September 25, 2022

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Business cuts to on-the-job training have made Australia increasingly reliant on migrants, experts say | Australian economy

Businesses have demanded governments invest more in skills training even as they reduce such spending themselves, leaving Australia reliant on skilled migrants to avoid falling further behind comparable nations, academics and unions say.

The assessment, made public days before the jobs and skills summit in Canberra, comes as the federal treasurer, Jim Chalmers, released draft legislation on Monday that would give $1.5bn in tax incentives for small businesses to lift the skills of employees.

The share of workers getting on-the-job training has fallen from about a third in 2005 to about 20% today, said John Buchanan, co-director of the University of Sydney’s mental wealth initiative.

“Businesses are squealing about skill shortages but they themselves have been contributing to the drought,” he said. “Employers’ planning around skills and training, outside of the army and the health system, is pretty pathetic.”

Buchanan said at the height of the mining boom the resources sector was asking for $200m for training “and they were making more money than God”.

Industrial relations issues have dominated the run-up to the summit on Thursday and Friday. Attention, though, may shift to the skills component of the event as ministers outline policies aimed at lifting the capacity of workers and improving their prospects of getting wage rises at least in line with inflation.

Chalmers, along with fellow ministers Julie Collins and Stephen Jones, released for public consultation details of two tax incentives contained in the March budget of the previous government that had not been legislated.

“Worth more than $1.5bn, the technology investment boost and the skills and training boost will be backdated to 29 March 2022 so small businesses can receive the full benefits,” the ministers said.

Small businesses with annual turnover of less than $50m would have access to a bonus 20% deduction for eligible spending on external training of employees by providers registered in Australia until 30 June 2024. They can also apply for a 20% deduction supporting digital technologies uptake until the end of next June.

Gerald Burke, a Monash University professor who outlined the long-term trends in vocational education and training in a paper earlier this year, said state companies, such as railways or Telstra, had once been big in-house trainers.

But privatisation had increasingly resulted in out-sourcing to for-profit providers, sometimes resulting in “appalling misuse of funds”.

One result has been the emergence of as many as 4,000 registered vocational trainers and 170 claiming to offer higher education that the Australian Skills Quality Authority (Asqa) struggles to regulate, Burke said.

“It’s just an enormous problem,” he said, adding Asqa “has to spend a lot of its time registering new ones and deregistering ones that aren’t meeting requirements”.

Apprenticeships in construction, such as electricians, tended to get subsided even though the mostly male graduates could expect good salaries. By contrast, training in other trades, such as care services which were mostly female, were often under-resourced, Burke and Buchanan said.

The head of the Centre for Future Work, Jim Stanford, said in a recent report for the ACTU that apprenticeships and other vocational training fell to postwar lows relative to the labour force during the Coalition government, as spending on Tafe and other programs dropped.

“Business investment in innovation and R&D also slid after the Coalition came to power: from over 2.5% of GDP in 2012 to under 1.9% when it left office,” Stanford said, citing national accounts data from the Australian Bureau of Statistics.

The president of the National Tertiary Education Union, Alison Barnes, said only one-third of the 250,000 workers in the tertiary sector had ongoing, secure work, reducing its ability to attract and retain the trainers of tomorrow.

“These are damning statistics … casualisation has been a long-term feature and it’s certainly increasing,” Barnes said. “This is undermining Australia’s long-term capacity to respond to the challenges the nation faces in coming years.”

Sources of funding for vocational education and training in Australia. (Excluding international students, government and private outlays are about the same.) (Source: Gerard Burke) pic.twitter.com/equ0gOmdev

— Peter Hannam (@p_hannam) August 29, 2022

On Sunday, Ai Group, the Australian Chamber of Commerce and Industry and the Business Council of Australia joined the ACTU in releasing a statement in support of “common interests on skills and training”.

Among the recommendations was the setting up of Jobs and Skills Australia as the agency responsible for producing advice on “economy-wide workforce needs”, and investment vocational education and training to provide “real and sustained funding increases to ensure the system meets labour market needs and increases accountability”.

Monash’s Burke said it was “speculative” to determine how much the private sector was spending on training since the data itself was poorly reported.