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Human Capital, the Competitiveness Agenda and Training Policy in Australia

Stephen McBride, Simon Fraser University

In contrast to Canada, where devolution of authority from the federal to the provincial level occurred during the past decade and a half, the Commonwealth of Australia (federal government) has moved to institute a comprehensive, national system of vocational training. Increased marketisation of training in Canada has been accomplished via devolution of authority to the provincial level, with an accompanying fragmentation of what was already an incompletely national training system, in Australia marketisation has proceeded through the construction of a national training system.

Australian training reforms have been driven by the following considerations:

1. Quality of work force skills is a key determinant of competitiveness in a global economy.
2. Not enough training and not enough of the right kind of training were being done in Australia.
3. The reason for inadequate quantity and quality of training lay in the training system itself. In particular, it was seen as a public sector monopoly which was unresponsive to industry.
It was assumed that the way to get more and better training done is to solve this supply side problem by making training client- or industry- or user-driven. In other words, the problem could be solved by creating a training market in which user choice would prevail.

This paper reviews evidence in the following areas:

1. Were the reforms driven by industry?
2. Is more training being performed as a result of the reforms to the training system?
3. Is more high skills training being performed?
Noting that the evidence, while preliminary, is often disappointing from the point of view of those who promoted the reforms, the paper concludes that the theory informing training reform may have been mistaken about the causes of poor training performance.

The tacit hypothesis in the Australian training reform agenda was that the training system itself was responsible for deficiencies in training. Consequently, reforms to the training system would induce more training and higher skills training. The essence of the reforms was to marketise the system through deregulation and privatisation, and to make it more responsive to the needs of industry. So far there is little empirical evidence that this is happening.

An alternative hypothesis is that factors connected with the structure of Australian business, especially the predominance of small businesses, may account for the training deficit.

Notwithstanding differences between training in Canada and Australia, notably the decentralisation of training in Canada and its centralisation in Australia, the Australian case is instructive for the Canadian training policy community. There is no evidence to support the proposition that commercialisation of training leads to more training or better training. Moreover, to the extent that deficiencies exist in the quantity and quality of training do exist; the causes may lie outside the training system itself in the structure and culture of private businesses. And if the cause is to be found there, changing these characteristics through public initiative and regulation must be part of the solution. Further, whatever its utility from a business perspective in breaking down negotiated job protection, the language of competencies does not appear widely understood by industry in Australia, and its claimed pedagogical superiority is, at the very least, not proven. For those in the Canadian training community who consider a publicly funded and delivered training system worth fighting for, these may be encouraging results.