Speech at the Industry Training Federation Annual Conference

Thank you for the invitation to speak at your conference today

With the economy on the road to recovery, and the significant task ahead of us to rebuild Christchurch, it is an opportune time to meet and discuss how industry training can best help deliver the skills that we need as the economy moves forward.

The economy must become more competitive if we are to succeed.

Tertiary Education and Skills

We spend over $4 billion per annum on tertiary education each year, including industry training and modern apprenticeships. That’s about 1.6% of GDP, which is high relative to the OECD average of 1.2%. 

So alongside comparable countries we certainly aren’t tight in the tertiary area. The challenge is to ensure we are getting the best results for students and trainees that we can right across our tertiary education spend.

Improving skills is a key part of the Government’s agenda for lifting New Zealand’s economic growth, and vocational training plays an important role in this.  It’s all about getting much better results with the spend we make (VFM = productivity).

New Zealand has a strong history of vocational training.  This tradition can continue to be strengthened through effective engagement with industry, innovative approaches to training and meaningful and relevant qualifications.

I’d like to start, if I may, with a newbie's first principles perspective (only eighteen months in) on industry training and make about half a dozen points that illustrate where I am coming from.

1. I believe industry-based training is hugely important.  It works because the practical skills associated with some occupations are best learnt on the job, and industry training allows formal recognition of skills learnt in workplaces.  The mixture of learning by doing, and gaining experience, supplemented by off-job block courses, is time-honoured in many industries.
2. Industry training is a partnership between government (taxpayers) and companies in industries.  Why is that?  Well ultimately, it’s what we used to call in Zoology a symbiotic relationship – everyone gets something out of it.  For the company there is the benefit they get from training and up-skilling workers for the jobs the company has going.  The government’s interests are in transferable skills that benefit trainees over their working career and therefore the economy as a whole.
3. It follows then that not all training in the workplace should rely on taxpayers’ subsidies.  If the skills gained are from short regulatory courses that are part of being in that business, or they aren’t transferable or don’t provide crucial building blocks like literacy and numeracy (talk about later) then they should be fully the responsibility of the employer.
4. Like everyone else who receives taxpayer funds, ITOs and employers have a responsibility to deliver in return.  That hasn’t always been the case right across the tertiary sector.  There has been a singular lack of focus in the first decade of this century on achieving better results and providing value for money, right across tertiary sector.
5. We need to evolve our training model further – I am still scratching my head at the level of complexity there is around getting off job and on job training to work together – to get pre-trades working together with industry training.  It works well in some places but there are issues in others.
6. We must have a focus on literacy and numeracy within our standard training model.  We can’t go around moaning about adult literacy and numeracy figures and not make it a core part of everything we do in levels one to three. 

So with those observations in mind – where are we at?

Industry Training State of the Play

Government funding for industry training almost trebled over the last decade. Unfortunately, the funding increases were not matched with sufficient accountability for the funding or a relative increase in performance.

Over the last year, TEC conducted compliance reviews and has recovered approximately $4 million from ITOs for trainees that were ineligible for funding, including where the trainee was not in employment, or had left the employer, or no valid training agreement existed.

There were also significant areas of low performance across the system.  The TEC figures show that 53% of trainees in 2008 (96,831) and 54% in 2009 (100,801) did not receive any credits.  There were 44,400 people enrolled in both 2008 and 2009 who achieved zero credits across both years.

In response to performance issues and evidence of low-value provision, the TEC has made a number of changes to operational policy settings, such as ensuring that funding is aligned to the actual progress of trainees.

A number of other policy changes were also agreed during 2010 to improve the link between funding and performance, and to focus funding upon training with wider economic benefits.  This includes requiring literacy and numeracy to be embedded as part of all level 1 and 2 training, which is part of the Government’s wider push for embedded LLN in all foundational learning.

These changes shift the funding system from one that is inputs-led towards a more results-focussed model.

Results to Date

The early results from these operational changes are very promising.

While we undoubtedly have a lower number of people listed as being “in training” than two years ago, the number of people actually achieving things from their training is growing substantially.

The preliminary 2010 performance data for the industry training sector shows a significant increase in both the credit achievement rate and the credit weighted programme completion rates over 2008 and 2009.

They also show a 14% increase in total credits achieved over 2008.

On top of that, preliminary data from NZQA shows there has been a significant increase in the number of qualifications achieved by industry trainees in the 2010/11 June year.

This is a great start.  We are getting more actual training and more actual results.  That is good for everybody. Congratulations.

I appreciate that for some the changes have been a bit of a cold shower, but progress is good.

Qualifications Review and Vocational Pathways

We are also making good progress in simplifying the vocational pathways – especially with the targeted review of qualifications, which is being managed by NZQA.

You know, the more I see of this project, the more excited I am about its potential.

We’ve all talked for a long time about how confusing the huge array of vocational qualifications is in New Zealand – now for the first time, I believe, we have the opportunity to properly resolve this issue and offer students and trainees a massively smaller number of easily-recognised nationwide qualifications that employers can rely on to provide a common set of skills and competencies.

Where providers and trainers are assessed on the quality of training, not whether they can think up yet another variant on the qual.

Can I encourage you to play an active role in this process.  So far we plan to have the 4600 qualifications at levels 1 to 6 down by about a third by the end of this year, with further progress in 2012 and 2013.

As part of this reduction, I'd like to see the best of the combined tertiary sector expertise and industry contributing to this work so that the "New Zealand qualifications framework" emerges as a robust system that supports the variety of ways people can learn a trade and develop a career.

Related to that I am excited by the development of new vocational pathways that will be rolled out next year for use in across the secondary and tertiary interface.  Initial pathways are being developed for:

• construction and infrastructure
• primary industries
• social and community services
• service industries
• Manufacturing and technology.

The ITF and the ITOs were instrumental in proposing the development of these pathways, which are now a central part of the Government’s Youth Guarantee programme.

Families, teachers, and career advisers will find huge benefit in having a simple framework of vocational options they can follow at that crucial formative stage, that lead to rewarding destinations in employment, tertiary education, and study at the highest levels.

Embedded Literacy and Numeracy

Another area where we are making good progress is in improving adult literacy and numeracy right across the tertiary sector.

Because without basic literacy and numeracy skills, people cannot participate – economically and socially.  Employers, teachers, government all have a stake in this.

I want to get us to the point where core reading, writing and maths is intrinsic in any foundation course or qualification at level one or two.

We’ve made great progress towards that goal.

Since 2008, we’ve seen the number of adults accessing programmes with an embedded literacy and numeracy component more than quadruple – these are courses covering any number of areas, from hairdressing to horticulture, that include the development of core literacy and numeracy skills.

In 2008, less than 15,000 adult learners accessed courses with literacy and numeracy.  Last year, that number was 35,000 and this year it will be as high as 70,000.

The increase in learning opportunities reflects the efforts of many stakeholders, including employers, unions and ITOs, as well as tertiary education providers. Adult learners have shown a willingness to improve their literacy and numeracy skills if programmes are relevant to their goals.

It’s still early days.  While increasing participation and awareness is the first step, it is clear that what we need to see now is improved learner results.  That is the yardstick right across tertiary.

Wider Policy Review

While the operational and compliance reviews have addressed some important aspects of ITO performance, I think now is an appropriate time for a slightly wider look at the industry training model to ensure that our settings are right.

The New Zealand model has some key advantages – it is industry-led, competency-based, and flexible for employers and trainees.  It is likely that the model is fundamentally okay, but given the experience of the last two years I think it’s important to have a wider scan at this time.

It is important that we have a clear, coherent system that is easily understandable to learners and employers, and that responds to the needs of industry.

The Ministry of Education is conducting the review, and I am pleased to announce the terms of reference (available on the Ministry of Education website).

This review will look at where the current model has come from, how industry training works in other countries, and whether the current system can perform to its full potential. 

I look forward to receiving input from employers and ITOs as we progress the review. I expect to be considering any potential options for change around the start of next year.

Moving Forward – Where to From Here

I appreciate that the changes that we have made in the ITO sector, and in particular the funding rules may require new business models for some of you. These changes are necessary to lift the accountability of the industry training sector, demonstrate that your respective industries value the services ITOs are providing and most importantly ensure that trainees successfully complete qualifications.

For some of you, this will require structural change. I expect to see ITOs continue their discussions about the best ways they can meet their industries needs. That is a decision each ITO needs to make and I encourage you to keep talking to each other, the ITF and the TEC to ensure your sector meets the needs of your industries and trainees.  If you focus on supporting the employers and trainees effectively, the right solution will present itself.

Don’t delay because of the policy review – whatever the outcome a smaller group of stronger ITOs is the most likely structure going forward.  Urge you to make your own destiny in that regard.

Christchurch Earthquake

The response to the Christchurch earthquakes is also showing us how the different parts of the vocational education sector can work together.

The BETA group of ITOs and ITPs in the Canterbury region are working hard to cooperate, innovate and provide pragmatic training solutions for the reconstruction. The Built Environment Skills Strategy is another example where collaboration between ITOs and ITPs is growing.

With the rebuild in Christchurch and the growing strength of the economy generally, we will need large numbers of skilled workers. It is important that ITOs show leadership with their industries to get more employees into training more staff to meet the future demand required.

Summary

In closing, the Government is continuing to invest in quality vocational and industry training, but we want to see that investment deliver results for students, taxpayers and the economy.

You will all play a key role in ensuring vocational training has a bright future in our country, and I look forward to working with you to help make that happen.

It’s all part of making our economy more competitive, and obtaining the skills we need to build that brighter future.

Thank you and I wish you all the best for your conference.