Karen Andrews (McPherson, Liberal Party) Share this | Hansard source

I rise today to strongly support this legislation. It delivers on our election commitment to provide interest-free loans of up to $20,000 to young Australians completing apprenticeships. This is a common-sense measure that will help more young people complete their apprenticeships and, along with other measures our government is introducing, will begin to address Australia's skills shortage.

Vocational education and training is important to building Australia. The prosperity of this nation and our communities does not rest just in the hands of university graduates and office workers but also in the hands of the craftsmen, labourers, builders and artisans of our country. We want young people to have confidence so that when they start to learn the tools of trade they can see those skills put into use through a long career.

This is our ambition, yet we are up against worrying trends. About 20 per cent of apprentices drop out of their first year, with 30 per cent not making it to the end of their second year. Only about 50 per cent of apprentices make it to the end of their training. This is a lost opportunity for industry and a lost opportunity for individuals. The obvious solution, for stopping this trend and skills shortage, is to make it easier for Australian apprentices to train and get skilled up. This bill today provides that first step in creating a VET system that supports apprentices and trainees on the road to a great career.

The Trade Support Loans provide loans of up to $20,000 for apprentices to help them complete their training, which will be paid monthly in arrears and repaid by the apprentices in a similar fashion to HELP. With the passage of this legislation, apprentices will be able to opt into the loan from 1 July 2014, in line with the year of their apprenticeship. For instance, a second-year apprentice will be eligible for the second-, third- and fourth-year payments, if they wish to receive them. The value of the concessional no-interest nature of the loan is expected to be worth between $8½ thousand and $10,000 on average during the life of a loan, which is substantially more than apprentices received under the previous government's $5½ thousand Tools For Your Trade handout.

Others in this debate have spoken about the anecdotal evidence that the money from the previous Tools For Your Trade handout was spent on a variety of personal things rather than on equipment or costs associated with study. I have heard those opposite say that there is no evidence to support the misuse of Tools For Your Trade. That is not true. We in the government understand the VET sector, and we understand its current limitations. The minister has been very proactive and has actively sought the views of the sector on a wide range of issues.

I have been involved in several of the VET reform workshops held around this country and have had first-hand advice, from those in the sector, about the way Tools For Your Trade has been used. The common view is that the cash is not just used for tools but is used for other lifestyle type purchases, if I can call them that—such as surfboards, PlayStations and holidays. This anecdotal evidence also comes directly from the Apprenticeships Centres. So the misuse of the Tools For Your Trade handouts should be seen as a fault of the system. It is effectively a system that has been set up for use by apprentices to support whatever it is they want, without necessarily for use to support the tools they need for their trades. Many employers were having to buy tools for their apprentices to use, while the Tools For Your Trade handouts were being used on anything the apprentices wanted.

We see this as a fault of the system, and it is one we are fixing. While the new Trade Support Loans will not come with any provision on how the money is spent, the fact that it is repayable ought to ensure that young people who choose to take part in this scheme take the support more seriously than they were likely to when the money was just a cash bonus given to them.

Further, the apprentices must opt in to the loan every six months, so the debt does not just accrue without notice. Under this scheme, loan recipients are not just given a blank cheque with no accountability. They must take charge of this decision, and, hopefully, the added responsibility that comes with accepting this payment will give apprentices the incentive to place the funds towards costs associated with their training. This six month opt-in period means that, if their needs change, they can then opt out of their loan whenever they wish and will only have to pay back what they have borrowed—and only when their income reaches around $50,000. However, the loan will be reduced by 20 per cent—which is possibly up to $4,000—when the apprenticeship is completed, providing a massive incentive for apprentices to stick with their training.

The eligibility criteria to receive a Trade Support Loan will be the same as under the Tools For Your Trade loan scheme, meaning that any apprenticeship or traineeship for an occupation on the National Skills Needs List or in the agriculture and horticulture sectors will provide eligibility for the loan. This is a timely change, especially following the Fair Work Commission's decision to increase apprentice wages, with some employers providing tools for their apprentices and most awards including a tool allowance.

I am very pleased to support this legislation. As I conclude, I want to let the almost 2,500 apprentices currently training in my electorate know that this government is serious about fixing the skills shortage, reforming the VET sector and providing them the opportunity to get ahead in their career of choice. This bill is merely one step down the road and I look forward to great reforms still to come. I commend the bill to the House.

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