Industry Training and Apprenticeships Amendment Bill — Second ReadingText is incorporated into the Bound VolumeIndustry Training and Apprenticeships Amendment Bill — Second Reading[Sitting date: 18 March 2014. Volume:697;Page:16791. Text is incorporated into the Bound Volume.]Industry Training and Apprenticeships Amendment BillSecond ReadingHon Peseta SAM LOTU-IIGA (Minister of Pacific Island Affairs)on behalf of theMinister for Tertiary Education Skills and Employment: I move That the Industry Training and Apprenticeships Amendment Bill be now read a second time. This is an important bill that implements the legislative changes required following a policy review of industry training. It complements the operational improvements to industry training that are already under way many of which came into effect on 1 January of this year.By way of background Government expenditure on industry training more than trebled from $64 million in 2000-01 to $204 million in the 2009-10 financial year. In 2011 there were approximately 154000 trainees and apprentices enrolled and this included 14300 modern apprentices compared with an average of 25000 per annum before 1992. However performance as measured by qualification completions and credit attainment was poor. Less than a third of trainees achieved a qualification 5 years after starting their industry training programme and typically over 50 percent of industry trainees and over 30 percent of modern apprentices achieved no credits between 2002 and 2010. This situation was obviously unsustainable and the Government took quick and decisive action. Our operational changes have led to significant improvements in both qualification and credit attainment. That work is ongoing and it has freed up funding for reinvestment into the system.The next step was to take a more fundamental look at the industry training system. In 2011 we initiated a comprehensive policy review to assess whether the current model is fit for purpose. The Industry Training and Apprenticeships Amendment Bill implements changes arising from that review that require legislative change.The bill will first establish a comprehensive apprenticeship system that provides the same level of support to all apprentices regardless of age. Secondly it focuses industry training organisations or ITOs on two key functions: setting skill standards for the industries and arranging training. Thirdly it clarifies the functions and powers of the New Zealand Qualifications Authority or NZQA in relation to those industry training organisations. Fourthly it includes criteria relating to quality assurance and the process by which the responsible Minister recognises an organisation as an industry training organisation.The bill’s reforms to apprenticeships are important. A big part of the vocational training story in New Zealand has always been apprenticeships. However the importance of apprenticeships slipped over the last 10 years in favour of more generic industry training. This in many cases involved a lot of short courses and very low levels of completion. The bill enables the establishment of New Zealand Apprenticeships a comprehensive apprenticeship system that provides the same level of support to all apprentices regardless of age. Submitters to the Education and Science Committee were supportive of this objective. The bill repeals the Modern Apprenticeship Training Act 2000 and amends the Industry Training Act 1992 so that legislation relating to industry training and apprenticeships is located in one modern piece of legislation. The apprenticeship reboot has been under way for a year now and the first 10000—and later extended to 14000—new apprentices enrolled since March 2013 have been eligible for a grant of $1000 towards their tools and off-job costs or $2000 if they are in priority trades with the same amount paid to their employers. Since the reboot started over 11000 apprentices have been signed up.I want to thank the members of the Education and Science Committee for their diligent consideration of the bill. I especially want to acknowledge the chair Dr Cam Calder. I also wish to thank the 30 organisations and individuals that made submissions on the bill.I will briefly cover the substantive amendments that the committee has made to the bill. The amendments illustrate that in its deliberations the committee has been particularly mindful of the status of industry training organisations as industry-owned and industry-governed bodies and I thank it for that. The committee has amended clause 11 new section 5 of the bill so that the Minister may impose or amend only conditions on the recognition of an industry training organisation that are “reasonably necessary to maintain the quality and effectiveness of industry training …”. I welcome the committee’s amendments to the provisions concerning the Minister’s power to impose conditions on recognition. Conditions on an industry training organisation’s recognition are intended to be the penultimate response before cancellation of registration for serious poor performance or non-compliance with lower-level quality assurance interventions. It is therefore appropriate that any such conditions are subject to a test of reasonableness and are limited to maintaining the quality and effectiveness of industry training.Clause 16 of the bill which inserts new section 13B gives the New Zealand Qualifications Authority the power to prescribe quality assurance requirements for industry training organisations using rules made under the Education Act of 1989. The committee has amended the bill so that quality assurance requirements may relate to an industry training organisation’s ability to hold approval by the New Zealand Qualifications Authority for the industry training organisation’s programmes or training schemes and to assess students against skill standards.The committee has also amended the bill to limit the extent to which quality assurance requirements may relate to the governance of industry training organisations. This amendment improves the bill. Industry training organisations are industry owned and governed organisations but it is important that industry training organisations are subject to appropriate quality assurance. The New Zealand Qualifications Authority has a valid interest in the governance of industry training organisations but only to the extent that it is assured that the industry training organisation has the ability to carry out its core functions and the committee’s amendment ensures this.I welcome the committee’s amendments throughout the bill to clarify that industry training organisations are responsible for maintaining skill standards as well as developing them. This is an important change to the bill which will have a real impact on ensuring the skill standards that industry training organisations set are responsive to the rapidly changing needs of industries.The committee has made several other amendments relating to the New Zealand Qualifications Authority’s powers under the bill. It has made amendments to address the fact that the bill as introduced did not include any consequences when an industry training organisation fails to address a quality assurance improvement notice. The committee has also made amendments so that the annual fee prescribed by the New Zealand Qualifications Authority may cover the cost of issuing quality assurance improvement notices and so that the bill references the relevant statutory powers under the Education Act 1989 for the authority to charge fees to industry training organisations.The bill enables the Minister to issue by notice in the Gazette an apprenticeship training code covering the responsibilities of apprentices their employers and organisations that arrange apprenticeship training. The bill’s provisions relating to the code generally re-enact provisions of the Modern Apprenticeship Training Act 2000. The committee has amended the bill to specify that before issuing a code the Minister may consult any person or organisation that the Minister considers appropriate. The committee has also made amendments to clarify the code to state that the code is intended to be mandatory and to require the Gazette notice to specify the date the code comes into force. The Government intends to support the amendments recommended by the committee.In summary the bill is a vital part of the Government’s comprehensive reforms to industry training to achieve better performance for employers for trainees and apprentices and also for taxpayers. I now commend the Industry Training and Apprenticeships Amendment Bill to the House.GRANT ROBERTSON (Labour—Wellington Central):The Industry Training and Apprenticeships Amendment Bill is one of those bills where there was an opportunity to get agreement across the House for support for the initiatives that lie behind here. There was a willingness or an acceptance in the Education and Science Committee that some streamlining was needed in our apprenticeship system that industry training organisations had needed to reform themselves and that there had been a period of time in which industry training organisations have themselves identified that things got a bit out of control in terms of the way they went about their work.There was the opportunity to put a piece of legislation in front of the House that came up with a consolidated clear New Zealand apprenticeship system that is supported by all parties in the House and also to ensure that industry training organisations are running effectively and efficiently and are governed in a way that is acceptable to the industries that they serve. Those were shared ideas across the committee but unfortunately Steven Joyce and the Government’s commitment to two silly ideological pieces of policy means that on this side of the House we cannot support this bill. I will come to those two pieces in a minute.In order to talk about the process of industry training and apprenticeships we need to take a couple of steps back. I welcome the fact that National has latterly worked out the importance of apprenticeships and industry training. This is the party that in the 1990s dismantled the apprenticeship system. It said: “We don’t want the apprenticeship system any more. We will get rid of it.” The damage from that decision has been felt throughout our trades and throughout our businesses in New Zealand over the last two decades because National dismantled the apprenticeship system. This is the system that brought people through businesses as a young apprentice. They learnt a trade which they then took out to the world. That went in the 1990s.Labour came in in the 2000s and we brought in the Modern Apprenticeships scheme. I am proud of that scheme. But I also recognise that the time had come to create a more coordinated system of apprenticeships. We had created a system where over 15000 people were in Modern Apprenticeships and from the 2009 Budget through to the beginning of 2013 2000 apprentices were lost in the system—2000 apprentices. Finally National had its apprenticeship reboot and finally it got some runs on the board. I congratulate National on catching up with that idea.But the reality is that unfortunately this legislation still bears the hallmarks of a party that does not properly get apprenticeships and industry training and that is what we see in the National Party. The two significant issues that prevent Labour from being able to support this bill are what is contained in new section 11 in clause 15 which is in fact the de facto privatisation of industry training. These new sections open up funding for industry training to non - industry training organisation bodies. Industry training organisations have been established in order to provide some kind of industry-wide qualification—something that is applicable across an industry. It is not about funding a business-specific skill or training. That should still be the job of a business. Just because industry training exists it does not abrogate the responsibility of an individual business to ensure that its workers are capable of doing the tasks that are in front of them.What industry training is about is making sure that we are equipping workers with skills that are applicable across an industry. What this new section does is open up the ability to directly fund bodies other than industry training organisations to organise and deliver industry training and that is de facto privatisation. It means that those businesses will be directly funded not only to arrange the training but to deliver it as well and that compromises it. But it compromises the whole point of industry training which is to provide those industry-wide qualifications.We also heard from the officials at the select committee that there was a desire for flexibility for employers in terms of industry training. That already exists. It is already completely possible for a business to move from one industry training organisation to another. In fact in the reorganisation of industry training organisations that has recently taken place there has been a significant amount of that. The flexibility is already there. That is a red herring. What this opening up of funding beyond industry training organisations will do is undermine those industry training organisations themselves. The people who will be able to go off and deliver industry training themselves are the big businesses. It is the small businesses left within the industry training organisations that will be weaker and that in turn will undermine their ability to deliver training. It is another example of National favouring big business against small business. It is favouring those members’ kind of idea of what a business is as opposed to the small businesses in New Zealand which actually need the support of industry training organisations.It was unbelievable in the select committee and I thank the Minister Sam Lotu-Iiga for mentioning the 30 submitters because all bar one of them said they did not want a bar of this opening up of the funding—all bar one. We were faced—Dr Megan Woods: Who was it?GRANT ROBERTSON: We will come back to who the one was. We were faced with the somewhat unusual situation of the Contractors Federation sitting down at the table after the Council of Trade Unions had given its submission and saying: “We agree with everything that the CTU has just said.” There was virtual unanimity that this opening up of industry training organisation funding to non - industry training organisations would undermine industry training.But there was one organisation that sort of came out for this. Business New Zealand is normally regarded as a great friend of the Government. This was its ringing endorsement of the opening up of funding: “Business New Zealand is cautiously supportive of proposed new section 11A … However such an approach must be independently evaluated to ensure that it results in learning outcomes linked to industry needs … The ability of ITOs to provide sustainable services to employers and apprentices must be maintained and enhanced …”. Business New Zealand really did not like it either. No one wanted this but this arrogant out-of-touch Government said: “We don’t care. We’re going to press ahead with this even though the entire industry training community said it did not want this.”This is a very bad idea and it is driven by ideology. It fits alongside Steven Joyce’s approach to the rest of the tertiary education portfolio—level 1 and 2 courses competitive tendering and extra funding for private training establishments while other parts of the system are not getting money. Steven Joyce ideologically does not believe in public education and unfortunately this is an extension of that. So we cannot support that part of the bill.The other significant area where Opposition parties have been unable to support this bill is the elimination of the skills leadership function from industry training organisations. We were told at the committee that the reason that this function was being taken away from industry training organisations was so that it would not be the responsibility of one part of the system but the responsibility of all those in the system except no one would actually be given the role of making sure it happens. A number of submitters came to the committee and said that the skills leadership role is important. Skills leadership is about identifying what the future skill needs will be and making sure that we are training people for the jobs that need to be done in the future. It is a vital role. Industry training organisations are brilliantly placed to play the leadership role there. No one really wanted it taken away but the Government is getting rid of it for some kind of nihilist fantasy whereby somehow there will emerge skills leadership.The Careerforce industry training organisation came to the committee and gave a great submission about what it had been doing in terms of skills leadership. It had just recently been working with Health Workforce New Zealand on the development of an unregulated health worker workforce strategy. That was it getting alongside the Government and saying: “This is how we will make sure that there is a future workforce in the health area that works for us.” It has been leading the review of qualifications in that area of the unregulated health workforce. That is its leadership role. It was mandated to do it in law and now that has gone away and we know and we heard at the committee that if industry training organisations are faced with restricted budgets and it is not in their mandate to do it they are not going to be able to do it and so skills leadership will go. On the grounds of the opening up of funding beyond industry training organisations and the lack of anyone being responsible for skills leadership we cannot support this bill. The Labour Party stands for a strong apprenticeship system and good-quality industry training. National does not.Dr CAM CALDER (National):Thank you very much for the opportunity to take a call on the Industry Training and Apprenticeships Amendment Bill. I just want to acknowledge the nature of the Education and Science Committee. The Opposition members have made it clear that they oppose this bill but I do want to acknowledge the fact that they cooperated to allow the amendments that are contained within this legislation to be reported back to the House and that is appreciated.The background on this bill is that the Government reviewed industry training over 2011-12. This review found that changes were needed to ensure the industry training system is well connected to industry with high employer buy-in is educationally sound and is coherent with the wider tertiary system. It also has to deliver value for money for employers and the Government. The bill makes the amendments required to implement the findings of this review. I notice that some of them are opposed by the Opposition and I will come back to that. The main provisions of the bill are that it will establish a comprehensive apprenticeship system that provides the same level of support to all apprentices regardless of their age and I think that is a crucial component of this bill and one that I think we all had buy-in about across the committee. It focuses industry training organisations on two key functions: setting skill standards for the industries and arranging training. It clarifies the functions and powers of the New Zealand Qualifications Authority in relation to industry training organisations and includes criteria relating to quality assurance in the process by which the responsible Minister recognises an organisation as an industry training organisation.We heard from the previous speaker Grant Robertson about some of the concerns that the Opposition hold. Members opposite expressed concern for instance about the provisions in the bill making it clear that non - industry training organisations can receive funding for industry training and apprenticeship training. Some submitters contended that funding non - industry training organisations risks fragmenting the industry training sector and will lead to the funding of training that is solely to an employer’s benefit. Submitters were also concerned that non - industry training organisations did not appear to be subject to the same quality assurance requirements as industry training organisations.In my view these concerns are misplaced. Allowing non - industry training organisations to be funded for arranging training and apprenticeship training activities will strengthen the incentive for industry training organisations to provide excellent service to employers and trainees. The review of industry training in 2011 found that a significant number of employers thought that their industry training organisations did a poor job. I understand that that was a couple of years ago and that there have been changes since but having this option available as an alternative for employers will encourage industry training organisations to provide quality service to their employee clients at all times.Second I would be surprised if many employers actually take up this option for their apprenticeship training in practice. Only $10 million—I say again only $10 million—of funding for non - industry training organisations is available in each of 2014 and 2015. That is about 5.5 percent of the total funding for industry training and apprenticeships. It is worth remembering that participating employers must have at least 40 trainees each year and that the programmes and qualifications that are eligible for industry training funding are the same for industry training organisations and non - industry training organisations.Finally the monitoring and assessing of the arrangements of non - industry training organisations for training will have to be acceptable to the New Zealand Qualifications Authority. Furthermore the funding determination specifies that in order to receive funding non - industry training organisations and industry training organisations must ensure any programme in which a trainee is enrolled meets the quality assurance requirements of the New Zealand Qualifications Authority. In practice and as a matter of policy the Government funds only industry training that leads to transferable qualifications for the employee. That policy will apply to non - industry training organisations in the same way as it applies to industry training organisations. There will be a level playing field. I commend this bill to the House.TRACEY MARTIN (NZ First):For a moment I thought the whole conversation about this very important Industry Training and Apprenticeships Amendment Bill was going to draw to a very rapid close so I appreciate the call. New Zealand First did support the bill with the amendments from the Education and Science Committee. The select committee is a very collegial select committee. It is well chaired by Dr Cam Calder. The members try very hard to work together to create legislation to have things that come out of the select committee that are to the benefit of all New Zealanders. So it was very unfortunate that at the end of the day there were two main pieces inside the bill that we could not support.We are happy to see the amendments made around the New Zealand Qualifications Authority. Of the submitters who provided verbal submissions to us as well as their written submissions there were several who had major concerns about the New Zealand Qualifications Authority because the way that the bill was written in the first instance meant that the authority could possibly start making some dictatorial comments or have influence over the people inside the governance structure of the industry training organisations.It was made very very clear to the select committee that the industry training organisations must be governed by people who come out of their industries. They must be directed by and have that continual link back to the industries that they are providing the training for. So the amendment was made to make sure. The New Zealand Qualifications Authority was I believe very supportive of the amendment. It was not the authority’s intention to get into the area of trying to hand-pick people who should govern but merely to make sure that the structure of that governance is solid so that the qualifications and the service delivered by the industry training organisations can be relied upon and can be a high-trust model for parents for apprentices and for the businesses for which they are training the future workforce.It was very interesting. For a moment there when I was listening to the new Minister of Pacific Island Affairs Sam Lotu-Iiga read from his prepared notes I thought I was losing my mind but I am pleased to have been supported by Grant Robertson in the fact that actually that was a very clever spin. There was a very clever spin inside the Minister’s speech there—I give him many many points for that—around the skills provision. It was around the industry training organisations retaining the other area that we have been unable to support the skills leadership function being stripped away. I say “stripped away” because of course the industry training organisations can still do skills leadership if they want to but nobody’s name is on it as a responsibility under this legislation. The argument on the Opposition side is that if nobody’s name is on it whom are you going to hold accountable? The only thing we could find out during the conversation at the select committee was that there was some form of cost saving there. We cannot find any other reason.Colin King: That’s a negative thought to have.TRACEY MARTIN: Perhaps Mr King when he stands to take a call—Colin King: I most certainly will.TRACEY MARTIN: That would be really constructive for the rest of the House. Why have we decided to make nobody responsible for skills leadership now? It was never forbidden for anybody else to do skills leadership but the role was deliberately given to the industry training organisations that they must do some skills leadership work inside those industries.The other area where we have been unable to support the bill is around the direct funding for industry training. It is actually another situation and another solution that nobody wanted. Nobody came to the select committee to submit that that was something they wanted. It was one of the recommendations out of the 2012 review. Many of the recommendations out of the 2012 review have been implemented and the select committee recognises that. The industry training organisations recognise that there has been some substantial improvement in the whole area of industry training provision and again I believe in the trust model being developed through more cohesive industry training delivery by organisations private training establishments and the industry itself. But not a single submitter actually came to ask for direct funding. Even the officials mentioned a trial that had been put in place with some businesses where not one of those businesses at the end of that trial had put their hand up to continue because it is so complex and because it is not actually something they wanted to get into.So again if nobody wanted it why does the National Government believe it needs to be put inside this piece of legislation? Dr Calder actually alluded in his short comments on this bill to the reasons we see it in there. No. 1 is that yes it did come out of the review. But just because something comes out of a review where you have got 13 recommendations and you have implemented 12 of them that does not mean you have to implement the last one just for the hell of it. Dr Calder said it would provide a “threat”—and I actually think that is the only word to use—to industry training organisations to keep them in line. This is a provision that could be used by a business if an industry training organisation does not pull its socks up and make sure that it stays on the mark.The fact is that those businesses can already complain to the Minister responsible and that those businesses can actually already change providers if they are unhappy with them. There are mechanisms that are currently in place. It is a little bit like charter schools. We are having the same conversations we had around charter schools. All that flexibility is still there inside the existing legislation. We do not need another piece of flexibility there—there are already solutions to this particular problem. It was the view of New Zealand First that these particular changes needed to be held out of legislation. Let the massive changes that have taken place to industry training organisations around this provision of delivery bed in. If we need to there is nothing to stop the House 2 or 3 years after a review of the current changes to industry training organisations from actually going back and saying: “OK that didn’t work. Let’s add something else.” But there has already been a massive restructure.There is not much else to say really about the bill. We are very very pleased to see the removal of ageism in the bill. We commend the Government for that stand. But we are disappointed that there is no recognition in this legislation or in any legislation coming into the House that there is actually still a major barrier to taking on apprentices for small and medium sized businesses. Small and medium sized businesses are the backbone of the New Zealand economy particularly in rural areas. I am referring to the fact that a hairdresser for example has a $500 fee per year per apprentice that they must pay for the privilege of actually taking on a young person—or a person of any age now—and training them into that industry.New Zealand First would have liked to see some more conversation some more incentives and some more discussion around how—if we are asking for more and more of our student body and more and more of our community to be able to go out and be educated inside the workforce thereby gaining less debt at the other end—we can just through small provisions that remove barriers like that fee incentivise small and medium sized businesses particularly to take on more apprentices. It is our view that those businesses in those communities particularly rural communities very much want to participate in the Modern Apprenticeships scheme particularly in hard times—as the Government keeps pointing out they have been hard times—but this $500 fee per year per apprentice is a continual barrier. That is just one of the industry training organisations and one of the apprenticeships that this barrier applies to and there are a variety of fees across the board. So unfortunately no matter how collegial the select committee was those two things make it impossible for New Zealand First to support this bill.DAVID CLENDON (Green):I am pleased to take a call on the Industry Training and Apprenticeships Amendment Bill. This is a bill that the Green Party would have liked to support. We supported it at the first reading through to the Education and Science Committee. We would have liked to see it right through with our support but unfortunately as with our Labour and New Zealand First colleagues we are unable to continue to support this bill for reasons similar to those we have heard already.We liked the bill initially because it did remove the age restriction on apprenticeships. That was something that was long overdue and that has been Green Party policy for a very long time. The days when people would go to school then go to some form of training or education as teens or young adults then go into a career a profession and stay there until they got their gold watch at 65 are long gone. We need to take every opportunity to accommodate the modern reality which is that people will change careers often a number of times in their lifetime. That is not a bad thing. That is something we need to encourage and enhance given that a lot of the jobs available to people today probably did not exist 30 or 40 years ago and that we do not know what career paths will look like even 10 years into the future. So to the extent that we can open up the apprenticeship pathway or model to a wider age group that is a good thing. It is an important benefit that will come from this legislation.Mr Calder made the point that we were able to get unanimity at the select committee around a number of the amendments. That is simply because they were good amendments not least of all the amendment that put some reins on ministerial discretion. The bill as first drafted gave the Minister for Tertiary Education Skills and Employment pretty much open slather in a number of important provisions. We like others thought that was not a good idea and that is one of the amendments we are very happy to agree to. But such is the nature of a select committee—people come along and make submissions we read them we discuss them and there are always different points of view. But it is extraordinary that for this particular bill—and the point has been made by Mr Grant Robertson I think—there was almost unanimous condemnation of one particular provision. There was not an enormous number of submissions—30-odd from memory—but they were well founded. They were well informed. They were from people and organisations actively interested in participating in the area of industry training. They were substantive submissions.I read the Business New Zealand case which Mr Robertson made reference to slightly differently. Business New Zealand did give very qualified support to the notion of allowing organisations other than industry training organisations access to the public funding but it put two quite clear conditions around that. One of those conditions was that there ought to be independent evaluation to ensure that learning outcomes are linked to industry needs; the other was that the needs of small to medium sized enterprises—those employing fewer than 20 staff—should be met. Nowhere in this legislation do I see those two qualifications those two criteria met. So to me that would put Business New Zealand in line with all the other submitters opposing the idea that public funds can go to organisations other than industry training organisations. The obvious danger is then that a large industry will get access to that funding and simply train people to work within that industry. It will not give them the range of transferable skills that are the logic and the intention of the learning outcomes for industry training organisations. I think Business New Zealand picked up on that very well.This bill has made some rather strange bedfellows. One does not often see Business New Zealand and the Council of Trade Unions allied in their opposition to a bill. They and the New Zealand Industry Training Organisation—the peak body the umbrella body if you like—and the Building and Construction Industry Training Organisation all very strongly opposed the notion that the Government funding should go to organisations other than industry training organisations. It is worthwhile just reiterating some of the reasons they found for that. The New Zealand Industry Training Organisation for example questioned whether organisations other than the industry training organisations that may get access to this funding would face the same compliance conditions that are perhaps a necessary burden on industry training organisations. They wondered whether giving this funding to specific export industries could in fact compromise New Zealand under some of the fair trade arrangements. It could very clearly be seen as a direct subsidy if the Government is funding the training of people within a company that is then exporting the product made by those people. That could very easily be read as a subsidy. I am sure it is not the intention of the bill but it certainly does create the potential for a hiccup further down the road.The Council of Trade Unions strongly opposed the amendment on the basis among other things that one could suggest that the intention of the change is to encourage a level of competition within industry training organisations. But that does actually already exist. The performance of industry training organisations has increased dramatically in recent years. There was a need for some change for restructuring and for upping the game frankly. We have seen evidence of that in recent years. The industry training organisations are uniformly committed to continuing to do well and to continuing to do better. So making funding available to non - industry training organisations really is a retrograde step. It fails to reward industry training organisations for the significant improvements and the efforts they have already made.There is of course the question of flexibility as I said. Employers can switch industry training organisations if they are not getting the service the satisfaction or the learning outcomes they require for their particular industry. It is important to keep coming back to the point that industry training organisations are obliged to equip their trainees—people who come under their umbrella—with transferable skills so that people can be an asset across a range of companies and indeed give those individuals more opportunity for employment.Along with the other Opposition parties we point to the matter of the opportunity for skills leadership to be picked up by somebody other than industry training organisations. There is a pious hope embedded in the legislation that some organisation or group of organisations will fill the gap that is left when the statutory responsibility of industry training organisations to provide skills leadership is taken away as this legislation does. There is no evidence to suggest that this will be picked up by industry training organisations.The Building and Construction Industry Training Organisation is a very significant body given that we are in very serious need of tradespeople around the construction industries. In Christchurch and Auckland we need lots of buildings built relatively quickly. It would be most unfortunate if we continued to have a high level of youth unemployment and an unnecessarily high level of adult unemployment and were needing to employ tradespeople to rebuild Christchurch and to build the housing stock we need in Auckland. The Building and Construction Industry Training Organisation pointed out that in its particular industry something like 90 percent of apprentices are trained within companies that are small to medium sized enterprises that employ fewer than 10 or 20 people and in many cases fewer than five people. That is by definition a very diverse and dispersed industry. Where is the skills leadership likely to come from within that? There are very few large players in it. Well there are some but the likelihood of the breadth of that industry collectively providing skills leadership is very very remote and very distant. The Building and Construction Industry Training Organisation picked up on that issue very clearly.One of the things as I said that we did like about the bill was the dropping of the age restriction. We also liked the fact that it required industry training organisations to give particular regard to the needs of Māori and other priority groups in line with the existing tertiary strategy. Of course the recently renewed or refreshed strategy specifically mentions Māori and Pasifika youth as two of those population groups. It is a good thing that industry training organisations will be obliged to lend some focus to them. What this bill unfortunately overlooks—and I think it is a gap—is that there is no reference to women as being a priority group that we need to encourage into apprenticeships. We know that the gender balance in trades is very very unbalanced. There is a pressing need to encourage more young women into trades and that is a missed opportunity. It is something that could have been included in this legislation and has not been.So as I began by saying this is a bill that we would have liked to support. It makes some useful changes but unfortunately because of those two specific flaws in the bill it is something that we will have to amend when we have a more progressive Government that is more willing to listen to the overwhelming number of submitters to follow their guidance and to follow best practice. We look forward to the opportunity to do that. Thank you.SIMON O’CONNOR (National—Tāmaki):The last speaker David Clendon mentioned a progressive Government. One of the great problems with progressivism is that there have to be winners and there have to be losers. They are arbitrarily chosen by certain individuals. That is something that people like myself and I suspect colleagues on this side of the House want to avoid because like this bill the Industry Training and Apprenticeships Amendment Bill it is about trying to help all people—all Kiwis—who want to move into the training space and particularly facilitating that through industry training organisations.I think our work in the Education and Science Committee was very collegial in working with submitters to bring this bill to its second reading now to a stage that is going to support industry training organisations to be even stronger but acknowledging too that there are other options outside the industry training organisation framework and being able to support in particular our young people—of all genders—to move into the training space where we need them the most. I commend this bill to the House.Dr MEGAN WOODS (Labour—Wigram):It is my pleasure to take a call on this bill the Industry Training and Apprenticeships Amendment Bill and set out again why it is that Labour cannot support this piece of legislation. I would like to acknowledge the work of the Education and Science Committee. If this was the Academy Awards I think you would be handing out an award for courage under fire to the Government members of the select committee. They had to sit there while submitter after submitter from industry training organisation to industry training organisation—and the Industry Training Federation and the Contractors Federation agreeing with the Council of Trade Unions—all traipsed in one after the other and consistently told the Government members of this select committee exactly what was wrong with this legislation how it was not going to work and how it was not going to fulfil the aims and the purpose of what we need in New Zealand with regard to putting strong and coherent legislation in place around how we fulfil one of the most important tasks which is that of ensuring that we have a trained and skilled workforce that is fit for purpose to work in New Zealand jobs.This bill is simply not going to do that. The Government members of the select committee were told time and time again but the tragedy is that these messages did not get through. The Government was simply not willing to listen. Government members were arrogant and out of touch. They knew best about what was going to work. It did not matter that industry representatives were coming up and telling them: “No no I’m sorry—what you’re saying isn’t going to work. This isn’t going to be fit for purpose for how we train apprentices.” To hear Government members of the select committee like the previous speaker Simon O’Connor describe this as a collegial environment is somewhat surprising. I guess it was collegial in that all the submitters agreed. They agreed that this bill will not achieve its aims. But Government members sat there and they hardly asked a question because they knew that the legislation that they were hearing submissions on at the select committee and that they were going to have to bring back to this House simply would not work.What was it that Government members were told about this legislation? When submitters came in it was very much what the other members of the select committee also thought. First of all they were told that this legislation was nothing but a continuation of this Government’s privatisation agenda within the education skills and training sector. We have seen it with charter schools we have seen it with public-private partnerships in our secondary education system we have seen it with the competitive tendering of level 1 and 2 qualifications within our polytechnic system and now we are seeing it within our industry training system. What we are seeing is that agencies other than industry training organisations are going to be eligible for direct funding from the Government to fulfil training requirements.This legislation is not what is going to achieve the aims of the Government. It allows these organisations to get direct funding. We see this as nothing short of an ideological commitment from this Government to make sure that it privatises privatises and privatises every bit of our education system that it can get its hands on. It is this ideological blinkeredness that meant that Government members of that select committee sat there and had to listen to submitter after submitter telling them how just giving money out willy-nilly without some kind of a more strategic approach to this was not going to fulfil the aims of what was needed for industry training in this country.Other speakers have talked about the other major problem that stops us in Labour from being able to vote for this legislation and that is the removal of the skills leadership function from industry training organisations. Industry training organisations are not simply organisations that are put there to channel funding through and to come up with standards. We think that actually there is a really important leadership function for industry training organisations and what they can do for industry in New Zealand. Other speakers before me have talked about the impact that this will have on small and medium sized enterprises and a number of organisations that are wanting to undertake industry training organisations actually fall into that category.Another element that was brought up is that the changes contained within this legislation are going to water down the ability for pastoral care within industry training in and within our apprenticeship system. Pastoral care and the ability to deliver pastoral care are an absolutely critical part of any successful industry training or apprenticeship scheme. My PhD thesis was about Māori trade training during and after World War II. The absolute success of that scheme was premised on hostels and it was premised on the matrons and the staff who were in there providing the young trainees with the care and the pastoral guidance that they needed through their time as trainees. You remove this element from our system of training at your peril in terms of course completions and in terms of people getting the kinds of skills that we need.The tragedy for us on the Labour side and I think the Opposition side of the select committee was that it was not any great surprise that National was taking this approach to this legislation. It was a disappointment because we saw a real opportunity to do something here but it was no great surprise because this is the Government that scrapped apprenticeships in the 1990s. There are often shrieks from Government members when you talk about how National scrapped apprenticeship training in the 1990s but it happened and it took the incoming Labour Government of 1999 to reintroduce something and to step up to the plate and put something in place.This is also a Government that has absolutely dragged the chain when it comes to skills training to rebuild Christchurch and to address the housing crisis in Auckland. John Key talked a big game before the last election in 2011 about how we were going to seize the opportunity how we were having Skills for Canterbury and how there was $42 million put aside and this was going to be dedicated. It took this Government nearly 2 years to start spending the money. It sat there unused because this was a Government that has absolutely no commitment to skills and apprenticeship training—too little too late. We are now 3 years into a rebuild. We could have had more New Zealanders with the requisite skills and training working on that and we have lost and squandered that opportunity because this is a Government that just does not believe in this as part of what a vibrant future for New Zealand looks like. That money sat there. Government members are shaking their heads. Well I am sorry; the facts are straight. The money sat there and the Minister for Tertiary Education Skills and Employment Steven Joyce claimed that he was not going to “frogmarch” people into training situations. This is while there was very little effort to get people into those schemes.We need to think creatively we need to think differently and we need to think beyond the narrow ideologically blinkered piece of legislation that we have on the Table before us. I have a member’s bill in the ballot which I sincerely hope will get drawn one day that picks up a piece of Labour Party policy from the last election. It is about using the money that we pay to young people in terms of unemployment benefit as a payment to employers to offset some of their cost of taking on more apprentices. The tragedy is that if we had actually adopted some of these pragmatic and very very sensible solutions we would have had more young people 3 years through their training who were able to take a really active part in the clamour for skilled labour in Christchurch that the city is experiencing at the moment. This is the kind of lack of thinking the lack of clarity and the lack of creativity we are seeing in this area. Instead what we are seeing is a desperate clinging on to the need to privatise yet another bit of our education system. Not content with our primary and secondary schools and our polytechnic sector now the Government’s sights are set very firmly on the industry training sector.There are real concerns about this bill. We are very disappointed that Government members of the select committee did not take the opportunity to listen to the people who are on the ground who are involved in industry and who know what it is really like and what is needed out there but instead clung to their very very narrow beliefs and produced a piece of legislation that Labour cannot support because it is to the detriment of apprentice and skills training in this country. For Labour skills training and the kinds of commitment we give that are absolutely vital to our future.COLIN KING (National—Kaikōura):It is a pleasure to speak on the second reading of the Industry Training and Apprenticeships Amendment Bill. May I start by saying that it is a bit rich to be lectured by the Opposition about industry training when Labour presided over the most wanting and wasteful situation around industry training. One of the Modern Apprenticeship coordinators only ever graduated one Modern Apprentice. The cost for that service was a quarter of a million dollars—and it only ever graduated one Modern Apprentice. One of the enduring indictments on the Labour Government was that waste of opportunity and waste of money.Just going back to the bill in the 2002 amendment where the leadership role was given to the industry training organisations by the Labour Government it was never ever defined. All it achieved was it created a greater tension between the Institutes of Technology and Polytechnics and the industry training organisations. What has occurred within this bill is a correcting of that bad behaviour that was encouraged under the Labour Government. When we actually look at the feedback from the industry the industry itself said that it required more input into the training qualifications. If you look at the 2012-13 review that is what comes out of there. When you look at new section 11A inserted by clause 15 of this bill it talks about opening it up to non - industry training organisations. That also came from the industry. There were five industry sectors that submitted in that 2012-13 review that said that they would like to have more options. Rather than preaching over there in a self-righteous way take a serious look at yourselves while you are in Opposition.Thank you—it is a pleasure to support this bill.CAROL BEAUMONT (Labour):If we are talking about preaching let us just get on the record that across the House sits the party that got rid of apprenticeships from our country and that led to us having massive skill shortages in trades and technical areas. So when that member Colin King says that the Labour members should not be lecturing National I think that that is something well worth remembering. We have struggled to actually bridge that gap—the gap that was caused by the lack of investment in skills and apprenticeships by a former National Government.This bill the Industry Training and Apprenticeships Amendment Bill in my mind is a real lost opportunity. This could have been an opportunity to actually get some consensus and to get an agreed position on something that is vitally important to our economy and that is industry training and apprenticeships. This is an area that—like my colleagues who have spoken tonight Grant Robertson and Dr Megan Woods—I feel passionately about. This is an area that I have done a lot of work in and I know how much difference this makes for individuals for families for workplaces and for our economy.The bill was an opportunity. We supported it in the first reading to go to the Education and Science Committee. We wanted to see what was possible to achieve jointly on this issue because we do actually accept that there were things that needed to be improved and we acknowledge that there have been some improvements in recent years in terms of industry training. This bill could have been something that was shared and agreed across this House but we will be opposing this bill now.I am going to talk as others have about the two main reasons. That lack of consensus that missed opportunity has big consequences for our economy because we still have major gaps. We have many many New Zealand - qualified tradespeople and technicians living in Australia. We have the absolute obscenity that we do not have enough people in the construction industry to rebuild Christchurch. We have to have numerous immigrant workers coming into this country because we failed to step up and do something to ensure that we had people to do the construction work in Christchurch. When Labour is elected and when we start our KiwiBuild programme we will find that we will not have enough people in construction as well because we will be picking up from this Government which has failed to ensure that it plans ahead. That is part of what this is about.The two main areas that we are concerned about include the fact that the Government does not seem to think that it has any role in any forward planning in any area—no strategic analysis of what is needed—and that it is somehow miraculously going to fall out of the sky. Miraculously we are going to know the number of carpenters builders plumbers fitters and all of those other trades groups that we are going to need. It is just going to miraculously happen by the invisible hand. Well it does not. It requires a strategic approach. When National was elected there was a skills strategy in place that had been developed by business by unions by Government agencies and by industry training organisations working together. One of the Government’s very first acts was to throw that skills strategy right out the window.Going back to this bill the two main reasons we are opposing it are first and foremost the privatisation by stealth through allowing organisations other than industry training organisations to be funded directly by the Government to organise and undertake industry training. The second reason is the removal of the skills leadership function of industry training organisations.If we look at the first of those reasons in the very early days of industry training organisations I was involved with the board of an industry training organisation. At that time it was only major companies that were involved. Most of the funding actually went to those major companies. I can see that that is precisely the route we are likely to go back to if we go down this line. As Grant Robertson mentioned small businesses are the big losers in this. If industry training becomes something that individual companies can get funding from in order to do the training that they want for their own particular workforce and their own particular needs that has the risk firstly that the trainees do not get a qualification that is recognised elsewhere is portable and is complete—they might get bits of qualifications—and secondly that in fact many employers will miss out as well. These are small employers which as we know are a vital part of our economy.That is something that is deeply troubling to us—that particular ideological drive about sitting down and saying: “Oh well we can’t have this money just going to industry training organisations. We’re going to have to let our mates in the big end of town actually access this money as part of what the Government is doing here.” This is despite the fact that actually the submitters—except for one which seemed to be as Grant Robertson has already outlined somewhat nervous about its support. But apart from Business New Zealand every other submitter opposed what was happening here: the de facto privatisation of industry training.I just really want to reinforce the importance to our economy of having skills that are transferable. It is so that we can have some confidence that we have people who are qualified to do a complete role rather than having particular employers accessing money to train to their own particular specifications.Actually they have a responsibility. Industry training was never about saying that the Government will provide all of the money for all of the training that employers should do. That is ridiculous. The company-specific training was always meant to be something that an individual business took up and all of the research shows that that is sensible business practice anyway because the returns from investing in training are really high—research report after research report. We could go out there and we could ask employers directly. There is no question that one of the things that has the biggest impact on lifting productivity is investing in training. So businesses do need to do that and they actually get an immediate benefit from doing so.The second reason for our opposition is around the skills leadership part—this is the planning bit. There seems to be an almost pathological fear of planning on the other side of the House. It is kind of like those members saying: “You know if we just leave it up to individual businesses or individual people it will all work out in the end.” but actually we need to be analysing where we need people; where we predict that we will need people in 3 years 5 years or 7 years; what the health workforce looks like at the moment; where we will need people in the future; and what the construction industry looks like.If we have a manufacturing industry left in this country after the economic sabotage from across the House the manufacturing industry will absolutely need skilled technical people—tradespeople. If we want to have good-quality jobs for people who may not want to go down the academic route but whom we need to play an important role in our economy and if we want well-trained people providing the sorts of skills we need in manufacturing construction and infrastructure then we need to plan for it. It does not just magically happen.That skills leadership function is an opportunity for those employers collectively in an industry alongside the unions in those industries and alongside some of the relevant Government agencies to sit down and work those things out and to look at what is needed based on their own knowledge and experience. I think it is just unbelievable that the Government would dispose of that in this bill. It does not make any sense.Finally I want to go a point that David Clendon touched on which was the issue of priority groups for industry training. Something that I personally have been quite vocal about is the appalling lack of numbers of women in many of the areas where industry training is in place. This bill was an opportunity potentially to have a look at that as well. But when you look at the numbers and you look at things like trainees in building construction 1 percent are women in joinery it is 6 percent in electricity supply it is 7 percent in the motor industry it is 3 percent and in infrastructure it is 6 percent. This is just appalling. Women are obviously missing out on the opportunity to get into some areas that may well best suit their interest that may well provide them with the best kind of job for their skills and that our economy needs. So I think that that is another failure of this bill—to not add women to that list of priority groups. Thank you.TIM MACINDOE (National—Hamilton West):The member Carol Beaumont who has just resumed her seat is correct that expenditure in this area did increase under Labour—in fact it virtually trebled during its time in office—but she is quite wrong in saying that the results were pleasing. In fact they bordered on abysmal. Not even a third of those who were studying under that scheme under Labour completed their qualifications. After 5 years many of them had nothing to show for it. That is totally unacceptable. The taxpayer of New Zealand rightly demands much greater performance than that and the Industry Training and Apprenticeships Amendment Bill will deliver a much better regime.Dr DAVID CLARK (Labour—Dunedin North):I am always disappointed not to hear more from that member Tim Macindoe but perhaps he feels that there is not much more worth talking about in the Industry Training and Apprenticeships Amendment Bill. And embarrassed he might be because this is a bill that once again sees small businesses being squeezed. As Labour’s small-business spokesperson I feel strongly about industry training organisations being undermined through the de facto privatisation of industry training that takes place in this bill. As many of those who have contributed this evening have noted there was virtually no support for this proposal from the submitters to the Education and Science Committee and we believe that it has the potential to damage the provision of quality industry training in New Zealand.This is a Government that is out of touch. It is looking out for the few at the top.John Hayes: Read the Tui ad: “Yeah right!”.Dr DAVID CLARK: It is arrogant. And Mr Hayes yells “Tui” across the House. He is not listening. That is illustrative of the exact point we are making—dismissive cursory one-liners. He is no longer engaged in what is going on in real New Zealand. That member is willing to dismiss the arguments willing to dismiss the submitters and willing to abuse the submitters I was just representing with a quick one-liner.An economic recovery in New Zealand should not benefit only the few; it needs to benefit all of New Zealand. Industry training with its skills leadership provides support to those small-business people who risk their shirt every day who struggle out there to make ends meet and who want to pay their workers a living wage but are squeezed by the bigger players in town who have scale and who often have fancy tax arrangements to avoid paying their fair share. The ordinary Kiwis out there who struggle day after day after day after day putting their mortgages on the line to fund their small businesses find that another plank of support is ripped out from under them with this bill.Direct funding will work for large businesses that are not interested in looking after the few employees they have got. They can buy the cheapest CD-packaged course from a non-accredited agency and not be concerned about skills leadership. But industry training organisations in their existing form have a concern for their own reputations. They have a passion for their industry they have invested in their industry and they have a background that leads them to be strong providers. There has been a big restructuring in this sector and I have heard no one from this side of the House argue strongly against that. That restructuring is making a real difference to the performance of the industry training sector and the services that are on offer but putting in place a system that will undermine these changes is short-sighted and would likely in my view erode the growing confidence of businesses in industry training organisations.When every man and his dog and every woman and her cat can go out produce a CD and market it as a course or skills training that will appeal to the lowest common denominator. That will appeal to that group of employers who are not particularly concerned about skills development in their workforce but are more concerned about getting wealthy off the back of cheap labour. And those who wish to support their workers who wish to strengthen their skills and who wish to grow value businesses—moving along the chain from volume to value—will struggle because the quality industry training organisations will be undermined by this new structure.So the skills leadership function being removed as a purpose from the industry training organisations is something that we strongly oppose on this side of the House. Now no one will be responsible for skills leadership in this sector. We learn in this bill that now everyone all at once is somehow responsible.Dr Megan Woods: No funding—none.Dr DAVID CLARK: Well if I have learnt one thing during my time at Treasury it is that clear lines of accountability matter—clear lines of accountability. To be able to go back and say: “This person is ultimately responsible for that happening.” is an incredibly important management principle. Saying that everybody is responsible for making it happen devolves it down so that no one takes responsibility.As my colleague Dr Megan Woods pointed out there is no funding there as well. Once again another important principle I learnt at Treasury or had reinforced there was that incentives matter. If there is no funding there is no incentive to develop quality training and that is not good for industry. It is not good for the future skill needs of our people. It is not good for the small businesses that rely on the industry training organisations. It is not good for our ability as a nation to be flexible on our feet to scale up to meet needs. I think of the marine sector where the industry training organisations meet—if you can excuse the pun—these bits of business that come in waves. Sometimes there are a whole lot of ships that need building; sometimes there are few. Those industry training organisations know how to scale up and know how to scale down. They are concerned with quality provision and meeting the needs of a high-value industry.If we have players that fly by night that undermines those industry training organisations that are concerned about quality provision and we as a country might lose them. Once they are gone they are gone. Then we have people with uncertain jobs who are there responding to the incentives to make a buck and provide the provision that ticks the box for the employer. Sadly that undermines the skills leadership function that has been developing so strongly in recent years and particularly through the changes that have been brought on through the restructuring which no one on this side of the House as I have said has opposed.The shortage of skilled tradespeople in New Zealand is a serious concern which National has exacerbated by failing to invest in apprenticeships and industry training. This is not a new phenomenon. People watching at home should know that from 2009 to January 2013 there was a 20 percent drop in the number of Modern Apprentices and a 37 percent drop in the number of industry trainees. That is a very very sad record for this Government.Labour is committed to ensuring that New Zealand has the skilled workforce it needs. Labour wants New Zealanders to have jobs and opportunities and to ensure that the Government cannot sit on its hands as this National Government has done and continues to do. After coming into office National oversaw that loss of thousands of apprenticeship positions—Dr Megan Woods: Shameful.Dr DAVID CLARK: —a shameful loss to oversee—and by the time it finally woke up the skills deficit had been created. Now we see further steps to undermine the industry training sector to undermine that skills leadership function which potentially will lead to higher costs for small businesses over time as you lose that regular training and you have to invest heavily from time to time.Dr Megan Woods: Privatisation.Dr DAVID CLARK: We have got privatisation in the sector. Once again we are seeing that this economic recovery that is being talked about is going to benefit only a very few at the top.Labour stands for opportunity for all New Zealanders. We support skills training. The OECD is very clear in its work on economic development that the best way to raise GDP growth in a country is to start with the low-skilled workers in the regions. The model of hubbing of bringing together the highest skills in the big cities has been pushed over many many years and it has its merits. There is agglomeration. There are benefits in that way of doing things. But the OECD has produced research that says that actually now the low-hanging fruit is not about having one or two more highly skilled people in those bigger centres but about raising the skills of the lowest-skilled workers in the regions. That is where 60 percent of our workforce is already and raising those skills will make the biggest contribution to GDP improvement.So it is logical that industry training organisations should be strengthened and not undermined as this bill is suggesting. That is the way to make sure that the benefits of any economic recovery are shared fairly so that the gap between rich and poor does not continue to grow and we know that that gap is at the highest level it has been in recorded New Zealand history. That is the shameful record of this Government: the gap between rich and poor continues to grow and it does nothing about it. We know that so much of it goes back to those 2010 tax cuts where the top 10 percent got 40 percent of the value of the tax cuts. The bottom 20 percent of New Zealand earners got just 2 percent of the value of the tax cuts and of course that was swallowed up in GST.That gap between rich and poor could be addressed by good policy on industry training organisations ensuring that skills training is available to everybody that evidence-based learning is followed and that the benefits of those industry training organisations that have contributed so much are built upon rather than undermined through a de facto privatisation of the industry training sector.CLAUDETTE HAUITI (National):I support the Industry Training and Apprenticeships Amendment Bill.A party votewas called for on the questionThat the Industry Training and Apprenticeships Amendment Bill be now read a second time.Ayes64New Zealand National 59; Māori Party 3; ACT New Zealand 1; United Future 1.Noes56New Zealand Labour 34; Green Party 14; New Zealand First 7; Mana 1.Bill read a second time.