Bob Baldwin (Paterson, Liberal Party, Parliamentary Secretary to the Minister for Industry) Share this | Hansard source

I rise to sum up on the Trade Support Loans Bill 2014 and the Trade Support Loans (Consequential Amendments) Bill 2014. I start by addressing the second reading amendment moved by the member for Cunningham and advise that the government will not be supporting that amendment. What I will do now is address each of the points the member for Cunningham raised in the amendment. First, she stated that we needed advise apprentices that we:

… would be abolishing the Tools for Your Trade program, thus leaving the Trade Support Loans as the only form of assistance for the purchase of tools.

Following the Fair Work Commission's decision to increase apprentices wages, with some employers providing tools for their apprentices and most awards including a tool allowance, it was timely to review apprenticeship programs. Any scheduled Tools For Your Trade payments that fall due prior to 1 July 2014 will be paid, subject to the eligibility criteria being met.

On point (2) of the amendment—'adequately explain in clear language the interest rates and the full liability of these loans'—the trade support loan amounts will be indexed to the consumer price index, CPI, from 1 July, 2017. Debts that are to be repaid through the Australian taxation system will be indexed in line with the CPI each year from 1 June 2016 to maintain the real value of the debt. An apprentice may opt out at any time if they no longer wish to receive payments. Repayments commence when a person's income exceeds the minimum repayment income, which is more than $50,000 per annum, in line with the Higher Education Loan Program.

On point (3)—'offer adequate protection for school based apprentices aged under 18'—the Australian apprenticeship centres must take due care in ensuring apprentices are made aware of the obligations and implications of taking on an income contingent loan and the need to repay it. In particular, where the apprentice is under the age of 18, additional information and references to assist apprentices will be provided to assist them to make a decision about taking on such a loan. Supplementary information will also be available for parents and guardians to ensure that they are aware of the requirements and obligations their child may take on. The availability of trade support loans for under 18s is consistent with other educational loans such as the HELP scheme.

On point (4)—'offer fair and reasonable transition arrangements for current practitioners'—the Tools For Your Trade program was intended at inception to support apprentices with the purchase of relevant tools, particularly early in the apprenticeship. Over the years, the focus of the payment has changed from providing tools directly to apprentices early in their training to general support of Australian apprentices. Most of this payment occurs late in the apprenticeship when the need to provide a payment to apprentices is actually at its lowest. We know that apprentices were not always using tool payments for the intended purposes and as payments were untethered there were no controls on the grants program. We know that payments were not always used to pay for things that supported apprentices in their training or their work.

Financial support will be available to apprentices through the trade support loans, which will provide consistent and regular payments to support apprentices with the cost of living, with learning and completing an apprenticeship, and as the apprentice determines it is required. Under trade support loans, payments are targeted where apprentices need them most: early in their apprenticeship. We want to usher in a new age of responsibility, where apprentices carefully consider the need for government support and how it can be best used to help them complete their apprenticeship and contribute to Australia's productive capacity.

On point (5)—'put in place adequate privacy for the large volumes of information that will be acquired through the Trade Support Loans Program'—the Department of Industry and the Australian apprenticeship centres are required to comply with the Privacy Act 1988, which regulates the handling of personal information. The information commissioner has powers to investigate possible interferences with privacy and has a range of enforcement powers and other remedies available. In order to ensure we do not impose unnecessary legislative or other red-tape burdens on employers or apprentices, we have chosen not to replicate existing legislation and other privacy requirements in this bill.

On point (6)—'offer apprentices the option of lump sum payments in order to purchase expensive items'—the government's new trade support loans will provide apprentices with more financial support when they need it most, while using taxpayers' money in a responsible way. The trade support loans will provide substantial support to eligible apprentices to assist them with the cost of living and learning while undertaking an apprenticeship. Under our trade support loans, up to $8,000 is available in the first year, when the apprentice needs it most.

The loans are flexible, to meet the needs of each individual. For instance, an apprentice could opt in for six months only to buy their tools; they could save up the first year's payments to buy a second-hand vehicle, then opt out of further payments; or they could take the full loan to cover living expenses through the years of their training. The loans will go a long way to supporting the individual with the very real costs of undertaking an apprenticeship. For example, a first-your apprentice on the award wage who takes out a trade support loan could potentially benefit from a 40 per cent boost to their income. A monthly trade loan support payment in the first year will go some way to covering a year of registration for a vehicle to help apprentices get to and from their workplaces and training.

In summing up the bill, the Trade Support Loans Bill 2014 gives effect to the government's 2013 election commitment to better support Australian apprentices through the introduction of the Trade Support Loans program. The Trade Support Loans initiative is a major skills initiative from the government and it signals a targeted approach to investing in key trades where the skill shortages exist. We need to ensure we are achieving the best value for money in our skills expenditure. Trade support loans will provide a stronger incentive for young Australians to take up the opportunity that an Australian apprenticeship offers. The program targets high-priority trade occupations such as carpentry and electrical trades and will be available to Australian apprentices undertaking certificate III or IV level qualifications leading to these trades.

There are currently around 149,000 apprentices in training in high-priority qualifications and a further 70,000 commencing each year. While the number of new apprentices has steadily increased over the last decade, only about one-half complete their training. Let me repeat that: only about one-half complete their training. This puts at risk the supply of trade qualified workers to the Australian economy, leading to production restraints, skills shortages and increased wages pressures. The loans scheme will provide support for apprentices to complete their skills training through access to interest-free loans of up to $20,000 over four years, to help with everyday costs during apprenticeships. To encourage those who start an apprenticeship to actually finish it, the program offers a further incentive of a 20 per cent discount on the amount borrowed for apprentices who successfully complete their trade. So, for every $500 borrowed by an apprentice under the initiative, they will receive back $100 on successful completion of that apprenticeship.

Australia's future productivity and competitiveness will depend on a skilled workforce. This bill sets in place the first step of this government's agenda for increasing our skilled workforce. We will ensure Australia has a workforce that is highly skilled, highly trained and capable of fulfilling the changing needs of a modern Australian economy. I am particularly interested in securing the capacity of the vocational education and training system to deliver high-quality training outcomes, and this program represents a major foundation stone through supporting Australian apprenticeships.

Through this debate, there have been many statements made by members opposite and the time to rebut some of those has come. The member for Richmond said she was concerned about putting debt onto young apprentices. I say to her: it was her government that was happy to introduce the HELP debts and continue to support loading up young people going to university. Is she saying that apprentices are not capable of managing their income contingent loans like their university peers? Clearly, Labor does not trust our young apprentices or give them the credit or the smarts that they deserve. With regard to concerns about saddling kids with huge debt, it is their choice as to how much they actually borrow, and that amount could be less than a few thousand dollars. Many, many will choose to opt in to the loan once, bank their money and draw on it as they need. While apprentices can access up to $20,000, they are under no obligation to borrow any more than they actually need. This is not a one size fits all approach and, unlike Labor's cash splash, our trade loans will require accountability and responsibility from the individual apprentice.

The member for Blair himself said that an apprentice wrote to him saying he was expecting to use his tool money for bills. Last time I checked, bills actually were not a tool for the trade—they were not when I was an apprentice. I do not for a moment suggest that apprentices do not need assistance with living and learning expenses, but, due to the debt and deficit disaster, taxpayers can no longer afford to cover such costs. The loan they receive is a helping hand from the taxpayer, who is then repaid for their support once an apprentice earns a sustainable income in excess of $50,000 per annum.

Members opposite might also be interested to hear that we too have received emails from apprentices about their payments being removed. One in particular that comes to mind was from a young lady who was upset that she was no longer able to go on a holiday with her tool money. I would like to say that this was a one-off, but, unfortunately, this type of story is far too common from apprenticeship centres and employers.

Despite information online and through apprenticeship centres explaining the loans and the indexation annually, the members opposite are still confused about how much interest the loans will attract. I do not know how many times we need to say that these loans are indexed with CPI to maintain their real value but do not attract any commercial interest like a bank loan would. Let me restate that: they do not attract any commercial interest like a bank loan would. If they bothered to do a Google search or have a look at the Apprenticeships website, they would have found this information all too easily.

The member for Lalor wonders what happens if an apprentice drops out of their trade training and is left with a debt. It is money that they chose to spend and it will need to be repaid. This is the same as for a university student, who repays their HELP loan regardless of whether they graduate. The suggestion that debt collectors will be knocking on their doors is just more scaremongering from those opposite. No repayments are made until the person is earning a substantial income in excess of $50,000 per annum.

The member for Lalor also misled the House when she said that the government cut the Youth Connections program. I say this: if Labor had thought the program was so valuable, then they should have budgeted for the program into the future years rather than letting the program's funding lapse in June this year. Members have demanded evidence on tool money being misspent. I say: get out into your community and talk to the local employers, talk to the apprenticeship centres who are complaining about apprentices turning up to work without tools, or chat with the apprenticeship centre who fields the calls from apprentices chasing tool payments just ahead of Christmas and New Year holidays.

The member for Melbourne is still banging on about the 34 years for a carpenter to repay his loan. Again, it is more complete and utter rubbish. We have done the estimates based on the facts, not a Greens' made-up interest rate. The average full loan amount with the discount will be repaid within eight years of an apprentice graduating. This is, of course, assuming that they have taken the full loan amount. Again, I remind the House that apprentices will be encouraged to borrow the amount that they need, which in many cases will actually be less than the $20,000.

The member for Parramatta went to great lengths to talk about apprentices' needs for lump sum payments—or, to quote her accurately, 'lumpy' payments. Under the loan scheme, by the three-month mark an apprentice would have received two payments totalling more than $1,300 and, by the end of the first year, up to $8,000. This is $500 more than the first tool payment and $6,200 more after just one year—and that is a lot of knives. The member for Parramatta then went on to claim it is a big ask for young people to save monthly payments. I say to this: we have more faith in the apprentices. If they are responsible enough to juggle work and training, they are capable of saving for their loans.

In conclusion, I want to thank all government members for their contribution to what has been, no doubt, a superior scheme than Tools For Your Trade. It is designed to deliver outcomes in completions, and, as such, a skilled future for our nation. I commend the original bill to the House.

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