Young Australians need a new pathway to prosperity

This essay by Jennifer Westacott was published in The Weekend Australian on April 20, 2017. It was the sixth in the Priorities for Prosperity series, which explored issues important to sustaining Australia's wellbeing.

Spend any time among aspirational young Australian tertiary students, as I did at the launch of the Business Council’s new cadetship initiative with the Smith Family this week, and you’ll find it hard not to be inspired.

A vibrant, educated population will be our greatest asset as we move to ensure Australia’s path to prosperity. Education is not only the key to their economic advancement, but also to tackling superstition, ignorance, prejudice and the fear of the unknown that sometimes holds our country back.

For the 50 disadvantaged students engaged in the “Cadetship to Career” program, the chance of an annual eight-week paid internship with one of Australia’s biggest companies while they study means opening doors that have traditionally been closed to anyone but the socioeconomic elite.

These Business Council member companies, in concert with the charity sector, realise that taking on these cadets isn’t a silver bullet for solving the complex problem of youth unemployment – now at 13.3 per cent - but it is a genuine effort to give a career kickstart to this group of young people, many of whom would be the first in their family to finish high school and go to university.

In the same way that education lifted me up from my own childhood in public housing, our mass education system is proving the great leveller that is enabling them to break the cycle of disadvantage and propel themselves into a rewarding, meaningful working life.

Of course, education is not only for the young. Life-long learning has never been more important, as workers of all ages are faced with constant disruption and the need to acquire new skills. And when people fall out of society through family violence, job loss, homelessness, or illness, education is the way back in. It gives everyone the opportunity, at all stages of their lives, to adapt and change.

Unfortunately for many people, our system is not designed to meet the challenges of the modern world. Employers are increasingly concerned that new graduates aren’t ready for a modern workplace.

We know that many jobs will change and disappear with advances in artificial intelligence and robotics, but these will be replaced by new roles. We can’t know exactly what these will be, but they will certainly be higher skilled jobs.

Years of bitter feuding over school funding levels has encouraged public debate to focus almost exclusively on school education – and on the level of funding, rather than quality of schooling – obscuring the many serious problems that plague our tertiary education system, which is now in need of fundamental repair.

The tertiary system – comprising higher education providers and vocational education and training (VET) providers – remains a product of an age when only a fraction of students were expected to finish school, let alone undertake further study.

Although the 21st-century global economy offers untold opportunity for young Australians, many of them are being let down by a system that is not suited to meeting a wide variety of needs, and is not equipping them with the sorts of skills that they will need to achieve their full potential.

Every time an Australian’s true abilities aren’t developed and utilised, it is a tragedy for those people and their families. But the impact is wider than that. When workers don’t have the right skills or are in the wrong role, businesses struggle to expand, export and pay workers more. And ultimately, that affects all of us.

The rest of society – particularly older Australians – depend on a vibrant, growing economy to sustain the workforce and tax base for services they will need in retirement.

At the heart of the problem is our education culture.  A culture that remains wedded to placing academic learning above vocational learning. One where theoretical learning is deemed superior to practical learning and universities are where the ‘best and brightest’ go. And most critically, a culture that was designed for a generation when most young people did not complete secondary school and less than 20 per cent obtained a tertiary qualification.

Back then, higher levels of education weren’t needed to fill the many thousands of jobs that relied primarily on manual or physical labour, rather than on workers providing services.

Those days are over. Rapid technological advances over recent decades have substantially remodelled the economy, displacing or altering huge numbers of jobs.

More recently, this disruption has begun to affect jobs that were once considered impervious to automation. The self-navigating car has gone from science fiction to on-road reality in just a few years. Sectors like construction now heavily depend on people with the ability to problem solve, high level technical expertise, and skills that complement machines.

At the same time, the world has become more interconnected than ever, allowing small, medium and large businesses to tap into global supply chains for goods and services at much lower cost. This has been a boon for consumers, with cheaper goods and services boosting their spending power, but it also affected the proportion of jobs available for low-skilled workers.

The jobs of the future – almost every single one – will require workers to interact with and use technology as part of their routine. Technological competence is becoming as important as literacy and numeracy.

Academic excellence may have been the pinnacle of achievement in the 20th century, but we now need to recognise that intelligence, and with it employability, comes in many forms – academic, practical, creative and emotional.  We need to nurture them equally, and recognise that success is not limited to people with academic intelligence. Just as importantly, we need to recognise that workers of the future will need to have a level of competence in all four domains.

This is particularly true of emotional intelligence and behavioural development. Employers will be looking for workers who not only have the skills and knowledge to operate on a day to day basis, but also have emotional intelligence and behaviours that work well for the organisation such as taking responsibility, being adaptable, and being a good team player.

To meet this challenge, we need to ensure everyone gets access to the skills they will need to gain and maintain meaningful work over the course of their lives. But our system, wedded to favouring academic intelligence above all others, is stuck in the past.

Sixteen years of formal institutional learning might suit some learners, but is it likely to suit the majority of learners? Our formal education system was not designed to service the majority.

Successive governments have been well intentioned and opened up university to everyone. But this has created a culture built on a false assumption in our culture that university is necessarily the way a young person succeeds. Young people who are being pressured into a Bachelor of Arts by their friends and family might be happier earning and learning as an apprentice chef or trainee nurse – and ultimately, just as professionally and financially successful.

As we continue pushing teenagers into universities, the number of apprentices in training has fallen by 45 per cent over the last four years – a difference of almost a quarter-million people.

Beyond the culture that we have created, why aren’t people going into vocational education and training? An important aspect is a funding model that effectively penalises young people for considering a path other than university.

Take nursing, for instance. A student who takes up a three-year Bachelor of Nursing at a university gets a $40,370 subsidy from the taxpayer, leaving them to pay only $18,770 – all of which they can put on an income-contingent loan (known colloquially as HECS).

Meanwhile, a student who takes up a two-year Diploma of Nursing and chooses to do it through some reputable private providers gets no public subsidy, leaving them to pay $25,730 upfront, with loans limited to a small number of providers and capped at $15,000.

The university student therefore pays nothing upfront, while the diploma student pays over $10,000. Which option would you choose?

Distorted funding models need to be straightened out so that they incentivise good decisions by consumers and providers, rather than bad ones.

These funding distortions are fuelling an already pernicious stigma around VET and the mistaken belief that a vocational qualification is somehow inferior to a university degree.

This bias pervades even the highest echelons of government, where politicians and public servants have invariably excelled in a university setting. Almost every state, territory and federal education minister holds a university qualification.

Let me be clear that I am not devaluating success in higher education. It was the thing that changed my life for the better. Where appropriate for the individual, succeeding in a university environment should still be something many people strive for, and excellence should be celebrated always. But our young people should pick the area that is right for them, regardless of whether it’s a university or a VET provider, and all tertiary students should strive for excellence.

Australia would be best served if it moved from a system that has two silos – VET and higher education, each with their own quirks and distortions – to a single, seamless tertiary system.

We need a system where VET is no longer treated like the “poor cousin”, and where the two sectors are valued equally. Students should strive for tertiary education – not a degree or a trade.

And in moving to that tertiary system, we must give people clear and transparent information so they can make informed decisions. Why can’t students be told upfront, when picking their course, what the average starting salary is for people who complete that qualification? Better yet, could they also be told how long it would take them to pay off their student loans at that rate?

I have been arguing for a number of years now that this move to a tertiary system needs to happen. It will be challenging and take a number of years to shift our culture and our system, but we need to start somewhere and we need to start now.

Rarely have I had more passionate public feedback than when I spoke in the media recently about the dramatic fall in apprenticeship numbers. Clearly, Australians realise there is a problem and they want it fixed.

Education is dear to my heart because it changed my life. It was the game-changer for me, as well as my siblings. It enabled me to seize extraordinary opportunities, first the public service, then business.

For the cadets I had the pleasure of meeting this week – all of whom have defied the odds and are now getting a foot in the door at great Australian companies – education is allowing them to excel where others like them would have been written off.

For those of us who come from disadvantage, there is a lot of hard work along the way. But there are also many people who spend their lives working 10 hours a day, sometimes in back-breaking labour, who don’t get the same opportunities because the education system failed them.

We owe it to the next generation of Australians to make sure they get every opportunity, or else we’ll be poorer as a society.

Jennifer Westacott is chief executive of the Business Council of Australia