Stephen Smith (Perth, Australian Labor Party, Shadow Minister for Education and Training) Share this | Link to this | Hansard source

The Social Security Amendment (Apprenticeship Wage Top-Up for Australian Apprentices) Bill 2007 legislates for additional financial support for first- and second-year apprentices to be exempt from assessment as income for tax and social security purposes. Such additional tax-free funding for apprentices is welcomed. Labor have long acknowledged the importance of encouraging more people into a traditional apprenticeship and has been calling for a trade completion bonus for apprentices since 2005. Labor are critical of the government’s delay in addressing ongoing skills shortages in the economy but we do welcome this measure, albeit belated. The bill exempts the value of the 2000 top-up payments for Australian apprentices who are under 30 and are undertaking an Australian apprenticeship in a trade occupation identified as experiencing national skills shortages from assessment as income.

After a decade of underinvestment in the vocational education and training sector leading to nationwide skills shortages, it is heartening to see Labor’s message about the need for greater investment in education at every level including vocational education and training is being heard by the government even if the government’s motivation for that is because there is an election just around the corner. The apprenticeship wage top-up payments will be made to apprentices who are under 30 years of age and who are undertaking Australian apprenticeships in areas of skills shortages as defined by the migration occupations in demand list. This additional financial support for apprentices acknowledges that the first and second years of an apprenticeship can be particularly difficult when wages are at their lowest. It also acknowledges how important these skills are to our continued economic competitiveness, performance and growth.

Under the apprenticeship wage top-up payment, apprentices under the age of 30 who are undertaking an Australian apprenticeship in a trade occupation listed on the migration occupations in demand list will be eligible to receive a $500 payment at the six-, 12-, 18- and 24-month points of their apprenticeship. Full-time apprentices will receive $1,000 a year, $2,000 in total, while part-time and Australian school-based apprentices will receive $500 annually over a longer time frame but nonetheless ultimately still a total of $2,000.

This measure is about keeping young people in apprenticeships and it comes two years after Labor began calling for additional payments to apprenticeships in the traditional trades in the form of a $2,000 trade completion bonus for apprentices. The latest annual figures show that, in 2005, nearly 130,000 apprentices and trainees cancelled or withdrew from their courses. That is a staggering 49 per cent of all those who commenced apprenticeships or traineeships that year. While the government often talks about the 400,000 apprentices in training, they fail to mention that only 140,000 of these apprentices are completing their training or the fact that less than a quarter of those in training are undertaking traditional trade apprenticeships.

Over its 11 long years in office, the average number of traditional trade apprenticeships under the government has been about 120,000 a year. The average achieved by the previous Labor government, the Hawke-Keating government, was 13 per cent higher, at 137,000. When you look at completion rates for these traditional trade apprenticeships, those areas where Australia faces the most dire shortages, the government’s record is even worse, with only 24,700 traditional apprentices completing their training in 2005. Over the term of the Howard government, completion rates for traditional trade apprenticeships fell from 64 per cent in 1998 to only 57 per cent in 2005. This is significantly less than the figure for Labor’s last year in office, when Australia had an apprenticeship completion rate of more than 70 per cent. The government’s constant claim that there are 400,000 apprentices in training is an attempt to disguise what is really happening. Less than 25,000 traditional trade apprentices are completing their training each year. Frankly, this comes as no surprise.

In 1997 the Howard government cut funding to TAFEs, reducing Commonwealth investment in vocational education by 13 per cent in the three years to the year 2000. Furthermore, Commonwealth investment only increased by one per cent between 2000 and 2004. According to data from the National Centre for Vocational Education Research, real expenditure per hour of TAFE curriculum has fallen by nearly 24 per cent since 1997. In this context, the expenditure on apprentices in the budget only begins to undo some of the damage done to vocational education and training by the government. As I said earlier, the bill is clearly welcomed but is also clearly belated.

In May 2005 Labor called for the budget to include a trade completion bonus for apprentices to address the skills crisis, and while it has taken the government two years to accept Labor’s positive policy proposal it is nonetheless better late than never. Labor’s plan involved two payments of $1,000 to be made to apprentices in traditional trades on the national skills shortage list. The payments were to be exempt from taxation or classification as income for social security purposes. While the government’s apprenticeship wage top-up is to be paid in the first and second years of an apprenticeship, Labor’s trade completion bonus would make one payment of $1,000 halfway through an apprentice’s training and a further $1,000 payment at the completion of their apprenticeship. The government has, disappointingly, not taken up this key element of Labor’s proposal or recognised the need to target this extra payment towards the completion of an apprenticeship rather than simply the first two years of training. Labor’s trade completion bonus was targeted to increase the rate of completions of traditional trade apprenticeships by providing payments to reward those who continued with their training beyond the first year and again to those who completed their apprenticeship.

The bill allows for the apprenticeship wage top-up payments to be tax-free and not count as income for determining eligibility for income support such as youth allowance or Austudy. Labor strongly supports this measure as it means not only that the apprentice will receive the full $2,000 but that the top-up will not prevent eligible apprentices from receiving additional ongoing income support or push them into a higher tax bracket. This tax-free element of the apprenticeship wage top-up is welcome; however, it draws attention to the government’s poor record in providing income support to Australian apprentices. Despite making income support through youth allowance and Austudy available to apprentices for 2005, the harsh participation requirements for these payments have meant that only a small number of apprentices are benefiting from this support. Of the 60,000 apprentices the Department of Education, Science and Training estimated would receive youth allowance in 2005-06, only one-quarter of this number—15,000 apprentices—actually received income support. The department’s explanation for the low take-up rate was that apprenticeship and parental incomes were higher than anticipated, yet the government acknowledges through this apprenticeship wage top-up measure that these wages need supplementing.

Along with the failure to provide adequate financial support for apprentices and to address the completion rates, particularly in traditional trades, the government has presided over 11 long years of neglect and underinvestment in the vocational education and training sector. Over the past decade the government has slashed investment in vocational education and training and as a nation we are now paying a high price in the form of acute skills shortages across the country. The government’s own estimates show Australia facing a shortage of more than 200,000 skilled workers over the next five years. The government’s cynical political response to this national skills crisis has been to spend nearly half a billion dollars on a stand-alone network of Australian technical colleges that will, at best, on the government’s own figures, produce 10,000 graduates by 2010.

While the government has been in power, the TAFE system has turned away over 325,000 and it is crying out for additional recurrent funding and much-needed investment in infrastructure. Instead, the government is establishing 30 duplicate Australian technical colleges across the country, generally scattered in marginal seats. Of the 20 colleges that are currently open, two-thirds are not registered training organisations and are being forced to use the facility of existing TAFEs due to delays and implementation problems. Three years after the colleges were announced, they are yet to produce a single graduate. On the government’s own figures, in the face of a skills shortage of anywhere between 200,000 and 240,000 over the next five years, the stand-alone ATC duplicates in marginal seats scattered around the countryside will produce 10,000 graduates. Such is the government’s neglect, incompetence and complacency when it comes to addressing a long-term skills crisis.

In order to seriously address the magnitude of the current skills crisis, Australia must focus on the areas of maximum impact, including TAFEs, which remain responsible for the substantial majority of postsecondary vocational education and training; vocational education and training in schools; and on-the-job trades training. That is why Labor has announced recently a $2.5 billion trades training centres plan aimed at the one million students in years 9, 10, 11 and 12 in all of Australia’s 2,650 secondary schools. The plan will provide secondary schools with between half a million dollars and $1.5 million to build or upgrade vocational education and training facilities in order to keep kids in schools, enhance the profile and quality of vocational education and training in schools and provide career paths to trades and apprenticeships for students.

As well as providing infrastructure to improve vocational education and trades training in secondary schools, last week the Leader of the Opposition, Mr Rudd, and I announced Labor’s plan to introduce a job ready certificate for vocational education and training in schools. This certificate will assess the job readiness of secondary school students engaged in trades and vocational education and training. Students will obtain the job ready certificate through the job training placements as part of Labor’s trades training centres in schools proposal. The job ready certificate will be a stand-alone statement of a student’s readiness for work and will be in addition to a year 12 certificate and any separate vocational education or trades training qualification. The certificate will provide students who complete secondary school with an increased focus and awareness of the skills necessary in the modern workplace. It will also provide employers with a tangible reference, including whether students are capable and ready to work. The job ready certificate will demonstrate that students possess basic workplace skills, including communication, initiative and enterprise, self-management, technology, teamwork, problem solving, and planning and organisation. At present, there is no requirement for education and training providers to formally issue a statement of these job ready or employability skills.

This has been an ongoing issue for industry, with repeated calls from the Business Council of Australia, BCA, the Australian Industry Group, AiG, and the Australian Chamber of Commerce and Industry, ACCI. As early as 2002, the Howard government, in response to these calls, had its Department of Education and Training develop an employability skills framework. Its implementation, however, since that time, has stalled. Labor is committed to making education and training more responsive to the needs of industry, which is one of the reasons why last week we announced the job ready certificate. It is interesting that on the day following Labor’s announcement of its job ready certificate, which the BCA, the AiG and the Australian Chamber of Commerce and Industry had been calling for since as early as 2002, a Commonwealth item which included further development of an employability skills framework was on the agenda of the meeting of Commonwealth and state vocational education and training ministers. The Commonwealth recommendation at the vocational education and training ministers’ meeting was to refer the matter to the education ministers. So, in 2002, the department developed an employability framework, a jobs ready framework, which was to the satisfaction of the major industry association and business association groups, but, five years down the track, was not able to implement it further. Labor will, as part of its trades training and skills policy ensure the adoption of the job ready certificate.

Australia’s ability to meet the growing need for skilled employees across the country is crucial to ensuring our future prosperity. The job ready certificate is a key part of Labor’s $2.5 billion trades training in schools plan, which includes $84 million to ensure students are involved in trades training and receive one-day-a-week, on-the-job training for 20 weeks a year. This will be implemented in consultation and cooperation with industry, states, territories and the states and independent school systems. That stands in stark contrast to the approach and attitude taken by the Howard government: refusal to work cooperatively with the states and the territories and refusal to acknowledge that, despite the government’s and the Liberal Party’s ideological hatred of the TAFE system, the TAFE system still trains, in Australia, 75 per cent of the students or 85 per cent of the hours. The government in the 2004 election, in a political device, established without consultation with or reference to the states stand-alone, so-called Australian technical colleges, which are effectively the Commonwealth seeking to operate and manage secondary schools without reference to the state system, without reference to any attempt to try to do it in a cooperative, sensible, collegiate way with the states and the territories. By making vocational education and training a viable option for all our secondary students, Labor’s plan will make a real and significant dent in the current skills shortage. The longer the government pretends a few technical colleges will make up for more than 11 years of complacency and neglect in vocational education and training, the more damage it will do to the prospects of our children and our economy.

Very many of these sentiments are contained in the second reading amendment, which I will formally move at the conclusion of my remarks. The second reading amendment captures those aspects and is in the following terms:

·              “whilst not declining to give the bill a second reading, the House welcomes additional financial support for first and second year apprentices but condemns the Government’s complacency and neglect of vocational education and training over the past 11 long years seen through:

These measures are welcome; they are belated. What a surprise that we see these measures only after 11 long years, that we only see these measures in the face of a skills crisis, that we only see these measures on the eve of an election. After 11 long years of neglect and complacency, with three, four, five months to an election, what do we see? We see the government move, not in an effort to save Australia from a skills crisis but in an effort to save itself. I formally move the second reading amendment circulated in my name and ask my colleague to second it:

·              That all words after “That” be omitted with a view to substituting the following words:

·              “whilst not declining to give the bill a second reading, the House welcomes additional financial support for first and second year apprentices but condemns the Government’s complacency and neglect of vocational education and training over the past 11 long years seen through:

David Hawker (Speaker) Share this | Link to this | Hansard source

Is the amendment seconded?

Chris Bowen (Prospect, Australian Labor Party, Shadow Assistant Treasurer) Share this | Link to this | Hansard source

I second the amendment and reserve my right to speak.