian.com.au/higher-education/boom-for-private-providers/story-e6frgcjx- 1226116237059 30

31. Expansion and quality training go hand in hand AWPA supports a demand-led system for VET but it should only happen when quality and regulation is properly sorted out. Examples of recent poor practices reinforce the importance of having a system of independent validation of assessment. 31

32. How can private providers lead in the demonstration of quality? Initiate your own quality assurance systems Introduce external validation of assessment Conduct peer reviews Develop strong governance models Be transparent and publish completions and other performance measures on your website

33. Many opportunities for private providers The strength of the Australian economy means there are “once in a generation” opportunities for tertiary providers on the demand side Opportunities for growth with the shift to demand-led funding The 56.4% increase in the number of publicly funded students choosing private providers between 2010 and 2011 Higher-level skills provides new markets in which to lead Access up-to-date information – DEEWR labour market data; NCVER; AWPA website; ISCs E-scans Leverage workforce development and workforce planning tools together with strengthening links to industry Enhanced Government funding available (e.g. The National Workforce Development Fund; Skills Connect – integrated services; South Australia’s Skills in the Workplace) The international market is slowly opening (e.g. ASEAN, India, China). 33

34. Enquiries about the conference should be sent to: conference@awpa.gov.au conference@awpa.gov.au AWPA and Industry Skills Councils 2012 Annual Conference Confirmed speakers: Tony Jones Mark Bouris Dr Ziggy Switkowski Prof Hugh Lauder (UK) Lynda Gratton (UK – via video)

35. THANK YOU @AWP_Agency