"If It Ain't Broke - Don't Fix it"Enterprise and Commerce
Speech to the ITO Federation Annual Conference
Ladies and Gentlemen, members of ITOs and key stakeholders.
I'm pleased to be invited here to discuss some of the challenges and opportunities facing you and, of course, to put on record for you National Party policy on industry training.
Challenges and opportunities are closely related. As you may know, the Chinese have one character that means both danger and opportunity - reflecting how closely related these two concepts are.
While there are currently a number of challenges to the future of industry training, I'm very optimistic about the future of the current Skill New Zealand Strategy.
I think it is well placed to take full advantage of the opportunities that will present themselves as we enter the new millennium.
Today I'd like to address three main issues:
1. National Party Policy
The National Party Policy
Let me start with the National Party Policy on industry training.
National is committed to the Skill New Zealand Strategy.
We believe in training that:
* has wide industry involvement,
* is of high quality;
* is accessible to all; and
* leads to transferable skills.
We introduced the Skill New Zealand Strategy in 1992 because the old apprenticeship system was not delivering the range of training required for a dynamic competitive economy.
It was turning out people in a narrow range of traditional male dominated industries. Fixed wages for apprentices kept adults out of such training, while numbers were declining due to structural shifts in the economy.
Something had to be done, a fact recognised by all major groups at the time.
The Skill New Zealand Strategy combined both education and labour market objectives as the two are inextricably linked.
And it has worked.
Since 1993 the numbers in industry training have trebled to over 50,000 trainees, and industry training has been extended to 32 industries which previously did not have structured, formal training.
The very fact that we have here today representatives from industries as diverse as the ambulance industry, community support services, seafood, aviation and sport and fitness, shows how far we've come.
More than three quarters of the whole work force now potentially has access to structured training, 16% of trainees are Maori, and women now comprise about 20% of trainees - a vast increase on the previous representation in the workforce.
And let us not forget that behind every number is a person. On my visits to companies and in my electorate I regularly meet people who have benefited from the industry training strategy.
People like Alan Tainui who left school at an early age and could barely read or write. Two years ago he entered industry training in the forestry industry.
Now he has gained 65 credits towards a National Certificate that he plans to finish this year.
Not only have his pay packet and job responsibilities increased commensurately with his new skills, but he is now able to help his grandchildren with their homework as he is able to read and write with confidence.
Meanwhile, Juanita Temarama is the country's first woman to complete the National Certificate in Electrical Engineering. She has now set her sights on a BE (Electrical) degree from Massey.
The Government has not shirked in its commitment to industry training.
Under successive National-led governments funding for industry training has trebled: from about $20 million in 1993 to $65 million in 1999/2000.
I make these points to underline the fact that the Skill New Zealand Strategy is working and is having a real impact on people's lives.
Some people, including opposition political parties look wistfully back to the past, and want to return broad-based flexible industry training back to a narrowly-focussed rigid apprenticeship system.
In fact, it is one of the great successes of the last nine years.
This is why I think the greatest challenge to industry based training today is Helen Clark and the "back to the future" view of the world that the Labour Party promotes as skills policy.
When Labour released their "skills strategy" I said that it was not "a plan for the 21st century, it is designed for 19th century workplaces."
I stand by that comment.
National wants to move industry training forward, Labour will drag it back.
I was stunned to hear Helen Clark say on Monday's Leaders' Debate that Labour would pass a new apprenticeship act to help the thousands of kids out there get the chance to go for a trade qualification.
Has she not heard of the Industry Training Act? What does she think your sector administers 40, 50, maybe 60 hours a week? Most importantly, what does she think industry trainees do?
Let me set the record straight for Miss Clark.
In 1990, there were 22,500 apprentices and cadets. There are now 53,804 New Zealanders with formal industry training agreements with their employers.
They may call themselves apprentices, trainees or simply employees but they are all learning and being formally assessed for national qualifications.
Every time the Labour Party implies that there are no apprenticeships, they are undermining the efforts and successes of over 50,000 New Zealanders who are working towards qualifications while doing their jobs.
This training is soundly based. Some 84% of industry trainees are working towards a national qualification at Level 2 or above.
These are broader than the former Apprenticeship Orders and they are highly portable because of their modular nature and registration on the National Qualifications Framework.
More people than ever before are also training in traditional areas.
In the past 5 years, plumbing apprenticeships have increased nearly four-fold, building and painting apprenticeships have each doubled, as has the number of apprentices in electro-technology.
At the same time, significant new areas of structured training have been opened up.
Labour Party Policy
So where are the problems and what are the Labour Party's solutions to these
Well, they will take the traineeships, and rename them "modern apprenticeships". Big deal!
No doubt they are influenced by Modern Apprenticeships in the UK- well I have news for Helen Clark and Steve Maharey - this is nothing more than what we've been doing in New Zealand for the last five years.
They will arbitrarily reduce the number of ITOs by making you merge.
We say that decisions like the number of ITOs and the best way to deliver training are best left to employer groups in the industries and ITOs themselves.
If you want to work closely together, in a virtual merger so be it. If you want to go the whole hog, fine, we'll help you do it. But we won't force you to like Labour will.
Labour will also give you new roles - including setting trainees' wage rates and policing trainees' work conditions.
Imagine what this will do to your relationship with employers - being policeman and service provider in one!
One Labour Party idea that may, however, be superficially attractive to some of you is the idea of levies to fund your administration costs.
Everyone likes a free lunch. However, our policy is that employers should pay ITOs not because they have to, but because they want to, because you are delivering what they want.
Labour also wants to throw up to $20 million a year at an employer subsidy scheme that will not work. Yet previous experience shows that 90% of employers who got subsidies to take on a trainee would have done so anyway.
The policy will be an expensive failure.
National is not proposing any radical changes to the Skill New Zealand Strategy.
That is not to say, of course, that we don't want to see some changes and improvements.
We must continue to improve and refine the Strategy because, in the knowledge age, standing still is the modern equivalent of going backwards.
Bright Future - 5 Steps Ahead
I believe that we have a major opportunity to make the tertiary sector work strategically for New Zealand in the next millennium.
The future of New Zealand will depend, to a very substantial degree, on the ability of our tertiary education sector (including industry training) to equip people with the new skills which will be needed.
To be successful, we are going to have to get the education sector co-operating internally more, and also interacting far better with research and development organisations and with business.
I wasn't happy with the analysis on this issue that appeared in the White Paper.
That's why the Bright Future package will create two new taskforces:
* a Higher Learning Sector Taskforce will examine the structure of the sector, including the relative roles of the Crown, enterprises and tertiary education providers,
* an Enterprise Education Taskforce will look at the degree to which current enterprise education arrangements meet the needs of business, community and individuals in the labour force.
This is a chance to help create genuine partnerships between industry and trainers, to promote a culture of constant training and to create a workforce with skills to thrive in the 21st century.
I would encourage ITOs and employers involved with industry training to participate in this process as you have some unique insights to offer.
As part of the Bright Future package, the Government will also be spending up to $20 million a year on enterprise scholarships to encourage links between enterprise and educational providers.
These will be available for advanced study with a research component, and advanced learning in technical areas.
We want to ensure that our best industry training graduates have the chance to reach their full potential and that employers get people with the skills they need.
You will also have seen the recently released Qualifications White Paper. I'm sure it contained no surprises for you.
It is clear that there is still a lot more work to be done in this area and I would value your involvement in this process.
The new industry training funding system I announced in June represents another significant opportunity for ITOs.
The system, which comes into effect next year, will give you greater flexibility to achieve better results. After all, you are likely to be the best ones to know what will work in your industry.
In return for this flexibility, however, you will be required to implement a new performance management system being developed by Skill New Zealand. This will provide us with better information as to how trainees are performing.
It is my expectation that this will also lead to increased per trainee credit outcomes by providing you with a strong incentive to ensure that trainees successfully complete their qualifications.
I appreciate that there is a balance to be struck between employers' desire for specific skills and the government's desire for more completed qualifications - however, we want to provide individuals with skills that will last beyond one job and build towards other qualifications.
Your discussion paper raises the issue of the funding cap. In the first few years of the Strategy when little was known about likely uptake, a funding cap was an issue of fiscal prudence.
And, while it is true that an upper limit is set on industry funding, in practice we have tended to operate a kind of "raising lid" policy as the substantial funding increases I outlined earlier show.
Unlike in the formal tertiary sector, where we had evidence of significant unfunded student places being carried by institutions, there is currently no evidence of unmet demand in industry training.
However, if this is an issue of concern for the industry, I would expect it to be looked at by the Enterprise Education Taskforce.
Funding for qualifications at Level 5 and above, is another issue of importance to some of you. I am aware ITOs are currently examining this issue for themselves, and it is something I imagine the Taskforce will want to examine.
Perhaps the biggest opportunity for you all is falling unemployment.
Unemployment has fallen for the last three quarters in succession. It is now 7% and figures to be released tomorrow are expected to show that it has fallen again.
At the same time employment is rising. In the first six months of this year 16,000 more people gained jobs, or about 615 people a week.
Rising employment means there will be many new unskilled entrants to the labour force, while others with rusty skills will come back in.
Now is the time for you to be promoting your wares to encourage employers to invest in the training they need to have a skilled workforce.
In your quest to raise skill levels, you must also not lose sight of the need for basic skills.
A recent Employers and Manufacturers' Association survey of manufacturers in the lower North Island highlighted difficulties that employers were having in getting employees with basic transferable skill levels.
It is therefore crucial that you ensure that trainees receive broader skills to enhance their employability.
Finally, I'd like to stress the need for you all to keep your eyes on the future.
For ITOs to continue to be relevant, you need to think beyond today's labour market.
You must look five to ten years out and imagine where you want to be, what the key issues for New Zealand enterprises will be and how you can best meet their needs.
As I said at the beginning I am very positive and optimistic about what the industry training sector has achieved to date, and more importantly, what it can achieve in the future.
I believe the current system is successful because it is flexible and industry driven.
We are not proposing change for change's sake, simply to increase fleeting electoral appeal.
The way forward is to make sure there is widely held vision for the tertiary sector and industry training's important role in the future.
The way forward is to make sure that ITOs and industries have more control - not less.
The way forward is to have more diversity - not less.
The way forward is with employers, trainers and employees working and learning together - not having government tell them how to train.
I believe that industry training, and New Zealand, has a Bright Future.