Event: Interview with Tim McMillan, ABC Radio Perth

Speaker: Jennifer Westacott

Date: 29 November 2018

Topics: Education and skills

E&OE

Tim McMillan, Host: Jennifer Westacott is the CEO of the Business Council of Australia. I spoke to her a short time ago and asked her if this review is something that the sector has in fact been crying out for?

Jennifer Westacott, chief executive, Business Council of Australia: Absolutely. We've been crying out for a review of VET for a long time but also a full inquiry into the post-secondary system. The vocational system has just been neglected in this country. It's been abandoned by governments. It's been treated like a second-class citizen. It's absolutely essential if we’re going to keep people in work. This review is welcome news, but we've actually got to get on with things to as well as reviewing them.

Tim: What's wrong with it at the moment? Where are the failings?

Jennifer: There are a few things that are wrong with it. The first is that there is just a cultural thing if you will, that it's treated as a second-class citizen. Everyone thinks that the most important thing in a kid's life is to go to uni and of course for some kids that doesn't work. The system, as a result of that culture, has been treated poorly in terms of funding. It's lost funding over the years. I think the main thing is that the way the funding system is organised creates an incentive for young people to go to university when in fact they might be suited to going to TAFE or going to a private VET provider, their employment prospects are going to be better. If we're thinking about how the economy is going to work over time, people are going to need more skills, they're going to need to upgrade their skills, they're going to need more technical skills, more vocationally orientated skills. That is what the VET system is for. Yet we have abandoned it and this review is absolutely essential.

Tim: Is it about enabling people to better access the sector as well, Jennifer?

Jennifer: It's a great point. One of the things we've called for is an information system that cuts across both universities and TAFEs and private providers. So the young person – or someone who is an existing worker – can look and say, 'what job do I want to do? What job have I got? What skills do I need? What kind of course can I get? How much is that course going to cost me? What subsidy will I get? What’s my prospects for getting a particular income when I leave? Then they can make an informed decision. 'Do I go to VET? Do I go to university? Do I do this kind of VET course or do I do this university course? We don’t have that at the moment.

Tim: Where has this come from Jennifer? Are employers saying that they're getting people come out of the system with the wrong skills for the jobs they've got available?

Jennifer: Absolutely -

Tim: Is this where the breakdown is?

Jennifer: I think that's absolutely right. Employers across the spectrum – whether they're large employers, medium size employers – all say that we need people with more vocational capabilities. As well as their capabilities they get from a university qualification. Most importantly though they are all saying to me, 'We need to be able to retrain people faster’. One of the things we've proposed is a lifelong skills account for everyone who is studying. Whether they are young, whether it's their first degree or whether they've been working for 30 years – can get a subsidy and a loan and they can go study a module of something rather than a whole degree or a whole certificate. They can keep their skills up to date. That’s one of the things employers are always saying to me, we're really worried about the people in their 40s and their 50s who have not maybe kept pace with the so-called digital economy – we need to retrain those people.

Tim: You used the phrase a moment ago Jennifer 'vocational capabilities', what does that actually mean? Are you talking about things that need to be taught that currently aren’t?

Jennifer: Yes. People want people to have what they call, to use the jargon, 'work ready skills'. If I’m an accountant for example, well obviously I need to know the rules of accounting. But jobs are different to that. Being an accountant is about problem solving, working with your clients, having good communication skills, being able to work in a team. Of course in many occupations now this skill level is going to go up. You think about at one time; your mechanic was a very different looking person to the person you see now when you take your car in for a service. They're using computers. They're very digital. The whole system is quite different. If I’m in the medical sphere, so much of that now is technology driven and you've got to be able to keep people up to date with those technology advancements and they’ve got to have those vocational capabilities.

Tim: Jennifer Westacott is our guest. She is the CEO of the Business Council of Australia. We're talking about a review that has been announced into the VET sector. Jennifer, this review will be chaired by Steven Joyce, a former New Zealand Finance Minister. Do you know much about him? Is he the right person for the job?

Jennifer: Yes I have met him. He's done an outstanding job in New Zealand of managing their economy. Skills are something they've really focused on. He did a magnificent job as Finance Minister of getting their finances in order. This is a very capable person and a person who I think has looked across the world at the sorts of things that economies like Australia are going to need. So I think it's a good choice.

Tim: Jennifer are there particular sectors where people are failing, in terms of there being a void between the skills they have and the skills they need once they come out of these institutions?

Jennifer: One sector that really needs the spotlight put on it is aged care. We're going to have a royal commission into the aged care system, but aged care is a very different thing to what is was 20 years ago. People who are going to nursing homes – they're much sicker. They need a much higher level of care. That’s not about having everyone as a registered nurse. But it does mean that enrolled nurses are going to need much more clinical capabilities as well as person caring capabilities because generally speaking, people who are going into a nursing home are very unwell and are not able to care for themselves. That was very different as you would remember – I don’t know how old you are but I am now showing my age…

Tim: Old enough...

Jennifer: That's very different to how it was 20 or 30 years ago when a nursing home – people might have been in there for a long period of time and they weren't always particularly unwell. That’s a very different world. So aged care is one. The finance sector where you're going to have a lot of people now working in a sector where things that were once done manually – data processing – will be done by artificial intelligence, by the digital system. It’s not that those people will lose their jobs. They will go to different jobs and that’s what our recent study showed. They'll go to different jobs where people want from their bank or their financial institutions, more customer service. They want more personalised services. Those people can be retrained into that area. But you’ve got to have a digital capability to stay in these systems at all.

Tim: And Jennifer, making people, graduates as you put it 'job ready', are there jobs then for them to go to?

Jennifer: Absolutely there are. This is one of the things we must remember that we've got the lowest period of unemployment we've had for decade. We've got jobs being created all the time. Our study that we released a few weeks ago was really important. It said there has not been big job losses. In fact, the rate of retrenchment had halved over the last decade. What we need to do is to remember that people’s jobs are going to change with technology. We need to keep their skills up to date so they can stay in those jobs. So that we can create those jobs in Australia. So that we can protect Australian workers. That's where the VET system is absolutely vital and that’s why this review is a much welcome announcement. And I do want to give credit to the Labor Party. They quite a long time ago announced the post-secondary review. I think both political parties now have got into space where people like myself and the business community want them to be. This is a vital step and we've got to make it work.

Tim: Post review, I’m guessing there may be election promises to come in terms of upping funding to this sector. Is that going to be enough? Just throwing a big whack of money at it?

Jennifer: No. It's a great question. There’s no doubt that some money is absolutely desperately needed into TAFE and particularly into particular parts of TAFE. But if you just throw money at things without a plan or without reform or without fixing the problem then you just waste money. And we don't get the things we need as taxpayers to make sure that money was well spent. More importantly we don’t solve the problems that are facing many Australians. Money is vital but if you don't get the system fixed in the way that I’ve talked about in fixing the things that are hugely problematic, well then I don’t think it'll be money well spent.

Tim: That’s Jennifer Westacott the CEO of the Business Council of Australia.