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A policy perspective: the role of higher education in meeting the needs of business and the community Mary-Anne Sakkara ACPET Symposium: Raising productivity, increasing prosperity – the challenge for higher education 3 February 2012

Introduction: what this session will cover

Productivity – what does it mean? Tertiary education – what we are trying to achieve and how Opportunities and challenges for higher education Opportunities presented by new portfolio

Productivity Productivity is what we produce for each hour worked But boosting productivity does not mean making Australians work harder and longer. It means people having the skills and resources to work more effectively.  Productivity is about sensibly producing more with less.  Improving productivity frees up resources to move to higher value uses and allows people more freedom to make choices about work, family and leisure.  Ongoing productivity growth is essential to:  build capacity to take advantage of current global demands  provide an opportunity for all parts of the economy and regions to grow substantially; and  improve living standards and assist those in need while meeting the fiscal challenges of an ageing society in the long run.

Productivity agenda The Australian Government’s productivity agenda is focused on the following three areas:  Stability – maintaining macroeconomic stability, i.e. steady growth with low inflation  Flexibility – ensuring that the economy is flexible and that incentives exist to encourage our labour and capital resources to move to their highest value uses; and  Capability – well targeted investments in skills, infrastructure and innovation.

Tertiary education has the capacity to influence flexibility and capability

How is Australia’s economy faring?  The Australian economy remains among the most robust of advanced economies – Treasury is predicting 3.25 per cent growth in 2011-12  However, our growth is lower than in developing countries where the World Bank predicts 5.4 per cent growth  The resources boom is driving a high Australian dollar and our economy is transforming as new industries emerge and older industries change  But our economy is running at different speeds depending on where you live

Productivity performance  Australia’s performance in productivity has deteriorated in recent years with both labour productivity and multi-factor productivity below the OECD average  Productivity growth has fallen from a high of 4.8 % in 2002 to just 0.4 % in the last financial year  Job growth in 2011 was its weakest since 1992

What we are trying to achieve through tertiary education  The Government is committed to investing in the higher skills needs for the jobs of the future.  Challenging targets have been set to increase the qualification levels of the Australian workforce.  By 2020: • Halving the proportion of the working age population without at least a Certificate III compared to 2009 • Doubling completions of diplomas and advanced diplomas compared to 2009 • 20 per cent of higher education enrolments will be for people from a low SES background

 By 2025: • Increasing the proportion of 25 to 34 year olds with a degree to 40 per cent

Tertiary reform contribution KPMG research shows that if we increase these tertiary education targets there will be improvements in both Australia’s long-term labour productivity and labour force participation rate.  By 2040, the tertiary reforms are estimated to build to additional contributions of:  2.1% gain in labour productivity through increased higher education  1.5% gain in labour productivity through increased VET  0.16 percentage point gain in the participation rate through increased higher education  1.0 percentage point gain in the participation rate through increased VET  Achieving higher education and VET targets could generate up to around an extra $50 billion output in the Australian economy every year on average for the next 30 years, or $1,850 per person. Up to around 180,000 jobs could be generated each year on average over the period.

Effect of all reform targets 9%

2040

2070 Workplace Relations Paid Parental leave

8%

0.7%

Percent Deviations from Baseline

7%

6%

Early Childhood

2.9%

Higher Education

2.5%

0.7%

5%

1.2% 4%

3%

2.1%

2%

1.5%

VET: Cert III-Adv. Diploma

1.65%

Schools

0.75% 2069

2067

2065

2063

2061

2059

2057

2053

2051

2049

2047

2045

2043

2041

2039

2035

2033

2031

2029

2027

2025

2023

2021

2019

2017

2015

2013

2011

2009

2037

0.6%

0%

2055

1%

Contribution to labour productivity increases (per cent deviation from baseline) Source: KPMG Econtech 2010

 GDP is expected to be 20.1% higher than the baseline by 2070 if all the reforms are achieved.

How are we trying to achieve these results?  More people with higher skills which will drive prosperity for the community  More equity of skills acquisition which will better meet needs of whole community  A greater role for industry which will ensure that we have the necessary skills for an evolving economy  The National Workforce and Productivity Agency will provide the Government advice on current and future skills needs and how well the VET and higher education sectors are meeting these needs  Australian Government Skills Connect will help link Australian enterprises with a range of skills and workforce development programs and funding, including the National Workforce Development Fund ($558 million over four years).

How are we trying to achieve these results?  A demand-driven higher education system which will give universities greater flexibility to respond to demand from students and employers  Recognition of the role of non-university and VET providers in the delivery of sub-bachelor places which will ensure the university sector does not expand at the expense of VET and private higher education providers  Improved quality through the national regulators which will underpin the reforms in VET and higher education  Improved transparency which will inform students and employer choice  My University, My Skills, Study Assist websites  Unique student identifier for the tertiary education sector – we have the CHESSN for higher education and are developing a USI for VET to be part of a cross-sectoral framework linking schools, VET and higher education

How does tertiary education meet the needs of business and the community?  Higher education – institution-to-institution basis  Engagement – Business and industry engage with universities and higher education providers at the faculty level to help shape the delivery of learning and teaching and the relevance of what is being taught  Accreditation – Professional associations work with higher education institutions to accredit courses to ensure they meet national and international benchmarks  Work integrated learning – Work integrated learning appears to be increasing significantly in universities

 VET – a more systematic approach to business engagement  Training package development – ISCs actively support the development, implementation and improvement of training and workforce development products and services including training packages  Advice – ISCs provide industry intelligence and advice to Skills Australia, government, enterprises on workforce development and skills needs

 Engagement – Industry is represented on the Skills Australia Board and in industry forums advising Tertiary Education Ministers

Opportunities and challenges

Ongoing global economic uncertainty High growth in Asia Clean energy Technological change Ageing population

 In response we need to:  prepare graduates with the skills and flexibility to deal with an unpredictable future  develop programs related to skills needs associated with Australia’s transition to a low carbon economy  prepare the necessary health and medical research workforce

Opportunities presented by new portfolio arrangements  The new Department of Industry, Innovation, Science, Research and Tertiary Education (DIISRTE) brings key economic levers together to drive growth, productivity and participation and help keep society and the economy strong.  The new department provides an opportunity to:  Build better connections between research and tertiary education and strengthen partnerships with industry  Strengthen our tertiary education agenda to meet industry needs through a better co-ordinated portfolio of industry programs  Focus increasingly on existing workers and re-training/up-skilling “an integrated industry, higher education and vocational training policy that underpins Australia’s economic modernisation” Minister Evans 31 January 2012

DEPARTMENT OF INDUSTRY, INNOVATION, SCIENCE, RESEARCH AND TERTIARY EDUCATION Industry House 10 Binara Street Canberra City, ACT 2601, Australia Telephone +61 2 6213 6000