The Sydney Institute

I begin by acknowledging the Gadigal people of the Eora Nation, the Traditional Owners of the land we’re meeting on tonight.

I pay my respects to elders past and present, and I extend that respect to all Aboriginal and Torres Strait Islander people.

I thank the Institute for the invitation to talk to you once again and to discuss an issue very close to my heart – skills.

In the last year or so the Sydney Institute has hosted events with several of my Cabinet colleagues, including:

• Richard Marles on defence.
• Chris Bowen on our net zero transformation.
• Ed Husic on a Future Made in Australia.
• And several events on housing.

Tonight’s event draws together the common thread through all these important areas – skills and training.

Skills are at the core of every major challenge and opportunity we face.

My goals, as the Skills Minister, are the means by which other Ministers achieve their goals.

On coming to government two years ago we inherited the worst skills shortage in more than half a century.

Some of this challenge was exacerbated by COVID.

But much of it was not.

It was the result of policy and fiscal neglect.

And an inability to grapple with the complexity of the issues and to collaborate to address them.

For example, the former government failed to reach agreement with states and territories on skills funding for their entire time in office.

The same states and territories that are central to the Vocational Education and Training sector; with whom it is essential to strike an accord in the national interest.

It is extraordinary that over nearly a decade the Coalition Government was unable to secure a national agreement on skills.

What is even more extraordinary is Niki Savva’s account of Scott Morrison vetoing a skills agreement with NSW, because of his personal enmity towards the then NSW Liberal Treasurer.

And it was workers, businesses and the economy that suffered.

It is fair to say we inherited a mess.

A mess resulting from disinterest and dysfunction.

In the last two years we have set about turning this around.

Anthony Albanese’s first key policy as opposition leader was to create Jobs and Skills Australia.

It was the first proposed legislation we introduced into the Parliament.

This Labor Government is the first to elevate the skills portfolio to a cabinet post in its own right.

Vocational Education and Training has either been a secondary responsibility of a cabinet minister, or the responsibility of a junior minister not sitting around the cabinet table to make the case for its importance.

The Prime Minister’s action was recognition of the vital contribution VET makes to workers, businesses and the economy.

Nine out of 10 new jobs will require a tertiary education – roughly half requiring a TAFE or VET qualification and half needing a university degree.

Vocational and technical education is not marginal or second best.

VET as a driver of productivity and economic growth is on par with the university sector.

And a foundation for a future made in Australia.

The PM understands the correlation between education and training and individual opportunity and national prosperity.

Like so many of us around the cabinet table, he is first in his family to go to university – and like so many of the cabinet he is rightly proud.

But when he is getting out and visiting students you will see him visiting a TAFE every chance he gets.

More often than he gets to universities.

The value this government places on VET and the skills crisis we inherited, have combined for the greatest Commonwealth focus on VET we have seen in a very long time – possibly ever.

It’s fifty years since the Commonwealth made its first serious foray into VET policy in the form of the Kangan Report.

We have the Whitlam Government to thank for its vision that led Australia to having the finest technical and vocational sector in our region and one of the finest in the world.

But it’s fair to say that the success of realising that vision has been patchy at best.

Whether it was a lack of opportunity due to losing office, focusing attention predominantly on universities, misguided or poorly implemented efforts at marketisation, or sheer neglect; the opportunity for the Commonwealth to champion VET has not been fully realised.

We are working to change that.

We have made good progress in two short years but structural reform and cultural change takes time and there is more to do.

There are many, many moving pieces and it requires considered and purposeful effort to co-ordinate them – for the whole to be greater than the sum of its parts.

From labour market forecasts to industry engagement, to having a sector more responsive to the skills needs in a fast-changing economy.

From resourcing to institutional capability, to building the VET teaching workforce.

Having the right institutional architecture like regulation, stewardship, and engagement.

All in the service of the student, apprentice and worker who want skills for a better life.

And businesses, who need a skilled workforce.

VET is critical to the economy and Australia’s prosperity, but it has lacked this kind of integrated, co-ordinated infrastructure and architecture needed to support it to achieve its full potential.

And this challenge is made greater because not only are we forced to play catch up to fix urgent gaps – like the impact of a decade of denial about climate change – we are living in an era of rapid change.

The composition of the economy is changing, and so are jobs within existing sectors.

Data in the Employment White Paper paints a nuanced picture of the trends that are shifting in the economy.

The shift in employment has not been from manual to cognitive work as many predicted in the 80s and 90s.

The shift has been from routine to non-routine work.

High-skilled, non-routine work, both manual and cognitive is growing.

While repetitive, routine work, both manual and cognitive is declining.

Not only do we need skills to do jobs that didn’t previously exist – like cybersecurity – pre-existing roles – like mechanics – are barely recognisable with the ones many of us grew up with.

For example, with combustion engine vehicles becoming increasingly computerised, and the increasing market share of hybrid and electric ones, the skill set needed by a mechanic has changed rapidly.

AI is playing an increasing role in the automotive industry – which, like the rest of our economy is adapting to the opportunities and challenges the new technology presents.

Whether it’s healthcare, retail or logistics – AI holds the potential to drastically change how businesses operate - and the labour market needs to keep pace. 

In twenty years, we’ve experienced huge shifts in the way we work and live using digital technologies.

From computers on our desks, to computers in our pockets.

These ongoing changes underline the importance of skills development in maintaining a modern workforce.

Learning new skills, acquiring knowledge and cultivating innovation is key to opportunity, wage growth and job security for workers, and to increasing productivity and revenue for businesses.

This is where Jobs and Skills Australia plays a key role.

Jobs and Skills Australia is forecasting future labour market needs and preparing capacity studies for new and emerging industries.

Critically it is doing this through the combination of large data and on the ground intelligence from the real economy.

It maps the entire labour market – ensuring our government has the full picture of the current and emerging needs of every industry so that we can make the most informed decisions.

And JSA’s work extends to providing advice on our skilled migration needs, another piece of the puzzle in overcoming skills shortages.

And another area that was left in absolute disarray by the previous government.

I need to point to the gaping holes in Peter Dutton’s proposition to help industry through the persistently tight labour market.

In his budget reply, the central pillar was to cut migration – and to cut it radically.

He provided no detail about how he plans to do that or which areas of migration he plans to target.

International students? Nurses? Construction workers?

He provided vague window dressing about prioritising skilled tradies from overseas to help battle the housing crisis.

However, new figures from Home Affairs shows he did exactly the opposite in office.

In 2018-19, when Peter Dutton was Minister for Home Affairs, he granted 6,995 visas to skilled migrants in the housing and construction sector.

In 2019-20, it was worse, only granting 4,893.

There were media reports last week claiming that we’re not prioritising skilled tradies – but the figures just don’t back that up.

In 2022-23 we granted more than 10,500 visas to skilled workers in housing and contraction.

And we’re on track to grant around the same amount this financial year.

They talk about it. We get on with it.

To support JSA’s work, we’ve established Jobs and Skills Councils to ensure real economy insight.

These Councils are industry owned and industry led tripartite bodies.

This new architecture will ensure governments, industry and education and training sectors work collaboratively.

For too long, the head has been separated from the hand, driven by the idea that practical skills obtained through VET cannot complement conceptual knowledge obtained through university, and vice-versa.

So, we are fostering a closer relationship between these two tertiary sectors.

The two vehicles driving substantive reform are the National Skills Agreement, and the Universities Accord – moving in tandem towards a more strategic and collaborative future for tertiary education.

Because each sector is critical to meeting our skills needs.

The National Skills Agreement provides $650 million to establish up to 20 nationally networked TAFE Centres of Excellence.

These centres will be leaders in their field, bringing together TAFEs, universities and industry in genuine partnership to deliver a skilled workforce for critically important areas like clean energy, sovereign capability, and digital.

They will work with Jobs and Skills Councils to look toward the future needs of our economy, giving us the lead time we need for investment in skills to keep pace.

In collaboration with JSA and JSCs, the Centres will more rapidly identify and anticipate the changing nature of the labour market, ensuring our education and training sector responds accordingly.

They will create immediate benefits in spreading innovative training practices across the country – with businesses, workers and our economy all reaping the rewards.

Yesterday I was in Perth with the WA Government launching one of these Centres of Excellence.

And more will follow soon.

Along with modernising the architecture of vocational education, we’re delivering the highest proportion of investment ever seen.

In writing about the Kangan Report, one of his fellow committee members recalls the collection of buildings that housed tech institutes.

Discarded milk factories and shoe factories, department stores, church halls, asylums, army barracks and endless numbers of Nissen huts.

That was only 50 years ago but talks to a legacy of overlooking the importance of our vocational training sector.

Again, we are changing this.

We have successfully negotiated a $30 billion five-year National Skills Agreement, which combines investment with shared stewardship.

The first of its kind in more than a decade.

And we are investing significantly in capital upgrades, so that the equipment being used in TAFEs reflect better what is used by industry.

We are investing more in housing and construction, the energy sector, the care sector and IT.

We are reforming how the qualifications system works, so that people have more flexibility to move between occupations and industries and have relevant qualifications more easily recognised.

A statistic that quite honestly floored me when I came into this portfolio was that 1 in 5 adults face significant challenges with fundamental reading, writing and digital literacy skills.

So, we’re addressing that, investing $436 million to redesign and expand access under the Skills for Education and Employment program, so that every adult who needs help with those foundation skills can get it.

We’re also investing a further $142 million under the National Skills Agreement to improve foundation skills training capacity, quality and access.

We invested more than $50 million in the May budget to support more women into traditionally male-dominated roles, like housing and construction trades.

Because what kind of successful business model in 2024 starts with the premise that more than half the population need not apply?

This is all critical work to solve the problems we inherited.

At the same time, we have a strong eye to the future.

To the skills and jobs that are changing or emerging.

So much of what we are doing to reform VET is complex – it involves many different people and institutions and perspectives.

It is not – and should not be – a command and control exercise from Canberra.

It is careful, detailed, collaborative work to make the whole system work together.

So, the way we do this is almost as important as what we do.

Neither micro-managing from the centre, nor handing over the money and hoping will work.

In contrast, the approach my ministerial colleagues and I are taking recognises that overwhelmingly our priorities are aligned with that of states and territories, and that we can help each other achieve our shared goals.

That may seem obvious, but it hasn’t always been the case.

Ours is a government deeply committed to partnership between government and industry.

Because it works.

Engaging all parties and genuinely listening is wha t governing is about, and how the best decisions are made.

No-one has a monopoly on wisdom or expertise, and we do better when we recognise that fact.

To conclude: VET’s time is now.

For too long it has been neglected or lacked national leadership.

But more than that, our changing economy means that advanced technical skills are in demand.

There is a growing recognition of this in the way we hear people talking about VET.

As I travel the country, more and more people are recognising what has always been the case.

VET offers great opportunities.

And with the kind of support that I have outlined tonight, it can do even better.

We have made enormous strides in two years.

And we are seeing progress.

It will take time.

But what we have started, we mean to continue.