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Address to the Agri-Food National Conference.



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Speech

9.00am, Thursday 27th September 2007

Well thanks very much John, our colourful racing identity otherwise known as the chair of the Agrifoods Skills Council, and someone who's very highly regarded and has done a super job I think, this being a difficult period for the Skills Councils, there's been a lot of change, and I'll come back to some of that a bit later. But you know, we need people as chairs of these organisations who've just got basic common sense and a lot of experience and John, you fit the bill - thank you very much.

Could I say also just with your racing hat on just how I'd like to convey my sympathy and empathy with what's going on, so a very difficult time, very difficult time, and as someone who's owned a horse all his life, not a racing horse unfortunately, couldn't afford it, but I love the animals and it's - but a tough time for the industry, so many tens of thousands of people affected by it.

Could I acknowledge Arthur - Arthur Blewitt who's a very highly competent chief executive and again been a fundamental part of the success of the Agrifoods Council.

To Kevin Bryant from New Zealand, there's a number of other quite distinguished in the room, ladies and gentlemen. Also to Ralph but I understand we mightn't see much Ralph this morning, he's caught in the lift. I hear that he's out trying to organise a new training package for lift maintenance. So I wish him every success.

Well, a warm welcome to the second National Agrifood Conference. I think the Skills Councils they are expected to show leadership, leadership in skills and training but also leadership in linking the skills and training to innovation and technology, and then trying to secure, and have that reflected on the ground through the various workforces.

And that's what we're here for over these two days to look at the workforce capability but linking the skills and training to innovation and technology.

And this conference is doing just that and I do congratulate the Council on it's leadership and a great roll up which is a good suggestion to me of the support and the interest and the perception people have of the Council as a leader in this area.

And I thought that this linking of training for technology and innovation is acutely relevant to regional Australia at the present time, it's relevant to all of Australia for reasons I'll get into in a second but it's acutely relevant I think because what I'm seeing out there is the response to unbelievable labour shortages in this country, is an absolutely extraordinary pace of adoption of technology.

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ADDRESS TO THE AGRI-FOOD NATIONAL CONFERENCE

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And that's where skills and training, linking into that innovation and technology, comes to the fore. Across all of business, I mean I'm on the road all the time, every day, across all sectors, they all come up to me, we've got a problem with skill shortage.

Well they have, but they've got first and foremost a problem with a labour shortage. We've had 14 years of uninterrupted economic growth, we've got an ageing population which is really just hit in the last three or four or five years. I mean we knew it was coming but it has arrived with a force.

The baby boomer bubble is moving through and it's starting to really have a serious impact on the availability of labour. And thirdly, we've had the profound and unexpected emergence of China and India.

It's a good thing, it's got threats as well, it's got enormous opportunities as we're all starting realise, but it is in fact creating, with those other two factors, a combination of things which are putting very serious demands on labour all over the country and in turn, skills. And you know, it's only going to get worse.

In fact, a number of people were telling me recently within five years China itself is going to face a serious skills shortage because of the One Child Policy, which given the growth that's taking place, the One Child Policy is going to really impact on a lot of their high technology, high value activities that are now sort of burgeoning up there. So they - they'll be in turn sucking skilled workers out of the developed world to go and work in China.

So it's not something that's going to go away and in fact, it's going to get worse. If you think this labour shortage we've got now is a difficulty, in the next six, seven, eight years it is estimated in South Australia for instance, three quarters of a million people in the workforce in South Australia, in the next eight years labour force economists are estimating there'll be a need to replace 340,000, nearly half of the jobs in South Australia in the next eight years.

I mean it's sort of impossible, that's the bottom line. We've got to do things and we are doing things. Business will respond and you know what it does normally do, amongst other things, if there's a labour shortage it does substitute technology for labour.

And we're seeing that at large and that's where the Skills Councils I think and training and all the rest comes into its own. But of course in regional Australia on top of those three factors I talked about we've got added to it, the worst drought in 100 years.

And so we've had somewhere between 50 and 70,000 people in the last few years leave agriculture. And it's a debilitating situation and especially and hopefully, it doesn't look like it, but if the drought starts to break, we thought it was but it's - we've had another setback, but when the drought breaks, we're going to need people back in the business and trained and capable to take things forward.

And you know, in the face of this, I think the ingenuity of the rural sector is quite extraordinary, and it does affect the five arms of this Skills Council, all of the arms.

And even the drought - I mean I was involved in agriculture for a long time and ran the National Farmers Federation in the '80s and was a stock inspector to start with in Victoria and did various things, so I know the industry well and - but I never thought you know, the seafood side of it was one that I thought, well drought doesn't affect seafood.

But then I had a mate of mine that I went to Agricultural College with who bought a big oyster business at Narooma and I was down there one day and he was bemoaning the fact that the drought was killing him.

And then he told me about water flows down the river and the way in which drought affected the feed - the foodstuff that was in the water that was coming down the river and how when he went to buy his stores, I never heard about store oysters, but there's store oysters, store cattle I knew all about, and sheep, but not store oysters. But again they would be affected, the size of them

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and the quality of them because of the drought etcetera.

So you're seeing impacts of course across all of regional Australia. But the ingenuity that I talked about I think is - was exemplified for me, if I could share a little example, a couple of you have heard before I suspect over the last couple of months, because it really - it blew me away.

When I went with my wife a few months ago to the Northern Territory and there's a friend we've got on a cattle station, north of Alice Springs and we went there one Saturday night for a drink and we drove off the main road and it's 20 minutes into the homestead and that 20 minutes is the front paddock, that's 10,000 acres and it used to be - was always the horse paddock, 200 thoroughbreds for mustering, been there for 100 years.

We drove in and I got to the homestead and said to my friend, I didn't see any horses, where's the horses? He said not a horse on the place. 8,000 head of cattle, I hadn't been there for 10 years, 10 years ago it was a traditional cattle station, 8,000 head of cattle.

Still 8,000 head of cattle but he said not a horse, it's all helicopters, light aircraft, a couple of motorbikes. Okay we have a drink, a bit later he said I've got to show you the cattle yards. So we go down to see the cattle yards and he proudly presents this $400,000 new cattle crush - cattle crush, metal cage, hold the cattle while you do what you've got to do to the cattle, and he's got races leading up to it and all the rest of it.

And he started this thing up, I mean normally it's just a few levers and it's quite dangerous, very labour intensive normally, if you're working 12 hours there, it gets quite - with big bullocks throwing themselves around and all the rest can be tiring and difficult, labour intensive and all the rest.

He starts this thing up, there's a keypad on the side of the cattle crush, the whole thing operates from the keypad, the crush itself, the gates all the way back up through the races into the yards, the whole box-and-dice.

He said I can do - I can work 8,000 head of cattle with two people. His son who's 40, up the front mounting the cattle and doing whatever, one other person, and some dogs to work the yards and quite extraordinary, all from the keypad.

And then we're heading back and I said I haven't seen any ringers, the cattlemen on the place, and he said I haven't got any ringers. No more cattlemen, no horses, no cattlemen, you know all the romance has gone. And not - no one on the place there's just his son and he, he's 68 this friend of mine.

He said - I said what do you use for labour, he said 100 per cent backpackers, German and Swiss and other backpackers. He then spent 40 minutes telling me all about the international backpacker market. And the Germans that he had organised to come down and the training program that he put in place when they arrive, four day training program he's got, and the Swiss backpackers and all the rest of it.

As I was leaving the place I'm thinking, what skills, what expertise do you need in Katherine and Alice Springs these day, you need somebody to keep the helicopter in the air, you need somebody that can maintain a $400,000 highly computerised all-singing-all-dancing cattle crush and you need people who are connected to the international labour market.

And it got me thinking, you know if that's what's happening on a traditional cattle station with a 68 year old cattleman in the middle of Australia, what is going on around the rest of country. And it's all happened, I suppose my principal point is, it's all happened in about six or eight years.

Such is the speed of what's happening with the great growth we've had for so long, the ageing population, China and India, all this combination of factors and in agriculture, the drought on top of it, the combination of factors which is driving the need for ingenuity to solve this problem, to stay afloat.

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And what's he doing, he's introducing unbelievable technology in the last eight years and he's 68. In his 60s this man has stepped away from his whole lifetime of traditional activity and done what he's had to do and it just I think shows you two things. One: the pace of change that's taking place, so the need for what the Skills Council sort of deem to be appropriate even three years ago, is probably not appropriate now, right.

And we're just galloping in a sense to - to deal with this situation of serious and continuing labour shortage which mean we've got skill shortages. So that's not - technology is not the only solution but its one major solution that's being adopted out there.

The other thing that struck me is, what politician or bureaucrat have gone onto this fellows place eight years ago and said, Grant I'll tell you this is what you've got to do in the six to eight years. You know I mean no one.

I suppose the point is business in my view will find the solution for their business. And everyone will be different, marginally different. What government has to do is to create a framework that - of flexibility in my view and a lot of what the Skills Council has to do is to create a sufficient framework that's flexible enough for people to see their circumstance, make changes accordingly and get on with it.

And so a lot of what we've been seeking to do as a government is to create this flexible framework. The things like the Workplace Relations, it is designed to give the capacity to do what say Bunnings are doing.

Bunnings get in - Bunnings have had a problem with their workforce, same thing, labour shortage. They saw possibility to get experienced tradesmen and women at the end of their career into their store.

They've made an explicit policy they've adopted as an organisation to go out and grab hold of experienced tradesmen and women who may no longer have the physical ability to go and crawl around the roof and do the plumbing that they've been doing but are still quite capable at 50 or 52 or 54 but are heading towards what they thought was retirement, which we've all said as a community at 55 you're out of here.

Well now we've got to change our thinking. We've got to delve into all the pockets of untapped labour. There's three million people between the age of 55 and 70 in Australia. A lot of those could do some work, want to keep working, but not necessarily what they've been doing for 30 years.

The Bunnings example is a classic. Someone comes in and says, I'm 54, I'm looking to retire, was going to spend three months of the year going around Australia with my wife every year, but I really wouldn't mind doing a bit of work. Not a problem. You do your three months a year,

we've got a job for you for nine months.

I want to play golf one or two days a week. Not a problem. You do that, you got a job for three days a week. It's all about flexibility, striking an arrangement with each one of those people which meets the needs of them.

You go in there now, it's a great experience. You've got all these experienced people who are motivated, loving what they're doing, and can tell you, inform you, about - used to be deeply frustrating for me to go to the hardware because I didn't know what I was doing. Now I enjoy the Bunnings experience.

But what I'm saying to you, we've got to create a framework so the workplace relations, the welfare to work, to give some incentive and training and special arrangements to the 700,000 on disability pensions. Many who can't work, but many want to work, love to work, but can't do the normal things.

For a Skills Council, some of those people could never do the 18 competencies for a certain apprenticeship, but they could do six or eight. Then they could do certain jobs which relate to

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those six or eight competencies and be highly productive, loyal, self-fulfilled, self-esteem, all the rest of it, and there's hundreds of thousands of them out there.

You've got a big role to play in all this and we have, as a government, to create that sort of, not only the ability, but the culture to say, we can be flexible, we can find ways to utilise.

So there's 700,000 on disability pensions, there's 750,000 on parenting payments. Many of those can't work, but many want to work, could work, but can't do full time. They want to maintain their skills, they want to get back in the workforce, etcetera, part time.

Again, childcare arrangements and other issues are really an important part - and the skills. Sometimes they haven't got the confidence they need to get certain skill sets, get back in the workforce, get the confidence, I'll do the rest.

We've got to have this building blocks approach, I think. It's very much a part of solving this labour shortage and the skills crisis that goes with it. The other thing is that we've got 490,000 people on unemployment benefits. So we've still got all these pockets of untapped labour resources.

So I think there's three things we've been trying to do to solve and deal with this labour shortage. One, to get anyone who can work into work, or to stay in work. So the over 50s stay in work in a way that's satisfactory to them, but useful for everybody else.

We've got really a total of about five million people across those groups I mentioned, many of whom can't work. But there's probably one or two million who can, who are not currently in the workforce.

Okay, we're bringing in skilled migrants and all the rest, but we've got on our doorstep a capacity to solve a lot of this labour shortage, and it does involve often training and other things.

It's not just training, it's a lot of other policy things that affect it: the tax arrangements for seniors, superannuation arrangements, childcare arrangements; all these other areas of policy that will impact.

You can bring some of that perspective to government as to what else will, in the presence of and with assistance of training, help people be properly and fully engaged in the workforce.

The second thing is to elevate the status of technical, vocational and creative careers. We have made a big mistake over the last 20 or 30 years talking down the trades. For all sorts of reasons, we've made it look a second-class career.

It's one of the contributing factors, in my view, to the problems that we've got at the moment. We've got 20 per cent of the workforce with a university education. With the modern economy, that's seen to be about what we need, with university degrees, about 20 per cent of the workforce. So it's pretty much in balance.

It's assumed we need about 60 per cent of the workforce with a strong technical or vocational qualification; we've got 30 per cent. That's a huge gap there and a big part of that, I think, is the way in which we have a community talked down the trades, talked down those careers. We've got to do all sorts of things to elevate the status.

The third thing is I think to build a culture to train and retrain people throughout all age groups, and it is a culture thing. In fact, all of those three are a culture thing. We're not employing lots of people with disabilities or on parenting payments or the unemployed because culturally, we don't do it.

We go and get others who can work a full eight-hour day under the normal circumstance. We've got to change the mindset. We talked down the status of the trades and technical and vocational careers. It's a cultural thing, it's in it.

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So many parents out there feel they've failed if their kids don't go to university. Yet, their kids might be born and blessed with wonderful technical and vocational talents, would be highly motivated if they're celebrated, those talents are celebrated and developed.

Yet, the whole mindset of the community and the schools, the career teachers and all the rest, it's all of us. You can't single anyone out, we've all got this mindset where academic qualifications are put on a pedestal.

I mean, it's great if you've got academic qualifications, you can do that. But if you've got technical skills, you do such wonderful things and so important, such a balanced part of our community. So it's a cultural problem.

The third thing, we have been saying to people, there is a view in our community when you do all your training through school and then post-school, immediately post-school, once you're in the workforce, that's it. Well, it's got to change; it is changing. The Bunnings people are doing a four-week retail course at 54 so they can do retail.

We've got to have a mindset and if we are going to have a labour shortage where business response is to introduce technology at the pace that my friend on the cattle station is doing, then the people that are best able to cope with that technology are the existing workforce.

Often, they need to be taken up a notch or two or three. They might already have qualifications, they might already have some training, they may have no training. There are 3.4 million people in the existing workforce who have no Year 12, didn't finish school and have no technical training

of any consequence. So there's millions out there.

They've got lots of experience, very good people. That's where recognising prior learning and experience is a really critical part to motivate them, to recognise their experience, add the other components they haven't got, get them qualified at 35, 45.

Things are happening, it's not all as though none of this is not occurring. There's 160,000 people now over 25 doing apprenticeships and there were 16,000 10 years ago. There are 544,000 people finished apprenticeships fully in the last four years, 130,000 a year. Ten years ago, there were 30,900.

So there is change taking place, but we've got to turbo-charge it really and it's not common across the board. In that building, the education or the desire in expectation to be retrained at all age groups, it does get back again to the building blocks, I think.

If someone's 35 with kids, all other responsibilities, to go and do a four-year course it's just not possible. But to do subsets and then to get some prior experience recognised and build on it, by 40, still working the whole time, they're often there with a fully-fledged qualification. Then who knows? They're off doing even more stuff.

All of a sudden, you're elevating progressively, right across the board, the whole level of competency of the workforce. It was some of that which has driven the decisions which you're hopefully all aware of, that were announced recently.

A couple of initiatives across all of agriculture and horticulture outside of the capital cities, every course, whether it's Certificate 2, 3 or 4, they will now all attract the toolkits and a $500 training fee voucher for the first two years.

No Certificate 2 attracts any of the incentives that we apply for people training. But a lot of agriculture and horticulture are Certificate 2. Now, every one of those courses will attract those arrangements of $50 million. It's an important thing given what we've seen going on across the rural sectors and the 70,000 people who have left.

Also, the skills needs list, we were using, as many of you would know, the Migration in Demand list to also prescribe who got the incentives for apprenticeships. Now we've separated those two.

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I didn't think it was adequately capturing the longer-term needs and real shortages in a lot of areas.

So we've gone from 40 on the Migration List to now 55 trades and professions which will attract all the incentives. There is a number this year in meat, butchers come into that list across some of the areas. There might be others which I would need to check on, and that'll be progressively reviewed each six months and others added, as required.

Finally, I'd just like to make a couple of comments about the review of the Skills Council while I've got the opportunity. As many of you know, the Prime Minister asked my predecessor, I think about last November to look again at the Skills Council.

There's been a lot of change, to me, over the last few years. There was suggestion of another review which would report back to the Prime Minister next March. I took up those responsibilities and I have now met with - the first two or three months I tried to get my head around the rest of activities in the sector and get some feel for whether the priorities and things were.

But through June, July and August I've met with all the Skills Councils. I've met with all of my counterpart ministers in the states and I've started a number of industry consultations; I haven't finished those, to be honest. It's been a wonderful experience for me, I've learnt an enormous amount.

What really did impress me was the depth of experience in all the Skills Councils. I met with the CEOs and the chairs, and separately at times with others, informally. I really came away with a lot of confidence about the expertise that is captured across the 10 Skills Councils.

I will be writing to all of the chief executives within the week, so you've got some idea formally before the election where my head's at. It's only indicative because I haven't finished.

But I've formed some reasonably strong views. The principal one I think, from your point of view, is that my sense was there's no need for revolution, in fact. I'm very impressed with a lot of the operations. There are things I think we need some fine-tuning; some not a lot at all there and others, there's things, but we'll work through that.

There's only one area that really concerns me and that is, I'm very confident that the governing arrangements - governance arrangements are now in good order across the Skills Councils. I think all that process has been very satisfactory. Some are still working through it, but it's all heading to me in the right direction.

I wouldn't want to interfere with any of that, I think we've arrived at a good place with the governance arrangements. I do think that the funding, there needs to be - certainly I will looking for some sort of three-year cycle so that there's some greater certainty about the arrangements.

I've run these sorts of organisations; they're fundamental to retaining good staff and also giving the industry and anyone else confidence about the arrangements. I can confirm that I'm looking to consolidate what we've got, to build in a sense of certainty and continuity so that people can get on with it.

I think it's very important for all the sectors that you're looking to do the training packages and all the rest for, that they have a sense that we're in real time and there's stability and continuity, and we've basically got it in some sort of good order to do the job that you're charged to do.

The commercial activity side of it, I've looked long and hard at that. I've run these sort of organisations. I remember there was one organisation I ran which was a big Federal organisation for several years.

One of the member organisations had $100 million worth of assets and I could never get to see my chief executive in the state, he was fund manager really. He was; it was a great thing that, all his resources. But you can get distracted from your core activity.

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I know when I was running a lobby group, if you were dependent really on your performance to get your funding from volunteer members, then it really kept you alert and a bit focused; you want to feed your kids.

So if you've got a big - if the focus is on making heaps of money and building other activities, I think it's very important that if there are commercial activities that enhance the core role, enable the Skills Councils that do what they're primarily there to do, and that is to develop really effective, flexible, relevant training packages.

If there are things you can do, and there are things I can see, which will make you money and need to be commercial, but they build your networks and your status and your understanding of the sectors that you're trying to look after. Now, if there's commercial activities doing that, I'm very comfortable with it.

But it can be hard to draw this line here, but if you get outside of that with a whole lot of overseas work and all that, to me, that's probably more relevant to other private organisations that are well-placed to do that, just as well-placed in many senses.

So they're some of the things I will in more detail respond over the next week on paper. But just finally, I am still concerned that in some of the Skills Councils covering very big areas, lots of industries large and small.

I am concerned to make sure that industry perspective and needs are truly reflected in the training packages not just lip service being paid. You can't have a disconnect where the Skills Councils become some sort of higher level authority which doesn't feel that it owes - all its responsibilities relate back to those industries. It's got to feed off them.

Again, when I ran the National Farmers Federation, around my board I would hear about issues because they were all people who were running their own businesses, had their own capital invested. I'd hear about interest rate problems nine months before treasury identified them in the statistics. That's not a criticism of treasury, it's just the way it is.

People on the ground, running businesses have got a very keen sense about what's important and what's not, and often a long way ahead of everybody else before it ever appears in statistics and all the rest. So I'm going to look not through the governance arrangements because I think that's - but down at a lower level where the industry boards and committees and things.

Every council's got different arrangements, but I want to explore that further and I'll be having a lot more discussions after the election, if we're re-elected. If we're elected, I'll be having a lot more discussions with industry and pursuing that aggressively and finalising that.

Well, in conclusion, flexible training I think is at the heart of getting with all the challenges we've got at the moment. They're wonderful challenges to have, to be honest. There's great opportunities out there, but you have got a really big responsibility.

I think these two days are going to be an important part of continuing that. Congratulations again to all of you and the leaders of the Skills Council here and I wish you all the best for the next couple of days. Thank you.

SPEAKER: It's my pleasure on your behalf to thank the minister. It's a privilege really to have a minister who's both, from your point of view within the industry, across the detail of the industry as Mr Robb so clearly is with his extensive background in the agriculture sector, but also reputationally in terms of what he's done in the portfolio so far this year.

I know that the Skills Councils I work with, including this one, greatly appreciate the constructive and frank engagement he's taken with them, and I might say, Minister, the messages of some certainty going forward because that has been a major issue for all of the councils.

I'd like again, on your behalf, to thank the minister for coming this morning at what we all know

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is a very busy time for you. I think Ralph, if he hasn't already done so, has a small presentation on your behalf.

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