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2012 ITAB Market Effectiveness Report


Higher Education and Skills Group

Department of Education and Early Childhood Development

30 March 2012

Contents

Glossaryi

Executive Summaryi

1Introduction10

2Industry employment forecasts12

3Overview of market effectiveness15

4Automotive17

5Building and Construction23

6Business Services32

7Community Services and Health40

8Culture and Recreation46

9Electro-technology and Communications52

10Food Processing60

11Forestry66

12Furnishing72

13Manufacturing and Engineering79

14Primary Industries87

15Racing94

16Services99

17Textiles, Clothing, Footwear and Leather107

18Transport and Storage114

19Water120

Appendix A : Industry concordance124

Appendix B : Industry consultation129

Appendix C : Australian Apprenticeships – National Skills Needs List, January 2010130

Limitation of our work131

Charts

Chart 2.1 : Industry employment growth in Victoria – 2012 (ITAB structure)14

Chart 4.1 : Employment outlook – Victorian automotive industry20

Chart 4.2 : Skilled Vacancy Index – Victorian automotive industry20

Chart 5.1 : Employment outlook – Victorian building and construction industry28

Chart 5.2 : Skilled Vacancy Index – Victorian building and construction industry28

Chart 6.1 : Employment outlook – Victorian business services industry36

Chart 6.2 : Skilled Vacancy Index – Victorian business services industry37

Chart 9.1 : Employment outlook – Victorian electro-technology and communications industry56

Chart 9.2 : Skilled Vacancy Index – Victorian electro-technology and communications industry57

Chart 11.1 : Employment outlook – Victorian forestry industry68

Chart 12.1 : Employment outlook – Victorian furnishing industry75

Chart 12.2 : Skilled Vacancy Index – Victorian furnishing industry75

Chart 13.1 : Employment outlook – Victorian manufacturing and engineering industry83

Chart 13.2 : Skilled Vacancy Index – Victorian manufacturing and engineering industry84

Chart 14.1 : Employment outlook – Victorian primary industry90

Chart 15.1 : Employment outlook – Victorian racing industry97

Chart 17.1 : Employment outlook – Victorian textile, clothing and footwear industry111

Chart 19.1 : Employment outlook – Victorian water industry122

Tables

Table 2.1 : Annual industry employment growth – Victoria (ANZSIC industry structure)13

Table 2.2 : Annual industry employment growth – Victoria (ITAB industry structure)14

Table A.1 : Concordance between ITAB industry structure and ABS ANZSIC classification124


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© 2012 Deloitte Access Economics Pty Ltd

Deloitte Access Economics

Glossary

ABBTF

Australian Brick and Blocklaying Training Fund

ABS

Australian Bureau of Statistics

ACCV

Aged and Community Care Victoria

ANZSCO

Australian and New Zealand Standard Classification of Occupations

ANZSIC

Australian and New Zealand Standard Industry Classification

ATV

Automotive Training Victoria

BICCIAB

Building Industry Consultative Council Industry Advisory Body

BSV

Business Skills Victoria

CBC

Competency Based Completions

CS&H ITB

Community Services and Health Industry Training Board

DEEWR

Department of Education, Employment and Workplace Relations

DHS

Department of Human Services (Victoria)

EPIC

Elecro-tech., electricity supply, IT, communications and printing

ESI

Electrical Supply Industry

ITAB

Industry Training Advisory Body

FurnITAC

Furnishing Industry Training Advisory Committee

MESAB

Manufacturing and Engineering Skills Advisory Board

NBN

National Broadband Network

nec

Not elsewhere classified

OH&S

Occupational health and safety

PICAC

Plumbing Industry Climate Action Centre

PSV

Primary Skills Victoria

R&D

Research and development

RMIT

Royal Melbourne Institute of TAFE

RPL

Recognition of prior learning

RTO

Registered training organisation

SSV

Service Skills Victoria

TCF

Textile, clothing and footwear

TCFUA

Textile Clothing & Footwear Union of Australia

TDT

Transport and Distribution Industry Training Board

TFIA

Council of Textile & Fashion Industries of Australia

VCEC

Victorian Competition and Efficiency Commission

VET

Vocational Education and Training

VFITB

Victorian Food Industry Training Board

VFITAB

Victorian Forest and Forest Products Industry Training Advisory Board

VTG

Victorian Training Guarantee

Executive Summary

The Higher Education and Skills Group (formerly Skills Victoria), commissioned Deloitte Access Economics to work with Victorian Industry Training Advisory Bodies (ITABs) to produce the 2012 ITAB Market Effectiveness Report. The Market Effectiveness Report expands on the Industry Skill Needs Reports produced for the Higher Education and Skills Group in recent years by also incorporating ITAB intelligence on training market effectiveness, including identified market successes and failures.

The purpose of the Market Effectiveness Report is to present an overview of skill needs in the Victorian economy, including analysis of occupations in demand and experiencing critical skill shortages, and to provide a summary of market effectiveness in the Victorian market for vocational education and training. The report is designed to assist the Higher Education and Skills Group in assessing the performance of the training market, providing industry intelligence to individuals and businesses, and stimulating training demand in skill shortage areas.

This report incorporates Deloitte Access Economics’ views, along with a summary of industry intelligence gathered from the 16 Victorian ITABs. The ITAB advice was provided to Deloitte Access Economics during meetings and through other correspondence in late 2011 and early 2012. The industry advice presented in this report has also been informed by consultations held with representatives of various Victorian government agencies.

Examples of market success

In the main, examples of market success nominated by ITABs focused on the identification and closing of a gap in the training market. In many instances, this was achieved by mobilising a suitable training provider or actively encouraging industry participation in the training market.

The examples highlight the capacity to stimulate training demand and develop and tailor new training packages aimed at a specific training need. Many of the examples relate to the activities of individual ITABs. However there are also cases of industry-led responses to training provision and instances where additional government funding has assisted to meet skill needs.

Examples of market failure

The impact of thin markets was raised as a market failure by a number of ITABs. The issue results when demand for a training course is insufficient for training providers to offer it, a situation most prevalent in regional areas (often served by a single training provider).

Although the issue appears well understood throughout the training system, a universal solution is not apparent (and may not exist). The problem of thin markets has been overcome in some specific instances through more flexible training delivery and greater cooperation between industry and providers.

A further example of market failure involves training providers (particularly those which are publicly funded) not keeping up with technological changes in the industry. This issue arises because of the pace with which technology changes and the cost of purchasing and maintaining specific equipment, and can result in outdated or irrelevant training and the stifling of skill acquisition. There have been some examples of training providers collaborating with industry more effectively in order to access the latest equipment and provide training which is as relevant as possible.

Related to this, it was reported that employers across a number of industries have been unsatisfied with the quality of graduating students. A common complaint is that students are not ‘work ready’, generating a loss of confidence in the training system among some employers.

Key supply side issues

Key supply side issues affecting a range of industries include the following:

The ageing of Australia’s population is a key concern across a number of industries, particularly those with an older workforce demographic such as manufacturing, electro-technology and textile, clothing and footwear. Although the issue is well understood, many industries are having difficulty encouraging new entrants in order to offset a looming increase in retirement. As a result, there is concern around the implications for skill shortages in specific occupations.

There is some concern that changes to funding arrangements for the VET sector will have implications for skill needs in 2012. The changes include the reduction in the disparity between funding for TAFE and private providers, along with reductions in some industry funding weightings (with growing enrolments in specific qualifications generating a reduction in training provider funding for all qualifications within a broader industry).

Key demand side issues

Key demand side issues having a general impact on Victorian industries include the following:

Broad economic conditions, including the resources boom, were cited as an important demand side issue across a number of industries. In some sectors, Australia’s two speed economy is generating strong competition for skilled labour, with higher wages available outside Victoria. Weaker economic conditions outside the resources sector are also relevant, with soft housing conditions and weak retail sales weighing on the outlook in some industries.

A related issue is the high $A, which is also influencing the business environment for export industries and those which compete with imported products (such as food, forestry, manufacturing and services). The elevated exchange rate is also contributing to some of the variability in oil prices, which is a particular concern in the transport sector.

The changing nature of consumer demand is relevant for skill needs across industries such as food, forestry, primary industries and services. Consumers are seen as increasingly ethically responsible and time poor. As such, there is a growing need to provide services in line with consumer expectations of ethical and sustainable practices.

The rollout of the National Broadband Network will have demand implications for the electro-technology and manufacturing and engineering sectors. Once the installation is complete, the culture and recreation sector is expecting demand for media- and internet-related services to increase, underpinning a growing skill need.

Finally, industry-specific regulatory change is also expected to be an important demand side driver of skill needs in 2012. They include, for example, building and sustainability regulations in the construction sector, the national approach to qualifications in the childcare sector, and animal welfare in primary production and processing.

Prospects for employment growth

Deloitte Access Economics expects the Victorian economy to record modest employment growth of 0.8% in 2012 – the lowest growth for a little over a decade – following the solid employment growth of 2.1% recorded in 2011. The State’s unemployment rate is projected to rise to 5.6% in 2012 from an average of 5.1% in 2011.

Applying the ANZSIC industry structure, the utilities and construction sectors are expected to record the strongest rate of employment growth in 2012, followed closely by mining and health care and social assistance. In contrast, financial and insurance services and accommodation and food services may record softer growth in 2012, while employment in professional, scientific and technical services, arts and recreation services and manufacturing is expected to fall back modestly.

The chart below shows how these projections translate into forecasts according to the ITAB industry structure. Community services and health, building and construction, and water are seen leading the way, while racing (a small industry, and therefore more subject to sampling variability) is forecast to record a recovery following a sharp dip in employment in 2011.

: Industry employment growth in Victoria – 2012 (ITAB structure)

Source: Deloitte Access Economics

The table below provides a summary of the occupations in critical shortage identified in this report. The occupations are listed by both industry title and a corresponding title according to the Australian and New Zealand Standard Classification of Occupations (ANZSCO). The table also includes the related qualifications which are required for occupations experiencing a critical skill shortage.

: Summary of critical skill shortages

Industry title

ANZSCO classification and related qualification

Automotive

Light vehicle mechanic

Motor mechanic (general) (321211)

Certificate III in Automotive Technology (Light Vehicle)

Heavy vehicle mechanic

Diesel motor mechanic (321212)

Certificate III in Automotive Technology (Heavy Vehicle)

Panel beater

Panelbeater (324111)

Certificate III in Automotive Vehicle Body (Panel Beating)

Spray painter

Vehicle painter (324311)

Certificate III in Automotive Vehicle Body (Vehicle Painting)

Auto electrician

Automotive electrician (321111)

Certificate III in Automotive Electrical Technology

Building and construction

Plant operator

Earthmoving plant operator (721211)

Certificate III in Civil Construction Plant Operations

Road construction (Asphalt)

Road roller operator (721915)

Paving plant operator (721913)

Certificate III in Road Construction and Maintenance

Project manager

Construction project manager (133111)

Certificate IV in Building and Construction (Building)

Certificate IV in Building and Construction (Site management)

Diploma of Building and Construction (Building)

Building surveyor / Building inspector

Building inspector (312113)

Diploma of Building Surveying

Advanced Diploma of Building Surveying

Estimator

Construction estimator (312114)

Certificate IV in Building and Construction (Estimating)

Business services

Accounting

Accountant (General) (221111)

Certificate IV in Accounting

Diploma of Accounting

Advanced Diploma of Accounting

Waste management drivers

Recycling or rubbish collector (899611)

Certificate III in Asset Maintenance (Waste management)

Certificate IV in Asset Maintenance (Waste management)

Sustainability assessors

Environmental manager (139912)

Certificate III in Asset Maintenance (Waste management)

Certificate IV in Asset Maintenance (Waste management)

Certificate IV in Home Sustainability Assessment

Continued on following page

Community services and health

Aged care workers

Aged or disabled carer (423111)

Certificate III – Aged care

Certificate III – Home and Community Care

Certificate IV – Home and Community Care

Certificate IV – Nursing

Certificate IV – Allied Health Assistance

Diploma – Nursing for (a) new entrants and (b) existing workers

Enrolled nurses

Enrolled nurse (411411)

Certificate IV – Nursing

Certificate IV – Allied Health Assistance

Diploma – Nursing for (a) new entrants and (b) existing workers

Children’s services workers

Child care worker (421111)

Certificate III – Children’s Services

Diploma – Children’s Services (Early Childhood Education and Care)

Diploma – Children’s Services (Outside School Hours Care)

Child protection workers

Family support worker (411713)

Welfare worker (272613)

Vocational Graduate Certificate – Community Services Practice (Statutory child protection)

Certificate IV – Child, Youth and Family Intervention (Residential and out of home care)

Certificate IV – Child, Youth and Family Intervention (Child protection)

Certificate IV – Child, Youth and Family Intervention (Family support)

Disability services workers

Disabilities services officer (411712)

Certificate IV – Disability

Diploma – Disability

Advanced Diploma – Disability

Community care workers

Community worker (411711)

Certificate IV – Community Service (Alcohol and other drugs)

Certificate IV – Community Service (Mental health)

Diploma – Community Service (Alcohol and other drugs)

Diploma – Community Service (Mental health)

Diploma – Community Service (Alcohol, other drugs and mental health)

Diploma – Community Service (Case management)

Diploma – Community Services Coordination

Advanced Diploma – Community Sector Management

Vocational Graduate Diploma – Community Sector Management

Vocational Graduate Certificate in Community Services Practice (Client assessment and case management)

Culture and recreation

Swimming coach / Aqua instructor

Swimming coach or instructor (452315)

Certificate III in Aquatics

Lifeguard

Lifeguard (452414)

Certificate III in Aquatics


Camera operator (film, television, or video)

Camera operator (399512)

Certificate IV in Broadcast Technology

Cinema theatre/facilities manager

Cinema or theatre manager (149912)

Diploma of Venues and Events

Advanced Diploma of Venues and Events

Lighting technician

Light technician (399513)

Certificate III in Live Production, Theatre and Events

Certificate IV in Live Production, Theatre and Events

Certificate IV in Screen Media

Certificate IV in Electrotechnology

Diploma of Screen and Media

Multi/New/Interactive media designer

Multimedia designer (232413)

Certificate IV in Interactive Digital Media

Certificate IV in Information Technology (Multimedia)

Diploma of Interactive Digital Media

Multimedia specialist and web developer

Multimedia specialist (261211)

Web developer (261212)

Certificate IV in Information Technology (Websites)

Diploma of Information Technology (Websites)

Post-production media technician

Production assistant (599912)

Certificate IV in Screen Media

Certificate IV in Electrotechnology

Certificate IV in Interactive Digital Media

Diploma of Screen Media

Electro-technology and communications

Cable Jointing

Technical cable jointer (342212)

Telecommunications cable jointer (342412)

Certificate III in ESO Cable Jointing

Rail Signalling

Railway signal operator (712917)

Certificate IV in Rail and Tram Signal Systems

Motor Rewinding

Electrician (General) (341111)

Certificate III in Electrical Motor Repair

Telecommunications Cabler

Cabler (Data and telecommunications) (342411)

Certificate III in Telecommunications

Certificate III in Telecommunications Cabling

Digital Printing

Small offset printer (392312)

Certificate III in Printing and Graphic Arts (Digital Printing)

ESI Line worker

Electrical lines worker (342211)

Certificate III in ESI – Distribution

Substation Electrician

Electrician (Special class) (341112)

Certificate IV in ESI – Substation


Food processing

None reported

Forestry

Saw doctor

Saw maker and repairer (323315)

Certificate III in Saw Doctor

Pulp and paper technician

Paper and pulp mill operator (712916)

FPP10 ASCED Manufacturing Engineering and Technology

Detailer / Estimator

Forestry worker (841311)

Certificate III in Timber Truss and Frame Design and Manufacturing

Silviculture and harvesting team leaders

Forester (234113)

Certificate III in Harvest and Haulage

Certificate III in Forest Growing Management

Wood machinist

Wood machinist (394213)

Certificate III in Wood Machinist

Forest technicians and land managers

Forester (234113)

Advanced Diploma of Forest Industry Sustainability

Furnishing

Stained glass and lead lighting

Glazier (333111)

Certificate III in Glass

Cabinet maker/installer

Cabinetmaker (394111)

Certificate III in Cabinet Making

Glass and glazing

Glazier (333111)

Certificate III in Glass

Flooring installer

Floor finisher (332111)

Certificate III in Flooring Technology

Upholsterer

Upholsterer (393311)

Certificate III in Upholstery

Curtin, blind and awning maker and installer

Home improvement installer (821412)

Certificate III in Soft Furnishings

Certificate III in Blinds and Awnings (n/a)

Manufacturing and engineering

Sheetmetal Trades Worker

Sheetmetal Trades Worker (322211)

Certificate III in Engineering – Fabrication trade

Aircraft Maintenance Engineer (Mechanical)

Aircraft Maintenance Engineer (Mechanical) (323112)

Certificate IV in Aeroskills (Avionics, Mechanical and Structures)

Aircraft Maintenance Engineer (Avionics)

Aircraft Maintenance Engineer (Avionics) (323111)


Aircraft Maintenance Engineer (Structures)

Aircraft Maintenance Engineer (Structures) (323113)


Metal machinists

Metal machinist (first class) (323214)

Certificate III in Engineering – Mechanical trade


Air-conditioning and refrigeration mechanic

Air-con. and refrigeration mechanic (342111)


Metal Fabricator (Boilermaker)

Metal Fabricator (322311)

Certificate III in Engineering – Fabrication trade

Metal fitters and turners

Metal Fitter and Turner (323212)


Primary industries

Arborist

Arborist (362212)

Certificate III in Arboriculture

Diploma of Arboriculture

Animal technician

Life science technician (311413)

Diploma of Animal Technology

Agronomist

Agricultural scientist (234112)

Diploma of Agronomy

Greenkeeper

Greenkeeper (362311)

Certificate III in Parks & Gardens

Diploma of Parks & Gardens Management

Parks and gardens worker

Gardener (General) (362211)

Certificate III in Sports Turf Management

Diploma of Sports Turf Management

Racing

Track Rider

Stablehand (841516)

Certificate III (Trackriding)

Services

Retail manager

Retail manager (General) (142111)

Diploma of Retail Management

Vocational Graduate Certificate in Retail

Supervisory staff – Retail

Retail supervisor (621511)

Certificate IV in Retail Management

Chef

Chef (351311)

Certificate IV, Diploma and Advanced Diploma of Hospitality

Hotel manager

Hotel or Motel Manager (141311)

Diploma of Hospitality

Restaurant managers

Cafe or Restaurant Manager (141111)

Diploma of Hospitality

Wait staff

Waiter (431511)

Certificate III in Hospitality


Textiles, clothing, footwear and leather

Textile clothing and footwear mechanic

TCF mechanic (323215)

Certificate III in Engineering – TCF Mechanic

Apparel patternmakers / Graders

Clothing patternmaker (393212)

Diploma of Applied Fashion Design and Technology

Dressmakers / Tailors

Dressmaker or tailor (393213)

Certificate IV in Clothing Production

General footwear tradesperson

Shoemaker (393114)

Certificate III in Footwear Production

Transport and storage

Heavy rigid to multi-combination drivers

Truck driver (general) (733111)

Tanker driver (733114)

Certificate II in Driving Operations

Certificate III in Driving Operations

Rail drivers

Train driver (731311)

Tram driver (731312)

Certificate IV – Transport and Logistics (Rail Operations)

Transport company manager

Transport company manager (149413)

Diploma of Logistics

Warehouse administrator

Warehouse administrator (591116)

Certificate IV in Warehousing Operations

Bus driver

Bus driver (731211)

Certificate III Transport & Logistics (Driving Operations)

Certificate IV Logistics

Deck hand / general purpose hand

Deck hand (899211)

Certificate II/III in Transport & Distribution (Maritime Operations)

Crane, hoist or lift operator

Crane, hoist or lift operator (712111)

Certificate II in Stevedoring

Certificate III in Stevedoring (Crane Operations)

Certificate III in Stevedoring (Team Leading)

Certificate IV in Stevedoring Operations

Forklift driver

Forklift driver (721311)

Certificate III in Warehousing Operations

Water

None reported

Deloitte Access Economics30 March 2012

(Deloitte Access Economics)ix

Introduction

The Higher Education and Skills Group (formerly Skills Victoria) commissioned Deloitte Access Economics to work with Victorian Industry Training Advisory Bodies (ITABs) to produce the 2012 ITAB Market Effectiveness Report. The Market Effectiveness Report expands on the Industry Skill Needs Reports produced for the Higher Education and Skills Group in recent years by also incorporating ITAB intelligence on training market effectiveness, including identified market successes and failures.

The purpose of the Market Effectiveness Report is to present an overview of skill needs in the Victorian economy, including analysis of occupations in demand and experiencing critical skill shortages, and to provide a summary of market effectiveness in the Victorian market for vocational education and training. The report is designed to assist the Higher Education and Skills Group in assessing the performance of the training market, providing industry intelligence to individuals and businesses, and stimulating training demand in skill shortage areas.

This report incorporates Deloitte Access Economics’ views, along with a summary of industry intelligence gathered from the 16 Victorian ITABs. The ITAB advice was provided to Deloitte Access Economics during meetings and through other correspondence in late 2011 and early 2012. The industry advice presented in this report has also been informed by consultations held with representatives of various Victorian government agencies.

The report is structured around sixteen chapters, each dedicated to providing advice relevant to a particular industry. These chapters include a summary of:

Training market effectiveness, including examples of market success and failure;

Industry change drivers and developments in 2012 and likely implications for skill needs;

An industry outlook compiled by Deloitte Access Economics, including forecasts of industry employment;

ITAB and industry responses to critical skill shortages identified in the 2011 Industry Skill Needs Report;

Occupations expected to be in demand and experiencing critical skill shortages in 2012; and,

A list of qualifications required for occupations experiencing a critical skills shortage.

Where data is available, these industry chapters include data on vacancies, drawn from Skilled Vacancy Index published by the Commonwealth Department of Education, Employment and Workplace Relations (DEEWR). There are some shortcomings to using this data. For example, the index is based on the number of advertised vacancies and is not a detailed measure of unmet demand. In this report, the vacancy data is presented as an index, with the number of vacancies in 2000 set equal to 100. Due to the availability of data, in each of these charts the data for 2011 represents the average of monthly data over the ten months to October 2011.

Each industry chapter begins with a brief overview of the industry, as described in the box below.

Coverage: The occupations covered by the industry.

Specific industry and business cycle drivers: Specific factors of particular importance to the industry and relevant economic factors.

Recent relative employment performance rating: A ranking of the industry’s employment growth performance over the three years to 2011. The ranking – rated as Low, Below Average, Average, Above Average and High – is relative to the employment performance of the other industries examined in this report.

Expected relative employment performance rating: A ranking of the industry’s expected employment growth performance over the three years from 2011.

In defining the lists of occupations in demand and experiencing critical skill shortages, ITABs were required to apply criteria developed by the Higher Education and Skills Group. The criteria are based on definitions used by Skills Australia and the Commonwealth Department of Education, Employment and Workplace Relations. The definition used to identify an occupation in demand is as follows:

An occupation is in demand when employers are unable to fill or have considerable difficulty filling vacancies for the occupation, or significant specialised skill needs within that occupation over an extended time period, at market rates of remuneration and standard conditions of employment, and in reasonably accessible locations.

Of those occupations listed as in demand, occupations were also considered to be experiencing a critical skill shortage if they met the following four criteria:

Long lead time: Occupations that require skills which are highly specialised and require extended learning and preparation time over several years.

High use: Where there is a high incidence of those undertaking formal training for a qualification subsequently taking up employment in the corresponding occupation.

High risk: Occupations where the disruption caused by the skills being in short supply imposes a significant risk to the Australian economy and/or community.

High information: Where the quality of information on the occupation is adequate to the task of assessing future demand and evaluating the first three criteria.

In addition to the industry-specific discussion and occupation lists, this report also includes broader information and commentary in two initial chapters. Chapter 2 includes forecasts of key Victorian economic indicators and employment by industry, while Chapter 3 provides a broad overview of training market effectiveness.

The forecasts in Chapter 2 have been compiled according to two industry structures:

The Australian and New Zealand Standard Industry Classification (ANZSIC) published by the Australian Bureau of Statistics (ABS). Deloitte Access Economics has included forecasts completed at the one-digit ANZSIC level.

An industry structure which is representative of the industry coverage of each ITAB.

The concordance between ANZSIC and ITAB industry structures developed by Deloitte Access Economics is included at Appendix A. We caution that this concordance will not always provide an accurate reflection of the employment base covered by each ITAB.

Industry employment forecasts

The following charts and tables provide a brief snapshot of Victoria’s economy, along with Deloitte Access Economics’ economic and employment forecasts. The employment forecasts are provided for the ITAB industry structure and the ANZSIC industry structure.

There are some limitations of using the ANZSIC industry structure to assess employment prospects across ITAB industries. For example, the rise of part-time farmers means that the Victorian primary industry often provides a secondary source of income for individuals. The implication is that a count of those who identify as employed in primary industry may not fully capture the industry coverage in aggregate. Imperfect alignment between the coverage of each ITAB industry and the ANZSIC industry categories may also give rise to some discrepancies in estimating the employment coverage of some ITABs. For example, advice from ITABs suggests that 2011 employment in the furnishing and forestry industries was 20,000 and around 27,500 respectively. That compares to the respective estimates of around 14,000 and 21,000 presented in Table 2.2 below.

Moreover, the activities covered by some ITABs (particularly across creative, leisure and ‘emerging’ industries) may not be adequately captured within the ANZSIC categories for the purpose of making an accurate comparison with the coverage of the relevant ITAB.

These definitional issues cannot be fully overcome through the concordance between ANZSIC and ITAB classification structures, and should be considered when examining these forecasts.

Snapshot of the Victorian economy

Gross State Product (real)

$305.6 billion

GSP per capita: $54,646 (2010-11)

Population

5.59 million (2010-11 est.)

Labour force

3.02 million

Unemployment rate: 5.2% (December 2011)

Key merchandise trade partners

China 19.5%, United States 11.0%, Japan 8.0%, New Zealand 5.8%, Germany 5.1% (2011)

Key forecasts

Annual % change except where noted *

History

Forecast

2009

2010

2011

2012

2013

Real gross state product

1.4%

2.4%

2.4%

2.1%

3.3%

Dwelling investment

5.6%

6.5%

5.7%

-1.8%

5.7%

Private consumption

1.3%

3.6%

3.8%

3.6%

3.2%

Employment

1.0%

3.8%

2.1%

0.8%

1.7%

Unemployment rate *

5.7%

5.4%

5.2%

5.6%

5.7%

Total population

2.2%

1.7%

1.5%

1.6%

1.5%

Consumer Price Index

1.4%

3.0%

3.5%

2.4%

3.1%

Source: Deloitte Access Economics, Australian Bureau of Statistics. Note: Business investment excludes intangibles.

: Annual industry employment growth – Victoria (ANZSIC industry structure)

Forecast

Employment level in 2011

2012

2013

2014

Agriculture, Forestry and Fishing

75,889

1.0%

1.6%

0.6%

Mining

11,720

5.6%

3.5%

5.4%

Manufacturing

304,264

-0.9%

-0.4%

-0.9%

Food, Beverage and Tobacco

76,351

1.8%

2.9%

2.4%

Textile, Leather, Clothing and Other

38,308

-0.2%

-1.1%

-2.1%

Wood, Pulp and Paper

19,195

-0.9%

-2.6%

-0.3%

Printing and Recorded Media

14,412

-1.4%

2.0%

-0.8%

Petroleum, Coal, Chemical and Polymers

35,234

4.8%

1.2%

0.1%

Non-Metallic Minerals

11,003

1.5%

-2.3%

-2.8%

Primary and Fabricated Metals

37,640

-6.4%

-1.8%

-2.0%

Transport and machinery equipment

72,124

-4.2%

-3.4%

-3.8%

Electricity, Gas, Water and Waste

37,392

6.1%

5.0%

3.9%

Construction

263,650

6.0%

5.3%

2.2%

Wholesale Trade

113,184

3.0%

-1.1%

1.4%

Retail Trade

317,896

0.1%

-0.1%

0.6%

Accommodation and Food Services

179,169

-3.3%

1.4%

0.6%

Transport, Postal and Warehousing

142,538

-2.9%

3.8%

1.8%

Info. Media and Telecommunications

57,928

3.1%

1.7%

0.9%

Financial and Insurance Services

122,710

-7.6%

6.6%

1.8%

Rental, Hiring and Real Estate Services

44,952

2.4%

3.6%

1.7%

Professional, Scientific and Technical

234,125

-4.1%

3.8%

4.2%

Administrative and Support Services

107,222

4.4%

2.9%

2.6%

Public Administration and Safety

137,650

-1.4%

0.7%

1.3%

Education and Training

217,519

-0.5%

2.0%

2.5%

Health Care and Social Assistance

337,428

5.2%

3.9%

2.1%

Arts and Recreation Services

59,801

-1.6%

2.2%

1.7%

Other Services

112,680

3.3%

1.6%

1.1%

Victoria

2,877,715

0.8%

1.7%

1.1%

Source: Deloitte Access Economics, Australian Bureau of Statistics

As Table 2.1 shows, Deloitte Access Economics expects the Victorian economy to record modest employment growth of 0.8% in 2012 – the lowest growth for a little over a decade – following the solid employment growth of 2.1% recorded in 2011. The State’s unemployment rate is projected to rise to 5.6% in 2012.

By industry, the utilities and construction sectors are expected to record the strongest rate of employment growth in 2012, followed closely by mining and health care and social assistance. In contrast, financial and insurance services and accommodation and food services may record softer growth in 2012, while employment in professional, scientific and technical services, arts and recreation services and manufacturing is expected to fall back modestly.

: Annual industry employment growth – Victoria (ITAB industry structure)

Forecast

Employment level in 2011

2012

2013

2014

Automotive

105,359

-3.8%

-2.0%

-3.2%

Building and construction

263,650

4.0%

5.3%

2.2%

Business services

438,673

-2.7%

5.1%

3.5%

Community services and health

337,428

5.1%

4.0%

3.2%

Cultural and recreation

61,635

0.6%

1.4%

1.4%

Electro-technology and communication

74,817

2.1%

0.2%

0.0%

Food

76,351

1.7%

1.2%

1.9%

Forestry

20,907

-2.0%

-2.0%

0.0%

Furniture

13,783

-0.8%

0.9%

-1.2%

Manufacturing and engineering

218,658

1.0%

0.0%

-0.1%

Primary

82,910

0.8%

1.6%

0.7%

Racing

2,304

29.2%

16.3%

10.8%

Services

638,643

-2.8%

0.4%

0.9%

Textiles, clothing and footwear

19,530

-1.6%

-3.1%

-3.6%

Transport

142,538

1.7%

4.6%

2.3%

Water

11,836

2.1%

4.2%

3.5%


: Industry employment growth in Victoria – 2012 (ITAB structure)

Source: Deloitte Access Economics

Table 2.2 shows how these projections translate into forecasts at the ITAB level, with community services, building and construction, and water leading the way, while racing (a small ITAB, and therefore more subject to sampling variability) is forecast to record a recovery following a sharp dip in employment in 2011, generating its strength in Chart 2.1.

Overview of market effectiveness

As noted above, this report expands on the Industry Skill Needs Reports compiled for the Higher Education and Skills Group in previous years. The key additional focus is the reporting of market effectiveness – that is, instances of both market success and market failure in the Victorian vocational education and training market.

Following the implementation of a more market-based training system in the State – the Victorian Training Guarantee (VTG) – the Victorian Government has recognised the need to monitor the operational effectiveness of the system and, where necessary, appropriately intervene to address any market failure.

The inclusion of industry intelligence on market effectiveness in this report is designed to assist the Higher Education and Skills Group to more fully understand the operation of the new training system and to identify and rectify market failures as they arise.

Deloitte Access Economics has sought to gather specific examples of market success and failure from ITABs. This chapter provides some background on Deloitte Access Economics’ approach to defining market effectiveness and includes examples relevant to the training market as a whole rather than to individual industries. Industry-specific examples of market success and failure are contained within each of the sixteen industry chapters which follow.

Defining market effectiveness

Victorian Government reforms have moved the VET sector toward a demand-driven model. The establishment of the VTG means that there is no set limit to the number of places a contracted VET provider can offer in any course it is registered to provide. Individuals in Victoria can access training through the VTG at a provider of their choice, provided they meet the eligibility criteria.

Eligibility arrangements were fully implemented for all VET qualifications from 1 January 2011. To be eligible for a government funded place under the VTG, individuals must be:

Under 20 years of age; or,

Undertaking a foundation skill course to address low literacy and numeracy; or,

Undertaking an apprenticeship or traineeship; or,

Up-skilling – undertaking a higher level course than their highest existing qualification.

The reforms also mean that the training market is now fully contestable, with funding for government subsidised places available to both government and private providers who apply and are approved for funding relating to eligible students.

The expected corollary of these reforms is that if VTG-eligible individuals cannot access the training they desire, a market failure must exist. This form of market failure is examined in this report. Importantly, the effectiveness of the training market is therefore assessed within the current policy parameters set by the Victorian Government.

Defining market success is less straightforward. It could be argued, for example, that success in the vocational education and training system simply involves an increasing rate of matriculation of students through courses over time. However such a definition provides few opportunities to explore positive training market outcomes through discrete examples.

In order to capture specific examples of market success, we have attempted to focus on instances where an increase in the quantity and/or quality of completing students has targeted a known training need or has otherwise had an identifiable positive impact. This could include, for example, cases where a skill shortage or market failure has been corrected, or where active involvement by industry participants has contributed to stimulating training demand in a particular area. This approach necessarily incorporates some examples of market intervention where it has been a positive influence in the training market.

Examples of market success

In the main, examples of market success nominated by ITABs focused on the identification and closing of a gap in the training market. In many instances, this was achieved by mobilising a suitable training provider or actively encouraging industry participation in the training market.

The examples highlight the capacity to stimulate training demand and develop and tailor new training packages aimed at a specific training need. Many of the examples relate to the activities of individual ITABs. However there are also cases of industry-led responses to training provision and instances where additional government funding has assisted to meet skill needs.

Examples of market failure

The impact of thin markets was raised as a market failure by a number of ITABs. The issue results when demand for a training course is insufficient for training providers to offer it, a situation most prevalent in regional areas (often served by a single training provider).

Although the issue appears well understood throughout the training system, a universal solution is not apparent (and may not exist). The problem of thin markets has been overcome in some specific instances through more flexible training delivery and greater cooperation between industry and providers.

A further example of market failure involves training providers (particularly those which are publicly funded) not keeping up with technological changes in the industry. This issue arises because of the pace with which technology changes and the cost of purchasing and maintaining specific equipment, and can result in outdated or irrelevant training and the stifling of skill acquisition. There have been some examples of training providers collaborating with industry more effectively in order to access the latest equipment and provide training which is as relevant as possible.

Related to this, it was reported that employers across a number of industries have been unsatisfied with the quality of graduating students. A common complaint is that students are not ‘work ready’, generating a loss of confidence in the training system among some employers.

Automotive

Coverage: Automotive (passenger motor vehicles, light commercial, truck, bus, trailer, recreational vehicles) manufacturing, retail, service and repair, and allied industry (earthmoving and construction, outdoor power equipment, recreational boating, recreational vehicles, bicycles).

Specific industry and business cycle drivers: Interest rates, tax provisions, the $A, tariff protection, Federal Government subsidies, petrol prices and the level of global capacity.

Recent relative sectoral performance rating: Below average

Expected relative sectoral performance rating: Low

Summary of ITAB advice and consultationMarket effectiveness

Automotive Training Victoria (ATV) report a mix of training market successes and failures for 2011. The examples of success demonstrate ATV and industry efforts translating into increased training in niche areas and the attraction of new entrants to the sector. The examples of market failure relate to skill needs that are emerging at a pace that the training sector cannot match.

Engine reconditioning provides a rare example of success in automotive training in recent years. This specialised skill – which applies to vehicle restoration, heavy vehicles and warranty work for manufacturers (all growing trades) – has traditionally proved a thin training market. However more recently, in cooperation with both large and small employers, around 20 students are being enrolled in the course per annum, with a mix of workplace and classroom training delivery. This level of training delivery will alleviate existing skill shortages if maintained.

Continued difficulty in recruiting apprentices led ATV to set a goal of attracting 40 school-based apprentices into the industry in 2011, utilising new technologies as the angle by which to generate interest. Working with the Victorian Chamber of Commerce and Industry, there was little difficulty in identifying suitable employers given the high demand for skills across the industry. Indeed the majority of these apprentices start at the Certificate II level in dealerships, and then move into a variety of other areas of these businesses. Additional funding from the State Government helped support this initiative.

In terms of market failures, automotive trimming remains a niche business, with corresponding low volume of highly specialised skill needs. In the existing format, training providers are currently only partly delivering the competencies required of a motor trimmer (similar issues are experienced by other parts of the automotive industry). This represents an example of the difficulties in providing external training at a trade skill level when a very limited number of individuals are engaged in the trade. Vehicle restoration businesses and the like will feel this labour constraint more acutely as they attempt to expand or face new industry entrants.

The Victorian bicycle industry is experiencing significant growth. Coupled with the introduction of complex materials and repair techniques (such as relating to carbon fibre), this is generating a significant skill need. However, appropriate training is not available and instead the sector is said to be importing skilled workers from outside the State to meet requirements and training on the job. High-end bicycle repair is therefore an emerging gap in training delivery, though the Certificate II in Bike Maintenance remains in high demand.

ATV acknowledge further success in attracting and retaining skill to the industry will be driven by industry and its ability to inform potential new workers (and their key influencers) on prospects and careers paths available, ensuring they are relevant to what the current generation of workers is demanding. It is also a case of the industry needing to restructure such that those skills in demand are mobile across businesses (as has been seen with top line technicians working across a number of businesses within a dealer network).

Change drivers and industry developments

ATV reported a number of change drivers for 2012, similar to those identified in 2011. They cover both demand and supply side issues, and include:

Continuous technological advancement in service and repair (demand side)

Growing uncertainty for future vehicle manufacturing (demand and supply side)

Growth in the resources sector (demand and supply side)

Public training provider capacity/currency (supply side).

The strong Australian dollar, pressure on government budgets, and the shift in consumer demand for small fuel efficient vehicles and sports utility vehicles, is compounding uncertainty around the future of automotive manufacturing in Australia and Victoria. The implication is the future skill needs of the sector are unclear, the ability to recruit labour when career prospects are in doubt is limited, and the only way to minimise skill shortages is through specialised in-house training with short lead times (in production and assembly).

Technological advancements in diagnostics remains the key to the success of automotive service and repair businesses in terms of the ability to identify the problem and solution in a timely and efficient manner, with the industry now less dependent on traditional repair skills. The service and repair aspects of automotive businesses are becoming more important to business viability than vehicle retailing, given the relative margins attached to each.

While manufacturers have traditionally held diagnostic technologies in-house (by way of preserving demand for after-sales service), United States legislation is now obliging this information be made available to the broader service and repair sector, and with this movement submissions are now being made to the Commonwealth Government for similar legislation. The implication is that service and repair businesses in Victoria can now at least import this information – at cost – to ensure their continued relevance as older vehicles are scrapped from the fleet.

While public training providers are providing basic electrical-based skills training, and the Automotive Centre for Excellence in Melbourne is in particular delivering advanced training, training in general is not meeting the technological demands of the vast number of non-manufacturer-backed service and repair businesses across the state. Advice from ATV is that the quicker the latest information and technology is available for broader training consumption, the sooner there will be an increase in industry up-skilling, new industry entrants (particularly younger technology-minded individuals) and accordingly institutional uptake.

With the increase in the cost of vehicle repairs (both labour and capital components), and as it relates to regulation around vehicle registration, there has been a lift in the ‘economic’ write off of damaged vehicles (where the cost to repair is greater than the market value of the car). While on the one hand this reduces demand for the repair sector, this is being at least partly offset by the cases of ‘repairable write off’. This is particularly relevant in times of increased storm activity, as has been seen in 2011 and early 2012 in Victoria. The Commonwealth Government is currently conducting an inquiry (the Bradbury Inquiry) which will have implications for the persistence of this trade going forward.

Growth in the Australian resources sector remains a double-edged sword for automotive output. At one level the demand for heavy vehicle mechanics to support the mining boom is drawing new and existing light vehicle mechanics away with significantly higher wages. Indeed existing light vehicle mechanics can retrain to attain the Certificate III in Heavy Vehicle Mechanics in 2-3 months, and are happy to pay for the training out of their own pocket given the improved earnings available. Furthermore the high $A is harming vehicle exports. On the other hand truck component and assembly businesses, as well as other heavy machinery business, continue to experience strong growth in sales and service.

Industry outlook

This industry has two parts: manufacturing and retailing. The manufacturing side includes motor vehicle and motor vehicle parts manufacturers; while the retail side includes motor vehicle and motor vehicle parts retailing (and wholesaling), as well as automotive repairs and maintenance.

Australian vehicle manufacturers had a difficult start to 2011. Vehicle production in the first three months of the year was down 17% on the same period last year, with total year-to-date production (to September 2011) 10% lower compared to last year. The latest data from the Federal Chamber of Automotive Industries appear more positive. Production increased by 10% in the September quarter to the highest quarterly level since the June quarter of 2010.

A number of issues are relevant for the sector. Most notably, the strong Australian dollar continues to challenge Australian manufacturers by reducing the price of imported products. Despite a brief decline amid Europe’s economic turmoil, the $A is once again firmly above parity with the $US. The currency may well remain elevated over the medium term, but is expected to eventually retreat to longer term trend levels.

Another key issue for vehicle manufacturers going forward is carbon pricing. The start of the carbon tax on 1 July 2012 will see Australia’s 500 largest companies required to pay a fixed price of $23 for every tonne of carbon dioxide equivalent they release into the atmosphere. This will affect the automotive industry both directly, through direct obligations to purchase carbon permits, and indirectly, through higher input costs. Over time it is expected that carbon pricing will lead to further restructuring of Australia’s car industry as firms adopt ‘green’ production methods and technologies to reduce their emissions liability.

: Employment outlook – Victorian automotive industry


Vehicle retailers also struggled through 2011, though not to the extent of manufacturers. Year-to-date vehicle sales to December 2011 are 3.9% lower than the corresponding period in 2010, although vehicle sales in Victoria are faring slightly better, falling just 1.6%.

Some of that sales weakness earlier in the year was due to supply disruptions following the Japanese earthquake and tsunami. Activity did pick up over the September quarter, where vehicle sales in Victoria were 10.5% higher than in the June quarter (in seasonally adjusted terms). However, this growth was short lived, with growth falling once again in the December quarter, by 1.7%. Retailers in general are likely to struggle over the next 12 months, including in the automotive sector.

: Skilled Vacancy Index – Victorian automotive industry

Source: Commonwealth Department of Education, Employment and Workplace Relations

The chart above shows skilled vacancies for workers in the Victorian automotive industry (as measured by DEEWR’s Skilled Vacancy Index). It shows that vacancies for auto electricians increased relatively sharply in 2011, while vacancies for motor mechanics and panel beaters declined in line with the Victorian average. The latter is seemingly at odds with the list of critical skill shortages discussed below. That may partly be explained by some of the drawbacks of the Skilled Vacancy Index, which does not indicate whether a decline in vacancies is due to weaker labour demand or stronger labour supply, or simply because employers are giving up on trying to fill vacancies.

Overall, the negatives for this sector appear likely to continue to outweigh the positives, and, after a lift in employment in 2011, employment in the sector is expected to continue a downward trend over the medium term.

Occupations in demand and critical skill shortagesResponse to 2011 critical skill shortages

For the majority of automotive occupations listed as in critical skill shortage in 2011, macro and microeconomic developments have outweighed any market adjustments that ATV, in conjunction with the automotive industry, have attempted.

Indeed the resources boom continues to have a negative effect on the availability of new and existing light vehicle mechanics, heavy vehicle mechanics and automotive electricians, with the prospect of significantly higher earnings in other industries. In all three of these occupations, industry and ATV are attempting to up-skill those holding Certificate II qualifications and are advising government on the suitability of migrant workers. However, these initiatives have had little success to date in terms of alleviating what is a growing shortage.

In terms of panel beaters and vehicles painters, while not subject to competition for skilled workers with the resources sector, they continue to face difficulties in both attracting new workers and up-skilling existing workers. The difficulties relate to career paths and prospects, and the availability of appropriate training, respectively. Similar to the case of mechanics and electricians, the response from industry and the ATV has been to look at alternative sources of labour, though again with minimal success.

In contrast to the deteriorating conditions in the other five critical skill shortage occupations during 2010, the shortage in truck assembly workers is said to have been alleviated during 2011. The introduction of further automation and ‘smart’ assembly lines is reducing the labour content of the production process. Furthermore the margins in these vehicles is enabling improved earnings prospects for workers, helping to attract and retain labour.

Occupations in demand and critical skill shortages in 2012

The tables below summarise the occupations in demand and experiencing critical skill shortages in 2012. These occupation lists have been advised by ATV and have been determined following formal engagement with industry.

Overall, the number of occupations in demand is reduced from 2011, though all of these occupations are listed as experiencing a critical skill shortage.

Occupations in demand and experiencing critical skill shortages

Occupations in demand

Industry title

ANZSCO classification





Panel beater


Spray painter


Auto electrician


Occupations experiencing a critical skills shortage

Industry title






Panel beater


Spray painter


Auto electrician


The table below outlines qualifications which are required for occupations experiencing a critical skills shortage.

Qualifications required for occupations experiencing critical skill shortages

Occupation (Industry title)

Qualification


Certificate III in Automotive Technology (Light Vehicle)


Certificate III in Automotive Technology (Heavy Vehicle)

Panel beater

Certificate III in Automotive Vehicle Body (Panel Beating)

Spray painter

Certificate III in Automotive Vehicle Body (Vehicle Painting)

Auto electrician

Certificate III in Automotive Electrical Technology

Building and Construction

Coverage: Civil Operations, General Construction, Plumbing Services, Shared – Building and Construction.

Specific industry and business cycle drivers: Resource prices, demographics (particularly population growth among those aged 18-30), interest rates (particularly for housing construction), business investment.

Recent performance rating: High

Expected relative sectoral performance rating: High


The Building Industry Consultative Council Industry Advisory Body (BICCIAB) reported a number of examples of training market success and failure which have occurred within the industry in recent years.

Examples of training market success centred on industry-led responses to skills demand, including the provision of equipment and other capital resources which are vital to ensure that apprentices and students are trained using the latest technology and machinery.

In particular, the establishment of the Australian Brick and Blocklaying Training Fund (ABBTF) has been a strong example of training market success in the building and construction industry. Historically, the sector has struggled to attract new apprentices into the bricklaying trade, while significant proportions of the existing workforce are ageing and do not possess formal qualifications. These challenges presented a current and growing skills issue for the sector.

The ABBTF is a national organisation founded, in part, to reverse this trend. The fund has implemented an apprenticeship scheme which is jointly funded by a levy on industry of $2 per thousand clay bricks or 10 cents per square metre of concrete masonry, and a matching contribution from manufacturers. The scheme promotes apprenticeships in the sector through a range of mechanisms, including a direct subsidy to employers for taking on an apprentice and the funding of programs in schools. The ABBTF also performs a wider role assisting skills development in the sector more broadly.

BICCIAB advises that the ABBTF has had a positive influence on apprentice numbers in Victoria. In 2003 there were six registered training organisations (RTOs) with 432 apprentices in bricklaying in Victoria. There are now 13 RTOs and over 1,000 apprentices in bricklaying.

Two other examples of training market success – the Plumbing Industry Climate Action Centre (PICAC) and the Port Melbourne Training Centre – highlight the benefits of exposing apprentices and existing workers to training opportunities using the latest technology and equipment.

PICAC is an industry-led facility providing plumbers and apprentices with broad skills, including a focus on sustainability. The success of PICAC stems from the ongoing involvement of industry organisations, the use of leading technology, and growing flexibility around training delivery (such as out of hours training). PICAC has also introduced training designed to meet demand in growing skill needs areas such as type A and B gas installation and servicing, and fire protection. An example is the introduction of a new Diploma in Fire Systems Design at the facility.

The Port Melbourne Training Centre is funded and run by the Construction, Forestry, Mining and Energy Union and provides training for crane drivers and related skills such as rigging, materials handling and labouring.

A significant capital investment – including the recent purchase of a new electric luffing crane from Europe – means that the facility offers the opportunity to train using new technology within a dedicated training environment.

A number of examples of failure in the training market were offered by BICCIAB. According to BICCIAB, instructors involved in the VET in Schools and School Based New Apprenticeships programs frequently are not trained or do not have trade experience in the discipline they are instructing. This problem arises from a general shortage of instructors due to relatively low pay, and can undermine the quality of the programs and result in the under preparedness of apprentices. More significantly, these training mechanisms lead students in years 10, 11 and 12 being graded as competent to the equivalent level of a second year apprentice. However, without on-site experience or access to off-site training resources at a TAFE, the individuals often struggle once they are employed. BICCIAB believes that students exiting secondary school with a Certificate II in Building and Construction are not as competent or industry-ready as those who have completed a pre-apprenticeship at a TAFE.

BICCIAB also cited the limited availability of training in some regional areas as a market failure. In particular, the advice of BICCIAB centred on the Mornington Peninsula region, where a small number of training providers have wide geographic coverage. There is strong demand for apprenticeships in the region (particularly around Dandenong), and in part the difficulty involves waiting lists. Employers have been more reluctant to take on apprentices as little residential construction activity is taking place in the area.

There is also some concern within industry regarding on-site assessments conducted by some training providers. Instances of a ‘tick and flick’ approach to on-site assessments have been noted, which does not foster improvement in the quality or competency of apprentices. This issue is not relevant for apprentice plumbers, who require more formal assessment due to licensing in the industry.

Change drivers and industry developments

BICCIAB reported several change drivers for 2012 that were identified during consultations with industry stakeholders. They cover both demand and supply side issues, and include:

The lack of major civil infrastructure projects in the pipeline (demand side)

The economic cycle (demand side)

Regulatory change (demand side)

New materials and products (demand side)

Sustainability (demand and supply side)

Significant changes to VET fees and policies (supply side)

Workforce employment structure (supply side)

Competency based completion (supply side)

The need for small business and soft skills (supply side)

BICCIAB notes that the economic cycle is expected to be a key demand side influence for Victoria’s building and construction industry in 2012. A key component of this change driver involves a lack of major civil infrastructure projects in the pipeline in Victoria, which may mean a loss of workers to other States. This is perceived to be a larger potential problem in civil construction, where it is common for large construction firms to move workers from one project to the next, including interstate where necessary.

The concern raised by BICCIAB is the potential for long term or permanent loss of workers from the State, which would leave a gap in the skills base when the construction cycle improves. This problem could be exacerbated by the potential for employers to receive larger training subsidies and levies outside Victoria, further encouraging the workforce to shift interstate.

Other economic factors are expected to have a mixed impact on demand for skilled labour. On one hand, Federal Government stimulus programs have drawn to a close, while housing starts have dropped and construction on Victoria’s new desalination plant will be completed shortly. However, the 2011 floods in northern Victoria have generated construction demand and maintenance work is steady for businesses established in that sector. Meanwhile, renovation activity is increasing, and some commercial building activity is occurring in the Docklands area of Melbourne.

This patchwork activity across sectors highlights the need for workers to have broad skills (transferable across residential and non-residential construction projects). These broad skills are gained through the completion of an apprenticeship. However, solid construction activity and a pipeline of projects is required to encourage employers to take on apprentices and ensure ongoing skills acquisition and further growth in qualified workers across the industry.

Various instances of regulatory change are expected to occur in 2012. They include the introduction of new energy, waste and water policies by the Melbourne City Council to be applied to all new building developments; national occupational health and safety regulations; the National Construction Code; bushfire building regulations; a new six star housing rating; and the implementation of national licensing for plumbers.

Industry will need to respond rapidly to each of these changes and, where necessary, run targeted short course training for the existing workforce. These short courses may be particularly relevant around the new bushfire regulations, waste management, recycling and incorporating sustainable practices into work methods.

Although there are clear exceptions (such as PICAC), in general the industry has historically been slow to take up new systems of working, including taking advantage of the introduction of new materials and products. According to BICCIAB, this could be improved by ensuring training for new workers is undertaken using the latest technology, while also encouraging existing workers in the industry to complete short courses and seminars to stay abreast of new product developments.

Sustainability and green skills continue to be a growing focus for the industry. BICCIAB advises that awareness of sustainability issues is becoming increasingly embedded throughout the industry. Building sites are becoming ‘cleaner’ in the sense that waste is sorted and recycling has become more common. For example, BICCIAB noted that some 80% of a commercial building that is demolished is now recycled. Much of the progress in this area has been driven by regulatory change, including the move toward six star rated houses. The Melbourne City Council is also encouraging the retro-fitting of some 1,200 buildings in Melbourne by linking building owners with finance.

In terms of skill implications, sustainability tends to involve changes in work practices rather than new technical skills (though there are some exceptions, such as the skills offered to the plumbing industry through organisations such as PICAC). To that end, the embedding of sustainability units within all qualifications is important, while short post-trade courses would assist existing workers, as would a focus on soft skills which could help to improve, for example, the communication of sustainable alternatives to customers.

On the supply side, change drivers for the industry in 2012 include recent amendments to fees and policies in the VET sector. BICCIAB reports some concern in industry regarding the decrease in TAFE funding per student (reducing the disparity between funding for TAFE and private providers). There is a view that this will put greater pressure on TAFEs in regional areas, potentially reducing the range of qualification options available to the public. Instead, providers may focus more heavily on relatively popular courses with a more sustainable enrolment base. It may also encourage some TAFEs to undertake more on-site assessments, potentially reducing the quality and rigour of the assessment process.

BICCIAB also advises of some ongoing consequences of the introduction of the VTG. For example, BICCIAB noted that the VTG requires mature age students (older than 20 years) to pay full fees in order to complete a pre-apprenticeship if they have already completed their Year 12 education, as both are considered Certificate II level qualifications.

An increase in fees for apprentices in 2012 will also have a significant impact as many apprentices struggle financially. BICCIAB has noted that some employers will cover the cost for their apprentices.

The changing workforce employment structure in the building and construction industry also has implications for skills. The hiring of migrants on short term contracts in the industry is becoming more common. However, in some instances, the hiring of migrant workers as sub-contractors rather than employees may be occurring in a deliberate attempt to circumvent employer responsibilities. This discourages the hiring and training of apprentices to the detriment of the domestic skills base. BICCIAB noted that one potential solution would be to promote group training of apprentices, allowing the costs of taking on an apprentice to be shared among employers.

Issues around the ongoing role of Competency Based Completion (CBC) in the industry were also raised by BICCIAB as a change driver for 2012.

CBC requires training providers to have contact with the apprentice’s employer four times per year. At these contact points the employer is required to confirm the individual’s competency (as determined by the TAFE). CBC creates an opportunity for an apprentice to be signed off prior to the usual three of four year training contract. This signals an early completion for an apprentice’s training, but does not necessarily correlate with their wage progression.

As such, BICCIAB advises that the monitoring of CBC assessment and the progression of apprentices could be improved to ensure the system operates effectively and with the confidence of employers and industry.

Finally, the need for small business skills and soft skills may help to reduce the number of small businesses failing in the industry. BICCIAB does not believe that small business skills should be taught as a unit within apprenticeships or other trade-specific qualification frameworks. However qualified workers in the industry should be encouraged to obtain these skills through post-qualification learning opportunities.

Industry outlook

The outlook for building and construction is solid, though there are a number of important challenges facing the industry at present.

Recent years have seen construction activity boosted by the Federal Government’s economic stimulus spending, primarily through non-residential building programmes such as Building the Education Revolution. Since 2010 however, as the effects of stimulus began to fade, construction activity has taken a hit. Between June 2010 and June 2011, completed building works fell by 15% Australia wide, and 7.5% in Victoria.

That overall relative outperformance in Victoria has been supported by residential construction in particular. Strong residential construction activity has been a theme of Victoria’s economy over a number of years. Indeed, while Victoria accounts for a quarter of the national population, and slightly less in terms of economic output, the State currently provides 40% of new housing starts in Australia.

However, there are a couple of important clouds on the horizon. Population growth has been a key driver of the relative strength of Victoria’s construction industry, particularly for residential construction, and growth is now slipping back. That is being driven by a number of factors, including the strength of the mining industry in States to the north and west (drawing workers away from Victoria), as well as the recent cuts to Australia’s skilled migration intake. The recent negative publicity surrounding the treatment of exchange students is also contributing to a considerable drop off in student numbers.

Some sectors of non-residential construction have also weakened. It is worth noting, for example, that approvals for office developments, traditionally one of the biggest contributors to overall non-residential construction, remain considerably weak compared to the peaks seen a few years ago.

This is contributing to a shortage of office space in the Melbourne CBD, with the Property Council of Australia predicting vacancies over the next couple years will remain low. Those low vacancies will contribute to higher rents and encourage further office development, but it may be some time before that recovery begins to take shape.

Despite these challenges, Victoria’s building and construction industry may continue to outperform growth in the rest of Australia, with residential activity remaining the key driver. The prospect of lower interest rates over the coming year may also help to support lending and provide a boost to construction over the next year.

: Employment outlook – Victorian building and construction industry


The chart below shows that skilled vacancies for tradespersons in the building and construction industry (as measured by DEEWR’s Skilled Vacancy Index) fell back slightly in 2011 in line with both the Victorian average and the historical trend over the past decade.

: Skilled Vacancy Index – Victorian building and construction industry

Source: Commonwealth Department of Education, Employment and Workplace Relations

Overall, and as the charts above show, Deloitte Access Economics expects relatively strong employment growth in Victoria’s building and construction industry over coming years, including growth of around 4% in 2012.

Occupations in demand and critical skill shortagesResponse to 2011 critical skill shortages

Responses to critical skill shortage occupations previously identified for 2011 have been implemented with varying degrees of success. Three occupations in the building and construction industry were listed as being in critical shortage in 2011: project managers and supervisors (commercial and domestic), gas appliance service technicians, and building inspectors.

A number of responses to the shortage of project managers and supervisors are being implemented. BICCIAB is actively participating in a newly established committee of industry and training provider representatives tasked with examining ways to improve the skills of project and site managers.

Industry also recognises the need to increase the supply of skilled project managers, and the civil construction industry is promoting the Certificate IV in Building and Construction (Site management). The occupation remains in shortage. BICCIAB advises that the workforce is ageing, with retirements anticipated to add to skill shortage pressures over coming years.

Since being raised as a critical skill shortage, an increase in the training of gas appliance service technicians has occurred through PICAC. BICCIAB has been liaising with PICAC and reports that a good number of enrolments exist. Although there are still episodes of high demand (for example at peak periods such as the beginning of winter and in some regional areas), the occupation is no longer in demand at present. It does, however, remain an ongoing concern for industry.

The shortage of building inspectors remains a key concern for the industry. BICCIAB notes that it has established the Building Surveying Training Working Group in conjunction with the Building Commission. The group – which includes members from the private and municipal building surveying industry, the Building Commission, training providers and BICCIAB – met monthly through the latter half of 2011 to gather industry intelligence and has submitted a training proposal to the Victorian Government for consideration.

Separately, the Australian Institute of Building Surveyors has been successful in regards to a proposal to the National Workforce Development Fund, while the Building Commission has been actively promoting a career as a building inspector or surveyor at secondary schools around the State and has established a career website.

Occupations in demand and critical skill shortages in 2012

The tables below summarise the occupations in demand and experiencing critical skill shortages in 2012. These occupation lists have been advised by BICCIAB and have been determined following formal engagement with industry.

Overall, there is an increase in the number of occupations listed as in demand compared to 2011, though a relatively small proportion are also listed as experiencing a critical skill shortage. A number of the occupations listed as in demand also appear on other lists of skill shortages in the Australian and Victorian economies, including the National Skill Needs List and the Victorian skill shortage list published by the Commonwealth Department of Education, Employment and Workplace Relations. The list of occupations also correlates with the advice of the relevant national Industry Skills Council (the Construction and Property Services Industry Skills Council), along with the Housing Industry Association and Master Builders Association.

Occupations in demand from 2011 that are no longer included on the list include draftspeople, which has been removed due to the downturn in commercial construction activity.

Occupations in demand and experiencing critical skill shortages

Occupations in demand

Industry title


Civil construction labourer

Builder’s labourer (821111)

Plant operator





Bricklayer

Bricklayer (331111)

Project manager


Estimator


Air-conditioning and mech. services plumber

Air-conditioning and mech. services plumber (334112)

Project administration

Program or project administrator (511112)



Bridge builder

Concreter (821211)

Pipe layer

Drainer (334113)

Sprinkler fitter and fire alarm / electronics specialist

Technicians and trades workers nec (399999)

Concreter

Concreter (821211)

Joiner (On-site installer)

Joiner (331213)

Fibrous plasterer (wall and ceiling lining)

Fibrous plasterer (333211)

Wall and floor tiler

Wall and floor tiler (333411)

Occupational health and safety advisor

Occupational health and safety adviser (251312)

Stonemason

Stonemason (331112)

Carpenter

Carpenter (331212)

Painter and decorator

Painting trades worker (332211)

Solid plasterer

Solid plasterer (333212)

Drainer

Drainer (334113)

Gasfitter

Gasfitter (334114)

Roof plumber

Roof plumber (334115)

Roof tiler

Roof tiler (333311)

Occupations experiencing a critical skills shortage

Industry title


Plant operator





Project manager




Estimator


The table below outlines qualifications which are required for occupations experiencing a critical skill shortage.

Qualifications required for occupations experiencing critical skill shortages

Occupation (Industry title)

Qualification

Plant operator

Certificate III in Civil Construction Plant Operations


Certificate III in Road Construction and Maintenance

Project manager

Certificate IV in Building and Construction (Building)

Certificate IV in Building and Construction (Site management)

Diploma of Building and Construction (Building)


Diploma of Building Surveying

Advanced Diploma of Building Surveying

Estimator

Certificate IV in Building and Construction (Estimating)

Business Services

Coverage: Accounting, Business Administration, Business Management, Cleaning and Waste Management, Finance, Human Resources, Insurance, Legal Administration, Marketing and Sales, Real Estate, Security, Shared – Business Services.

Specific industry and business cycle drivers: Credit growth, interest rates, corporate profits (this trio affects demand across the sector), housing and commercial construction cycles (which affects demand for real estate agents and architects).

Recent relative sectoral performance rating: Above average

Expected relative sectoral performance rating: Above average


A number of examples of training market success and failure were reported by Business Skills Victoria (BSV).

Examples of training market success include six Stimulating Training Demand Projects which were funded by the Higher Education and Skills Group (formerly Skills Victoria) through 2010 and 2011. The projects – which included a targeted focus on real estate, finance and facility management along with broader customer contract and green skills – were highly successful, resulting in the placement of around 500 people in training in targeted industries.

The results exceeded training market targets for all projects and the benefits of training promotion and skills deepening in these industries are expected to be ongoing. The projects provided training for both new entrants and existing workers.

Recent work by BSV and the Royal Melbourne Institute of TAFE (RMIT) to promote qualifications in the facility management industry represents a second example of training market success. As facility management is an emerging industry, the existence of relevant qualifications is not well understood by industry or the public.

BSV and RMIT conducted promotional activities to encourage take up of the Certificate IV in Property Services (Operations) and Diploma of Property Services (Asset and Facility Management). This work included targeting employers, networking through the Facility Management Association and undertaking marketing at workshops and meetings. The project was successful in raising awareness of training pathways in facility management.

A third example of success relates to the promotion of career pathways in t

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