New vocational education to re-gear the economy – comment by CEO Craig Robertson

Red sky at night, sailors’ delight.
Red sky at morning, sailors take warning

Red sky mornings in North Eastern Australia portend the dangers of the fire season facing Australia this summer. As if that’s not enough, the red morning sky forewarns troubling economic times ahead, akin to the 1990s recession. Vocational education rose to the challenge then. Is it ready again?

Last week’s national accounts revealed what many have feared – the lowest level of GDP, certainly since the GFC, and productivity the lowest since the 1990s recession.

The rate of turn-over in the economy, so vital in keeping confidence up and businesses going, is stalling. Per capita GDP, lower than it was a year ago, sheets these economy-wide figures home, literally. Household disposable income is down more than 1 per cent over the past year. “Household incomes per capita are currently at the same level they were in real terms in 2010.”[1]

We also have a productivity challenge – the capacity to achieve more from each piece of input, whether that’s building things or improving efficiency from employees or the way they work. The three-year average annual growth figure of 0.4% is the worst it has been since the 1990s recession.^[2]

Students of vocational education in Australia will recall the 1990s recession was the pathogen that triggered structural changes to the sector. Keating called for responsibility for vocational to fold into the national government. Poor communication at a crucial time with his education minister, Kim Beazley, meant the resistance of the NSW Premier, John Fahey foiled the plan. ANTA[3] was the compromise – a Commonwealth statutory authority to work with the states and territories, even to pool their contributions for national redistribution for skills development where it was needed. It would be horizontal equalisation of skills akin to the fiscal equalisation mission of the Commonwealth Grants Commission.

Read the Joyce Review and we are back in the territory again, sort of.  A national skills commissioner is to tell us where the skills demands are, how much governments should contribute to ensure quality and leverage private contribution and then will track the follow-through.

ANTA achieved many things, but funding consistency,let alone funding certainty, was not one of them. I’ve never met a Premier prepared to give up his/her state’s hard earned to support another.

Possibly ANTAs biggest claim to fame was national industry training packages to house competency-based training. The model was for the time – many Australian workers were at risk of displacement from industry restructure and recognising the skills they had acquired on the job (not necessarily in an institution) gave them confidence to transition into new jobs in new industry.

Now, we are concerned about today, and tomorrow.

Philip Lowe, our Reserve Bank Governor warned again just last month^[4] that interest rates and a floating dollar are not enough to stabilise our economy. He suggests structural reforms that encourage firms to expand, invest, innovate and hire people.

As if predicting the national accounts, he said of structural reforms:

“Given the productivity challenges that we face, this is probably the best lever. But it, too, is hard to move or is stuck in many countries. Structural reforms are often highly politically contested and our political systems are having trouble building the necessary consensus about what to do, and how to do it.”

Here’s my suggestion for structural reform. Vocational Education reaches millions of workers and prepares many more. We can reach out to bring new-world skills and technology savvy talent to firms to give them the wherewithall to start their innovation journey.

It’s a new form of vocational education design and so easily within reach. One predicated on trust of TAFEs to engage with industry and employers, to build opportunity for individuals that resonate with their aspirations. It’s far more effective than reliance on a centralised model of training specifications which are so easily out of date and out of tune with demand.

Senator Gerard Rennick in his maiden speech this week called for a new focus on vocational education – skills based training through TAFE should take precedence over non-vocational university studies, which of course is welcome. More important were his words on productivity:

“Innovation and productivity are driven from the ground up by individuals’ hard work, not top-down by vested interests shuffling paper. As Adam Smith said: The directors of … companies … being the managers … of other people’s money … it cannot well be expected that they should watch over it with the same anxious vigilance with which … partners … watch over their own … Negligence … must always prevail …”

Facing troubled times we need to ask why there’s been no movement to Australia’s vocational education model – a model that looks backward, has limited guarantee to lifting basic skills like literacy and numeracy (which underpin adaptability) and is stuck like araldite to occupations we know are disappearing or changing.

There may be some form of structural reform in establishing the skills commission. Without structural reform to most vocational qualifications to deliver productivity enhancing skills to the individual – entrenched interests win as Lowe fears and an opportunity is lost.

Here’s hoping for a red sky at night…. in sailors’ parlance in this case but for a bright future for vocational education as well.

Note: Photo is from Bintan Island, Indonesia.