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Wednesday, 27 June 2001
Page: 25254

Senator CARR (4:28 PM) —I seek leave to incorporate the speech of Senator George Campbell on the Vocational Education and Training Funding Amendment Bill 2001.

Leave granted.

The speech read as follows

Funding of Vocational Education and Training is integral to Australia's future and the cornerstone of our ability to become a knowledge nation - something the government is clearly ignorant about. After all, the Howard government approach to vocational education in the past has been nothing more than to cut funding, and squeeze resources.

It is bodies like ANTA and the quality of education we provide our youth, that suffer through a lack of funding, so that the government can afford their massive wasteful advertising budget in the lead up to the next federal election.

Labor supports this bill and supports VET. It is vital that our nation provides the educational infrastructure necessary to support a vibrant vocational education sector.

While this bill aims to increase funding for Vocational Education and Training (VET) to meet CPI increases, it is insignificant compared to the pressures on the VET system and does not provide for its future needs. The VET system should be at the centre of Australia's innovation and knowledge economy. Investing in skills and training gives us the ability to compete in a global economy.

If Australia wants to be a skilled nation it has to increase expenditure on VET. A significant funding increase to the VET system would be a key way of fostering the formation of the knowledge / innovation economy - which is the high road to better economic development.

This government has clearly ignored the importance of developing our knowledge and skills base. The funding agreement for 2001 to 2003 is only concerned with addressing price adjustments. In real terms there is no increase in funding just a partial restoration of the previous cuts.

The Bill will also make additional growth funds available to ANTA for distribution to a State. At first glance this is a step forward but we find that “it is contingent on that State approving the ANTA Agreement, the Minister determining that the State complies with the Agreement, and the Minister determining that a specified amount is to be paid to ANTA in respect of that State.”

If that isn't difficult enough a further hurdle is included in that the Minister's determinations in respect of a calendar year for all States may not exceed the limit provided for in the table—$50 million in 2001 and $75 million in 2002. In this day and age the last thing we should be doing is running down our skill base by freezing funding or making it impossible to obtain.

Don't forget also that this Government has already slashed an estimated $240 million off VET funding since coming to office in 1996.

Moreover, they have cut the former (Labor) Government's commitment to fund $70 million per annum for growth of the VET system

When you consider that there is now, in fact, increasing demand for vocational and education training, the system combined with this funding freeze is at breaking point. In 1999, 1.8 million people participated in the VET system - a 7.3 per cent increase since 1998, and an increase of 29.4 per cent since 1995

Capped funding plus the increased demand for vocational and education training leaves the system cash strapped with the quality of service falling as the system stretches itself to meet demand.

So all in all, there's not much in this Bill for the VET system and in fact it shows a continual failure by this Government to recognise the importance of skills and training to Australia's future social and economic prosperity.

It is imperative that there is a coordinated, national approach to Vocational Education and Training and the Australian National Training Authority is the best model available to deliver this national coordination. The ALP supports the allocation of funds to the Australian National Training Authority for vocational education and training.

ANTA was an initiative of the former Labor government that was outlined under the One Nation package. The One Nation package brought Vocational education and training into the 21st century with the creation of ANTA. Unlike the coalition government, which constantly and desperately clings to outdated notions of state sovereignty over the commonwealth, Labor recognises that the real issue is Australia's place in this region and its place in the world.

Workers skills are becoming more and more portable today than they ever have been before. They change jobs within their industry regularly and even cross industries several times in their career. Employers need to know what skills potential workers have and workers need to have portable skills that are marketable. For these reasons a national system of qualifications based on industry developed training standards is essential. From its formation in 1992 to 1995, the Labor Government lived up to our national responsibility in funding ANTA, and did much more. It provided $70 million per year to fund further growth of ANTA until 1995 and provided an additional $100 million for growth in the vocational education and training sector.

In comparison the coalition's record in this area is a disgraceful blight on our national reputation. Since the Howard Government's election in 1996 they have failed to deliver adequate funding to vocational education and training. Immediately after coming to office the first act of the Howard Government was to begin to cut funding to ANTA.

It introduced a five per cent cut to ANTA's overall funding but didn't stop there. It also ended the five per cent real annual growth increment on base funding to ANTA. These cuts were a fundamental reversal of policy and ripped at the heart of the entire vocational education and training system in Australia.

Two years after their election in 1998 the Howard government dealt another significant blow to vocational education and training by reducing annual funding to states and territories for vocational education and training in the budget. This measure was explained as `an incentive to the states to achieve efficiency gains in their vocational education and training operations'.

This government has taken every opportunity available to cut funding to the vocational education and training sector and reduce the standard of education available. There is a close link between investment in education and training and research and the development and the capacity for firms, individuals and the economy as a whole to adapt to take advantage of growth opportunities.

The VET system should be a central component of this strategy. It's a key training system for our manufacturing sector, which is an essential driver for the economy. Yet, the funding freeze in the VET system undermines our ability to adequately grow the manufacturing and services sectors as part of a growth strategy in the global economy. It's indicative of this government's failure to adequately fund investment in education and training, and for that matter research and development.

It would be appropriate to mention some recent figures that highlight this Government's poor investment in knowledge and training. Our investment in knowledge is on all counts below the OECD average. Public expenditure on education is 4.3% compared with the OECD average of 4.6%. Our R&D spending is half that of the OECD average. While software expenditure is 6.7% compared with 7.9%.

The effective funding freeze in this VET bill together with our wider under-investment in education and research is significant. Simply, this under-investment in knowledge-based activities is fundamentally linked to the decline in Manufacturing as well as a constraint on other sectors such as IT, communications and key service industries.

Australia's under-investment in core assets of the knowledge economy has widened to around 1 to 2 per cent of GDP - well in excess of $7 billion dollars. And if left to grow this knowledge deficit will widen to around $135 billion in terms of education / innovation spending.

All of this undermines our ability to compete and the results of this are now starting to show up in our trade performance. There is now a widening intellectual trade imbalance. For example, IT&T is the fastest growing area of world trade. Yet Australia imports more IT&T products and services at twice the rate of exports. An efficient well-funded VET system is an essential part of solving this imbalance.

Australia's trade deficit on IT&T has increased $3 billion under the Coalition from $6.73 billion to $9 billion in 1998-99. And the deficit on IT&T is predicted to triple to $28.7 billion in deficit by 2010-11

What this Government is doing by undermining the VET system's funding is undermining our ability to compete, grow and adjust. This is not a satisfactory situation.

This government claims to support VET, they say that it is a good thing for employment and the economy more generally, which is true, we agree with that, and listening to Minister Kemp you would really think that the Coalition believes in the virtues of vocational education and training, the following is a quote from a speech Minister Kemp made in July of last year to the ANTA conference in Melbourne;

“The Commonwealth Government is committed to developing a social coalition in Australia based on strong partnerships between individuals, families, business, government and the community and welfare organisations...

And education and training is at the heart of that social coalition.

Education and training is the foundation for a prosperous, democratic society. It is more than the acquisition of knowledge. Education helps develop analytical and problem solving skills. It develops an inquiring mind and promotes innovation.”

Fine words indeed, but they do not have a scrap of serious commitment to the VET system in them. If there were, Minister Kemp would be drastically increasing the funding to make up for the Coalition's past cuts and to cope with growth in demand.

When we consider the funding freeze the VET sector has been placed under since this government came to power you begin to realise that the VET system is just not being given its due respect. They support VET, they support training and apprenticeships, but won't fund it so that it works properly.

The other false claim this Government makes in relation to the VET Bill is that it improves the quality of the VET system. They claim this by arguing that their so-called `growth through efficiencies' measure, is improving the standard of courses and training. But in reality, with increased demand for courses and a funding freeze, the quality of VET courses is only going to decline further.

I want to now briefly expand on the problems with this so-called “growth through efficiencies” funding arrangement. The growth through efficiencies funding model is a cynical attempt by the Coalition to shirk its funding responsibilities onto the State Governments.

Rather than make up its share of the funding, the Government demanded that the states accommodate the growing numbers of VET students through efficiency gains. While some efficiencies may have been achieved, the Senate References Committee VET inquiry found that funding cuts have reduced the quality of training. Particularly as efficiency gains have quickly reached their limit with little slack to make up the funding short fall.

In reality most of the `efficiencies' have been gained at the expense of reduced service quality, especially in the TAFE system.

Most State governments, both Labor and Coalition gave testimony that they have had their VET systems cut to the bone. To quote from the Victorian Government's submission:

“In the last few years Victoria has been able to achieve some significant growth in apprenticeships and traineeships, but it has been at the expense of some these [quality] issues ... we cannot have quality and growth in a national system without additional resources. From our point of view we have no interest in nationally consistent mediocrity”.

Even ANTA, who generally support their Minister to the hilt, have been forced to admit that:

“... if growth in new apprenticeships were to continue at the current rates, current funding arrangements would be unsustainable and they would expect to have difficulties restoring future demand for new apprenticeships”.

Not only has this Government frozen funding they have also aggravated the situation by then turning around and aggressively promoting apprenticeships and traineeships.

Under the funding arrangement the State governments are forced to divert further funds to pay for a new apprentice or trainee's courses. So long as the States continue to treat a new entrant as an entitlement the Commonwealth promoted growth of new apprenticeships calls on their VET budget outside their control. This means State governments are forced, by the Federal Minister's own deviousness, to divert resources from the public TAFE system.

Another key facet of achieving a higher national skill and knowledge base is that every one has access to education and training. A nation is only as rich as its knowledge base.

The VET system, is providing training to a significant number of people from disadvantaged groups and backgrounds, who equally need to access well funded education.

In a Sydney Morning Herald article of 15 August 2000, it was highlighted that there were a disproportionate number of students from disadvantaged areas taking up VET, particularly in secondary schools. The survey conducted by the Australian Council of Educational Research said that the take up rate is higher among students who lived in country areas.

The Federal government cannot ignore these trends towards VET as a means of accessing further education and training to boost employment and hence alleviate disadvantage. Therefore a funding arrangement that does not recognise growth in numbers of recipients or the loss of revenue associated through the subsidising services is unacceptable and will only lead to a diminution of standards.

A report by the House of Representatives Standing Committee on Employment, Education and Training entitled “Today's Training. Tomorrows Skills”, released in July 1998 recommended (point 6.2) that:

“....the Commonwealth should provide additional funds on a dollar for dollar basis to State/Territory Governments through the Australian National Training Authority, to assist TAFE institutes enrolling a disproportionately large number of disadvantage students.”

The Government in its reply stated it did not support this recommendation. This report was looking more specifically at TAFE as VET service providers, and highlights again the need for an adequate funding structure that is commensurate with growth in demand for services rather than price movements.

But the Coalition isn't interested in measuring the success of the VET system on the basis of criteria such as the number of people from disadvantaged groups they educate.

No, they are only interested in reduction of unit costs. They couldn't care whom these effective funding cuts effect. To quote from the NSW Government's submission to the Senate VET inquiry:

“The key indicator of success under the (Commonwealth Government's) policy is the reduction in unit costs. Other measures, such as quality, ease and cost of access, participation by disadvantaged groups are not considered relevant”

They only care about penny pinching and this undermines an important equity role performed by the VET system.

We should be pursing policies that help us become a highly skilled nation and increased expenditure on the VET system is an essential part of this approach. We should be increasing investment by firms and by government in education, vocational training and, for that matter, R&D.

We should progressively increase investment in education and training qualifications, especially computer literacy, until we are comparable to leading economies. And we should give existing and new workers the opportunity to acquire new skills and qualifications in the new economy, including computer skills. Unfortunately the Howard government just isn't up to the task.