Renovating our vocational education system

Vocational education and training in Australia remain at a crossroads. A Productivity Commission report, to be released on Friday, is expected to deliver a devastating verdict on our VET system, painting a grim picture of the results - or lack of them - it delivers for both students and employers.

It's clear there is a crisis demanding urgent action. While problems with workforce skills have been apparent for some time, the collapse in migration numbers because of the pandemic means we need to move quickly to fix the glaring problems in our VET framework.

A key part of the solution must be industry-led training.

Figures from the National Centre for Vocational Education Research show that TAFE continues to see completion rates below 50 per cent compared with 90 per cent in industry-led training. For every dollar we spend on a student, we lose more than two.

In construction - which will be a key driver of the nation's economic recovery post-COVID - a student has a sorrowful 57 per cent chance of getting a job in their chosen vocation when they finish their TAFE course.

Surging enrolments in free TAFE courses conceal the real issues for Australia's VET system. As the Productivity Commission will show, there's a hole in the bucket. While the TAFE sector plays a critical role in providing foundational training, it cannot invest in the capital-intensive, highly skilled training needed by industry.

The Productivity Commission has been asked to examine how to ensure that government investment in VET produces the best returns for the community, with options for improving funding and pricing arrangements to determine the level of government support.

Its interim report reportedly will show a fall in the proportion of employers who were satisfied with training between 2009 and 2019 and, simultaneously, a fall in the proportion of students who managed to secure a job related to their training.

The federal government has rightly capped growth in TAFE funding because the demand-based models to date have failed and students deserve to know they have a job at the end of their training.

Writing bigger and bigger cheques to TAFEs to deliver apprentice training with low satisfaction and completion rates is hardly the answer. Setting up doomed consultation mechanisms to try to connect TAFE with industry will also be fruitless. We need to let TAFE do what it is good at - providing universal vocational training - and then fund industry to deliver capital-intensive, practical workplace training.

Much has been made of the potential for industry and union collaboration in a new accord to address shortcomings in our industrial relations system, but we should lift our vision because this model can also fix our skills crisis.

Instead of relying on TAFE to do it alone, we must elevate the status of industry-led training models - such as the Plumbing Industry Climate Action Centre - with industry and unions working together to tackle the skills issues in their sector.

These models, funded primarily by the industry in which the skills shortages exist, would realise their full potential if embraced and supported by government. Their success comes from the fact they are run by industry, so they are better placed to monitor employer demands. They see higher levels of satisfaction and completion than TAFE and deliver more job-ready students.

We need a long-term, demand-based investment model that shifts people out of training in hairdressing or business management to where skills are really needed.

The need for reform is no better demonstrated than in the construction industry, which generates $360bn in national revenue (9 per cent of gross domestic product), employs about 1.15 million people and supports more small businesses than any other industry. We have a record infrastructure investment pipeline in front of us and residential construction is booming. This means we need 113,700 additional construction workers by 2024 - and when you add the expected retirement rate, that number increases significantly.

We are simply not going to get there with business as usual. Indeed, we may not even deliver half that number. Contributing to the expected shortfall is the decline in apprenticeship and trainees, which have fallen by more than 30 per cent since 2013, partly because of lower incentives for employers.

Both federal and state governments are focused on the vocational training system as a key driver of economic recovery following COVID-19. The incentives are aligned to get this right. The political will to deliver change is also there.

The only thing that will prevent sensible skills reform is if our political leaders recoil to a tribal defence of TAFE as the primary training option, or a misguided attack on it. We need the sensible centre to prevail with investment in both TAFE and industry-led training.

Erik Locke is chief executive of construction body Incolink. He is a former state secretary of the Victorian Branch of the Australian Labor Party.

Article originally published in the Australian