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Tuesday, 22 May 2012
Page: 5038


Ms LEY (Farrer) (17:00): I rise today to speak on the Skills Australia Amendment (Australian Workforce and Productivity Agency) Bill 2012. This is a bill that seeks to establish the workforce and productivity agency in accordance with an announcement made by the government in their 2011-12 budget. This agency will take over from Skills Australia and will expand the mandate of Skills Australia.

By way of background, as I said, the agency was announced in the 2011-12 budget, and the budget indicated that the new agency would develop sectoral workforce development plans, undertake research, consult industry and disseminate information on workforce planning issues. The agency would also have responsibility for administering the national workforce development fund, a fund worth a total of $558 million over four years and incorporating the $200 million critical skills investment fund announced in the budget. So this bill is giving effect to a budget announcement, but the Minister for Tertiary Education, Skills, Jobs and Workplace Relations announced in September last year that the government would bring forward the work of the agency. An interim board was appointed and it commenced on 1 October 2011, nine months ahead of schedule.

In a speech to the National Press Club the minister attributed the urgency of the new arrangements to 'rapid change in key industry sectors and workforce pressures exerted by the 'patchwork economy'. I am trying to give the House a sense of the patchwork nature of the introduction of this bill and these measures. A minister made an announcement. Like a lot of the government's announcements, it was designed to give the impression that, No. 1, the government cares about you and your future, and, No. 2, it is doing something to make that future more pleasurable and productive—in this case, in the area of skills.

But the coalition's concern about this bill is that, while there is a lot of fluff and activity around the edges, when you drill down, what is really going to change in this area? In any case, how can the government create the productivity and jobs that it talks about so often? The Prime Minister rattles off skills, job creation, productivity et cetera as if these things are happening in the Australian economy with a wave of her magic wand; but those who understand economics know that it is a productive, confident small business sector that enables people and organisations to invest, to look to the future and to have the courage and the faith—two things they do not really have when it comes to this government.

To go back to Skills Australia: it was, as we know, a creation of the Rudd Labor government. Just four years on, Labor looks like it believes it has already passed its use-by date. Skills Australia was a core component of the government's Skilling for the Future policy, which had a total price tag of $1.9 billion, with Skills Australia costing $19.6 million to set up. I think it costs about $5 million a year to run. This bill appropriates $25 million over three years. You can already see with this succession of ad hoc announcements and the way things are being cobbled together that there is some empire building going on. Clearly the government is indicating with this bill, this initiative, the speech by the minister in the Press Club last year and bringing the whole agenda forward nine months that nothing is really quite working and that Skills Australia has not achieved what it was set up to do.

Its mission in its own words on the Skills Australia website is:

To provide independent and high quality advice to ensure the government's investment in education and training promotes the development of a highly skilled workforce, increases workforce participation (especially among less advantaged groups), meets the needs of industry and increases Australia's productivity.

That is an enormous, sweeping scope. I am not particularly critical of Skills Australia. I have met with them on several occasions, and they have produced some good documents. They have produced some good research and have highlighted the challenges facing a diverse and changing economy in terms of its productivity, its future and its employment participation. They have been a good small organisation dedicated to this research and with the level of expertise to do these things.

So it has done a very good job and has provided comprehensive advice to government. The failure does not really lie with Skills Australia; it rests with the government—a government perhaps unwilling to heed the advice provided by Skills Australia in publications such as Australian workforce futures: a national workforce development strategyand Skills for prosperity—a roadmap for vocational education and training. Both of these are highly comprehensive documents making practical and achievable suggestions to boost skills and, ultimately, employment; yet the government prefers to focus on what makes for the best media grab as opposed to what makes a sound platform for our nation's future economic development.

This is a government that will be remembered for its training debacles. There was the highly vaunted Productivity Places Program where 31.8 per cent of job seekers dropped out prior to completing their courses. I would like to know whether the government has any expectations for improved completion rates for these courses. I could speak all day regarding the failings of the Productivity Places Program. However, I will keep it short and restrict myself to reminding the House about the rorting of the program by some providers and the fact that there was no consideration given to just how many security guards and certificate II qualified retail assistants the economy needed at that time. Let us face it: this government has let down job seekers—and not just with foolhardy programs such as the Productivity Places Program. Thousands of job seekers have found themselves forced onto a training treadmill at the behest of this government. With the virtual abolition of Work for the Dole, job seekers are being pushed into training for their mutual obligation activity. Yet these courses are not leading to real employment outcomes. The point has been reiterated by Andrew Forrest, in particular, regarding Indigenous Australians, some of whom have multiple certificates yet have failed to find real jobs. We need a training system that provides Australians with real job prospects.

This new agency sees another three members added to the existing board of Skills Australia—or formally added, because they were actually added in September last year—and of course additional funding. But I turn to the membership of the board to note that the unions are represented with two members. There is no representative from the training sector, and this point was remarked upon by training providers in their submission to the Senate inquiry. Where this new agency really differs from Skills Australia is that it will have responsibility for the administration of a $558 million Workforce Development Fund plus a $20 million fund to allocate to unions and employer organisations. So, again, the government has managed to find a slush fund for their union friends. Given the recent and highly publicised mismanagement of union funds, I find it outrageous that they would be so blatant about funding their union cronies.

I turn now to the National Workforce Development Fund. This $558 million fund is intended to provide a co-contribution for training. The government intends that this fund will train 130,000 people, with an estimated allocation of $4,292 per person. The National Workforce and Productivity Agency will supposedly identify the key areas of skills shortage for the direction of these training dollars. I am concerned, however, that for some employers the required contribution may still put training out of reach. If you are a small business and you are asked to make a 30 per cent contribution—I think that is the requested contribution under these rules—to the training effort, it just might be too much for you as a small business. It might not be too much for a much larger business to put in their required contribution of 50 per cent, but I do not see this as being particularly small business friendly.

Given that there is a forecast training shortfall of more than 250,000 skilled employees over the next five years, it will be an increased challenge to ensure a match between skills expansion and work opportunities. It is vital that training produce the skills that industry is prepared to pay for. This will not happen if the agenda is warped by the government having to keep its favourite stakeholders happy.

On the topic of training, I raise something that many business owners have raised with me as I have travelled the country. Many do not see the need for their staff to spend months undertaking entire certificate-level qualifications. Instead, their preference would be for the employee to undertake certain skills sets—modules or components of various courses. We do need to give far greater consideration to flexibility in training, and employers should be able to tailor the training needs of their organisation as best suits them. This may also grant us a greater capacity to improve productivity and go some way towards meeting the forecast shortfall of 250,000 skilled employees by focussing instead on the particular skills sets they need to undertake their work. So, while I recognise that the OECD measurements are made on the basis of qualifications completed, there does need to be a recognition within the measurement and within the datasets which are looked at and which feed into government policy that there is not always a need for a complete qualification and that in up-skilling or simply getting the required skills for a job you may not need a completed qualification. When the government demands entire qualifications, I have some sympathy because that, as I said, is the OECD measurement request. But they need to do better; they need to be able to demonstrate what is really going on in the training market.

The Senate inquiry submission from the Queensland government highlighted that there is evidence that the purchasing of training by both the states and the Commonwealth is fragmenting skills investment and duplicating effort and that this government could even consider specifically earmarking funds for the states. Again the Labor government's current arrangements show just how cosy the Labor government is with the union movement and how well it is looking after them with the proceeds of the funds allocated under this bill and the Skills Australia mandate. The Queensland government made a very good point, because if a Commonwealth government and a state government both allocate taxpayer dollars for the training effort—the qualifications task—the absolute No. 1 requirement that we as the custodians of those dollars should have is that the training task not be fragmented and that taxpayers get good value for money.

I have heard examples as I have travelled around and talked to state training authorities—and I pay tribute to them. While I recognise the need for a federal body of this type, state training authorities and training and skills organisations know what is going on in their own states, and they provide valuable information—and, of course, they provide it to the Commonwealth as well. But I have heard stories of these organisations saying, 'We turned around and saw that, under one of these Commonwealth federal programs, money had been allocated to something we knew nothing about and we, unaware that federal dollars were flowing also, might have been sending money in that direction.' On the ground, that does not work. It does not work for the employer or the training provider, it does not particularly work for the consumer who is going and doing the studying and it certainly does not work as value for money for taxpayers.

Much of the funding from the Workforce Development Fund that will be administered under the legislation is old funding in a new guise. There was, for example, the $200 million from the Critical Skills Investment Fund. The fund was short-lived, but the money has been folded into this fund. Of course, when a government has such abysmal economic credentials, it has to find money somewhere to make new announcements and grab that feel-good media opportunity. What could be better than rolling over a newly created fund and making it look like new money? This government does seem to hope that the electorate has limited memories of this sort of thing and does not realise that it is not all new. With the Workforce Development Fund, the government is attempting merely to reuse and recycle.

I certainly hope that this agency will help boost our national productivity and create real employment opportunities. Unemployment is tipped to increase to 5.5 per cent in the 2012-13 budget outlook. Regrettably, as with its misunderstanding of the needs of the vocational, education and training sector, the government has done the dodgy on employment services providers and the newly unemployed by slashing almost $200 million from Job Services Australia. The majority of this $200 million consists of savings from slashing assistance to the newly unemployed, or those classified in the jargon as stream 1. In August 2011, 24,718 stream 1 job seekers had been unemployed for 12 months or more. This figure will only worsen if Labor cuts the funding to those job seekers. Everybody recognises that, while the government may describe the unemployment figure as 'notionally lower than some others', the figures are quite resistant and it is quite difficult if you are unemployed to get a job. Therefore if you have been out of work and you are a stream 1 client of a job services provider you have already been out of work for at least 13 weeks, and so to pull back on the resources to get stream 1 clients back and engaged in the workforce quickly could well work out to be a disastrous mistake.

I am concerned that Labor are condemning Australians to languish on welfare unnecessarily. Their failure to support a system of early intervention is to the detriment of those who need assistance in finding a job. I also believe that this government's track record in overspending and under-delivering is a real concern. I am also concerned by the language and the announcements surrounding this particular bill.

We cannot let this government get away with talking up its own unemployment figures when we consider the disastrous figures for youth unemployment. There are areas in my electorate in western New South Wales where youth unemployment—that is, unemployment among 15- to 19-year-olds—is about 25 per cent. There are areas in the northern suburbs of Melbourne where youth unemployment is closer to 41 per cent. No government can ignore those figures, yet in the last budget we never saw youth unemployment announced, mentioned or tackled—not once. The rate is, I think, 40.8 per cent in Broadmeadows, and there are areas of Western Sydney where it is up towards 30 per cent. I will take this government seriously on its economic credentials on jobs when it takes seriously the shocking level of youth unemployment in this country.

To go back to the bill itself and make a few remarks, I did mention that Skills Australia is transitioning to the new agency. It has announced in its business plan how it will do that—it will include having consultations with stakeholders, developing operational procedures and setting up systems to support the administration of the fund. Let us just hope that there is not too much bureaucratic staffing to no particular end or too many announcements et cetera around that particular part of the transition to the new fund. It is only a matter of adding some members to the board, changing the name and changing some of the tasks.

The Parliamentary Secretary for Higher Education and Skills described the rationale for the proposed new agency in her speech to parliament. She said that it consisted of two points: industry and union partners had called for an increased focus on workplace productivity and better linkages between skills funding and industry needs, and Skills Australia had recommended a new partnership approach to workforce development involving government, industry and enterprises. They are fairly innocent statements. I wonder why the entire program had to be brought forward by nine months because of some urgent productivity agenda, which was not particularly well identified by the minister at the time.

When the Senate committee considered this bill they received nine submissions. Overall, some of those submissions were quite welcoming of the amendments, but I think we should drill down and look in a bit more detail at what those submissions and the committee's then considerations tell us about this bill. They noted that there was a shift in focus from training to workforce development. I think that is just a question of language, as is the change of name of the particular body and the expanded membership of the body. A nine-member board is quite large and could in some circumstances be considered unwieldy—but maybe not in this case. There is a new role in providing research and analysis and a new role in the provision of advice on Commonwealth funding.

I note that the Australian Chamber of Commerce as well as Industry and Restaurant Catering Australia argued in their submissions that the new requirement for employee representation should be matched by a requirement for employer representation. That is really quite important because the bill says that, in making up the new board of the Workforce and Productivity Agency, the membership has to have certain qualifications and characteristics. The members of the board must have between them experience in academia, the provision of educational training, economics, industry—and critically but not unsurprisingly—the representation of employees. The ACCI submission, while not particularly arguing with that, did wonder why this final requirement for the representation of employees was not matched with a similar requirement for the representation of employers.

The bill requires, I acknowledge, that there be industry representation. But industry representation is not defined. I think that unions would describe themselves as representative of industry, and, if we have those who represent employees on the board, we should also have those who represent employers. The recommendations from the Chamber of Commerce and Industry and from Restaurant and Catering Australia were that this proposed paragraph be changed from specifying the representation of industry to specifying the representation of employers so as to add clarity and resolve to an apparent inconsistency. I am not holding my breath that that will happen, so I simply ask the government that, when they move ahead, they bear that statement in mind and that, accordingly, the industry representation on the board be very much focused on the needs of and the environment facing employers, particularly today.

In its submission, the Australian Council for Private Education and Training called for a training sector representative in the membership of the agency. One of the things specified was that the board member was required to have experience in educational training, but that does not amount to specifying a training provider—someone who is at the cutting edge of providing training in the real world. I think that is a huge missing level of expertise that we are not demanding as a requirement of a member of the board of this new body. The proposed new agency will continue to have the same functions as Skills Australia in providing advice to the minister on Australia's current, emerging and future workforce development and workforce skills needs. The bill proposes two additional primary functions. These are: to provide advice to the minister on improving the productivity of the Australian workforce; and to provide advice to the minister on the allocation of Commonwealth funding, including through the National Workforce Development Fund, to address Australia's workforce development and skill needs and improve its productivity. So this board and this agency will have quite widespread powers if they are recommending how to allocate the funding in the National Workforce Development Fund.

The New South Wales Department of Education and Communities, in noting that, also noted the potential for duplication and overlap in this function, given that the Australian Productivity Commission also undertakes research on productivity. So if this body is required to advise the minister on productivity needs in the Australian economy, or how best to maximise those, why would it not make use of the Productivity Commission? Is there duplication? Is there overlap? I do hope not.

In advising on allocation of funding, which was the second task that I mentioned, the agency will provide 'advice on the allocation of Commonwealth … funding including the National Workforce Development Fund'. But the 2012 budget papers state that the agency will be responsible for administering the National Workforce Development Fund, which is a very direct role in allocating funding—much more direct than the wording of the bill suggests. It is worth noting that the government needs to correct that inconsistency. General advice on the allocation of Commonwealth funding, as this bill says, is incredibly broad and general, and we have to remember that there are other agencies and institutions that are well equipped to do this; we have to be careful about giving any particular agency powers that are too widespread. The submission from the New South Wales Department of Education and Communities points out that the use of the word 'including' leaves scope for the agency to provide advice on Commonwealth funding more broadly, and it is not limited to providing advice on this fund. That is an inconsistency that should be corrected.

There is a new, additional function, which is to 'assess research relating to improving the productivity of the Australian workforce'. The wording of this function again differs from what is in the budget papers because, while the budget papers stated that the Australian Workforce and Productivity Agency would undertake research, the bill refers only to the assessment of research. So we need to be careful. We have increased the funding to this organisation, we have changed its name, we have widened its scope, we have increased the board membership and we have given it, it seems, quite widespread powers, and the empire is beginning to build. We need to be careful that we did not continue to allocate scarce government dollars and scarce government resources to functions that could well be performed by other agencies. In fact, I make the point that these functions should be being performed within the Department of Education, Employment and Workplace Relations.

To have the Skills Australia body, soon to change its name, sitting to one side—why are we not confident in our Public Service that we would not task some of the smart graduates that joined the Public Service with some of this research and some of this assessing of research and with coming up with some ideas? It would make for a public service that has good career pathways, is an interesting place to be, and attracts the best and brightest graduates. But if we take all of those sorts of tasks away from the rank and file public service and put them out in statutory bodies or authorities to one side, it is not giving a very good message about the quality of our Public Service. I have a great deal of faith in the quality of our Public Service, having been a member of it years and years ago, and I know we have some really smart people there.

I talked about the financial implications and the need to be very cautious about those costs increasing. In conclusion, I say that the bill seeks to formalise arrangements that have been in place since late 2011. The coalition does not seek to oppose this bill—from 1 July the Australian Workforce and Productivity Agency will replace Skills Australia—but I say, on behalf of the coalition, that we will be watching very closely to see that this does not become yet another clumsy, inflexible organisation that is dishing out money to favourite people in favourite circumstances while ignoring sound, sensible advice from state and local agencies that really understand what the skilling and the workforce needs are of the people they represent in their varying and diverse parts of Australia. I thank the House.