Labour’s tertiary education reforms will be even wider than first thought and will strip power and assets from regional polytechnics, National’s Tertiary Education spokesperson Dr Shane Reti says.
“The reforms will mean regional polytechnics will be renamed as subsidiaries of a newly formed statutory entity called New Zealand Institute of Skills and Technology (NZIST). After two years they will be amalgamated.
“National has obtained a Cabinet paper which outlines this information, the Government will take this paper to Cabinet on Monday.
“The polytechs will be controlled by a head office. They will have their cash and community legacy assets ring fenced at head office. All other assets including buildings and land will be taken away and consolidated.
“For high performing polytechs like the Southern Institute of Technology this will be devastating. Education Minister Chris Hipkins is pushing ahead with ideology over what is best for students and regional New Zealand. The paper shows enrolments will likely fall over the two year transition period and perhaps beyond that.
“More than a thousand jobs all over New Zealand will be lost.
“Subsidiaries will exist for two years before consolidation. Current boards will be sacked on day one, including local members and will be replaced by a subsidiary board, and regional leadership groups will be advisory only.
“There will no longer be out of region provision, like the Otago Polytechnic campus in Auckland. This has been a critical way of recruiting learners to the regions.
“The Cabinet paper also details that the industry body which looks after apprentices (ITOs) will be dissolved over a two year period. At the moment the industry organises placements for apprentices because they understand the needs of industry and who will be the best fit for them. That will now be taken from them and given to polytechs who won’t have the resources and skills to manage that.
“National has released this information because we believe these reforms will be disastrous for regional education and apprenticeships. We are bringing this information forward to try to stop the Government from going ahead with this.
“National will return polytechnic assets taken by Labour and give them back to communities. We will return polytechnic decision making back to communities and the regions. We will return apprentices to industry. Mr Hipkins should be addressing the problems where they are and leaving successful institutions alone.
“National will fight these reforms, we will fight for regional New Zealand and we will fight against idealistic educational reforms.”
The following is a paragraph from the Cabinet paper.
This paper seeks to reform New Zealand’s Vocational Education system, following public consultation.
This paper proposes to move from a system where vocational education is primarily split between eleven industry training organisations (ITOs) delivering work-based training and sixteen institutes of technology (ITPs) delivering provider-based training, to an integrated model where around 4-7 workforce development councils (WDCs) have oversight of all vocational education, which is primarily delivered by a single institution spread across a range of regional campuses. Provisionally titled the New Zealand Institute of Skills and Technology, this institution would deliver both work-based and provider-based training. Wānanga and PTEs would continue to be important contributors to the system.
A companion paper sets out fiscal implications, and seeks agreement to initial appropriations to support the reforms.
A public-facing ‘change document’, a summary of submissions, a Regulatory Impact Assessment, and a Programme Business Case are all attached to this paper.
The Coalition has promised to create 80,000 new apprenticeships in areas of skills shortages if it wins the election. Most skilled trades (such as motor mechanics, panel beaters, carpenters, automotive electricians, plumbers, hairdressers) have recently been in shortage.
The Coalition aims to reduce the shortages through doubling employer incentive payments, making cash payments to apprentices and creating training hubs in regional areas and other areas of need.
Labor said it would pay upfront fees for 100,000 TAFE places. Labor has also said it would provide incentives for employers and apprentices for an additional 150,000 apprentices.
It’s clear trade apprentices and associated skills shortages are a central concern of both parties. But it’s not clear providing incentives is the best way to handle the issue, as history shows government incentives to employers have made little difference to the (mostly male) trade apprenticeship numbers.
Difference between apprentice and trainee
In considering the policies of both parties, it’s important to understand the differences between longer-term trade apprenticeships and shorter-term traineeships.
An apprentice, in the narrow use of the word, is contracted in a tradesuch as that of an electrician, carpenter, chef or hairdresser. An apprenticeship can take up to four years to complete. Trade apprentices make up a small proportion of the vocational education and training sector – around 14% of all government funded vocational students.
Traineeships were established in the late 1980s to provide apprentice-type training for young people in non-trade occupations such as sales and clerical, and many of the care occupations including disability and aged care.
The aim was to provide options, particularly for early school leavers, which combine work experience and learning on the job. It was hoped this would enhance early school leavers’ job prospects and add to the stock of skills in the economy.
Traineeships usually take one to two years to complete, much shorter than trade apprenticeships.
History of incentives
From the 1970s, the federal government had been providing financial incentives to employers of trade apprentices. The states also provided assistance. From the mid-1990s the federal government extended incentives to trainees, existing workers and to part-time and older workers.
Together with the introduction of a low training wage for trainees, the incentives led to a rapid expansion in the numbers of trainees in the late 1990s and to new training modes including fully on-the-job training. There was a sharp increase in the number of training organisations as employers were allowed to choose a private or public provider for off-the-job training (often one day a week).
A 1999 review into the system found some firms were using traineeships as a source of wage subsidies and, in many instances, provided little training to the trainees. For some, the skills acquired were not valued by employers over general work experience obtained during the traineeship. And the issue continued into the next decade.
In 2011, an expert panel noted Australia was the only country that paid government incentives, on a large scale, to employers of apprentices and trainees. The panel reported research that showed incentives paid to employers for the shorter traineeships represented a significant part of the wage costs (in some cases about 20%) and contributed to the large increase in trainee numbers.
For the longer, and more costly, training of trade apprentices, government payments to employers represented a much smaller proportion of the wage and training costs. And so, the incentives had only a marginal effect on the numbers of trade apprentices employed.
The expert panel suggested the government would be better to confine its payments to programs that added value to the economy, such as those in community services, health and information technology.
The panel also recommended the government not give funds directly as incentives to employers. Instead, both employers and government would pay into an employer contribution scheme. Employers who met benchmarks such as a strong induction process and effective mentoring would have their contribution rebated, either in part or in full.
These recommendations were particularly aimed at the non-completion rates of apprentices – on average less than half complete their apprenticeships with their first employer. The most common reason given is dissatisfaction with the employment experience including difficulties with employers or colleagues.
Drop in trainee numbers
The government at the time didn’t take up the recommendation of an employer contribution scheme. It retained incentives for apprenticeships in trades on the national skills needs list such as construction and telecommunications, and for traineeships in priority occupations in aged care, childcare, disability care and nursing.
It abolished incentives for existing workers in other traineeships. Together with cuts in state subsidies to the providers of off-the-job training in some courses, these changes led to a large fall in traineeship numbers.
For example, by 2018, traineeships in clerical and sales had fallen by more than 70% from 2012. Older and female workers were most affected.
But the numbers of starting apprenticeships in trades in the last ten years in the largest three groups – construction trades, automotive and engineering, and electrotechnology and telecommunications – is virtually unchanged. And a fall in automotive was offset by increases in the others.
These results were largely in keeping with intentions of the expert panel in 2011.
A male dominated industry
Trade apprenticeships are male dominated. In 2018, 65,000 males started trade apprenticeships compared to 9,000 females. And females bore the larger share of the reduction in traineeships since 2012. It seems unlikely many of the women who missed out on traineeships are among the entrants to higher education where women form the majority of undergraduates.
The available research shows electrotechnology and telecommunications trades and construction trades graduates are relatively well paid, while hairdressers are the worst paid.
Trade apprentices are already the best-supported VET students during training. They can access trade support loans of up to $20,000 over four years – with a 20% discount of the debt on completion. Apprentices can receive allowances for living away from home, and the government provides support for adult apprentices as well as rural and regional skills shortage incentives.
Extra government incentives to improve apprenticeship numbers do not seem to be the most effective, or equitable, policy. The next government must undertake a comprehensive review of incentives and all other forms of apprenticeship assistance.
The review should revisit the advice of the 2011 expert panel and ideally, should be conducted in the context of a review all tertiary funding (similar to what Labor is proposing).
Labor has promised to make childcare free for most low-income households and to provide up to an 85% subsidy for households under $175,000. It has committed to funding an extra year of preschool for three-year-olds. This is evidence-based and builds on commitments by several states to support two years of preschool.
The Coalition will likely retain the means-tested subsidy introduced as part of its major childcare reforms in 2018. While these reforms benefited an estimated one million lower-income families, the means test also left around 280,000 families worse off, including families with neither parent in work.
Given states and territories are largely responsible for schools, federal investment should be targeted where it can make the most difference. Two key areas are needs-based funding, to ensure additional support is available to students who need it the most, and central investment in research and evidence-based practice.
Both major parties have promised a national evidence institute. Laborhas allocated funds for it, with the Coalition yet to do so. This initiative reflects the urgent need to ensure evidence helps to shape the education system. The Productivity Commission has recommended such an institute, to connect educators and policymakers with the latest research on teaching and learning.
On funding, the Coalition wants us to judge it on its reforms to the schools funding package, which is now mostly modelled on the needs-based funding approach outlined in the Gonski Review. But funding has still not reached the recommended levels. The Coalition has supported the National School Resourcing Board to review these funding arrangements and develop a fairer model for all schools.
Both Labor and the Coalition have committed to increased support for apprenticeships, through financial incentives for employers.
For universities, Labor says it will bring back demand-driven funding, which existed between 2012 and 2017, where universities are paid for every student studying and there is no limit on the number of students that can be admitted to courses. Evidence suggests this has been effective in boosting studies in areas where there are skills shortages, such as health, and also appears to have improved access to education for disadvantaged groups.
When casting our votes, we would do well to look past the dollar signs, and think about how each party is shaping an education system that will deliver quality learning for all Australians, from all kinds of backgrounds, from childhood through to adulthood.
The Coalition has delivered needs-based funding for schools and promises a greater focus on regional and rural students in all sectors. But there are some apparent gaps in early learning and tertiary policy and funding.
Labor has pledged more funding in all sectors. It has made a prominent commitment to early childhood education and care. However, Labor’s policies are expensive and would need to be implemented effectively to make sure they achieve the intended outcomes for students and deliver the financial benefit to the economy in the long-term.
Apprenticeships help skill up the workforce and can unlock a lifetime of job opportunities for those lucky enough to secure one.
Both major parties are promising to boost apprenticeships, amid claims by Opposition Leader Bill Shorten that the Coalition Government is to blame for creating a “crisis in trades training”.
“They have a shocking record on vocational education,” he told reporters recently, before claiming the number of apprenticeships in Australia has fallen.
“It was 420,000 before the Abbott/Turnbull/Morrison government. Now it’s south of 280,000 and declining.”
Mr Shorten said he wanted to return Australia to being a “tradie nation”.
“What I need to do is remedy the crisis in trades training which the Abbott/Turnbull/Morrison governments have created in Australian apprenticeships,” he said.
So, has the number of apprenticeships slumped since the Coalition took office in 2013?
And if so, can blame be laid at the feet of the Abbott, Turnbull and Morrison administrations?
RMIT ABC Fact Check investigates.
Mr Shorten’s claim is misleading.
Apprenticeships have long been associated with traditional trades, such as plumbing.
But traineeships are a newer type of training program and are typically associated with the services sector, retail being one example.
The latest official data shows the number of apprenticeships (broadly classified as trades) has been in decline since mid-2012, but there has been a much more dramatic decline in traineeships (broadly classified as non-trades).
Mr Shorten used the term “apprenticeships” when speaking to reporters, but he was, in fact, referring to combined figures for apprenticeships and traineeships.
September quarter figures show there were 485,440 people in training for apprenticeships and traineeships in 2012 — higher than Mr Shorten’s figure of 420,000.
When the numbers are separated, it’s clear the sharp overall decline is driven by the fall in traineeships, which slumped by 66 per cent, compared to apprenticeships, which fell by 18 per cent.
Conflating the numbers may not seem unreasonable since the Government’s own website states that “apprenticeships” are “often referred to as apprenticeships and traineeships”.
However, Fact Check deems Mr Shorten’s claim to be misleading as his comments were made within the context of traditional trades; he referred to there being a “crisis in trades training” and expressed his wish to return Australia to being a “tradie nation”.
Further, policy changes actually introduced by the Gillard government in 2012 aimed at addressing widespread rorting of incentive payments to employers led to the sharp decline in traineeships, which became apparent from 2013, the year the Coalition came to power.
The more moderate drop in apprenticeship numbers was largely in response to labour market changes and the decline in traditional trade industries, such as automotive manufacturing and mining, according to experts consulted by Fact Check.
Traineeships also involve employment and formal training, but were established in 1985 to provide opportunities in the non-trade or services sector, typically in retail, hospitality, administration, child care and aged care.
But it does divide data into trade and non-trade sectors, which broadly align with apprenticeships and traineeships respectively.
This data is produced quarterly and consolidated annually.
Apprenticeships and traineeships are measured as commencements, completions and in-training.
When asked for the source of his numbers, Mr Shorten’s office referred to the official September quarter figures for people in training in 2012 and 2018.
The NCVER collated September quarter “in-training” figures for Fact Check from 2009 to 2018 (the latest available).
These show an overall drop of 45 per cent from 2012 to 2018, with the decline mostly driven by a slump in traineeships (down 66 per cent), ahead of a fall in apprenticeships (down 18 per cent).
As the chart below shows, the numbers of people in training for both apprenticeships and traineeships peaked in 2012.
Since then, apprenticeship numbers have remained relatively stable, while traineeships have fallen sharply.
In his comments to reporters, Mr Shorten provided combined numbers for apprenticeships and traineeships yet referred only to “apprenticeships”, creating a misleading picture about a crisis in the traditional trade-based apprenticeship system.
In an article published by The Conversation in 2017, they argued that not only was it misleading to present figures in this way, but that many parties on both sides of the political divide, including industry groups and trade unions, had done so at various times to suggest there was a crisis in Australia’s apprenticeship system.
The academics argued that while apprenticeship numbers had fallen, a closer examination revealed that, in some industries, apprenticeships had experienced recent growth, while for others there had been a decline.
So, are apprenticeships in crisis?
Many people start apprenticeships but do not complete them, so it’s worth taking a look at how the number of completed apprenticeships has tracked over the same period.
As with the overall numbers of people in training, the numbers of those completing an apprenticeship also declined after 2012, driven largely by a drop off in traineeships, rather than in apprenticeships.
Data collated by NCVER for Fact Check shows there were 55,605 people who completed trade-based apprenticeships in 2012.
This number fell by 26 per cent to 41,300 in 2017 (the latest full-year figure available).
Meanwhile, 138,625 people completed traineeships in 2012.
By 2017, the number had fallen by 62 per cent to 52,535.
Did the Coalition create a ‘crisis in trades training’?
It is important to understand why apprenticeships and traineeships spiked in 2012 — a peak that Professor Noonan and Ms Pilcher have labelled a “distortion”.
In the mid-1990s, the Commonwealth began paying incentives to employers on a large scale to help offset the costs of apprenticeships and traineeships, and to encourage more people to take on such programs.
The incentive payments scheme was expanded in 1998 to cover existing workers, not just new workers, and part-time as well as full-time staff.
Professor Noonan and Ms Pilcher noted in their Conversation article: “These policies made it very appealing for companies to take on a trainee, or to make an existing employee a trainee, as in some cases the incentive acted as an effective wage subsidy.”
“A business model emerged whereby employers would share the incentives with registered training organisations, who then delivered training, too often of questionable duration and quality,” the pair wrote in a more extensive 2017 academic paper (on which their Conversation article was based).
When it became evident that incentive payments were being rorted, the Gillard government scaled back eligibility after 2012, leading to a sharp decline in people taking up traineeships.
It’s a different story for apprenticeships.
Various sources claim that the fall in apprenticeships is principally due to a softening labour market and competition from the higher education sector.
A 2015 parliamentary library report suggested the decline in apprenticeships from mid-2012 may reflect reduced demand for labour in industries that are in long-term decline, such as manufacturing, or industries such as mining and utilities that shed labour in response to market conditions.
The report noted that despite the impact of the global financial crisis, apprenticeships in trade-based industries had remained relatively consistent over the past decade.
Chandra Shah, an affiliate in the Faculty of Education at Monash University and an Adjunct Associate Professor at Victoria University, told Fact Check that demand for apprenticeships remained strong in industries that continue to grow, such as construction.
However, the uncapping of university places, and lower entry scores for some courses, meant young people were often attracted to university ahead of considering an apprenticeship.
In their paper, Professor Noonan and Ms Pilcher said the decline in apprenticeships had not been due to funding cuts, as they remain fully funded by the states and continue to attract Commonwealth Government employer incentives.
‘Apprenticeships’ as shorthand for apprenticeships and traineeships
Associate Professor Shah told Fact Check that using “apprenticeships” could be problematic.
“There is some confusion and mixture and blurring of lines between traineeships and apprenticeships in some occupations,” he said.
“So, in an election environment, people are going to step into grey areas.”
But Dianne Dayhew, the executive officer of the National Apprentice Employment Network, said Mr Shorten’s use of the shorthand reference was “technically correct” as the term “apprenticeships” was used by the government itself.
However, she conceded it could be unclear to those unfamiliar with the differentiation between traditional apprenticeships and the more recently designed traineeships.
“Apprenticeships is often a term used by government for the collective of apprenticeships and traineeships. It can be confusing,” she said.
What are the major parties promising in this election campaign?