Ian Macfarlane (Groom, Liberal Party, Minister for Industry) Share this | Link to this | Hansard source

I move:

That this bill be now read a second time.

Australian apprenticeships are a critical component in ensuring the Australian economy has all the skills it requires for future competitiveness. I have to say, Madam Speaker, how important this is in improving the competitiveness of Australian industry right across the board. It is a great opportunity for companies to take advantage of apprenticeships and improve their productivity, but, of course, the goal is to ensure that apprentices are able to gain the skills that they will need for a long and successful career and profession of their choosing. For the individuals who undertake them, apprenticeships also provide a valuable pathway into long-term employment.

Some of us see a skill and a trade as equal and as important as a degree at university, and we as a government will do everything we can to ensure that those opportunities are made available.

We know around 20 per cent of trade apprentices drop out by the end of their first year and, in fact, 30 per cent by the end of the second year; and that is an opportunity lost. Apprenticeships provide an opportunity to secure a career and it does not mean they will be in that career all their lives, but they miss the opportunity of that first step towards employment and long-term ability to earn a wage. Despite promising employment prospects and earning potential, many young people find the first few years of an apprenticeship financially difficult.

The government is taking action to support Australian apprentices when they need it most—to help them complete their apprenticeship and deliver these valuable skills to the economy. The Trade Support Loans Bill 2014 introduces and underpins the Trade Support Loans to provide assistance to Australian apprentices from 1 July 2014.

Trade Support Loans are concessional, income contingent loans, which function in a similar manner to FEE-HELP loans received by university students, and provide for up to $20,000 over four years directly to apprentices undertaking an apprenticeship in a priority occupation or qualification.

Implementation of the bill is estimated to have an impact on fiscal balance of $439 million over the forward estimates.

To encourage apprentices to complete their training, the loan amount received by an apprentice will be reduced by 20 per cent when they successfully complete their training. This is an incredibly important part of this initiative. It says to apprentices: 'Complete what you are setting out to do and we will provide you with a 20 per cent discount on the debt you accumulate. That is to say that we place a great deal of importance on you finishing your trade. There is no point in getting halfway through something and giving up. We know it is difficult and we know you need support. We know that this support is what you require.'

The goal is as much to get the apprentice to finish their trade training as it is to support them during that training. By providing a 20 per cent discount, the government is basically offering them a $4000 gift—their debt is reduced by $4000.

Trade Support Loans will be available to apprentices in occupations and qualifications on the priority list that I will determine as the minister. The priority list will include traditional trades such as electricians, plumbers and carpenters whose highly skilled occupations significantly contribute to productivity and to the economy.

I had the opportunity to address the HIA conference a few weeks ago on the Gold Coast, and they were insistent that their apprentices be included in this scheme. I am pleased to say that in the case of electricians, plumbers and carpenters that they are, because that industry wants to have the young people of today turned into the tradespeople of the future. They want to stand behind them all the way. They want to see the government doing that. In particular, they want to incentivise those trade trainees to complete their trade so that they are there to provide the workforce.

The loans will be repayable at the same income thresholds as Higher Education Loans Programme loans for a university student, so apprentices do not have to repay any money until they are earning a sustainable income with repayments made through the Australian taxation system.

Apprentices will be required to opt in to the loans regularly. Unlike Tools for the Trade, where the money was basically thrown at apprentices and there was no ownership or feeling of responsibility related to those payments, apprentices will actually have to sign up to these loans every six months. This will make sure that they are fully aware of what they are taking on. By doing this, the intention is to give them the opportunity to reassess their personal circumstances and make an informed decision about continuing to receive loans. This will reduce the risk of apprentices unintentionally accumulating large debts.

To provide support where it is needed most the loans will be paid in monthly in arrears to a total of $8,000 in the first year, $6,000 in the second, $4,000 in the third and $2,000 in the fourth year of the apprenticeship. The loans are more heavily weighted to the first two years when support is needed most. We want to address these startling dropout rates for apprentices in their first and second years that I mentioned earlier.

Australia's future productivity and competiveness depends on a skilled and trained workforce. Learning a trade is invaluable to the individual, the community and the economy, but learning skills does not come cheaply. The measures in this bill will provide the regular financial support required for apprentices to complete their training and move into a paid job as quickly as possible. That is our goal: to get, particularly, young people, but all people who decide to take up a trade, through their training and into a job where they not only become a productive member of the economic community but they have the financial security that we want.

By implementing Trades Support Loans, this government is actively contributing to improve the apprenticeship completion rate, currently around 50 per cent. Really, that is something that we must address. We must get that completion rate up. When an apprentice does not complete their training, there is a substantial loss of time and financial commitment as a result. This translates directly into lost opportunities for the economy because fewer skilled workers are available and fewer productive gains can be achieved without them. Ongoing support such as that provided by the government's Trade Support Loans will help mitigate these losses to apprentices, employers and the national economy.

This bill will further the government's commitment to delivering highly-skilled individuals in priority trades where there are growing skills shortages, and will deliver the improved productivity and competitiveness that the Australian economy needs.

The best feature of these loans, of course, is that they are interest free. Interest free for the term of the loan, and we expect the term of the loan to be something like seven years, indexed each year by the rate of CPI. I know there are those who do not understand the difference between interest and CPI, but CPI is an adjustment for the cost of living. Interest is what you pay on money. So we are giving these loans out interest free, and the saving for an apprentice who, let us say, takes a couple of years to get to the earning threshold before they start repaying it over five years, as against a commercial loan—were they able to get an unsecured commercial loan—that they may have to take out to buy a motor car so they can get to work or pay for whatever they need to to sustain themselves during their traineeship, is at least $8½ thousand. In fact, if you were using real figures it is probably closer to $10,000. But let us take a conservative number: if you add the $8½ thousand to the $4,000, this is now worth to the apprentice in training some $12½ thousand, or more than double the tools for the trade. We are confident this initiative will not only help young people in particular get through the challenge of working in their apprenticeship and completing their training but also get them into productive work.

Debate adjourned.