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Select Committee on the Future of Work and Workers
04/06/2018

CALDER, Mr Wayne, General Manager, Business Environment Branch, Department of Industry, Innovation and Science

DOWD, Ms Liz, Acting Group Manager, Improving Student Outcomes Group, Department of Education and Training

DURBIN, Ms Alison, Acting Group Manager, Workplace Relations Policy, Department of Jobs and Small Business

ENGLISH, Mr Dom, Group Manager, Higher Education, Department of Education and Training

GREENING, Mr Malcolm, Branch Manager, Industry and International Strategies, Department of Jobs and Small Business

HOPE, Ms Angela, Acting Branch Manager, Future of Work Taskforce, Department of Jobs and Small Business

MANNING, Mr Greg, Group Manager, Youth and Programs, Department of Jobs and Small Business

NEVILLE, Mr Ivan, Branch Manager, Labour Market Research and Analysis, Department of Jobs and Small Business

PALMER, Mr Bryan, Group Manager, Skills Market Group, Department of Education and Training

[15:29]

CHAIR: Thanks, everyone, for joining us today. I understand that information on parliamentary privilege and the protection of witnesses and evidence has been provided to each of you. The Senate has resolved that an officer of a department of the Commonwealth or of a state shall not be asked to give opinions on matters of policy and shall be given reasonable opportunity to refer questions asked of the officer to superior officers or to a minister. This resolution prohibits only questions asking for opinions on matters of policy and does not preclude questions asking for explanations of policies or factual questions about when and how policies were adopted. I now invite each of you to make a short opening statement. At the conclusion of your remarks, we'll have some questions for you.

Mr Manning : I have a short opening statement. I think we're the only department to have one. I'd like to start by acknowledging the traditional owners of the land upon which we meet, pay my respects to elders past and present, and extend that respect to any other Aboriginal and Torres Strait Islander people present or watching. The Department of Jobs and Small Business welcomes the opportunity to speak at today's hearing. In my opening statement, I want to briefly address the impact of technological and other change on employment in Australia.

As outlined in the department's submission, in our view it's difficult to predict the future impacts of automation on the workforce. The available research uses different models to predict the level of automation. Some focus on tasks and others on occupations. This means there are varying predictions of the vulnerability of the Australian workforce to automation, ranging from around seven per cent to over 40 per cent. Currently there's no measure of the rate of technological change and little evidence to support a correlation between technology and labour market change. There are, of course, many variables influencing the pace and extent of automation, including how technological capabilities will develop, their implementation costs, and social and regulatory acceptance.

The department considers it more likely that most jobs will change rather than disappear. Tasks within jobs will change, and their skill requirements will change. This means it's vital to improve labour market information to help people make career choices. The department is developing a more granular and up-to-date picture of what's happening across regions and demographics. We're analysing demographic data using traditional and real-time datasets, with the aim of helping people understand workforce trends in their region. The department is using Burning Glass data which scrapes online job ads using artificial intelligence technology. This provides real-time evidence on employer demand and the skills profiles for specific jobs. Burning Glass data also reveals how seemingly dissimilar jobs can share similar skill sets. We're starting to analyse these common skills to discover pathways between declining and growing jobs. This new data can help jobseekers and workers identify skills gaps, training needs and expanded career options.

Life-long learning is another area of interest to the department. The ability to continuously upskill will be an important factor in how well Australians transition to different jobs. In the 2018-19 budget, the government announced a number of measures to support people most impacted by the transitioning economy by providing opportunities to acquire skills. For example, the online Skills Transferability Tool will help identify an individual's current skills and how they are transferable to other jobs, and the Skills and Training Incentive will help mature-aged Australians build skills in the later stages of their career. These budget measures build on the department's ongoing initiatives to support Australians, particularly those in regional areas or experiencing unique challenges due to large-scale industry changes.

So I've outlined two key priorities around improving labour market data and skills which underpin the department's strategy to help prepare Australians for jobs of the future. However, it's important for individuals, industry and education providers to also play an active role in shaping this future. Thank you.

CHAIR: Would we be able to get a copy of that opening statement? Would any other agencies like to make opening statements? Thanks for coming today and thanks to those who arrived just after we kicked off. We are running ahead of schedule. We are coming to the end of this inquiry so you can imagine that we have accrued a lot of claims and counterclaims about the state of readiness of Australia to deal with these issues so it is a good opportunity for us to put some of those issues to you. At a high level, can we better try to understand what process the government is using at the moment to predict where the jobs of the future are going to be? One of the things we have been told throughout this inquiry by many witnesses is that, compared to other countries, Australia—that is, our government—is not doing enough to anticipate where the jobs of the future are going to be and it is not doing enough to work with industry, unions, employees and educational institutions to ensure that the skills that are going to be needed will be provided. There's a bit of an absence of government leadership in that space, especially compared to other countries. I don't expect you to agree with that but, before we get to the work that's happening overall, can we break down the different components? Starting with anticipating where the jobs of the future are going to be, what work is actually happening at a government level?

Senator PATRICK: As you answer that question, and I guess each department will contribute to that, could you can actually state what your department's responsibility is in respect of that as well, just to help me out as to who holds responsibility for what.

Mr Neville : At a very broad level, the Department of Jobs and Small Business produces annual employment projections. These projections are done at a detailed industry occupation skill and regional level and they cover the next five years. They are updated annually. The most up-to-date employment projections that we have are for the five years to May 2022. We will shortly be starting our next round of annual employment projections covering the five years to May 2023. These projections are anchored to the Treasury employment forecasts and projections that are included in the budget and are based on ABS labour force survey data for those various categories that I mentioned.

Senator PATRICK: Do you extend that data to establish a trend?

Mr Neville : That's right. In very simple terms, we're using a time series model. It's based very much on using the trend of the current data series but we also make some allowance for our knowledge of the jobs market. We make some allowance for initiatives such as the rollout of the NDIS, which we know will have an impact on employment. It's very difficult for us to incorporate in those projections some sense of what technological change will have on employment.

Senator PATRICK: Is that the diagram that's in your submission? There's a pie chart in there that gives a projection.

Mr Neville : Do you mean projection by industry?

Senator PATRICK: Yes, that's it.

Mr Neville : It is five years to May 2022. That comes from the Department of Jobs and Small Business.

Senator PATRICK: So you're the predictor in terms of responsibility?

Mr Neville : I'd prefer to use the term 'projector 'rather than 'predictor'.

Mr Manning : I am from the Department of Jobs and Small Business also.

Ms Hope : I might just add that, in the context of looking forward further—the predictions that Ivan is responsible for—we have done some work with KPMG to try to predict the areas where jobs growth might occur into the future.

Senator PATRICK: That's a funded study, is it?

Ms Hope : It is a funded study.

Senator PATRICK: That has been completed?

Ms Hope : It's nearing completion. There are four main areas where growth is predicted. Data and ICT roles are areas that are probably not unexpected.

Senator PATRICK: Is this beyond the 2022 projections?

Ms Hope : Yes, that's right. So there's data analysts, creative occupations, using digital clusters and cybersecurity and cyberlegal occupations. That's the first category. The second category is human resources, change management and capability roles, which are focused on human resource and change management specialists, and roles aimed at facilitating capability development and fostering talent. The third category is roles supporting stronger networks and interconnections across business and industry—so brokering support roles, connecting cities, regions and business ecosystems; roles that combine manufacture and services, which is manu-services; and occupations focused on new business models and systems integration. The fourth category is industry-specific roles like engineering specialist kind of areas, occupations supporting renewable energies, high-tech manufacturing and occupations linked to the bio economy.

Senator PATRICK: So, collectively, you're doing shorter term and then longer term projections?

Mr Neville : The projections that I talked about are only for a five-year period and they really just look at the change in employment over that five-year period—so, from the start of the five-year period to the end of the five-year period, what the change in employment's going to be.

Ms Hope : What I outlined basically was what leading academics and researchers are saying might occur further into the future.

Mr Calder : The Department of Industry, Innovation and Science isn't really trying to predict where jobs may come from into the future, but what we do know from research is that it is really going to be non-cognitive, non-routine types of jobs that will be more in demand in the future. So, as people use technology, technology becomes more embedded in the workplace and, in changing jobs, the ones least likely to be disrupted are most likely to grow over time and less disrupted by technology.

I will just wind back a step. I think the future of work is an interesting conceptual framework in which to view the current wave of technological change that is occurring globally but it is also related to globalisation, changing and consumer trends and urbanisation patterns globally. There is a whole raft of large-scale trends that are moving through the global economy at the moment, which is going to determine not only individual employment outcomes but also the types of industries that could grow into the future. But we do see from the data that those tasks that require high-level skills, high levels of personal interaction and are non-routine—so they can't be disrupted by mechanical or automation into the process—are the ones that are most likely to survive for longer in time.

Senator PATRICK: There's a development of an understanding of where the future of work is. What's Industry's role in that future of work?

Mr Calder : We're trying to foster competitiveness, so to make Australian industry as competitive as we possibly can be, and trying to foster innovation. We saw through the National Innovation and Science Agenda, which was released in 2015, a raft of initiatives that were to promote cultural change, promote capital into the marketplace and promote skills—and government is an exemplar of innovation. The 24 initiatives announced in 2015 are still moving through the system and we're trying to create that cultural change so people, business and industry will be more adaptable into the future. We have seen through budget announcements recently that there is a renewed focus on the Australian science and technology package and other initiatives to promote innovation and more competitiveness in Australian industry. So it's really trying to prepare industry to be adaptable—to be competitive to be able to adapt and take up new technology so they'll be competitive into the future and be able to export and thrive in a more globalised environment.

Senator PATRICK: So your role is, in some sense, isolated from what Jobs and Small Business needs to do. How do you interconnect those two?

Mr Calder : Not necessarily. We relate quite closely together. We work together quite often, thinking about the concepts around the future of work. The department has jointly funded what is called the Colmar Brunton market research, which has looked at attitudes within the community about what they thought future work meant, what they thought were the outcomes that were likely to occur and what industry thought was going to occur with technological change, automation and digitisation into the future. So we do work closely together, but they've got a distinct role in terms of their labour market projections.

Senator PATRICK: What was the origin of those 24 initiatives? How were they selected?

Mr Calder : It was done through a whole-of-government task force through the Department of the Prime Minister and Cabinet. It brought together all arms of government to consider what sorts of initiatives would be effective and engaged with the community and business to filter out what ideas they thought would be relevant and what things could be taken forward. So it came out of that process in the lead-up to the announcement.

Senator PATRICK: And education: what are your roles and responsibilities in that workspace?

Mr English : The primary focus we have is in making sure that students have as much information as we possibly can supply them with to inform their decision-making about courses they may be considering embarking upon. Alongside the sort of information that I think the industry portfolio talked about in terms of the likely future growth in the job market over the next five years, we try to provide information about the employment outcomes that graduates are achieving at the end of their courses now which would influence the way students think about their enrolment options. Over time, we're looking to build closer linkages across the data between what we currently show, in terms of immediate outcomes from higher education, and the sorts of projections that were being discussed before. But our role is mainly to inform the choices and decisions made by students as they enrol on the higher education side and, similarly, on the VET side. But, on higher education, definitely we want to make sure that the investment of time and effort they make is informed by what the current opportunities are for students and which are the good universities in terms of providing employment outcomes and good teaching.

Senator PATRICK: One of the criticisms we've had from the university sector, not just today but in previous sessions—and this is not necessarily related to students but to the courses themselves—is: do you have a role in guiding universities as to courses that they should generate or develop in order to prepare the workforce for the future so they can give students perhaps newer choice?

Mr English : At the core of our university system is the idea that universities are autonomous and self-accrediting institutions. So they choose the courses they deliver and the way they deliver them as a matter of institutional autonomy, but they are part of a network that has a range of influences on it that they are responsive to. Most importantly, we say, through our university accreditation systems, that, if they are offering a course that purports to meet professional standards for employment in an industry, they have to provide all of the services required to meet those employment requirements. So, if there are work placements required or if there are various elements of curriculum that need to be delivered, that's an important part of our threshold standards for being a university. That enables the relevant professional bodies to define what they are looking for out of graduates coming into that labour force over time. The more obvious ones—for example, the law, accounting, engineering, psychology and architecture communities—all have standards that try to anticipate and reflect both current and future labour market requirements for the graduates in those areas. We think that that system puts continuous pressure on the universities to produce courses that meet graduate needs when they are finished their courses and are going into the labour market. And it relies on the people who know those sectors, rather than us, trying to determine what should be taught and how it should be taught. There are one or two exceptions to that rule, obviously, and the states, territories and the Commonwealth have put down firmer markers on teaching, but it is primarily a public sector workforce so that's not inconsistent with what I'm saying about this set of arrangements that then drive university behaviour. The fact that students have free choice about where they go, which institutions they enrol in and that they can also seek to move around between institutions creates an imperative for the universities to be quite responsive as we perceive it. We certainly think institutional autonomy creates the capacity for universities to respond quickly to emerging labour force issues. You will find examples of universities that do that better than others, for sure. That's the value of having a more open and competitive landscape for tertiary education. The way I understand the VET system works, and my colleagues should talk about that, a more centrally managed process has its strengths and weaknesses as well. For us, the autonomous institutions and competitiveness of the sector mean there is always pressure for innovation to attract, retain and graduate students.

Senator PATRICK: Does anyone at the bench actively go in and promote? You say it's autonomous but in some sense it's funded by government and it is a means to an end, not an end in itself. So maybe I'm questioning the merit of making it completely autonomous and whether or not there is a space for government to direct universities based on knowledge drawn from perhaps the projections of Jobs and Small Business.

Mr English : I think if there was evidence that students were not moving towards the courses that were likely to lead them to labour market outcomes then, yes, we'd have to think again about whether the autonomy of both student and institution choices is appropriate. But by imposing greater central control on the way those courses and choices are provided, it's possibly more important to remember that implicitly you are going to start saying to students they can and can't do certain courses. In a world where they pay 50 per cent of the costs on average through the loan scheme, through publicly funded students at university, it is their opportunity cost to participate in higher education. It's a three-year choice. For many people that's a full-time commitment, three years at least, so you are talking about $100,000 opportunity cost by the time they've given up other work and maybe relocated to study. The threshold for us to intervene and start to direct where students should study and what universities should offer, I think, would need to be reasonably high in those circumstances. That doesn't say we shouldn't be trying to inform that market and shape it by the way we provide information to it. There is evidence that you can see students respond to those things.

STEM enrolments at universities have generally trended up against a reasonably static labour market outcome for general STEM subjects. Students tend to struggle initially coming out with generalist STEM degrees but, despite that, there's a reasonable rate of participation in STEM courses still because of the public policy discussion that's been going on. The jobs currently showing large growth are mainly in health, IT, agriculture and the like. They are showing very healthy student enrolments. In fact, a third of our growth—if I remember the numbers correctly—in student enrolments in the last few years have come from nursing and related health areas. We keep this under review to see the results students get from tertiary study are appropriate, but the threshold to start intervening I think needs to be reasonably high given that has serious implications for the choices students can make and there isn't the evidence they are making bad choices across the board at this point. Again, you will find people who will make examples all the time, saying a particular course didn't lead to a particular result for a student. We would argue that the ability to try to seek an outcome is a fundamental labour market opportunity for students. Not all of them will succeed immediately, but, over three years, we know that even the more generalist degrees—which tend to have a slower translation to the labour market—then catch up with the average of all degrees, and the average of all degrees is quite strong.

Senator PATRICK: So, across the bench, I'm seeing in some sense a response to the five-year data—industry is getting encouraged; you guys in Education are providing information. But I wonder, Ms Hope, whether someone's taking your information, which is the very futuristic stuff, and using that not just to inform but to drive where grants and effort may go and taking a more proactive driver-seat role rather than coaching the whole thing along in accordance with the way in which it's travelling already. Is there scope for that? Is there anything happening inside government in relation to driving the outcome? Or is it just considered not appropriate?

Mr Manning : I suspect it comes back to the comments that Mr Calder and Ms Hope made, in terms of we've had people say, 'Well, this is where we believe it's going.' But ultimately it's about creating the parameters within which businesses will make their decisions about what they want to do, and it's about creating the conditions for that to allow businesses to make those decisions for themselves.

Senator PATRICK: But it was not a criticism. I'm, in some sense, saying that you hedge both ways: you do what you're doing, and that creates that environment where we're ready for the things that are coming along in the short term, but maybe there are some things you pick out and choose, and then—

Mr Calder : Just on that, the government has rolled out the Industry Growth Centres Initiative, so it has identified a set of priority sectors where it thinks Australia has a comparative advantage and can make big inroads, becoming a really competitive export industry around those. Those are advanced manufacturing; cybersecurity; food and agribusiness; medical technologies and pharmaceuticals; mining equipment, technology and services; and oil, gas and energy resources. Government is putting in initiatives around where it thinks industry has the potential to grow and adapt to new technologies to really move to become a very strong export industry. Although some of them currently are, we can see global competitiveness always increasing, and globalisation will continue, I think, for the foreseeable future. So the government does have a range of initiatives across a raft of things. But, if I wind back to some recent comments that a group from McKinsey Global Institute made to us, a generation ago there were a million coalminers working in the United States; now there are a million interior designers. They're still comparatively well remunerated, but no-one could foresee that change, which occurred over a generation. So I think being very specific in driving very targeted outcomes from what you think we can see at the moment doesn't necessarily produce the right conditions. It's more about encouraging that adaptability, encouraging the competitiveness and allowing industry education to move into the areas that it needs to.

Senator PATRICK: With those priority areas—and I'm glad you're telling me about those—if you were to pick one or two of them, where do we find the road map, the strategy? And, then, how does that interlink with perhaps education and, obviously, the work you're doing in terms of industry and across government? Is there any sort of road map that spells that out?

Mr Calder : Each of the growth centres has its own growth centre. These are private sector enterprises supported by government in the initial phases, so they'll be each creating their own road map for what they think they need to do with the industry, how they need to engage with industry and the types of things the industry needs to factor in, as well as trying to build that management capability for dealing with what we can see emerging in technology and what we can see emerging in globalisation so the industries themselves can start preparing themselves.

Senator PATRICK: Do those road maps actually exist right now?

Mr Calder : I'd have to check on that, because, as I said, each of the growth centres has its own centre and each one of them will be doing something a little bit different. I know that there are communications that go from each of the centres to its members and a broader communication from—

Senator PATRICK: I'd be interested if you could maybe get a couple of those that had been completed and provide them to the committee—it just shows how you're driving those priority areas forward—and then perhaps talk about, once again, the roles that government are playing in each of those road maps.

Mr Calder : I'm sure that something would be on the department's website, although I can't recall it at the moment.

Senator PATRICK: Could you take on notice to provide the committee with a couple of examples of those priorities. As you said, oil and gas, I think, was one of them.

Mr Calder : Oil, gas and energy resources was one.

Senator PATRICK: Yes, and perhaps—

Mr Calder : Advanced manufacturing?

Senator PATRICK: advanced manufacturing. I'd love to see that one, being very keen on that particular topic. I'm sorry, Chair; I've dominated this.

CHAIR: That's okay; you're covering similar ground to what I was interested in anyway. Can I just try to summarise what I understand to be the roles of the different agencies in this space? Mr Neville, the Department of Jobs and Small Business does annual modelling to forecast areas of job growth five years into the future. Ms Hope, you do similar work but more long-term, also for the Department of Jobs and Small Business.

Mr Manning : I'd probably clarify that a little, in the sense that the work Ms Hope was speaking about was work we had undertaken to try to give us a better understanding around the debate that's occurring and to move our understanding away from simple claims of the percentage of jobs that is vulnerable to automation. So we had that done, as distinct from Ms Hope's area sitting there doing that on a routine basis.

CHAIR: Yes.

Ms Hope : So, effectively, we are trying to do some more research to actually understand the issue better to then inform us where we should be heading in terms of future policy directions.

CHAIR: Okay. Then, Mr Calder, it's your department's role to analyse industries in general where there are growth opportunities for Australia and, as a result, those growth opportunities in industry that are likely to have job growth opportunities as well.

Mr Calder : Yes. I guess we're more a macroeconomic department, so we look at the broader macroeconomic conditions and try to foster that competitiveness, and international competitiveness in particular.

CHAIR: Then, the role of the Department of Education and Training is primarily to ensure that students have access to information about the likely employment outcomes from whatever course they end up deciding to undertake. Is that a fair summary?

Mr English : Certainly, on the higher educational side.

Mr Palmer : It's probably worth adding that, in some ways, the vocational education and training system is a little bit different to the higher education system, in that the construction of training packages is actually managed by a joint ministerial council, the COAG Industry and Skills Council. Recommendations of what should be in training packages are brought to that council by the Australian Industry and Skills Committee, which in turn is informed by 68 industry reference committees. There are about 13, 14 or 15 members in each. They comprise representatives from unions, employers and other key stakeholders and experts in each of the fields, and they make advice to governments. The vocational education and training system is primarily managed and funded through state governments. They make advice about the content of those training packages and about ensuring that those training packages are up to date and responsive to industry.

Recently, in March this year, the Australian Industry and Skills Committee commissioned an industry reference group on what's called Industry 4.0. That reference group is specifically looking at the kinds of issues that you're looking at, making sure that the vocational education and training system, right across the system, is responsive to the skill needs of the future, including those skills that are less susceptible to automation as the ways that business is done change going into the future.

CHAIR: So the Department of Education and Training has commissioned that work.

Mr Palmer : It's jointly Commonwealth-state, so, while the Department of Education and Training and the Commonwealth provide the support, it's a joint Commonwealth-state initiative—the Australian Industry and Skills Committee and that advisory mechanism.

CHAIR: Who's actually doing the work around Industry 4.0?

Mr Palmer : It'll be a specific reference group commissioned by the Australian Industry and Skills Committee. It has been announced but it has not been finalised. It was announced in March; that is my understanding

CHAIR: So it would be a combination of Commonwealth and state public servants.

Mr Palmer : No, it will be industry people. It'll be unions; it'll be key stakeholders with expertise.

CHAIR: Okay. Thanks for that. I think we've got a bit of an understanding of what each agency does in this space. The obvious question is: who is bringing it all together? Who is looking at the forecasting data that you're doing? For the industries where you can see growth, where the education providers are providing opportunities for people and what the employment outcomes are going to be, who is bringing all of that together? Because clearly they're related. That's what we're still trying to understand because, fairly or not fairly, over and over again through this inquiry, we've been told from other witnesses with a range of perspectives that no-one is really bringing that work together from a government perspective. Does anyone want to put up their hand?

Mr English : I think it depends on what you mean by 'bringing it together'. The Treasury certainly has an overarching view of the effectiveness of the labour market and the way that both micro and macroeconomic policy tools influence our future prospects as a nation. The Jobs and Small Business portfolio looked at that from a labour market perspective in a bit more detail from the perspective of their programs. We have a perspective about whether the education system is working to deliver effective and efficient outcomes overall. To be fair, the broad question you've asked could be answered—I suspect, unhelpfully—by saying, 'Well, that's what cabinet does', but it's probably more helpful to say, 'What do you actually mean by bringing it together?'

CHAIR: Let's say the Department of Jobs and Small Business identifies that over the next five years we are going to need an additional 20,000 widget analysts. Data analysts would be a good example. Who uses that information to say, 'Right, we better make sure we've got people coming out the other end who are going to be able to fill these roles.' Is there anyone who does that? Because from what I've heard so far from the department of education, it seems to be a relatively hands-off approach in that it's largely left to the educational institutions and professional bodies to meet the supply and demand.

Mr Palmer : In the vocational education and training space, the five-year projections produced by the Department of Jobs and Small Business are provided to the industry reference groups. They are also provided other forecasts for industry and training needs about changes in the way jobs are done and anticipated changes in the way jobs are done, and all of that information feeds into the development of training packages in the vocational education system. So we are a keen user of the forecasts produced by the Department of Jobs and Small Business.

CHAIR: Does that happen from a higher ed perspective as well?

Mr English : Certainly we are always trying to see whether there's translation of graduates to jobs and jobs that are relevant and meaningful. As I said before, there is good evidence to suggest that graduates are successful in the labour market and are moving into the industries where they're wanted. But the question is still so large. You can't have missed, for example, the government's effort to highlight the need to build a defence industries pipeline of qualifications and skills to support public investment in that. The government has taken on that role because defence industry is a uniquely public-sector-led activity. Outside of that, there are other portfolio areas that have an interest and responsibility for thinking about the longer term sustainability of some sectors of the economy, so the health portfolio is always interested in how the health workforce is developing. Do we go looking for sectors to intervene in? As a matter of course, now, no, because the incentive structure is to try to push students to respond to the fundamentals of the labour market, rather than any judgement that I might make about what is good for young people to study, for example, and that's the tension.

CHAIR: I totally get the argument that students have got to be able to make some decisions about their own lives. Institutions have got to be able to make some decisions about what is in their interests to offer, but aren't there countless examples over the last 20 years where there has been a mismatch between graduates produced and graduates needed?

Mr English : It is the nature of a market that you need to actually see a price or quantity effect before that market will start to clear and you will get people starting to respond to incentives. If employers want more graduates in a particular discipline, there is a pretty easy way to signal that, which is to talk about it because graduates are responsive and then to also pay a premium for graduates if they want to attract more from other disciplines because that's the way the market works.

CHAIR: That's the point. From what I'm hearing, it's largely a market-led approach?

Mr English : In those areas where we don't have a strong public sector role, it is largely market-led.

Senator PATRICK: Considering that but to give a real example, I encountered at estimates last week the Motor Trades Association claiming there is a shortage—I have no reason to disbelieve them—of something like 14,500 motor trade artificers, people who can fix cars. I go back to a 2014 Senate inquiry that predicted the same number, so there is clearly a shortage in that space. I wonder how you work across the three elements of the team to deal with that shortage because that's an instance where it has been identified. It has been talked about yet there is still a big gap between what the Motor Trades Association requires and what's actually available. I don't know whether you can shed light on that real example as to what's happening. I did put this on notice to Minister Cash and she undertook to try to corral that, but I wonder if there is someone here who wants to put up their hand and say, 'This is what's happened in that space and this is why it hasn't worked out.'?

Mr Calder : Just reflecting on the question: in a market economy, you are always going to see an instance where you will have a degree of overshooting or undershooting in whatever particular investment or employment outcomes you encounter. Mr English is right in the sense that price mechanism flows through the market and allows markets to clear at whatever level they need. But it's very difficult for employers or employees or government in general to try to predict where those trends are going to be at any particular point in time, whereas the market will adapt over time. The one example that sticks in my mind is the incredible peak of the mining investment boom which occurred in about 2009. It was completely driven by market signals. You saw the industry invest on a large scale as a part of that process. Some would say it was a once-in-a-lifetime event that we would see in Australia. Followed by a very large surge in production processes, prices then come down in the resources sector as the market responds to those new production conditions. So in market economies and global economies, you are always going to get a degree of over or undershooting. We are never going to be able to completely determine at a point in time, every market clearing solution for every particular industry or every particular commodity that we would see, so there has to be some flexibility and adaptability in the economy to allow it to respond to changing conditions.

Senator PATRICK: Sure. But going back to the example I put, I'm pretty sure that back in the Senate inquiry, the prediction was about 14½ thousand tradesmen short and that's where we are now. I wonder how, across the three groups that we have here at the bench today, you have not solved that problem? Because it clearly hasn't been solved.

Mr English : With respect, an apprenticeship requires a willing employer and a willing apprentice to sign an agreement that is a four-year indenture arrangement, generally for motor trades, to happen. We have a system, which my colleagues can describe in much more detail, that provides substantial and meaningful support into apprenticeships. But we can't, to be honest, make people take those opportunities up if, for example, young people finishing school feel that the training salary offered in the apprenticeship is too low or they can't foresee the job opportunities that are there. We can try to promote the information about the jobs of the future and we are doing that in a range of ways. Again, my colleagues can describe it more efficiently than I can. But the nub of that problem is it's much about the way employers and employees engage in that transaction. To be honest, in a more competitive marketplace, some employers might make the decision that it is difficult to take an apprentice on, and that's a decision at the local level, for example.

Senator PATRICK: But in some sense you're saying it's hands off; we're not doing anything.

Mr English : It was not what I was actually saying.

Mr Manning : Senator, I could, if it would assist you, talk to through some of the programs we run to get young unemployed people ready to enter the workforce. I am happy to come back to that if you like. But getting back to your overarching point, one of the things we are looking at is how to better inform the market, for want of a better term—that is, citizens—about what changes are taking place in the labour market, what skills employers want and, perhaps building on from that, how they can most efficiently go and get information about how to obtain those skills.

Senator PATRICK: I get that. But in some sense this has been identified, it has been predicted, and I just can't see a response that has come from government. I take your point that it is not all the responsibility of government. But in some sense that is what the three organisations here are here to do. I think it is a great case study, and I have asked Minister Cash to perhaps put together how that hasn't happened—because if it hasn't happened in an industry we know and understand, I wonder how it happens for a future industry.

Mr Manning : We may all provide input to that question on notice, but I can perhaps give some information that is relevant to it. It is particularly relevant to the motor trade industry in the sense that one of the programs we run as part of Youth PaTH is Employability Skills Training, which is in response to feedback that a significant proportion of young unemployed people aren't ready to enter the workforce. In procuring providers to provide that training, we procured some providers who were specialists, including some who represent the Motor Traders Association, as well as others who provide general training about expectations in the workforce. I don't have numbers with me about who may have gone into the automotive field, but it is an example of a program whereby industry can be involved and help prepare a certain cohort of young people—not people coming directly from school, but people on income support—for a life working in that particular industry. That has been rolled out. Over 20,000 people aged under 25 have done Employability Skills Training generally. As I said, I don't have figures about how many might have had a particular interest in the automotive industry. It is an example of a program where, in addition to what goes on in the education sector, people who haven't made that transition can be assisted to get back into a situation where they can make that transition into employment.

Senator PATRICK: But I wonder whether there is anyone inside government, across the three departments, who would be in a position to say: 'There was an identified shortfall. Your KPI is to assist in dealing with that shortfall.' Is that the case? Is there someone in charge of that shortfall?

Mr Palmer : The Department of Education and Training has a National Skills Needs List. There are a number of apprenticeships that are on that list, including automotive electrician, motor mechanic, motorcycle mechanic, panel beater, vehicle bodybuilder, vehicle painter and vehicle trimmer. What does that do? As a result of being on the National Skills Needs List, employers are eligible to receive an Australian employer incentive program incentive payment. The apprentices themselves are eligible to receive a trade support loan, which can contribute to their tools or other costs that they may have. On top of that, we have the Australian Apprenticeship Support Network, which provides mentoring services to apprentices. So there are a wide range of support structures available. Because those motor mechanic skills are on the National Skills Needs List, there are additional supports for motor mechanics that not all apprentices receive. That is designed to provide incentive. On top of that, the government has announced the Skilling Australians Fund, which will provide additional funding to the states and territories to support apprenticeships. With that additional funding, they can also address the needs that are occurring that you referred to in the automotive trades.

Senator PATRICK: That is all very helpful, but how do you track whether you are achieving success in filling those areas of shortfall?

Mr Palmer : We provide a range of incentives. As both colleague said about market clearing prices and market clearing mechanisms, those things also need to work through. We don't tap people on the shoulder and sign them up to specific apprenticeships or force people into indentured arrangements.

Senator PATRICK: I understand that, but there is also the option to be able to encourage people into a particular area where you can say to them: 'At the end of this process, it's highly likely that you're going to get a good job; if you take the other three paths that you're considering, it's less likely.' Surely that is a place you can be?

Mr Palmer : We also work in that field. The minister, at last year's National Training Awards, launched a video that encourages people to take up apprenticeships. The Australian Apprenticeship Support Network also does a lot of that supporting and encouraging of people to consider apprenticeships as they leave school. So we are in the encouragement game as well.

Senator PATRICK: I am broadening it back out to the future of work. Where I was trying to get to is here there has been difficulty in the current employment area. If we are not quite getting that right, how do we do it for an area that doesn't exist and we are just using Ms Hope's data to project that? How do we get people into those spaces when the job doesn't quite exist at this point in time?

Mr English : That is, in the end, inherently what you rely on: individuals making informed decisions and making their own investment of time and effort to get skills that they think they can use in the workplace of the future. For the average university student, with a course of between three and four years, it is a very future focused decision to make that investment. They have to back themselves not only for four years but also the period that comes after, when they want to be working and reaping the benefits of their study. We are working with the tax office to improve the data that we make available to students about the benefits that they get. We are trying to connect more to the future projections produced in other portfolios rather than replicating and taking our own view and that, because we are not necessarily the people to do that. In the end, you also need the network around the potential student, in both sectors, to help inform their decisions. The school system obviously has an important role to play in that. In the broader public discussion, when we talk about the skill needs of the future, you can clearly see that students take notice of that in their enrolment patterns. I don't think there is a one-size-fits-all solution to make students make the right choice. Even then, there are plenty of examples we can point out where the broad skill set provided by a tertiary education is both valued by employers and a robust way to inoculate yourself against future labour market changes, because you learn all the skills you would need to adjust to a future labour market.

Senator PATRICK: The government in some sense recognises that it is not a free for all—in its endeavours to cap HECS, for example: you can't just keep educating yourself; at some stage it has to benefit the community. There is an investment by government in the training of people in both the vocational sector and the higher ed sector. Have you considered changing the subsidy, not so much on the cost of the course but on the future needs of the economy, to give an incentive for school leavers to go into particular areas?

Mr English : There have been a range of initiatives tried down this path in the past. We still have in the system differential rates of student contributions by course—roughly $6,000, $8,000 and $10,000 a year, depending on the subjects they take.

Senator PATRICK: Is that driven by cost, or is it driven by data coming from jobs and small business?

Mr English : The science of those fee levels is a bit murky by time, you might say, but generally they reflect the likely earnings expectations in each of those graduate areas. So the highest rates apply to the things you would expect them to like commerce, law, medicine and so on, and the lower rates apply to the things where the earnings potential might be a little lower like teaching and nursing, for example. There's a bit of influence in the system from that, but, to be blunt, the value of a variable fee behind an income contingent loan scheme on decisions made now about lifetime future earnings is pretty limited to be honest.

Young students tend to make decisions about what their interests are. Older students tend to make decisions about what they need right now. Our research tends to show that that's the way they make those choices, so that's why we are trying to inform both ends of that with better information over time.

In the past, there have been incentives for students to study various courses. For example, nursing, teaching, maths and STEM subjects had a bit of a burl, at various points, of making discounts on loans for graduates in those areas. To be blunt, none of those had a significant or meaningful impact on the choices and behaviours of students, and certainly no more meaningful impact than the student's own assessment. From what we can tell of the likely of market outcomes, based on the data they can see more broadly, we would be reluctant to suggest that there would be much scope for incentives for the loan scheme.

I think it's much more likely that the sorts of discussions you would like to see employers having with students are about prospects and opportunities, engaging their imagination and intellect on the opportunities that employers know are coming up—because they're in the game already—and reaching into schools and the various pathways to study and reaching into the other parts of the labour market where they need workers to come across. We can certainly support that with the information we give, but we needs students and employers to engage in that discussion as well, so that it is a meaningful and honest discussion about, 'What's the work going to be like and what are the opportunities going to be in the future?'

CHAIR: I noticed that there was a bit of discussion at estimates about the Future of Work Taskforce, without going into all the detail—and Senator Cameron was very interested in the make-up of that taskforce and spending—in broad terms, what is that task force actually doing?

Mr Manning : Consistent with the theme of the discussion we've been having, whereby the issues here are very large and we haven't changed the arrangements within government to do it, it's a bit the same in our own department whereby the various parts of the department have maintained their responsibility insofar as it is impacted by the future of work. But, still, because of the breadth of issues and the commentary around the issues, we thought that it would be important to have an area which can focus on it. In particular, to add to those debates, perhaps doing research and undertaking particular projects. Ms Hope spoke about the project which looked at some of those predictions, and did a range of other things as well, and the task force oversaw that. I think a real focus of the task force is, perhaps, on projects which help people transition where they need to.

Another project that the department has underway deals with trying to model ways that the Australian labour market is changing, so that you can develop a way where people can identify what skills they have and how they can transition from a job with a certain bundle of skills to a different job, for example. That's a large data integration project, and it's fair to say that more than 50 per cent of the people who work in the task force would be working on trying to see whether we can develop that prototype.

Otherwise, the other three or four people who work in the task force would work on other projects, such as the ones we've discussed, where across government you might be looking at what's the best way to communicate what individuals might need to do in relation to themselves? The task force would be involved in that work and other projects or research as they come on.

CHAIR: I'm going to have to make these ones fairly brief, I'm afraid, given the hour. Mr Calder, I don't know whether you were there the other day, but I did overhear some questioning at estimates for the department of industry around artificial intelligence and the work that your department is doing. Are you across any of that?

Mr Calder : Only very broadly, Senator.

CHAIR: Any department can chip in. Obviously there are the automation issues, but there are also massive issues coming for the workplace and jobs around the increasing use of artificial intelligence. What work is occurring within government to try to map out what the impact of that is going to be, the jobs that will come and go and the skills that are going to be needed to deal with that? Is any department taking the lead on that?

Mr Calder : There were certainly announcements during the budget about the government putting in additional funding to help stimulate artificial intelligence and stimulate our understanding and development of artificial intelligence. This is going to be a key development into the future and Australia still needs to remain competitive with other countries, so adopting these types of technologies will be important to help boost productivity and economic outcomes into the future. I note that the Chief Scientist is actively thinking about artificial intelligence and how we might utilise that better into the future, but I certainly wouldn't speak on the Chief Scientist's behalf. A range of initiatives are being funded through the budget around artificial intelligence.

CHAIR: I don't know if this is part of the Future of Work Taskforce, but is anyone specifically looking at the impact of artificial intelligence on jobs?

Ms Hope : Not the impact of artificial intelligence per se but generally the impact of automation on jobs. We certainly have looked at the raft of reports that currently exist and are predicting the impact of automation on jobs. I guess we have recognised that there's such a variance in results in terms of the percentage of jobs that are highly likely to be impacted by automation. The percentages range. Take, for example, a real estate agent. If you use occupational based methodology, you'll come up with quite a significant portion of that job being automatable, but then, if you take a task based approach, it's a smaller figure. We are certainly part of recognising the fact that looking at tasks within a job as opposed to jobs on their own is an important part of trying to work out what the transition pathway might be for someone into the future. The issue is not to look at AI on its own but to consider a range of factors in relation to what's happening in terms of globalisation and in terms of demographic shifts and the impact that will actually have on the specific tasks within a job and how we expect that might change into the future. That requires looking at things like the skills that are currently involved in doing one particular job, such as a declining job, the skills involved in a job that is increasing or growing, the skills gap and how you can match a person's pathway from a declining job to a growing job. I guess that's the type of data work and data integration work that we're currently doing.

CHAIR: One other issue that came up at estimates, and it's one of the other major themes that's been raised across this inquiry—leaving aside all of the issues of automation—is the risks to workers in the future of new forms of engagement, such as an independent contractor, the fragmentation of the labour market and the new forms of exploitation that we're seeing, particularly in the gig economy. I noticed that Ms Parker, who I think is the departmental secretary—

Mr Manning : She's deputy secretary.

CHAIR: Without getting into the details of advice provided, she said that the department had analysed research about that kind of exploitation and provided advice to the government about what that research was saying—'Here's what the government could do if it were inclined to make any changes.' Are any of you aware of that sort of advice being provided to government?

Mr Manning : Insofar as we were there when that evidence was given, we're aware of it, but we don't have more detailed knowledge of it.

CHAIR: That doesn't come out of your parts of the department?

Mr Manning : No.

CHAIR: Okay. I suppose I'm just kind of interested generally: is work being undertaken within the department to analyse some of these new developments in the way people are working, whether it be about digital platforms or new forms of engagement? Is someone in the department doing work to analyse that and provide advice to government about how it should be dealt with?

Mr Manning : Certainly our workplace relations cluster would be staying apprised of all of those developments and things like inquiries such as this and others.

Ms Hope : Certainly, in terms of our work in the taskforce, the submission that we made identified, I guess, a number of threshold issues in relation to digital platforms and where things currently stood and what the challenges and opportunities might be.

CHAIR: Ms Durbin, do you know something about that sort of work that might be being undertaken?

Ms Durbin : I can't really add much to my colleagues, but I figured that, being from Workplace Relations Group, it would not be appropriate for me not to come to the table. Certainly, as we talked about at Senate estimates, we keep a very close watching brief on all the information that comes around on different forms of work. We are very closely monitoring international evidence. I think we talked a little bit about some of the UK experiences. We carefully look at what academic research comes out, whether it be from the Productivity Commission, international evidence or Australian academics. We touched on the fact that we are aware there are a number of regulators in this space who are also obviously very active—not only the Fair Work Commission but also competition and those kinds of things—and also the broader strategic government future agenda—things like the Black Economy Taskforce, which is clearly looking at a much broader range of things but looks at alternative options around that as well. In terms of specific work that we're doing on the future of work, we are clearly keeping a very close monitoring brief as things emerge. But I think, again, as we talked about at evidence, it is very early days. There are a range of mixed views, and we are very much looking forward to the outcomes of this Senate inquiry because there are, as you know, so many different views about how we should move forward.

Mr English : I might also add that in the Department of Education and Training, on the higher education side, we've also been trying to take the lessons of people who do some of that learning work, like the CSIRO, into the way we think about future policy design for the higher education system. Going to my point before about how it means different things to different areas in the Public Service, we're really now starting to grapple with what microcredentialing means as a way of people accumulating skills through the tertiary system over time that doesn't rely quite as much on fixed bundles of skills and the like and is a bit more responsive to people's needs. That has a few regulatory and funding challenges that I can't pretend we've solved yet, but that's certainly an area where we are quite cognisant of the need to have policy work that gets to some of those answers.

CHAIR: My last question is probably to the Department of Education and Training. There has been a lot of commentary through this inquiry about the need for a much bigger effort on upskilling and reskilling people who are in the workforce. In fact, the Vice-Chancellor of ANU today called for a national upskilling agenda. What is happening to lift our effort around upskilling and reskilling the existing workforce for the jobs of the future?

Mr English : I can start on the higher education side, and Mr Palmer can deal with the VET. On the higher education side, we've continued to look at ways we can inform the choices that are presented to workers who need to either renew, refresh or get different skills, or upskill as you say, as they go on through their working career. Part of our market research is to try to identify that there are different paths and choices made by students coming into the sector at different points of their lives. As I said, the simple conclusion from our market research suggests that young students value the broader experience, the threshold experience, the social side and the greater sense of opportunity over time, whereas the older student typically has a very focused need they are trying to meet and they need to assess the quality of the offering that they can access either directly or online. So we are working with the university sector at this point to create a national admissions transparency platform—which doesn't yet have a great name, because that's pretty wordy. But that will provide the ability for students to make fundamental comparisons between the range of opportunities that universities are offering in the areas and disciplines that they want to study, in terms of the way they have to apply to get into those courses, the results that those courses are delivering for their students and other information about the way the curriculum is constructed.

Again, on the information side, we're trying to do that. The government has responded to a particular need identified by the Halsey review of regional education needs and made 500 additional places available in sub-bachelor programs, which tend to be shorter, more occupationally focused diplomas and the like offered by universities. We think that's certainly an important thing, particularly for regional labour forces, where you will have people of a broader mix of educational backgrounds coming in for higher education who don't necessarily need a three-year foundation bachelor degree. They can get the benefit of a one-year diploma course. Again, we'll add 500 places to that over time.

We're also putting in place a range of regional study hubs around the country to help people access support while they are studying remotely in places where there isn't a university campus. There's an example in Cooma where there's a regional study hub that's supported by the local council and the Snowy Mountains hydro. It provides a place for students who are studying at any university to get access to resources, facilities and support to help them with their study when they are trying to remain in place, work in Cooma and study something that will give them a chance to change. There are a range of those sorts of things.

CHAIR: I might have to look at the transcript to see what Mr Palmer has to say, but if you could answer that as well that would be great. I will leave you in the capable hands of Senator Patrick. Thank you for coming.

Mr Palmer : In terms of vocational education and training, the observation I would bring to the table is that upskilling is already an important part of the system. If we think about the life courses—with people under 24 years as initial learning, people 25 to 44 years as early-career learning and people over 45 as later-career learning—and look at the proportion of students upskilling and enrolled in vocational education, and by that I mean the qualification they are currently enrolled in is at a higher Australian qualification framework level than any previous qualification they've had, of people aged under 24 years, 80 per cent at the certificate III or higher level are upskilling. In terms of people aged 25 to 44 years, 56 per cent of that population are upskilling. And, in terms of people aged over 45 years, 57 per cent of that cohort are upskilling. Forty-one per cent of people enrolled at certificate III level or higher are aged under 24 years. So you've got 59 per cent aged over 25 years in certificate III or higher level in the vocational education and training system. It's already helping people through the life course skill and reskill as they need to improve their own competitiveness in the labour market.

ACTING CHAIR ( Senator Patrick ): Are those numbers changing as a function of time? Are they getting larger?

Mr Palmer : I don't have them over time. I can take that on notice.

ACTING CHAIR: If you wouldn't mind. It's a little bit similar to the evidence presented where pretty much everyone's saying, 'There's no crisis here; it's all normal.' I was discussing with one of the witnesses before the fact that, as a normal part of any engineer's career, you learn a discipline and then you might go sideways, learn a secondary discipline to broaden your knowledge or, alternatively, go into management or go into training. I wonder if those numbers are really changing.

Mr Palmer : I actually won't be able to answer that question because it depends on total VET activity and we only collected that for the first time in 2015, and I've given you 2016. I'll be able to give you one year's worth of history.

ACTING CHAIR: Which is not a good way to do business I suppose, but at least you're starting. I will just flick one more question as we're running out of time. Mr Calder, you said that there are a number of AI programs that are being initiated by different areas. Is it possible for you to take on notice to get a list of those areas and the total amount of money being spent?

Mr Calder : Yes, I can do that.

ACTING CHAIR: That would be appreciated. Unless anyone else has got anything to say—

Mr Neville : Senator, I just draw your attention to a publication produced by the Department of Jobs and Small Business called Australian jobs. It's an annual publication. A lot of the information on the jobs market that we've talked about today across all agencies is included in that publication. The publication is aimed at students, both school students and university students. It's aimed at career advisors and jobseekers. Within that publication there is a matrix of about 350 occupations. As part of that matrix we draw together information on job prospects for those occupations. We produce about 120,000 copies of the publication. It goes to every secondary school in Australia. It used by our employment service providers. A lot of the information we've talked about is actually being shared amongst students and jobseekers.

ACTING CHAIR: And available on the web?

Mr Neville : It is available on the web. It's also available in hard copy, so we actually distribute 120,000 copies.

ACTING CHAIR: Maybe you could do me a favour and get a copy to my office. I'd be interested in that.

Mr Neville : More than happy to. Have you got school-aged children, Senator?

ACTING CHAIR: No, I'm just interested in what might be included in that. I'm sure Senator Watt would be as well.

Mr Neville : I'll make arrangements to get a copy to you both.

ACTING CHAIR: That would be fantastic. In some sense what you're doing there is in fact what Mr English said that the education department is doing in terms of students, so clearly there is some close cooperation—or is this the first you've heard of this book?

Mr English : The information out to schools—I know my colleagues are engaged with the schools group, yes.

ACTING CHAIR: I think you were going to add something before.

Mr English : Just a minor point. Mr Palmer was talking about the fact that the system does enable upskilling of course for students wanting to come back and upskill, as you talked about on the engineering side. We do offer a system under the new arrangements that is free at the point of access through the HELP loan scheme, unless the student has exhausted their HELP loan limit. That means that no student in Australia at this point needs to reach into their own pocket for that upskilling exercise. If, like you say, an engineer needs to translate to a management role, for example, they are capable of putting that on the HELP loan. Even under the cap arrangement, they are capable of putting up to nine years of the most expensive courses in the publicly funded system on a HELP loan, so that's more than enough for your average engineer to do their four or five years of engineering and then two or three years of management study before they get anywhere near the cap in the publicly funded system.

ACTING CHAIR: Thank you very much. I thank the witnesses who've given evidence to the committee today and of course the Department of Jobs and Small Business, the Department of Industry, Innovation and Science and the Department of Education and Training. I thank broadcasting, Hansard and the secretariat.

C ommittee adjourned at 16:48