Steve Irons (Swan, Liberal Party) Share this | Link to this | Hansard source

I rise to speak on the Trade Support Loans Bill 2014. The Australian government is committed to building a high-quality and nationally consistent Australian apprenticeship system which supports apprentices and responds to the needs of employers and the economy. There may be some members in this place who have done an apprenticeship. I did one myself back in the seventies. After completing form 4 at Blackburn High School I decided I wanted to be an electrician. I entered an apprenticeship with a one-man business in Eltham and then moved to a company in Doncaster which was closer to home. Part of the reason for that was transport issues. I was too young to drive and on many occasions ended up hitchhiking from Eltham to Box Hill North, often after dark. In the seventies that is just the way it was. Today we would be horrified to know that 16-year-olds were hitchhiking home late at night from work.

This bill goes part way to addressing the financial and transport challenges that apprentices face in today's economy. Apprenticeships are declining in Australia, but I know there are many industries and people who want to see an increase in apprenticeships. There are a couple of people from the Air Conditioning and Mechanical Contractors' Association in the gallery today—David Eynon, who is the CEO, and Chris Smith, President of AMCA. Chris is from WA. It is great to see them in the chamber. I know they have a major interest in apprenticeships. There are major changes planned for the refrigeration mechanic apprenticeship courses. Energy Skills has initiated a project to dramatically alter the apprenticeship training program for refrigeration mechanics. The project is being guided by a steering committee which has representation from AMCA on it.

I see the member for Chifley leaving. He might be interested to hear that my first take-home pay as an apprentice back in 1974 was $39 for one week. Things have moved on since then. It was at a time when apprenticeships were still being focused on as a genuine vocation to aspire to and to achieve after people left school. People then were more focused on getting apprenticeships than they were going to university. Things have turned around since then. Part of this bill and part of the reason for the bill is that we want to make sure that being an apprentice is sustainable not only for the apprentices but also for the businesses who provide the opportunities for apprentices. That is what this bill leads to.

I know the member for Cunningham expressed some concerns over school aged apprentices accessing loans. I am pleased to inform her that trade support loans for those under 18 are consistent with other education loans that can be accessed by students under 18, such as HELP. Similar to HELP, information will be available to apprentices and parents to ensure they are aware of their responsibilities undertaken with the loan. It is also worth noting that apprentices must opt-in to the loan every six months, ensuring they remain aware of the accruing loan.

I know the member for Cunningham has moved a second reading amendment. The coalition will not be supporting that amendment. We will be supporting the bill in its original form. I know she has a deep interest in trade. She was a TAFE teacher and I have served on the education committee with her. But this is part of a total package of measures by the government to fix the debt and deficit problems left by the previous government. It is in this context that I do support the bill in its original form.

The bill's immediate purpose, as I said before, is to make available loans to apprentices to help their cost of living and learning during the course of their apprenticeships. Australia's needs a skilled workforce for its future competitiveness in industries like the air conditioning industry and particular those industries that feed into our massive mining industry. We are constantly told that there is an overall shortage of skilled tradespeople in the economy. In Perth we certainly need these skills more than ever on the major construction projects going on everywhere you look in the city and of course across the mining sector.

The latest official data from the Department of Employment on skills shortages in Western Australia lists state-wide shortages in trades such as solid plasterers, stonemasons, roof tilers, panel beaters, locksmiths and electrical line workers—all trades that are needed in a growing economy. My son is working as a bricklayer at the moment. He is hoping to gain an apprenticeship in the next short while and he is very keen to take advantage of the loan. It has been described as an offset as there is a loss of the Tools for Your Trade payment of $5,500. But if they complete the apprenticeship there will be a $4,000 rebate if they take up the full $20,000 and over that period of time the $1,500 and the HECS-style loan will be greatly assisting them in achieving an income that tradespeople can achieve under the current system. If you look at some of the trades that are working in the mining industry, I am sure we would be happy with the income they are receiving. They will be able to pay that back as a HECS-style loan.

I hear from constituents who try to find an apprenticeship place for their son or daughter but cannot as they are told there are now available places. Yet overall in Perth we are seeing a decline in the number of apprenticeships being started and completed. This bill hopes to encourage people wanting to be apprentices. The latest available statistics from the WA Department of Training and Workforce Development show a decline in apprenticeship commencements across all regions of WA of 10.1 per cent in the 12 months to the end of 2013. Apprentice commencements in electrical trades, for example, have fallen by about 17 per cent since 2011.

There is enormous interest in this bill, as we can see by the number of speakers. In the short time I have left I will wrap up by saying that what I am most proud about Swan is that there are currently 5,184 apprentices in the electorate of Swan, which is the fifth-highest electorate in Australia for number of apprentices. I guess that comes down to having a transport industry and over 20,000 businesses within the electorate of Swan. Of these 5,184, there are 2,103 undertaking an apprenticeship in a skill listed on the National Skills Needs List. They are supported by the Swan TAFE, which is in Carlisle in my electorate.

There are many members wishing to speak on this bill, and there is limited time remaining for the debate, given the need to get the support from those on the opposite side, have the legislation passed, and get it underway. We need to have this program ready to commence on 1 July 2014. The next speaker will give us passionate reasons why this should not go ahead and why we should support the amendment. The coalition will not support the amendment. I yield the call to the next member and conclude by commending the bill in its original form to the House.

Joel Fitzgibbon (Hunter, Australian Labor Party, Shadow Minister for Agriculture) Share this | Link to this | Hansard source

I rise to support the amendment put forward by the member for Cunningham. It is welcome that all sides of the House are focused on what is a very important issue—that is, maintaining an appropriate level of skills in this country and in this economy and, on that basis, keeping us internationally competitive.

I speak on this bill with possibly more authority than most, having been an apprentice myself. I am an auto-electrician by trade and proud of it. If your car is older than about 1985, I am sure that I could still fix it for you. If it is more modern than that, then I might struggle a little bit with the new technology. I left school at 16. I did not like school all that much, I must say. I only ever wanted to do two things: a trade and to play first grade football for my hometown. These were two aspirations I achieved, I am happy to say. I was apprenticed by a wonderful couple by the name of Eryl and Marcia Lightfoot. They ran a workshop in my hometown of Cessnock, and I enjoyed the experience very much and am thankful to them to this day for that opportunity. After that, I went into my own business, which I operated with a partner, Greg Stacey, for around 10 years before going on to a less honourable trade called politics.

Alannah Mactiernan (Perth, Australian Labor Party) Share this | Link to this | Hansard source

It would appear you have a private sector background, and your hands are dirty!

Joel Fitzgibbon (Hunter, Australian Labor Party, Shadow Minister for Agriculture) Share this | Link to this | Hansard source

I have had my hands dirty, yes. I thank the member for Perth. I have been to TAFE and I did block release in those days, because auto-electricians were far and few between, and obviously there was not a critical mass of apprentices to hold regular TAFE courses. So we would go off to Sydney for a week at a time—I suppose five or six weeks a year. Interestingly, in my earliest days, I stayed at the Villawood detention centre. If that does not highlight some of the struggles apprentices face, particularly earlier in their time as an apprentice, nothing would. I made a few mates there and we did not stay in the Villawood detention centre too many weeks. I think we found ourselves a caravan in Bass Hill. Support from the government to pay for the accommodation for the caravan would have been welcome at the time.

Apprenticeships are a complex area. I know those on the other side of the House like to say that they place as much value on apprenticeships as they do on a university degree. I place as much value on apprentices as I do on university graduates, but I do not know what the former statement means. I will keep trying to work that one out. But I know that it is a very popular statement, because members of the government know that people out of their own community like the idea of apprenticeships unfolding in the same way as they did historically, and they would like to see the government trying to rekindle that old environment.

Times change. In my day, apprentices finished apprenticeships. I do not understand for the life of me why 20 per cent do not get beyond the first year now and some 30 per cent, as I understand it, do not get beyond the second year. Years 1 and 2 are the worst paid of all as the employer gets virtually no return for your work effort, because you simply do not have the skills to be making a high-value contribution to the business or the workforce. But when years 3 and 4 come around, you are making a substantial and technical contribution and the employer is in a position to pay you more. If the government really placed the same level of value on apprenticeships as they do on university degrees, they would not spend so much of their time trying to drive down the wages of tradesmen. That is their mantra: 'We could be more internationally competitive if we could pay our workers less, including tradesmen.' There is a contradiction in that approach, and it is one worth highlighting for this chamber.

Having said that, we are talking about ensuring our international competitiveness by making sure that we have skilled people. We will not have skilled people if we do not indicate to them that after their apprenticeship there is a reasonable salary to be earned. That is what has to be kept in mind first and foremost. The member for Swan made the point that, too often, tradesmen, after completing their apprenticeships, are poached by other employers. In my own region, and in the mining regions generally, including in Western Australia, that is typical of the mining industry. I know it is a great source of frustration for those who secure and engage those apprentices. I would dip my hat to someone who came up with a solution for that economic dilemma, because I do not see one. We must continue to do all we can to bolster the supply of tradesmen through apprenticeships. This bill takes away one initiative the former Labor government had, to encourage people into apprenticeships and to complete their apprenticeships, and replaces it with another. I am not going to get into a debate today about which is the better system. I would like to think that most out there in the community do not care much, as long as we are working together to address what is a serious problem and a challenging issue.

I am happy to acknowledge that the government has factored into its scheme a 20 per cent discount in the final year of the loan payment as an additional incentive to complete the apprenticeship. There are some aspects of the loan scheme that concern me—like very young kids being capable of raising a loan and therefore putting themselves into substantial debt for someone of that age, potentially without the authority of their parents. I understand that hasn't been clarified, and we need to watch these things very closely.

I know that it is very difficult to administer a policy design which requires the apprentice to spend the money on certain goods or services only. I accept that but I think this is a program that will need to be watched very, very closely to ensure that the money is not misspent and that young people find themselves in debt without completing their apprenticeships—a debt which the minister describes as interest free. But it is also a debt that is indexed to the CPI and therefore grows over the term of the loan, which I think is worth pointing out.

Regions like my own are often described as insufficiently diverse. This is a topic of conversation at the moment because, as we all know in this place, the coal prices have collapsed in the case of coking coal from $320 a tonne only 18 months ago to something like $120 a tonne at the moment. When the coal price falls and mining turns downward, we feel it in the Hunter.

I remind people that we are a very diverse economy in the Hunter. In fact, mining only makes up about 10 per cent of the economy. Our biggest contributors are of course the services sector—health and education, in particular. We have very significant thoroughbred breeding, agriculture, viticulture and tourism industries. We have got new growth industries like the CSIRO Energy Centre promoting renewable energies in our region

We are struggling in manufacturing because we have difficulties with the dollar, and I congratulate HunterNet for recently organising a round table so that we could discuss how we might overcome those problems. Certainly for those employers, apprentices are an issue, apprenticeships are an issue, and we were told at that round table from a number of employers that they are employing nowhere near the number of apprentices they previously were. In their case, it is about the state of manufacturing sector but it is another reminder that we must constantly work on keeping up the supply of apprentices.

In the good old days, BHP steelworks trained thousands and thousands and thousands of apprentices—I forget the number; I know it was in the thousands every year. They not only trained apprentices for themselves but provided tradesmen t for the whole valley, including the mining industry, and they are no longer there. We need other broader policies to ensure that employers take on the responsibility of training apprentices. The coalmining industry does it to an extent, but I think they could do more.

The other point I would like to make is that we need training providers for these young people. In the Hunter Valley providers like Hunter Valley Training Company have popped up and is now very effectively and efficiently providing some of that training, but in all regional areas we need public institutions. We need a strong TAFE system that both employers and apprentices can rely on to secure the training they need to bring a young apprentice from day one on the broom through to a fully-fledged apprentice.

I do not oppose the loans scheme. I am concerned about the indebtedness for some kids. I am hopeful that the government will watch closely to ensure that it does not run out of control. I think government members have to acknowledge that you will not encourage apprentices into trades while you are telling people the best way to fix all the ills of the economy is to pay people less. More broadly, you need to have training institutions in place that kids in regional Australia can access. It is not like the capital cities where you can get a bus around the corner and find yourself a TAFE place or a place with a private training provider; sometimes the training facilities can be a long way away as was the case when I was a kid.

Governments need to focus on public institutions like TAFE, because the reality is that these will not always be viable concerns. If it is all right to subsidise loans to kids to encourage them into apprenticeships and to complete their apprenticeships, then it is all right to subsidise TAFE training courses that at the end of the day will form the basis of our skills model here in this country.

I think there is a very strong message for governments at both the state and federal level to recognise the importance of our TAFE system, the efficacy of putting public money into structures that provide outcomes like tradesmen and therefore the need to ensure that our TAFE system is adequately funded.

Again, in the second reading amendment I think the member for Cunningham made some very good points. The government made no mention of getting rid of Labor's program prior to the election so that makes this bill officially another broken promise on the part of those on the other side.

But they are in government. They say they want to bolster the supply and completion rates in apprenticeships. We certainly will not stand in their way. They believe a loans system is a better way to go. We thought that our Tools for Your Trade system, a cash payment to kids, for the same reason was adequately doing that job. I suppose the proof will be in the pudding. We will know in a few years time which scheme worked more effectively. We will not stand in the government's way of changing from one scheme to another and rebadging the scheme, so I suppose they can claim credit for it, if it goes well. We will be reminding them, if it goes badly. On that basis, we will not be opposing the bill in this case.

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

The aims of these bills, the Trade Support Loans Bill 2014 and Trade Support Loans (Consequential Amendments) Bill 2014, are to help address apprentice drop-out rates, to improve completion rates. We have a duty of responsibility as a government to get people job ready, job steady, to infuse them with the skills and, in particular, to encourage, support and develop young people in the completion of their apprenticeships.

The current scheme is clearly not working. The evidence shows that young people are not completing apprenticeships. In fact one out of two fails to complete an apprenticeship. The facts of the matter are: this government has decided to invest $1.9 billion in loans over the forward estimates at a cost of around $439 million over the forward estimates. The member for Hunter, the previous speaker, said that this was a broken promise because we had said nothing before the election. That is not true in any way, shape or form. This was one of our key priorities going into the election. It was a key priority. I remember the announcement well—the $20,000. So to say that—

Joel Fitzgibbon (Hunter, Australian Labor Party, Shadow Minister for Agriculture) Share this | Link to this | Hansard source

What? Abolishing Tools For Your Trade?

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

Member for Hunter, you are absolutely wrong on this one. You cannot cover it up. We made it very clear that we would be replacing the program.

Secondly, Ms Bird, the shadow minister, said in this debate that she did not understand how young people would be able to afford their uniforms and their tools. The reality is that this program delivers $8,000 to first year apprentices. The reality is that young people will actually be better off in their first year. It will be paid monthly in arrears and it is an opt-in process. If people do not want to engage in this loan system, they do not have to take it up and they can opt out at any six-month renewal.

We need to incentivise the completion of apprenticeships. We will achieve this by offering a 20 per cent discount to those apprentices who complete their apprenticeship. Over the full scheme that is the equivalent of a $4,000 rebate. NCVER did a survey in 2010 that found that 38.7 per cent of apprentices leaving trades did so because of the associated wages in the early years of an apprenticeship. I can reflect on that. I am a tradesman myself. I was an apprentice fitter/toolmaker. I can remember the princely sum I earned as an apprentice—admittedly this was more than one or two years ago—of $10 a week. That was pretty hard to get by on, but jobs were plentiful and opportunities were great.

Today cost-of-living pressures are a lot higher and it is arguable that wages paid to apprentices would not meet the true costs of living for those people but, as other speakers have said and many more will say—and from my experience as both an apprentice and a tradesman—most first year apprentices are a liability to the company. In the second year they are less of a liability but are still a liability because they are not generally producing a profit for the company. It is only when they get to their third and fourth years that they are assets in that they are bringing in a return to the company. Apprentices are a long-term investment by a company. We the government are prepared to co-invest in that. We will provide $20,000 through the trade support loans, with $8,000 being paid in the first year, $6,000 in the second year, $4,000 in the third year and $2,000 in the final year. This investment of taxpayers' money will deliver a real, measurable outcome.

We want to see an end to the dropout rates. I will give you some examples of the dropout rates that have been put to me. Let us look at the rates for automotive and engineering, which is ANZSCO grouping 32: in 2006, 51.5 per cent completed their apprenticeship; in 2007, 49.5 per cent; and in 2008, 50.1 per cent. For electrotechnology the completion rate was 57.6 per cent in 2006, 57.1 per cent in 2007 and 54.1 per cent in 2008. Let us look at hairdressing: the completion rate in 2006 was 37.7 per cent, in 2007 it was 38.9 per cent and in 2008 it was 37.8 per cent. That shows there is an inherent problem in the system.

Employers cannot afford to pay higher wages for first year apprentices. That is why the government needs to step in and provide support. Because it is a loan the money can be used at the discretion of the participants in this loan program. It can be used as a wage subsidy, to buy tools, to make an investment or to save up for a ute if they are a builder or the like. The reality is that we have to do something different because we have to deliver a real outcome, and that outcome will be measurable improvements in completion rates for all apprentices.

I will curtail my comments there because there are a lot of speakers. It is important that these bills go through so the program can commence on 1 July. I encourage members opposite to get behind this, to support it, particularly if they want to see completion rates in apprenticeships improved. I commend these bills to the House.

Justine Elliot (Richmond, Australian Labor Party) Share this | Link to this | Hansard source

I rise to speak on the Trade Support Loans Bill 2014 and the Trade Support Loans (Consequential Amendments) Bill 2014. As we have heard, these bills establish the Trade Support Loans Program for Australian apprentices. These loans will be concessional and income contingent with a lifetime limit of $20,000. The loans are repayable when the individual's income reaches the Higher Education Loan Program, HELP, repayment thresholds. The bills also provide for a 20 per cent discount to be applied to the loan incurred when the apprentice has successfully completed their apprenticeship.

I have a range of concerns about this government's approach generally to training and some of their cuts to education, particularly how they relate to many of the broken promises we have seen since the election. Prior to the 2013 election the Prime Minister announced the trade support loan, but he failed to tell apprentices and their families that he intended on scrapping Labor's $1 billion Tools For Your Trade program. He failed to tell those considering an apprenticeship that the $5,500 per apprentice under Labor's program would be axed. Our program was in recognition of the significant costs that apprentices often have for items such as uniforms, tools and the necessary safety equipment. They often have a whole range of significant costs.

We have seen this broken promise. We have seen a lot of broken promises throughout the budget and, in terms of what we had in place for apprentices, there certainly was another in this case. Before the election the Prime Minister had promised Australia's 400,000 apprentices more financial assistance to help them learn their trade and then find a really good job. But now, after the election, he is ripping away some of that support and breaking that promise in taking away the Tools For Your Trade program. What was equally disappointing was the industry minister's response to all of this—saying that it did not really matter because, under that other program, the apprentices were just spending their Tools For Your Trade money on tattoos and mag wheels. Quite frankly, this is very insulting; that is certainly what a lot of apprentices and their families have conveyed to me. It is incorrect and it shows how out of touch he and the government are when it comes to issues relating to training.

The fact is the government has replaced the payment we had in place with a debt. Apprentices cannot now buy their equipment without taking out a loan. They will have no choice but to sign up to the loan because the government has left no other financial support in place. As the shadow minister, the member for Cunningham, has said, Labor will not oppose the Trade Support Loans bill, but she did move an amendment. I understand that amendment includes a request that the House notes that the government has failed to: advise apprentices that they would be abolishing the Tools For Your Trade program, thus leaving Trade Support Loans as the only form of assistance for the purchase of tools;    adequately explain in clear language the interest rates and full liability of these loans; offer adequate protection for school based apprentices aged under 18; offer fair and reasonable transition arrangements for current apprentices; put in place adequate privacy protections for the large volumes of information that will be acquired through the Trade Support Loans Program; and offer apprentices the option of lump sum payments in order to purchase expensive items. These are all very good amendments in relation to this matter.

Youth unemployment is unacceptably high, particularly in regional communities like mine on the north coast of New South Wales. The Prime Minister has said that our young people must earn or learn, but he is taking away so many of the programs which actually support them to do so. These comments were echoed recently in The Australian when Tony Nicholson, the director of the Brotherhood of St Laurence, made the point that the earn or learn requirement demanded of young people requires the government to provide support and training programs to assist young people gain the skills they need in the workplace.

The fact is the Abbott government has taken the axe to support for so many training programs for apprentices. There is a whole range of programs. As well as axing the Tools For Your Trade program, they have axed the Australian Apprentices Access program, which assisted vulnerable job seekers who found it difficult to enter employment with nationally recognised prevocational training support and assistance. This program was delivered by local providers who worked with local employers to deliver training to meet industry needs. Participants received individualised, intensive job search assistance.

Also axed was the Australian Apprenticeships Mentoring program which targeted apprentices who may face barriers to participation. Mentoring programs usually focus on that first year of training when, as we know and have heard today, apprentices are often at the most risk of withdrawing from their apprenticeships. Also axed was the Apprentice to Business Owner program which helped tradespeople who had completed their trade training make informed decisions about whether or not to start a business. The program provided business management skills to ensure participants have sound financial business plans and meet the requirements associated with employing staff. There was a whole range of programs.

The Abbott government has demonstrated they really do not understand the need for these important training programs. What they have slashed is a billion dollars in investment in skills and training for our workforce. I will read through some of these, including some of the ones I mentioned before; it is quite a long list. There are programs like the National Workforce Development Fund; the Workplace English Language And Literacy program; the Australian Apprenticeships Access program; Accelerated Australian Apprenticeships program; Australian Apprenticeships Mentoring program; the National Partnership Agreement on Training Places for Single and Teenage Parents; the Alternative Pathways program; the Apprentice to Business Owner program; the Productive Ageing through Community Education program; and the Step into Skills program—a whole range of programs that focused on upskilling existing workers to meet the needs of the modern workplace.

What is also a concern with the introduction of this bill is it raises a whole series of questions in terms of what the impacts will be, particularly in rural and regional areas. Will horticultural and agricultural students, who have lost their Tools For Their Trade grants, be eligible for Trade Support Loans? Another important question is: will parents now be responsible for a 16-year-old school based apprentice's $20,000 Trade Support Loan? In Senate estimates, the government confirmed they are looking to outsource debt management for Trade Support Loans. Realistically, is the government happy to potentially saddle young apprentices with $20,000 debts and leave them in the hands of private debt collectors? This raises a whole host of concerns as well.

We know that many apprentices have huge start-up and continuing costs for necessary tools and equipment but now they will be left with the debt under the Abbott government's program, rather than being provided important funds to purchase tools and get going in their chosen trade.

By comparison with all this Labor, when in government, put in place real support to help young people—particularly those in regional and rural Australia—to get in and finish an apprenticeship and undergo training. What we are seeing is this government gradually ripping away a lot of that support. We are also seeing very harsh actions by state Liberal and National Party governments, who are making massive cuts right across education. They are very harsh cuts in terms of slashing resources and funding for TAFEs, which provide such a great training resource, particularly for younger people in regional areas. We have seen them cutting many courses. We have seen them closing campuses. We have seen some real concerns about fee increases. We have seen staff numbers cut. This could have a devastating impact. I know first hand what a great job TAFEs do in my area, the north coast of New South Wales. There is an outstanding network of TAFEs there that really provides fantastic training for our young people. All that is under threat from the actions we are seeing from both federal and state governments.

It was great to see last week the Leader of the Opposition in New South Wales, John Robertson, announce some Labor policies to protect TAFE. It was fantastic to see those initiatives. He said that, if elected in New South Wales, Labor will abolish the Baird government's massive fee hikes to TAFE courses. He went on to say:

Labor will always treat TAFE is a central part of our public education system … We will stop the mass sackings, cuts to courses and the massive fee increases to ensure we have a fair and affordable vocational education and training system in New South Wales.

I commend the Leader of the Opposition for his very strong action in terms of the initiatives that Labor would introduce if in government in New South Wales, because it has been devastating to see what these cuts have meant to students right across the state—particularly for those in regional areas like my own.

It is only Labor that has properly provided funding for education and training right across the board. From this government we tend to see ongoing cuts in the training and education sectors. We were devastated to see in the budget those broken promises—that $80 billion in combined cuts to hospitals and schools is a major amount; some of those cuts to education will be devastating for younger people. Also of major concern in terms of accessing education was the deregulation of university fees. This has had a major impact and many people have raised concerns about what that will mean for families—particularly, again, from regional areas. Before the election the Prime Minister and all his then shadow ministers were saying, 'We will ensure the continuation of the current arrangements of university funding.' That has been a broken promise because the budget cut $5 billion from university funding, resulting in forecasts for fee rises of 40 to 60 per cent just to recoup the shortfall. We have also seen the government impose an interest rate of up to six per cent on those debts and the deregulating of universities, which makes it absolutely inevitable that fees will rise. That is a concern that many people have approached me about, particularly families who are so worried about how their children will be able to access university, knowing that it will be out of their range. We have seen some forecasts of jumps in fees that are quite frightening. Of course, there are often so many associated costs for people from rural and regional areas to even access a university, so those increases will add to that. It is a really big concern, not just from the perspective of a broken promise but because it means people from regional areas are more disadvantaged in being able to access any educational opportunities.

What we have seen across the board is this government cutting so much funding for training and so much funding for education and higher education. It is disheartening and upsetting, firstly to see a broken promise and then to see how it impacts people, particularly younger people, who will not be able to access adequate training. I am particularly worried about how the trade support loans will saddle younger people with huge debts they will have to carry and that will have a huge impact on their lives. That is combined with some of the massive TAFE cuts that we are seeing right across the states. We are certainly seeing that in New South Wales, where it is a big concern. Overall, it shows that the government is out of touch in so many areas. We saw that throughout the budget, with the cuts to pensions and to health, but education has been one of the biggest areas of concern that shows how out of touch the government is about being able to providing for people, particularly younger people, right across the country.

Contrast all of that with what Labor did in government with our focus on education. I certainly saw that in my area, particularly through the Building the Education Revolution. More than $115 million was invested in 90 schools. We see every day what a positive benefit that has been to young people throughout the North Coast. In contrast, we are now seeing a government that is ripping away so much support for education and for funding.

Labor are supporting this bill, as I said. We have moved the second reading amendment which contains proposed changes that we think are particularly important, especially those that provide protection for school based apprentices. There is a growing interest in school based apprenticeships, which are being accessed by a lot of younger people and we want to make sure that protection is in place for them. That is why all of these proposals are very worthy ones. We have to have a fair and reasonable transition arrangement to make sure those apprentices are properly looked after. The adequate privacy provisions are also very important, given the large volumes of information. But what concerns us most is that the government are abolishing the Tools for Your Trade program. I think it was such a good program to have in place, so it is a real concern that that is happening. We will be supporting this bill, but these proposed changes are vitally important, particularly from the perspective of clear language relating to interest rates and the full liability for these loans. When it is much younger people who will be taking up these loans, it is very important that they are fully aware of the ramifications of what they are signing up for. That is why I am focusing on the importance of the proposed amendment to this bill.

Sharman Stone (Murray, Liberal Party) Share this | Link to this | Hansard source

I very strongly support this Trade Support Loans Bill 2014 and the Trade Support Loans (Consequential Amendments) Bill 2014. In fact, I think the Trade Support Loans scheme is one of the most things we introduced in the budget and I am so pleased that it is likely to commence, and at last give our trade trainees some semblance of a decent income, as early as July this year.

I am in awe of the previous speaker, the member for Richmond, whose main complaint was that we had done away with a lot of the old regime of trade training in Australia! Well, thank goodness we did, because we had the number of people turning to trades as a career in Australia on a steadily declining trajectory and less than half of our trainees in trades finishing their qualification. There was something seriously wrong. I think it began in Victoria in particular when a Labor state government decided that they would abolish the old technical secondary schools. The idea was that if you were in a tech school you must be an inferior student and you would surely therefore be better off, in terms of feeling good about yourself and learning a decent set of skills for a future career, if you went to what they then named a secondary college.

Tech schools were abolished and everyone was supposed to go along to these secondary colleges. Technical teachers right across the state lost their jobs. All the great old equipment that was used in automotive training, carpentry, plumbing and boiler making was lost to the system. Labor rejoiced because they had a one-stop shop for all students in secondary schooling in Victoria. That was the beginning of the rot—it set in from that point. Right now the coalition government are trying to reinstate technical training in schools with our trades training centres. I am very pleased to have a number of these being established in the electorate of Murray, but they have nothing like the comprehensiveness and very local access that we used to have with the old technical schools.

We know it is incredibly hard for a young or even a middle aged or mature aged trainee in a trade to survive on the current wages that are paid. What we are introducing that this bill is a fantastic opportunity to almost double—to increase by 40 per cent—the income of a trades apprentice so they can survive even if they do not have supportive parents or they are not living at home or they are mature aged with perhaps a partner and children. They will have up to $20,000 in, of course, a completely voluntary loan which will be indexed in line with the CPI. The apprentices will be paid amounts totalling $8,000 in the first year of their apprenticeship, $6,000 in the second year, $4,000 in the third year and $2,000 in the fourth year. These loans will be repayable under arrangements very similar to the Higher Education Loan Program, or HELP, debts—in other words, you do not start to pay until your income reaches a certain threshold.

This is about the coalition recognising that we should not have two standards when the country is considering the needs of our up-and-coming skilled people in the next generation. For a long time we said people getting university degrees were eligible for HECS loans

We said that university students could also have special loans available through the universities themselves. Now we say: so should trainees in trades. Of course they should. This is, I think, a great step. It should, for the sake of so many of our trade trainees, have happened a long time ago.

The previous speaker lamented the loss of the $4,000 tool-kit grant, which was Labor's best effort. Those tool-kit grants were able to be claimed early in the apprenticeship and there was no accountability—there was no requirement that a receipt be forwarded to anyone to show that the apprentice had actually bought tools with this grant. As I say, the vast majority of apprentices gave up on their apprenticeships very early in the piece, which was very disappointing. I suppose it was like the pink batts program, cash for clunkers and GroceryWatch: a good idea from someone all of a sudden, but, with the way Labor managed it, it did not give the individual any better way to live on their very low salaries. They, hopefully, got a box of tools, but it did not keep them in food and fuel for their vehicles.

This is an extraordinarily important bill. I am pleased to note that, in my electorate of Murray, there are 3,055 apprentices in training. I have to say that the majority of the apprenticeships being undertaken are not on the National Skills Needs List. I hope more of our young Australians become familiar with that list when getting career guidance. These $20,000 loans will be available in particular to those who are undertaking an apprenticeship that is on the priority occupation list—but, for the benefit of the previous speaker, who never does her homework, yes, they are also available to agricultural and horticultural apprentices. Yes, they are. It would not have taken much to look that up.

I strongly support this bill. It is going to make a huge difference to the numbers of people who will then be able to support themselves—in fact, live—on the very low apprenticeship wages. I hope it will give them better direction as to which trades are most in need in Australia. I hope more women can take up apprenticeships in what have traditionally been male gender dominated areas like construction and automotive. I certainly am most concerned that, as we saw with the previous speaker, the member for Richmond, we still have this denigration of trade training in Australia where we say it is second rate—'It's not as good as university education, so, no, you shouldn't have the support from the public purse that we have been offering university students for a very long time.' I commend this bill to the House and very much look forward to the program commencing in July.

Shayne Neumann (Blair, Australian Labor Party, Shadow Minister for Indigenous Affairs) Share this | Link to this | Hansard source

I am pleased to support the Trade Support Loans Bill 2014. The budget coincides with the country shows that I do every year in my electorate. I have been to Kilcoy, Marburg, Toogoolawah, Esk, Lowood, Ipswich and, last week, Rosewood, and I can say that people are very anxious about the budget. They are very anxious about the changes that this government intends to make. They feel deceived by this government. I have spoken to pensioners, self-funded retirees, young mums, students as well as businesspeople who feel very much aggrieved at what they are experiencing. Last weekend, at the Rosewood Show, I spoke to people furious about the $7 GP tax.

Tony Smith (Casey, Liberal Party) Share this | Link to this | Hansard source

Mr Deputy Speaker, I rise on a point of order. The member does need to at least address the substance of the bill before the House. I thought he was beginning a preamble; it is turning into a treatise. There are many opportunities in the House for him to give his opinion and his experiences at all of his country shows—and we all in outer metropolitan and rural electorates go to those—but this is about the Trade Support Loans Bill and he has to at least make reference to it.

Russell Broadbent (McMillan, Liberal Party) Share this | Link to this | Hansard source

I thank the member for Casey and I remind the member for Blair to confine his remarks to the bill before the chamber.

Shayne Neumann (Blair, Australian Labor Party, Shadow Minister for Indigenous Affairs) Share this | Link to this | Hansard source

If the member for Casey had seen my notes, the next sentence says that I had spoken with young people about their apprenticeships. So he got in a moment before I was about to turn to the substance of the bill, but I thank him for talking about my preamble and reminding my constituents of the many mobile offices I conducted in the last month or so.

These apprentices who have spoken to me are very concerned over what they are experiencing, but I also have spoken to many mums who have discovered that the Tools for Your Trade program has been cut, leaving their sons and daughters stranded in their apprenticeships. I received an email from an apprentice baker in my electorate and it is pretty typical of what my office have received and the feedback we have got in relation to the budget measures that are before the chamber today. It is an email from a guy called Adrian Lowe. This is what he writes in his email:

My name is Adrian Lowe. I'm 28 and an apprentice baker,

I have 3 children and a stay at home wife due to our youngest is a new born

My apprenticeship is up at the start of November which means I will not be getting any of the money promised to me for completion of the apprenticeship.

I am out of pocket almost $2800 which would have helped if I cannot secure a new contract as a baker at my place of work

The money would have help pay bills in between jobs.

Not to mention I signed a contract with the government to complete my apprenticeship and they will help me to do so financially.

That is pretty typical of the response that I have received at the many mobile offices I referred to and that my office has received as well. We have been contacted by registered training organisations concerned about the impact the axing of the Tools for Your Trade program will have on their apprentices and also about the substance of the bill before the chamber.

The government proposes to provide trade support loans for Australian apprentices. These loans will be concessional and income contingent, with a lifetime limit of $20,000, indexed from 2017. They are repayable when the individual's income reaches a certain level, equivalent to the higher education loan repayment threshold. It is available to young apprentices aged 16 to 18 years. There is a discount to be applied to the loan upon the Australian apprentice successfully completing the apprenticeship. In my office, as I said at the beginning of my speech, we have seen anxiety as a result of the changes this government is bringing in. Apprentices in their second, third or fourth years of their apprenticeships had budgeted for their Tools For Your Trade payments that are not going to be paid. These apprentices often had instalment payments on a car or other types of commitments that they had made. They were struggling on low wages and were trying to educate themselves and get the kind of training and education they needed to enhance their skills, talents and abilities to get the job they wanted in the future—as a carpenter, an electrician, a plumber, et cetera.

There is concern and confusion from these apprentices, their families and the training organisations about Trade Support Loans. And I have spoken to people like Anita Dwyer, from Apprenticeships Queensland in my electorate. I spoke to her recently one Saturday—at the Ipswich Cup, to be honest with you—about the impact on her organisation and, particularly, on those apprentices that she deals with each and every day. Anita is currently the President of the Ipswich Chamber of Commerce as well, so she is well qualified to talk about the impact on apprentices of these budgeted changes.

Australian apprentices had no idea that the now Prime Minister intended to scrap the Tools For Your Trade program prior to the 2013 election. They might have heard a bit about his Trade Support Loans—a loan, a debt. And they might have seen him spruiking on the TV in his hardhat, his safety vest—the high-vis orange vest—about the loans, surrounded by apprentices. Oddly enough, he failed to mention these intended loans were to be the only income support that his government would offer apprentices.

On 26 August 2013 in the Sydney Morning Herald it was reported that the now Prime Minister visited a mechanical manufacturing firm in North Brisbane. And he was talking up his loan scheme. The Tools For Your Trade was not mentioned until the final link of the Sydney Morning Herald story, which says:

The coalition loans will be made available in addition to the commonwealth Tools For Your Trade incentive scheme, a spokesman for Mr Abbott later confirmed.

They were an optional extra. But now they are a substitute. So which was it? Before the election they said one thing; after the election they said another. That is pretty typical of this government—'no changes to pension', 'no cuts to education', 'no cuts to health'. It is typical of this government to say one thing before an election and do another thing afterwards. Either way, they believed they had a choice in relation to Trade Support Loans or, indeed, Tools For Your Trade.

Apprentices, like so many others, have been hit by this government's budget. They learnt the truth on budget night. And it would have come as a real shock to a lot of people, as it did in my electorate of Blair. The Prime Minister cut $2 billion from apprenticeship support payments and investments in skills training targeted at apprentices. The Tools For Your Trade program was cut. We have seen $1 billion taken out. On top of that—as I mentioned earlier today in a 90-second speech—we saw $950 million stripped away for trade training centres. I have about four in my electorate and they are terrific with the work that they do. They get young people prepared for apprenticeships and prepared for the workforce—real-life experience, partnering with industry and with organisations like Apprenticeships Queensland. And earlier today I mentioned we had the Ipswich Region Trade Training Centre, and that Apprenticeships Queensland is partnering with Ipswich State High, Bundamba State Secondary College, Lowood State High, Bremer State High and Rosewood State High. That is the kind of thing that makes a difference—genuine partnership with schools, with providers, with apprentices.

What this government has done is actually to trash its credibility across this space. Apprentices in later years of their apprenticeships, or those about to complete, will now miss out on these expected payments. They had thought they were going to get them. The comprehensive range of targeted vocational programs for assisting apprentices to find, keep and thrive in their apprenticeships will be cut. Those opposite did not have the fortitude and integrity to actually tell apprentices before the election what was going to happen. So, many of them would have voted thinking that they had options, and they did not. That is the reality.

We have seen, of course, the minister make some interesting comments about apprentices wasting their money. In fact, the Minister for Industry, Mr Macfarlane, actually gave short shrift to any complaints in relation to this. And he said in Fairfax Media on 17 May this year:

We’ve got evidence that they—

referring to apprentices—

were spending the money on tattoos and mag wheels for their cars, and birthday parties.

It is not often a minister feels he can so arrogantly denigrate those whom his legislation will now adversely affect. It is extraordinary that that is the case.

In contrast, by the way, was the minister's statement in the second reading speech:

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.

Is the minister suggesting that all apprentices were wasting their Tools For Your Trade support payments? Does he really think that the Tools For Your Trade was propping up the tattoo industry? Is that his real perspective? He may have a different opinion if he spoke to the apprentices in my electorate in South-East Queensland who contacted me. He should not insult young people in this way.

One of the justifications for this government scrapping the Tools For Your Trade is its belief that apprentices were wasting their payments perhaps on tattoos, mag wheels, parties or something else. We designed the Tools For Your Trade program when we were in government to provide initial payments to assist apprentices with significant costs—tools, uniforms and vehicles—at the start of an apprenticeship which might present a deterrence to them commencing. The minister complained on 17 May 2014 that they certainly did not have receipts for their tools. Perhaps the minister can direct us to the section in the Trade Support Loans Bill which requires a receipt for the purchase of apprenticeship-related items in exchange for a Trade Support Loan payment. I bet he cannot. Surely the minister has prohibited tattoos, mag wheels and party products in the legislation. He has not. He cannot because there is no such restrictions or requirements in relation to the bill.

The government's main argument for the introduction is this will improve completion rates of apprenticeships. But, in fact, that is not the case. We all agree that apprenticeship completion rates are too low. But they do not understand that the 2010 Apprenticeships for the 21st Century Expert Panel provided a detailed report in relation to this issue, and talked about the challenges and the complexities in relation to it.

The expert panel reported considerable qualitative research that identified four recurrent issues contributing to non-completion: workplace or employer issues, lack of support, low wages and not liking the work. The panel identified problems with the workplace or employer as a cause of 'a significant proportion of attrition in apprenticeships and traineeships'.

Mr Baldwin interjecting—

That is what the expert panel said. On page 24, if the interjector wants to read it, it says that workplace and employer issues were wide-ranging including 'excessive unpaid overtime, too few hours, not being allowed to take breaks, or not being paid correctly are common concerns'. It went on:

Personal safety concerns through both workplace bullying and unsafe work practices are also relatively common.

The panel reported, on page 35, research suggesting that workplace or employer issues are 'of critical importance in the early stages of an apprenticeship or traineeship as they often have an immediate effect'. This lack of support inside and outside the workplace is consistent with the non-completion rate research. Although wages were another factor that the expert financial panel identified, even after the 2013 Fair Work Commission decision that dramatically raised apprenticeship wages—those opposite did not like it at all—apprentices remained fairly relatively low-paid workers.

The expert panel identified considerable debate about the extent of their impact. While low wages play some role in the decision not to complete, it is rarely the prime reason. Where wages were a reason for non-completion it was often due to a concern about wages anticipated when the apprenticeship was completed rather than the wages during the apprenticeship itself.

Finally, not liking the work was another reason for non-completion. The expert panel reported that many of these issues involved a lack of understanding by the apprentice as to what their apprenticeship entailed and the expectation of the employer.

The expert panel identified many issues, but those opposite ignored the advice. They do not like experts, whether they are scientists or climate scientists—or anything to do with innovation and research. They do not like experts and they ignored the expert panel in relation to this. There is no evidence at all that the half billion dollars that they are spending across this area will make a difference.

We targeted programs in the Australian Apprenticeship Mentoring Program and the Australian Apprenticeships Access Program. Those on the other side of the chamber have cut funding. There is a whole range of funding that they cut, including $2 billion in the skills program, over $1 billion directly supporting apprentices and a whole plethora of organisations. Those on the other side of the chamber should hang their heads in shame in relation to these matters.

Karen McNamara (Dobell, Liberal Party) Share this | Link to this | Hansard source

I rise to support the Trade Support Loans Bill 2014 and cognate bill. As the member for Dobell, I am committed to increasing local employment opportunities for our school leavers and job seekers, and to providing real support for apprentices on the Central Coast. Increasing the support offered to apprentices is crucial if we are to encourage more job seekers to take up, and, importantly, complete apprenticeships.

This government is committed to building a high-quality and nationally-consistent Australian apprenticeship system which responds to the needs of employers and the economy and which supports apprentices. Trade Support Loans have been developed to specifically address the needs of young job seekers wanting to undertake apprenticeships, and to reverse the trend of falling apprenticeship completion rates.

Unfortunately, apprentices have been let down by the former, Labor government, who failed to provide them with the necessary support to complete their apprenticeships. Over the past decade, only half of those who commenced an apprenticeship, attained their qualification. Measures introduced by the former, Labor government failed to address this damning statistic. This just is not good enough. Trade Support Loans provide real support for apprentices to complete their skills training and provide stronger incentives for young Australians to become apprentices.

The introduction of Trade Support Loans will see more apprentices in the Australian workforce, meaning there will be a greater capacity to fill the diverse and changing needs of our modern Australian economy. Specifically, Trade Support Loans are designed to assist apprentices with the costs of living and learning during their apprenticeships. For an individual, failing to complete an apprenticeship can be damaging to their self-esteem and often carries a financial burden. For businesses, a non-completion represents an unfulfilled investment, which, in trying economic times, can be a disincentive to providing opportunities to young people.

These factors shape our commitment to building a high-quality Australian apprenticeship system which supports apprentices and responds to the needs of employers and the economy. As a government, we acknowledge the need to support young job seekers commencing apprenticeships. Trade Support Loans will encourage a greater take up of apprenticeships and will provide ongoing support to apprentices. Analysis undertaken by the National Centre for Vocational Education Research indicates that the main cause of non-completion is low wages. This is particularly true in the early years of an apprenticeship, accounting for one quarter of all non-completions.

This government's Trade Support Loans specifically target the cause for low completion rates. Significantly, our Trade Support Loans are a hand up, not a handout. Trade Support Loans replace the former Labor government's unsustainable Tools For Your Trade, which failed to provide adequate support to apprentices. Trade Support Loans provide apprentices with the flexibility required to support their training and studies. Apprentices will have the discretion to use their trade support loans as an income supplement to purchase equipment and tools, to support their studies and to cover external course fees. An apprentice can also elect to use their Trade Support Loan to start up their own business at the completion of their apprenticeship.

In my maiden speech, I spoke of our duty and obligation to the young people of Dobell to plan for their future skills and employment. In Dobell, one in two students obtain Year 12 qualifications and only 14 per cent of people aged 17 to 22 years are engaged in tertiary education. As of April 2014, there were 8,534 people undertaking apprenticeships across the Central Coast and Hunter region. This figure represents approximately 16 per cent of all people undertaking apprenticeships in New South Wales. It is estimated that there are currently over 4,000 people seeking an apprenticeship or training on the Central Coast.

The former Labor government's economic mismanagement has resulted in a distinct lack of opportunity for apprentices on the Central Coast. Working with local businesses, we must actively encourage the employment of apprentices and support employers who provide such opportunities.

Karen Drinan, a small-business owner, believes Trade Support Loans would be beneficial to an apprenticeship as they would assist with the costs associated in completing an apprenticeship. Karen stated:

Unfortunately for many apprentices, wages are low until their third or fourth year. These Loans will assist apprentices with costs such as tools, TAFE fees, transport and everyday expenses—which will increase their ability to stay in an apprenticeship.

One of Karen Drinan's current apprentices, Mark Dumpleton, is due to complete his apprenticeship in October. Mark has welcomed Trade Support Loans, saying that if he had had access to the Loans at the commencement of his apprenticeship he would have used the Trade Support Loan to supplement his wages and living expenses, such as his car registration.

Trade Support Loans have also won support from group training organisations who specialise in matching young people with apprenticeship opportunities. Michael Bennett, Chief Executive Officer of HTN, a leading group training organisation in the hospitality industry, has welcomed the announcement of Trade Support Loans, saying: 'The Trade Support Loans will provide much needed support to young people completing an apprenticeship.' Greg Best, General Manager of Central Coast Group Training, has called Trade Support Loans 'one of the most significant and progressive policy initiatives in the past decade'.

The introduction of Trade Support Loans will offer the required level of assistance to apprentices and help reverse the trend of increasing non-completion rates. This is central to our commitment to build a high-quality Australian apprenticeship system that supports apprentices and responds to the needs of employers and the economy. Locally, our future productivity and competitiveness depend on a highly skilled and trained workforce.

I am personally committed to supporting our young job seekers as they undertake apprenticeships. I commend this legislation to the House.

Joanne Ryan (Lalor, Australian Labor Party) Share this | Link to this | Hansard source

As many in the House know, before I joined this place I was a school principal. I am also the mother of three sons, two of whom have been apprentices. As a teacher and principal, I worked with students and my own children to plan and secure work placements that would build their skills and give them the best chance at securing a trial for an apprenticeship.

This meant writing to or ringing local tradespeople, sometimes up to 40 plumbing companies. I worked to enrol students in VET and TAFE courses to pursue training, work placements and certification to boost their chances of securing an apprenticeship. As a year-level and senior-years co-ordinator, I was responsible for cohorts of students' pathways and work-experience engagements, trade tasters and work-ready programs. I saw the pride in the young students I taught when they secured an apprenticeship. As a mother I shared, in a much more personal way, the excitement and promise an apprenticeship creates. An apprenticeship was their pathway to the future, a secure qualification that set them up.

I know too, first-hand, that being an apprentice is hard. The minimal trainee wage is hard to live on. Most continue to be supported by their families whilst an apprentice. The families in Lalor work hard, often for a modest wage, but they are mostly happy to support their children in this way, where they can. In addition to receiving a training wage, apprentices often have other financial pressures placed upon them. They made need to contribute to the cost of their TAFE courses, incur travel costs and purchase tools.

The Tools For Your Trade program went some way to addressing the monetary pressures faced by apprentices. No-one really likes lending their tools! Small businesses found it difficult to ensure the apprentices had the right tools to make a useful contribution. Tools that are for general use are often not cared for like tools you may own yourself. That is why this program was so valuable. I know from my own home the excitement this program created—the message it sent to young people that their work, their commitment to their trade, was valued by the community, that the community had a vested interest in their success and completion.

A young carpenter, mechanic, landscaper, electrician and pastry cook, to name a few, all rely on specialist tools to do their work. The Tools For Your Trade program meant that apprentices could purchase tools whilst training. These tools enabled them to become more productive employees and also to value and care for their tools. We know there is a skills shortage in Australia and that is why we must ensure a vibrant and active apprenticeship system is in place.

It is not easy to take on a young trainee in a small business. It places an administrative responsibility on the business, and not every apprentice ends up being a good fit for an employer. Over the years there have been lots of programs to support businesses and apprentices to make the skilling pathway easier. We have seen, in recent years, an over-reliance on the 457 visa to fill skill shortages. Surely this reliance could be reduced if we ensured our young people were skilled in the employment areas we need. Programs like Tools For Your Trade went some way to assist.

While there is some merit in having the training costs picked up through a HECS style loan, why does this have to come at the cost of the Tools For Your Trade program? As a school principal and mother, I saw the pride in securing an apprenticeship. I also saw students return to school after six or so months when apprenticeships did not work out. I remember one young student who suffered terrible bullying in the workplace. This all came to a head after he was shot in the shoulder with a nail gun. A terrible situation, you will agree.

Sometimes these young apprentices need support. The Australian Apprenticeships Mentoring Program was one such support program. It largely focused on the first year of an apprenticeship, the time when most dropouts occur. The Australian Apprenticeships website proudly lists the benefits of this program and provides a list of successful case studies, showing how a mentor program assists the business and apprentice to work through issues. There is, however, one very sad line on the program website. In a section titled, 'Who can apply for funding?', it states:

The Australian Apprenticeships Mentoring Program is now closed to new applications. No further projects will be funded under this Program.

It is a similar scenario with the Australian Apprenticeships Access Program and the Apprentice to Business Owner program, also now scrapped. These are further examples of this government's lack of real support for training. You can make noises about the young needing to learn or earn, but if there are no jobs and no training support, I am not sure how this can happen.

Those opposite cite low wages as the main reason for non-completion and, in its place, want to put debt. I am not sure this will convince apprentices that they are earning more. And how will that debt be recouped? What will happen if an apprentice fails to complete their traineeship? Hopefully, from my experience, they will return to school. The trade support program means many will have accumulated a debt for a part-skill they are unlikely to use. They will end up leaving school with a debt already hanging over their heads.

There is another group that has the potential to leave school with a debt. Some young Australians are actually lucky enough to commence their pathway to work through a school based apprenticeship. The trade support loans mean that someone as young as 16 may get saddled with a loan before they have even left the school gate. Why am I concerned with the young acquiring these debts? There is no provision in the legislation for them to have a parent or an adult with them when they sign up for the debt. This cannot happen at a bank or credit union, so why should these young people be put at risk without some form of protection? And with the government considering outsourcing the debt management to private providers, who knows how many may get caught up with a $20,000 loan and be left in the hands of private debt collectors, not all of whom are known to have compassion as part of their remit.

There is also confusion within the government about the loan scheme, with government ministers showing confusion recently about the implementation. When asked about the scheme in question time on 2 June 2014, Minister Macfarlane said:

There is no doubt that the loans are interest free. It gives me an opportunity to highlight the great regard and delight from industry in relation to the trade support loans. The loans, as the shadow minister knows, are indexed annually with CPI.

He mentioned two loan interest measures in the same sentence. The department's website and the budget papers make it clear that loans will be indexed. I quote from Budget Paper No.2:

Trade Support Loans will be provided at concessional interest rates and capped at $8,000 in the first year of the apprenticeship, $6,000 in the second, $4,000 in the third and $2,000 in the fourth.

Loans will be indexed by the Consumer Price Index and repaid on an income-contingent basis through the taxation system, similar to the way HELP loans are repaid.

This is not the only example of the government not being across the detail of budget initiatives. If they are not across the detail, how can we have faith in their ability to deliver the program? Some apprentices who drop out may never return to training and study, leaving them to a working life, most probably on a low income, with this trade debt always there. Some will never achieve a wage that allows them to repay the debt.

There is another aspect of these trade loans that not many have mentioned: they are only available to those apprentices who are training for a skill on the National Skills Needs List. As discussed earlier, we do have a skills shortage in Australia. Most skills on the national needs list are weighted to the traditional male dominated industries—building, mining, telecommunications and the like. There is some call for hospitality and hairdressing, but with the list so heavily weighted to the male dominated industries, our young female trainees will not have access to the trade loan scheme. I also note that the skills list changes over time. So it is very difficult for careers guidance counsellors and schools to help prepare students for what will be supported and what will not.

The government has already ceased the fee exemptions for childcare trainees. They have taken childcare support away from the mainly young mums wanting to return to study, and now young women are effectively being blocked from accessing this initiative, as poorly designed as it is.

Last week, I met with the National Growth Areas Alliance, a group of councils that represent the high-growth communities across Australia. They drew to my attention the 2014-15 State of the Regions reportfrom the Australian Local Government Association. This report should sound the alarm to Minister Macfarlane about investing in skills and workforce development, particularly for young people in regional areas. The report identified the areas with the highest youth unemployment rate. It highlighted that youth unemployment is a persistent problem, particularly in regions in transition.

It is more important than ever that the federal government supports our young people on their pathways to employment. We know that the trade loans scheme was an election promise, but we did not know that it would result in the minister decimating support to apprentices by taking the axe to other programs such as the Tools for your Trade payments program, the Australian Apprenticeships Access Program, the Australian Apprenticeships Mentoring Program and the Apprentice to Business Owner Program. I know, from my own experience, how excited young people get in the first and second years of their apprenticeship about the potential for them to become small business owners. I know that that program, and the support given to those young people to make that transition, was critical in them continuing in their trade beyond their apprenticeship.

This government also axed the Youth Connections program which helped to give vulnerable young people a second chance to obtain training and employment. I have seen firsthand the success of this program on some of the most vulnerable in our community. Combined, despite the loan scheme, these cuts to programs are just not fair. On top of that, the Liberal state governments are implementing savage cuts to TAFE which have resulted in fees rising, courses being cut and the closure of TAFE campuses.

The Abbott government is insisting that young people need to earn or learn, yet they are ripping away all the programs to support our young people into apprenticeships, employment and education. I suggest that the minister needs to look at supporting our young people on their pathways to employment instead of axing the mentoring and access programs that support them.

Nickolas Varvaris (Barton, Liberal Party) Share this | Link to this | Hansard source

It is undeniable that, as a national community, we need highly skilled tradespeople engaged in training and employment for the sake of Australian industry. The trade support loans that the government will provide to apprentices will ensure that young people are obtaining the priority skills they need for long-term employment and the skills that Australia needs for productivity and competitiveness. These loans will provide up to $20,000 over four years in a HELP-style concessional loans scheme to assist with the considerable expenses of living and learning. Apprentices will pay back the loans, once they can afford to, through the Australian tax system. This is a steady, manageable and reasonable means of repaying this loan. Contrary to the perception of the Greens, this loan will only take on average five years to repay, not 50 years.

Apprenticeships are a valuable pathway into long-term employment, a worthy subject of investment by the government. The skills that apprentices gain are valuable to the Australian economy and to countless employers in need of highly technical skill sets across a wide range of areas. It is essential that, where these skills have been acquired, there is follow-through so that these skills are delivered to the economy. The fundamental belief which underpins this bill is that a technical skill is as valuable and important to Australia and to the government as a university degree.

That is why this is such a landmark bill, a bill that has been a long time coming, because it finally sends and ratifies the message that young apprentices are some of the finest assets that the nation of Australia possesses and that we do not take them for granted. We want to support them, just as we support our university students. We certainly do not view their craft as a second-rate skill, and we want them to follow through on their passion by completing their training and unlocking the opportunities awaiting them in the labour market so that these priority skills can be delivered to the Australian community.

Unfortunately, the statistics are that 20 per cent of trade apprentices drop out by the end of their first year and 30 per cent by the end of their second year. Overall, only half of apprentices that commence training will complete it. Indeed, the first few years of an apprenticeship are challenging. They are difficult in many ways, but particularly the government has heard that they are some extremely difficult years in terms of young people's finances. This is despite genuine employment prospects and earning potential which apprentices will eventually enjoy. If the government can provide young people with the financial support that they require, we can unlock for them and for the country the fantastic potential for the Australian trades sector. Completed training will more than pay off in a big way for apprentices themselves and for the economy at large.

These exciting loans will be available for eligible apprentices in less than a month, on 1 July. The promise is there for young people that, if they stick with their trade, finish training and enter employment, they will receive a 20 per cent discount on the amount of the loan that they must repay. That is almost a year's worth of value for free, effectively a gift of $4,000 from the government upon the completion of your training. This 20 per cent discount and the features of the loans scheme in general encourage apprentices to follow through, with the knowledge that, when an often costly process of skills acquisition is cut short, it means that a big economic investment for the student is in vain and an opportunity is lost for the Australian economy.

We know how difficult it is for the genuine, enthusiastic young people who enter apprenticeships to feel like following through on their apprenticeships over multiple years is just not a viable option. That is why this bill will do so much good in such a vital area, stimulating the economy in the long run, where the most opportunity for productivity and growth exists. I am pleased that among the list of priority skills and occupations, which will be determined at the discretion of the Minister for Industry, are traditional and popular trades such as plumbing, electrical and carpentry. Given the ingenuity, insight and spirit of consultation with which the minister has conducted himself in the preparation of this scheme, I am sure that many other vital and deserving trades will receive support with this scheme. The provision of this scheme will support young Australians and incentivise them to fully attain their skills and enter the workplace, which is the best result for apprentices, the industry and the nation.

What I appreciate about this bill is that it will greatly benefit and encourage the thousands of technical college students and apprentices within my electorate. St George TAFE has been providing high-quality courses for apprentices for decades, in the areas of automotive finishing, electrical technology and body repair as well as electrotechnology and light vehicle technology. With these trade support loans, the government is investing in these Barton residents and the industries to which they belong. The government is finally sending the message that, if you are in a trade, you are just as important and useful to our country as if you are in a university getting a bachelor's degree. To invest in these young people who are gaining vital technical skills is to invest in our economy and our whole future as a nation. I commend this bill to the House.

Adam Bandt (Melbourne, Australian Greens) Share this | Link to this | Hansard source

Before the election, you could not move without seeing the Prime Minister in a fluoro vest and a hard hat, gladhanding apprentices and workers. He said, 'An incoming coalition government will help more young Australians to start a trade, stay in a trade and finish a trade.' What is becoming increasingly clear is that these were hollow words. Without being told that it would happen, we have seen the axe being taken to the Tools For Your Trade program, halving the program which pays for apprentices' tools, cutting the scheme from $1 billion to $476 million over four years, to be replaced with this program that we are debating in the Trade Support Loans Bill 2014 today.

I want to share an email from a fourth-year apprentice called Matthew, who said: 'The changes affect me and two other apprentices in my depot, along with thousands of other apprentices nationwide who rely on these payments. While I do not agree with the changes to apprentice funding, I am disgusted that they can change the system apprentices such as myself are halfway through.' Another fourth-year apprentice, also called Matthew, said: 'The current Abbott government is going to rip this up without any thought of how it will affect us. Every bit of money helps, especially as I am also supporting my wife and daughter and paying a mortgage. The removal of this payment is approximately six per cent of my annual income, and I could only imagine the uproar if Tony Abbott and Joe Hockey were asked to delete six per cent of their annual income.'

This is what another apprentice, called Luke, said: 'I am grateful that I was the beneficiary of the Tools For Your Trade program throughout my apprenticeship. I used the money to buy tools like big-ticket items such as drills that cost upward of $700. Apprentices already struggle with a low income, studying and paying bills. These incentives are what attract young job seekers in the first place, without the added stress of paying loans like a tertiary student.' Luke speaks on behalf of thousands of other apprentices round this country who have opted to go and do an apprenticeship and to work on the low wages that that entails while being you are being trained up. They have done it on the basis that they are not going to be plunged into debt. But, instead, that is exactly what this government intends to do to them.

For someone who ends up as a carpenter, with a starting salary of $40,000, you can estimate that, if they take out the full whack of the debt, it will take them 34 years to pay that off. It will be less time for someone who is in a higher paid occupation—automotive engineer, welder, plumber or electrician—but what is clear is that we are moving towards putting all the young people in this country, whether they are at university, whether they are doing an apprenticeship or whether they have the misfortune of being out of work and looking for a job, further into debt and making it harder for them to get by.

The minister and his government come in and say that it is justified to rip up the grants program and to put people further into debt, making one of the most offensive statements that has probably been uttered with respect to apprentices, saying that it is okay because they were spending the money on 'tattoos, on mag wheels for their cars, and on birthday parties'. Firstly, there is no evidence of that, not one shred of evidence has been put forward. It is disgraceful that a government minister would use their position, supposedly to speak out on behalf of apprentices—being the responsible minister—and to slur them all without any evidence.

But if that were even the government's motivation, and it is not—because the government's only motivation is to cut spending on apprenticeships and put apprentices further into debt—but if it were, you would expect some restriction in this bill on what students and apprentices, who are now going into debt, could spend the money on. But no, there is not. For all the government cares, they can spend $20,000 on another set of mag wheels and tattoos as long as they are in debt, instead of being given a grant. The fact that this government has not thought through how this loan scheme is going to work, the fact that there are no suggested restrictions even on it so that it has to be linked to tools, for example, shows that that offensive suggestion about tattoos and mag wheels was nothing more than a distraction and an offensive slur on all apprentices so that the government can get away with its agenda. And its agenda is to cut funding to young people and, instead, to put them further into debt.

This government is not getting rid of debt. You hear a lot of talk from the Prime Minister and Treasurer saying that the government was elected to tackle debt and deficit. I will tell you what they are doing: they are not getting rid of debt; they are just shifting it away from the government that can bear it onto apprentices, students and young people who cannot.

The government also suggests that one of the reasons they want to introduce this scheme is to address the low level of completion rates amongst apprenticeships. It is admirable to want to look at why so many apprentices are not completing their apprenticeships. It is admirable to say, 'Let us give some incentives perhaps,' as this bill purports to do. However what this government has failed to take into account is that the biggest reason most apprentices do not finish their training is because they are let go by their employer. It is not because they do not want to finish; it is because their employer lets them go.

What does this new move from the government do to those people who are a year or two away from completing their training but are then let go by their employer? Those people through no fault of their own are now going to end up with a debt and without any training to perhaps get themselves into a job to repay that debt. So people who are in that category, that we know exists—it is the single biggest reason apprentices do not complete their apprenticeship—are now going to find themselves objectively worse off, thanks to this government. They are going to find themselves not only without an apprenticeship, not only without a road to get a good job, but in addition they are going to find themselves in debt as well. Then, while they are looking for a job, they are going to have to spend six months of every year without any Newstart. That is what this government has in store for people under 30. That is why this is another one of the bills that is part of the government's measures that will brutalise Gen Y and everyone who comes after them. It will make life incredibly difficult for anyone under 30 in this country. Part of the government's agenda, of which this bill is an example, is to make it so that for everyone under 30 in this country that you will be forced to accept any old job with any old wages and any old conditions. It will not matter that through no fault of your own your employer sacked you and you did not finish your apprenticeship, if you do not want to live six months of the year with no income at all you had better go and take that job paying less than the minimum wage. And you do not want to complain about that because, if you complain, then you will find yourself put through the washing machine again and having to spend another six months without any income. That is the vision this government has for this country.

When we know that the most common reason for people not completing their apprenticeships is employment-related and we combine that with the fact that apprenticeship commencements are also declining, we have two choices. You can do what the government is doing, or you can do the sensible thing which is to put more money into apprentice training to boost commencements and completion rates.

It is known that a loans scheme is likely to deter students from low-income and disadvantaged backgrounds. It stands to reason. The government has been unable to confirm in the Senate estimates process or anywhere in this debate that they will not change the arrangements for this debt in the future, similar to what they have done with HECS debts. So for all we know, the debts that these apprentices are about to incur could be required in the future to be paid back even more quickly or at even higher rates of interest and, if you look at what they have done to higher education students, you could imagine that that is only a year or two away.

If we really wanted to build a sustainable and clean economy, we would be investing in our apprentices. We would not be saddling them with thousands of dollars of debt. By funding apprentice training and investing in infrastructure, we could build the skills of the future to help Australia get ahead of the curve. And rather than relying only on the private sector to train the next generation of Australian workers, the government should take a leading role in funding and supporting them so that we have a generation of workers skilled up and ready to build a clean economy. The idea of owing Tony Abbott's government thousands of dollars in debt will just send a chill down the spine of many young people thinking of starting an apprenticeship. As we have seen with the massive changes to the HECS system, it does not matter if you have signed up for a lower interest rate, this government is going to slug you anyway.

So it is crystal clear that what this is about is not a better deal for apprentices. This is about making life worse for many, many apprentices. This is about making life grim for young people and gutting the supports that would see apprentices commence apprenticeships in greater numbers and complete them in greater numbers. It is no wonder that there have been many, many submissions on behalf of apprentices and on behalf of working people saying that debt is the wrong way to go. I urge the government to reconsider this measure, to reinstate the Tools for Your Trade programs and to treat our apprentices with respect instead of disdain.

Lucy Wicks (Robertson, Liberal Party) Share this | Link to this | Hansard source

Apprentices will receive better support thanks to the coalition government's Trade Support Loans legislation. Having more apprentices in the workforce means we can boost our productivity and meet the changing needs of our economy. It also means we can continue to enjoy the standard of living we have today. Imagine, for a moment, a world without tradespeople and apprentices. Imagine a world where trade skills were lost because they were not passed down to a younger generation. It may seem like hyperbole, but consider for a moment the possible consequences. Our houses would fall down eventually because there would be no-one to fix a leaky roof or the plumbing. We could not build any new houses. Manufacturing would become a thing of the past. Cars and public transport would come to a standstill. Baking and bread making would become a home based pastime, and we would all have to learn how to make our danishes and sausage rolls for morning tea. We would have no furniture because there would be no cabinet makers. Our computers and our IT systems would not work—not even Facebook. We would cut our own hair. It would even impact romance, because even jewellery making is considered to be a trade.

So our Trade Support Loans scheme, the fulfilment of a commitment that we made to the people of the Central Coast in our growth plan, will provide real support for apprentices to complete their skills training and provide a stronger incentive for young Australians to become apprentices and complete their apprenticeships. At present, there are high dropout rates in apprenticeships, and only one in two people actually completes their training. This can have a significant economic and social impact. Our trade support loans are part of the solution because they have the dual effect of providing financial support for people to complete their training as well as encouraging more Australians to learn a trade by offering interest-free loans of up to $20,000 to assist with everyday costs. Payments will be made monthly in arrears and will be at a higher rate during the first two years to provide support when it is needed most and when wages are at their lowest. Apprentices will have access to up to $8,000 in their first year, $6,000 in their second year, $4,000 in their third year and $2,000 in their fourth year.

These Trade Support Loans will commence in July at an estimated cost of $1.9 billion over the forward estimates. They are flexible to meet the needs of every individual. For example, an apprentice could opt in for just six months so that they could buy their tools, or perhaps save up their first year's payments to buy a second-hand car and then opt out of further loan payments if they wanted. Or they can take the full amount to cover living expenses throughout their four years or so of training. Apprentices will have to apply for a loan and will have to indicate every six months if they want it to continue. In this way, we can ensure that apprentices are aware of the debt they are accruing. As an additional incentive, anyone who completes their apprenticeship will have the amount owing on their loan reduced by 20 per cent. Like FEE-HELP and HECS loans for higher education students, apprentices will only repay their loans through the tax system when they are working and earning an income of at least $50,000 per year. Unlike Labor's Tools for Your Trade program, our trade support loans are a hand up, not a hand out. The Tools For Your Trade program delivered a payment of $5,500 in five lump sums. But what we found by talking to apprenticeship centres and employers, including those on the Central Coast, is that there was growing community concern that some apprentices were wasting their tool allowance on holidays, 21st birthday parties and other recreational activities.

The feedback that I am getting from people on the Central Coast about our loans scheme is very positive. Caine Howell, a third year apprentice bricklayer from Green Point, told me it is hard to make ends meet and that the Trade Support Loan scheme will provide him with help when he needs it the most. Jack Vicary, a third year apprentice carpenter from North Avoca, said he has a long list of expenses such as car costs, petrol and general vehicle costs, and he needs these things to be able to do his job. Jack told me he was really pleased to hear how the government was supporting tradies on the Central Coast. Jack and Caine are just two examples of the more than 2,000 apprentices in my electorate who will benefit from our government's reforms. Our plan will also be better for employers on the Central Coast. Brock Robson, owner of All Jobs Plumbing at North Avoca, said he has been reluctant to take on plumbing apprentices due to the fear of them losing interest in their trade and leaving. He believes the new Trade Support Loans scheme will help apprentices stay focused on completing their trade. Mr Robson said it gives him the reassurance he needs to take on apprentices and give them a fair go.

Australia needs a training system that provides the skills that industry needs and delivers real jobs. The Trade Support Loans Bill is part of this system which is already being well received in my electorate of Robertson. I commend the legislation to the House.

Lisa Chesters (Bendigo, Australian Labor Party) Share this | Link to this | Hansard source

Prior to the election, Tony Abbott announced the Trade Support Loans scheme, which a number of people have referred to in this House. But what he failed to do prior to the election—and has failed to do so often—was tell apprentices that his government would scrap Labor's $1 billion Tools for Your Trade program. On budget night a number of people were shocked, including many of the apprentices currently relying on this program. In my own electorate of Bendigo a few days after the budget, participating in the Walk a Day in My Shoes program, I was at the Country Cob Bakery in Kyneton. They have two apprentices. One is mature aged and the other is a young man who took up his apprenticeship after finishing year 12. They spoke about the shock of learning that this program had been scrapped at short notice, and they asked how they were going to buy the tools that they needed for their baking apprenticeship. A lot of their coursework these days is online because Kyneton is an area where there is no TAFE. Because of state government funding cuts to TAFE, the Bendigo TAFE has closed the Kyneton campus. So the only way these students could do their coursework was via their own computer at home. They were planning to use their Tools for Your Trade payments to purchase those computers and to pay for the internet access to be able to do their coursework online. After meeting with those apprentices a few weeks ago, I caught up with them on the weekend and they said they still do not know whether they will be able to purchase the equipment. I asked them whether they would consider taking out a trade support loan. The answer to that question was, 'Only if I have to. Only if there is no other way to get more money in my budget will I take out a loan.' The idea of having debt before you had even started your career is not something that they were in favour of.

In this debate earlier, Bob Baldwin said that it was clear that the tools for trade program would be replaced. I hope that is the case, that the government has a new policy it is going to announce. I call on the minister to provide evidence of this and to outline this new particular claim in his summing up speech, because that would be great news to those young apprentices in Kyneton and in the electorate of Bendigo, who want the tools for trade program in its original form.

However, this bill seeks, as others have outlined, to replace the tools for trade program with a loans scheme for apprentices, where they could, through their lifetime, incur up to $20,000 in debt. The reason why Labor is supporting this is that there needs to be something to help these young apprentices. I do not like it. I do not think it is the right way to go. But if those Kyneton apprentices have no other way to purchase their tools and choose to take this option of debt, then it is good that they have at least got something. But it is not good enough.

Many apprentices who have already completed their trades are worried. They are now waiting on these payments. They are expecting to receive them, but they may be cancelled. Many people who have already purchased their tools are now in a situation of debt. Their employers are also concerned that they have entered into an arrangement, and they do not know who is going to be able to support them with these tools. As I said, the idea of getting yourself into a loan is not something that is attractive to a lot of young people.

The Abbott government has taken the axe to support for apprentices. As well as axing the tools for trade program, they have axed the Australian Apprenticeships Access Program, they have axed the Australian Apprenticeships Mentoring Program, and they have axed the Apprentice to Business Owner Program. It is further evidence of how this government does not really get it when it comes to supporting apprentices. This government is quick to get you to take up a loan and generate a bit of income for them to make it look good in their budget papers, but yet it does very little to fund the programs that help apprentices and that help businesses keep apprentices.

The government have also confirmed that they are looking to outsource the debt management for trade support loans. That is a huge issue for people. The idea that—unlike the HELP debt, which the government is supposed to manage—you could be in the hands of private debt collectors for a loan that the government has given you is simply not fair. It is an unfair burden to place on people as young as 16 who are seeking a trade.

But let us be honest about this area. The Liberals just cannot be trusted on the issue of education. We have to look at their track record. We have to look at it because it speaks to why I do not believe that this loan scheme will be very popular with young people. Federally, there have been cuts to trade training centres. We hear lots of talk from people saying they did not build enough. But they did build some, and the ones that they built are very successful. The critique of the trades training program was that it was not rolled out fast enough, not that it was not a good program. So what the government should be doing, if they believed it was not rolled out fast enough, is investing more money in the trade training centre program, not less.

In my own electorate of Bendigo there is a great network of schools in the Bendigo town working together. Thirteen schools are part of the trades training network. But the areas in my electorate to miss out on trade training centres were Castlemaine and Kyneton. They are disappointed that they have missed out on the opportunity to build a trade training centre, because this government has scrapped the program.

The state Liberals also have an appalling record when it comes to TAFE and vocational skills in education. The state government has cut, already, $1.2 billion from TAFE. It has had a huge impact on regional students. As I mentioned, there are campuses that have been closed directly because of state Liberal government funding cuts to TAFE. Apart from closing the Kyneton campus, at the campus of BRIT there have been over 150 job losses. There have been 36 courses cut from the Bendigo campus. Because of the funding cuts, because of the courses being cut, my local TAFE, BRIT, has now been forced into a merger with the Kangan-Batman Melbourne based TAFE. This is an area that demonstrates how the government simply does not understand how to deliver vocational skills in the region. Bendigo has forever lost its stand-alone TAFE in a town which has had a school of mines for over 150 years. It no longer has a mines course. It no longer has a stand-alone TAFE. The Melbourne takeover has been done without consultation with the broader community. There was money put on the table by the state government, effectively bribing TAFEs to merge. It demonstrates, again, how Liberals in government—state or federal—cannot be trusted. They cannot be trusted to administer this loan scheme. I understand why people are sceptical about taking up a loan.

In relation to the state of our TAFEs in Victoria, I have mentioned the Kangan-Batman. This is the one that Bendigo will be merging with. They have had 52 courses cut. They have lost 172 staff. Students have been slugged with increased fees. There has been a massive drop in student numbers, and that is because of the increase in fees. Bendigo TAFE, as I have mentioned, does not fare much better. They have also had a massive drop in students. It is because the Liberals cannot be trusted in this critical area of delivering TAFE and training. They are scrapping a system that works and they are replacing it with a system that just sees students get themselves into more debt. The area of apprenticeships and skills in our community is not something that you can ignore. That is why it is so disappointing that this government has scrapped programs that were working.

Yes it is true that 48 per cent of apprentices are not completing training. They are not completing it right now. But rather than looking at why they are not completing their training, the government is saying 'you can just get yourself into further debt'. That is simply not good enough. The programs need to be there, the TAFEs need to be there, the support and mentoring needs to be there, and this government has scrapped the assistance.

Given the attrition rate for apprentices is so high, there needs to be more funding in the system. The current apprenticeship system is under strain due to a number of challenges: there is national inconsistency; there are poor completion rates; there is a persistence that it be time served as opposed to competency based delivery; and further application for the pathways needs to be invested. These are not just my words but the words of industry starting to speak out.

I think about some of our local traditional apprenticeships and traditional courses that we have. Hawkei, which is being built at the Bendigo Thales site, is a great project. We hope the government signs on to build the Hawkei in Bendigo. This particular establishment used to be the old Australian Defence Industries. Back in the day when it was owned by the federal government, before it was privatised, they had 100 apprentices—25 in each year level. Today Thales Bendigo has two. I worry about the future of high-tech skills manufacturing in this country if, within one lifetime, we have gone from 100 apprentices at this one local facility down to two. They are not alone. As we have seen over and over again, when we lose manufacturing, we not only lose those high skilled jobs but we also lose our major education provider for people with skills and trades, particularly in heavy metal manufacturing.

The recent budget announcements seem to be designed to make it more difficult for our young people to gain a skilled qualification. We are not just talking about what has been scrapped in the way of support for apprentices but about what is making it harder for people to obtain a university qualification. The biggest deterrent for people from a regional background and the biggest deterrent for people from a low socioeconomic background is cost. Saying 'that is fine; you can get yourself into $100,000-worth of debt' is not good enough. What people in the regions want are opportunities for young people. They want to be able to gain an apprenticeship, they want there to be a strong well-resourced TAFE sector to support them and they want to be able to go on to university if they choose to do so. But what we have seen from this government are continued broken promises in this area.

When the Prime Minister was opposition leader and announced that he was introducing this scheme, at no time did he say to young apprentices that he would be scrapping Labor's $1-billion Tools for Your Trade program, a program that was working and supporting hundreds of thousands of apprentices achieve their apprenticeship.

What will make it hard for these young apprentices apart from the changes in this particular area are the increased costs they will have as a result of the budget. The previous speaker spoke about the cost of fuel, which is another issue that will hit young apprentices hard. One of the speakers on the government side said that was okay. He said they can spend this loan on petrol. Is that really the design of this program? Is it a $20,000 loan so apprentices can get from a to b? I would suggest that getting them into debt around the very basics like transport and course costs is not the best way to support people doing an apprenticeship,. That is not the kind of nation we want to be setting up. There will be a generation of young people who cannot buy their first home because they have so much debt forced on them by the government when achieving their education.

If we are serious about developing the skills we need for the future and about ensuring that we have a strong economy going forward then we need to reinvest in our apprentices, not through loan schemes but through programming. We need to support businesses to take on more apprentices so that maybe one day the manufacturing sector in Bendigo, through organisations like Bendigo Thales or Hofmann's, can get back to employing the 100 apprentices that they used to have. It is important that as a nation going forward we do more to support our young people. But what we have seen from this government is nothing but broken promises.

Matt Williams (Hindmarsh, Liberal Party) Share this | Link to this | Hansard source

It was interesting to hear the member for Bendigo speak about the Victorian TAFE system because the cuts that she mentioned made me remember the South Australian Labor government's TAFE system with redundancies and cuts. I thought she was speaking about South Australia, not Victoria. There are some similarities between the South Australian Labor government and the federal Labor government, as you would be aware, with poor financial management and the huge debt and deficit. In South Australia in the recent budget there is over $1 billion in deficit for the second year running. Interest repayments are a billion dollars a year in South Australia, which is less than we have federally, but it is still an issue for our state. The end of the Labor government in South Australia cannot come soon enough but, unfortunately, we have got four more years.

I am not here to speak about that but about the trade support loans. The education of our next generation of workers is one of the most important investments we can make in our future workforce. When I have gone to various TAFEs around Australia, whether in Townsville, Bendigo, Perth or Newcastle, I have been impressed with the facilities, the operations and the staff. The staff are knowledgeable, passionate what the about what they do and they seem to be reasonably well resourced, which is great to see.

The big problem we have, as we have heard in this debate, is we have only one in two apprentices finishing their training. So when we have a problem, rather than just throwing money at things and wasting money unnecessarily, we on this side of the House take a very practical view to it and think, 'Can we do better? Can we change things and get a better outcome?' That is the position we are coming from. These Trade Support Loans provide ongoing support to help apprentices with one of their greatest challenges—completing their training. It is important. Where we have got these skill shortages out there—whether it be that we need more chefs, mechanics or tilers—we need the apprentices to complete their degree. That is why we have structured the Trade Support Loans in the way that we have.

I was out with the motor trades industry a few weeks ago, and they talked about the numbers of their apprentices not completing certain degrees or programs, as well as the job opportunities that were there. Whether it be the panel beaters or the mechanics, where we have these skill shortages we need to do the most we can to encourage the apprentices to complete their degree. In that respect, the loans have been structured so that apprentices have greatest access to financial support in the early years when they need it most—$8,000 in the first year, $6,000 in the second, $4,000 in the third and $2,000 in the fourth.

The beauty of these loans is that they are also flexible to meet the needs of the individual. If a carpenter knows that he only needs $8,000, then that is what he will take out as a loan. If they need to cover living expenses, then they can take out more. We must remember also that they only start paying these loans back when they earn over $50,000 and, importantly, they receive a 20 per cent discount on their loan when they complete it, so that creates a great incentive for them to finish their loan. The 2,500 apprentices in Hindmarsh—and I have had input from a number of them—know that this is a well-structured program.. They know that this will provide them with some great support throughout their apprenticeship.

We always have to look at why things are not working. There is no point throwing money at something when we are not getting the outcome, and we heard anecdotal stories of how the previous program under the Labor government had waste in it—which is not surprising, given that Labor programs often have waste, but this was another one. There were concerns raised by both employers and apprenticeship centres about how some apprentices were wasting their tool allowances on things like 21st birthday parties or mag wheels. I heard a story once of how an apprentice rocked up with a new surfboard and said, 'This is what I've bought with my $5,000.' That is not what this scheme was designed for. I accept that it often takes a few individuals to wreck it for everyone else, but there were obviously enough of these incidents happening where the money was not being best spent for its purpose. There was concern of the wastage out there where apprentices did not need that $5,000.

We are providing the loans and the necessary support. We are assisting people with their training. There is also some other assistance in the trades and industry sector that I wanted to touch on. In South Australia we have announced a $155 million growth fund to generate the jobs of the future for employees and supply chain businesses that are suffering in the automotive sector due to the closure of Holden and Toyota. This growth fund includes a $30 million skills and training program to assist automotive employees to have their skills recognised and provide training for new jobs while they are still employed. That is real assistance—targeted assistance—for those that need it.

We have also got a $60 million Next Generation Manufacturing Investment Program to accelerate private sector investment in higher-value, non-automotive manufacturing sectors in Victoria and South Australia. Importantly, there will be new opportunities in those other sectors that have a real future, where they can compete internationally and where we are again providing great support for those that really need it across a series of training sectors in our economy.

In closing, Australia can no longer afford unaccountable taxpayer-funded handouts. We are giving people a hand up and assisting them when they need it. It is a responsible program, a well-targeted program and a program that will assist those many apprentices to make sure that they complete their training in courses we need them to complete.

Sharon Claydon (Newcastle, Australian Labor Party) Share this | Link to this | Hansard source

I rise to speak on the Trade Support Loans Bill 2014 and to support the amendment moved by the member for Cunningham. Very briefly, this bill establishes the Trade Support Loans Scheme for Australian apprentices. These loans will be concessional and income contingent, with a lifetime limit of $20,000 indexed from 2017. The loans will be repayable when the individual's income reaches the Higher Education Loan Program, or HELP, repayment thresholds. The bill also provides for a 20 per cent discount to be applied to the loan, incurred when an Australian apprentice has successfully completed their apprenticeship.

To be fair, prior to the 2013 election the Prime Minister did announce his proposal for a Trade Support Loans program, and those of us on this side of the House are indeed amazed that the Prime Minister finally appears to be keeping one of his election promises. But what he did not tell apprentices was that he was going to scrap a key assistance measure—Labor's $1 billion Tools For Your Trade program—that provided $5,500 to each apprentice who took part. Replacing Labor's $1 billion Tools For Your Trade program with the Abbott Liberal government's $439 million loans scheme means that this government has just lifted $561 million out of the pockets of Australian apprentices, who, in my electorate of Newcastle, are the future hope of us retaining a skilled manufacturing industry.

With the passage of this bill, struggling apprentices on pay well below the minimum wage will be forced to swap their tool allowance, which was a grant, for a $20,000 bank loan instead. This now means that what was an optional loan available to apprentices—the new Trade Support Loan—is now the only financial support offered to apprentices. It is borrow or bust. The loans were also tagged as being interest-free when announced, yet in real terms, following the announced changes to HELP loan indexing arrangements, these loans will actually accrue up to six per cent interest over their lifetime from 2017. For the first time, apprentices will be loaded with spiralling debt before starting their careers.

The lack of clarity around how the loans will work is another concern, particularly as they will be available to school-based apprentices.

Teenagers at school need to be offered adequate protections and advice regarding the loan agreement that they will be entering into. The provision of the optional trade support loan is not opposed by Labor, but it should not have come at the expense of the Tools for Your Trade scheme and should have appropriate advice requirements in place to ensure informed and voluntary decisions by apprentices, some of whom are school based.

The industry minister flagged that a key reason for ceasing the Tools for Your Trade program was because there was evidence that apprentices were spending their money on tattoos and mag wheels for their cars or on birthday parties. I just heard the member for Hindmarsh suggesting similarly. This cheap shot at apprentices is offensive and demonstrates the minister's lack of understanding about the costs apprentices incur while training. Many apprentices have huge costs for tools and equipment, and the minister's accusation that they are misusing these funds is offensive to the majority of apprentices, who have used these much-needed funds to do the right thing and buy the equipment that they need to help them on their career path. Apprentices are on pay well below the minimum wage. They need support to purchase the tools essential to their trade. This is a minister and a government that is clearly out of touch.

While it is true that the government did flag its intention to introduce these trade support loans, they absolutely did not tell the industry or apprentices that other successful programs that support our apprentices will be axed at its cost. Group trainers and employers were delivered a severe blow when the announcement was made that the very successful Australian Apprentices Access Program, the Australian Apprenticeships Mentoring Program and the Apprentice To Business Owner Program were being axed. They are successful programs that help apprentices find employment and finish their apprenticeships. They now sit on this government scrap heap, which is getting higher and higher every day.

I would like to draw particular attention to the difference the Australian Apprenticeships Mentoring Program and apprenticeship access programs have been making for apprentice and employers in my electorate of Newcastle. Of the current 31 programs that are being delivered under the Commonwealth mentoring program, three deliver specific services in Newcastle. The Australian Rugby League Commission's Trade Up with the NRL program focuses on increasing the retention and completion rates of Australian apprentices who are also involved in rugby league. Mentors work with the clubs and regions to assist identified apprentices within the rugby league community with successfully completing their apprenticeships. Former Newcastle Knight and qualified electrician Anthony Quinn is a mentor in the program. Earlier this year Anthony retired from the NRL having experienced significant injuries during his rugby league career. Thankfully, he has a trade to fall back on. Mind you, it took him 13 years to complete his apprenticeship while he juggled football and family commitments.

In his role as a mentor in the NRL's program, Anthony helps young footballers ensure they have options when their playing careers end. Anthony is only 31 and he has already had to embark on a new career. Other players are not as lucky and through injury, misadventure or a drop in form may be faced with the ending of their sporting career in their twenties or even teens.

Another program delivering services in Newcastle is BUSY At Work's Apprentices on Track Industry Mentoring Program. Their project provides mentoring support to Australian apprentices across the transport, postal and warehousing industries as well as rail related industries including electrical, carpentry, welding, metals trades and fitters and turners. The rail industry is at a crossroads in Australia and in my home town of Newcastle in particular as state Liberal governments offshore their purchasing of new carriages rather than building them in Australia. The Apprentices on Track Industry Mentoring Program helps give some sort of assurance to apprentices at a time when their industry and other, similar industries like shipbuilding are at pains to survive under Liberal governments.

The third program operating out of Newcastle is NovaSkill's Australian Apprenticeship Mentoring and Support Service program—AAMPED—delivering mentoring to apprentices who are at high risk of drop-out and non-completion of their trade. NovaSkill is an organisation that has been operating ahead of its time for much of its 33 years of existence, and its mentoring program is no different. In the early 1980s, when a severe economic downturn was experienced in the Hunter, the Hunter Training Group, now NovaSkill, was formed to ensure young local apprentices could continue on with their trade training even if they did not have a day-to-day job to go to. The apprentices spent time being hosted by local employers and attended training with the training group so that when the economy improved they would be able to continue with their trade. This helped bridge a potential skills shortage that often occurs when economies recover. They were operating under an advanced model that we could well consider today as industry transitions.

NovaSkill's current mentoring program under the Australian Apprentices Mentoring Program is based on a model that was already operating successfully before the formal introduction of Labor's mentoring scheme in 2012. With a strong commitment to Indigenous employment and training, NovaSkill were delivering a specific program for Aboriginal and Torres Strait Islander that spawned their current AAMPED program. AAMPED has seen more than 1,600 Australian apprentices or trainees complete their apprenticeship, including more than 155 Indigenous apprentices and assisting more than 800 local employers in the process. While some other trainers direct the mentoring program at any apprentice who is employed, NovaSkill makes a point of only including in their program apprentices who are deemed most likely not to complete their apprenticeship.

To measure the risk of drop-out, apprentices complete a brief survey that measures various aspects of their life that may contribute to them leaving their apprenticeship like if the apprentice owns a car, if they live close to work, if the apprentice is from an Aboriginal and Torres Strait Islander background, if they live at home or in a share house or if they are facing financial pressures. The apprentices complete the survey at regular intervals to make sure their current risk is being assessed, as their circumstances may change, with the risk of drop-out reassessed. To ensure ease of delivery and high survey completion rates, NovaSkill developed an iPad app so apprentices could quickly complete the survey using a comfortable medium rather than a potentially uncomfortable interview or being grilled by their trainer. Despite only targeting high-risk-of-drop-out apprentices, the AAMPED program is delivering outstanding results. Their attrition rate for apprentices that go through the program is less than 10 per cent, whereas the national rate of attrition for apprentices is 48 per cent. According to NovaSkill, the program is also delivering real financial gains and skills results of national significance. For example, the cost to the Australian government of apprentices who start but do not finish their trade can be reduced by over 80 per cent per annum, and national skills shortages can certainly be addressed with over 40 per cent more apprentices completing their trade. By any measure, the mentoring programs delivered under the current Labor model are making a massive difference. But we see this government again making decisions based on ideology rather than evidence and instead of supporting or expanding this fantastic mentoring programs they are axing them and abandoning apprentices in the process.

While the ongoing funding for the mentoring program had its writing on the wall under this government, with failure to commit to its extension since elected, the scrapping of the Australian Apprentices Access Program came as a surprise to most. The access program provides vulnerable job seekers who experience barriers to entering skilled employment with nationally recognised prevocational training, support and assistance. Women who wish to return to the workforce by gaining new skills or updating existing skills will also be disadvantaged by the programs abolition. They may have been out of employment for a number of years and leant on programs like the access program to re-enter the workforce. Young culturally and linguistically diverse women, Indigenous women, women with disability and mothers will be left without this dedicated pathway to training and employment.

Again, while Labor does not object to the provision of the trade support loans, I do want to take this opportunity to flag a concern with how the Trade Support Loans program is being targeted, in particular the inequity it creates for women. While the inequity may not be intended through the program's delivery, the result is clear—loans will be available to more men than women. As with the Industry Skills Fund, very few women will be beneficiaries of Trade Support Loans as the funds are only available for apprentices undertaking a qualification in an occupation on the National Skills Needs List. Of the 65 or so occupations that are listed, only a handful have female apprentices.

The publicly funded TAFE system is slowly being displaced by the creation and expansion of a demand-driven competitive training system with a drive to privatise and commercialise the VET system. The VET system is promoted as industry driven and the sex segregation of occupations is entrenched in many industries. I urge the government to work with organisations like the National Foundation for Australian Women to ensure females who undertake a trade have the same financial support as males and are not further disadvantaged.

Having skilled and qualified workers is an important part of our overall economic sustainability. Apprentices, training organisations and employers are vital parts of the skill development and training ecosystem, so it is important that government supports them. Without them we will be faced with skills shortages for the jobs of the future and an ever-growing unemployment list that people will struggle to leave.

Under the Liberal state government in my home state of New South Wales we are seeing devastation in the TAFE and VET sectors. There have been massive drops in apprenticeship enrolment numbers—up to 50 per cent for some courses in my region in the Hunter; a lack of investment in capital works; more than $800 million in funding slashed; and over 700 teachers sacked. Industry figures are warning of future skills shortages. The Liberal state government is ignoring industry concerns and are pushing ahead with moves to a privatised vocational education sector and increasing course fees by up to 400 per cent from 1 January next year, pricing young apprentices out of training.

I congratulate the NSW Leader of the Opposition, John Robertson, for heeding advice and last week committing that a Labor government would abolish the Baird Liberal government's massive fee hikes and will commit to capping TAFE fees at current 2014 levels with increases no greater than CPI. They will also stop mass sackings and cuts to courses. That is what a strong government should be doing. They should be doing the right thing for apprentices and our nation's future. It is not good enough to swap a tool allowance for a $20,000 loan program. I urge the government to reconsider the abolition of these vital industry and apprentice support mechanisms. (Time expired)

Eric Hutchinson (Lyons, Liberal Party) Share this | Link to this | Hansard source

The were many failures of the previous government—Pink Batts, school halls, the Australia Network, the NBN, but Tools for Your Trade should not have been one of them, frankly. This would not have been on the list if the planning and the compliance and the tools had been the thing that were actually purchased. But everyone knows—everyone has a story—about poorly spent grants under the Tools for Your Trade scheme. Ultimately it is the responsibility not just of the employer but also of the apprentice to contribute to their education and their training.

It is through education and training that opportunities open. I have a technical background. I studied a trade many years ago and other doors opened. I completed that and I went on to further study. On Friday I was at home in my electorate and I visited Mark Turner, at Turners Blackwood Furniture in Western Junction. I walked in and, having introduced myself, I met Daniel, who is the fourth year apprentice at that business. I asked him straight out. I asked him the question in front of his employer, Mark, and by the end of it we were having a bit of a chuckle, because, as I said, everybody knows a story, everybody has seen the examples of how a notionally good idea with poor planning did not deliver on expectations that I think many would have had—no doubt with good intent—when it was devised. Indeed, in my home state of Tasmania, we are experiencing a skills shortage in more than 60 trade areas, including carpentry, bricklaying and electrical work. My state's economic downturn has dramatically affected our industry and manufacturing base. Tasmania has suffered a serious cycle of business shutdowns. Young Tasmanians bear the brunt of that flow-on effect more than just about any other sector of the community. The number of apprenticeships offered has dropped and less apprenticeship positions are being filled. As one industry leader told me this week: 'This part of the business and industry sector is always the first to be affected when times get tough. Apprentices are often the first to go.' It is last on, first to leave when a business or industry closes and the boss can't afford to keep them. This does not bode well for an already challenged younger generation for our country's tradesmen and tradeswomen.

The latest national figures reveal that in my electorate of Lyons we have only 1,037 apprentices in training, including 430 identified as from the skills shortage areas. This is not a large number when you consider that my electorate makes up nearly half of the area of Tasmania. That is why this Trade Support Loans Bill 2014 is important for the young people in my electorate of Lyons.

We welcome whatever can be done to support more young Tasmanians into and through training to increase their skills level and, therefore, their chances of long-term employment. That message has already trickled through to business and industry in my state since the scheme was announced as part of our government's first federal budget last month.

Austral Bricks, at Longford in my electorate of Lyons, is a subsidiary of the national brickworks business. Austral has been making bricks in Tasmania for more than 35 years. It employs 25 staff and has invested $3 million in the plant in the past three years. Only last month, federal Minister for the Environment Greg Hunt flew to northern Tasmania for the official launch of Australia's first carbon-neutral brick produced at that factory. Austral general manager David Robertson told me this week that his company welcomes the Trade Support Loans scheme as extra support for apprentices through to the end of their training. He said that Tasmania needed as many apprentices as it could muster to help fill skills shortages. This new scheme will provide financial support similar to the HELP scheme for university students, which has been extended to sub-bachelor degrees and diploma courses, which, as David suggests from personal experience, is a good way to assist cash-strapped students towards the end of their training. It is a similar thing with apprentices starting on a very low wage base. This scheme will help them in those first vital few years, when their take-home pay is minimal but they face the same costs for tools and other equipment or accommodation as their qualified counterparts.

The Tasmanian Building & Construction Industry Training Board chief executive Simon Cocker said this week that he too thought that the new scheme would work well to help cut the dropout rate among young apprentices. He tells me that there is a more positive feeling for growth in Tasmania's building and construction industry than there has been for a number of years, with several big projects on the way, like the rebuilding of the Myer store in Hobart, the Royal Hobart Hospital—if we can get it back on track—and the Parliament Square development. Let us all hope that this scheme may also help to attract some young people back to the state to train and work in the industry locally.

These Trade Support Loans deliver on an election commitment by this government to provide income contingent loans for living costs for apprentices. Up to $20,000 will be available over four years to apprentices undertaking certificate III or IV qualifications. They will be similar to the Higher Education Loan Program, as I mentioned, with the repayment done via the tax system once the threshold income level is reached. Students who successfully complete their training—and that is something we want to see—will receive a 20 per cent discount on their loan. What a deal! It is the best loan I will ever get in my life. According to the latest data, about 20 per cent of trade apprentices drop out by the end of their first year and about 30 per cent by the end of their second year. So 50 per cent do not complete the course. The retention rate is unacceptable. One of the reasons for apprentices not completing qualifications is the minimal associated wages in an apprentice's early years. This bill goes a long way to address such deficiencies. The scheme targets the aspect of noncompletion and provides support where it is needed most with loan payments heavily weighted in the first two years of the apprentice's training when the risk of withdrawal is highest and wages are at their lowest. It is a must if we are serious about increasing the number of apprentices to tackle our skills shortages, as we are in Tasmania.

In summary, there is a mutual obligation between the apprentice and the employer. The scheme offers front-ended payments of $8,000 or 12 payments of $666.67 in year 1, $6,000 or 12 payments of $500 in year 2, $4,000 or 12 payments of $333.33 in year 3 and $2,000 or 12 payments of $166.67 in year 4. The important thing to recognise is that the apprentice can borrow as much or as little as they require. For example, somebody may, over six months, using $4,000 of their loan, buy tools and then opt out. They complete their apprenticeship and after four years they get a 20 per cent discount on that $4,000. What a wonderful deal!

Another example might be when they save over the first year to buy a second-hand ute for $8,000. On completion—this is depreciation on steroids—they get a 20 per cent discount on that rate. What a deal! It is the best deal they will ever get in their lives. There is an extensive list of apprenticeships on the National Skills Needs List. I am very pleased to note that the minister has included—this is true particularly for my electorate and in Tasmania more broadly—agriculture and horticulture qualifications, which are not on the National Skills Needs List, as additional skills priority areas that are eligible for the Trade Support Loans, although they are not on that list. That is particularly important in respect of skills within the dairy industry, in my state of Tasmania, and also within the horticultural sector as well. They are growing areas. I am really pleased to see the addition of those two apprentice courses within this loan scheme. It is a very positive initiative. It has broad support from apprentices and employers, and elevates apprenticeships and the trades to sit alongside diploma courses, sub-bachelor degrees and the higher education and university degrees. I commend the bill wholeheartedly to the House.

Nick Champion (Wakefield, Australian Labor Party) Share this | Link to this | Hansard source

I rise to speak in support of the Trade Support Loans Bill 2014. Like everything that the Abbott government do, there is a nasty surprise in this set of arrangements around trades. On the face of it, the government have kept their commitment—that is, they are implementing this loan-based scheme. We find and we discussed last week that they are cutting a whole lot of programs that assist apprenticeships and apprentices. The key program is Tools for Your Trade—not a mention about cutting that program before the election, not one skerrick or intimation to the people of Australia that they might consider cutting that program. Yet here we find this nasty action post election.

We hear those opposite talking about these programs, but the effect of their actions is to stop people joining the middle class. Whether you are studying for a degree or undertaking an apprenticeship, they want to saddle you with debt and, when you remerge from your period of training, the consequences will be that you will put off buying a house, starting a family and starting a business, because of these debts being loaded onto apprentices in this case but all other students and trainees.

This goes against the Australian compact. We heard those opposite talking about mutual obligation. There is an obligation on individuals to do well, train hard and advance themselves then they give back to this country by paying taxes and being good citizens. This scheme will break that compact and insert onerous debt in its place.

Labor has always been the party of trades and, if you look at the Labor Party's No.1 most quoted Prime Minister, Chifley, was a tradesman. He was a locomotive driver, which was a trade in those days. He gave technical education lectures in Newcastle. The Labor movement more generally has been a movement of tradespeople. We have done many things over the years: protecting and advancing wages; making sure that employers had the required number of apprenticeships; and pushing more training numbers through the economy through actions on the shop floor and the floor of this parliament.

Tools for Your Trade is a classic example of this—a grant to help apprentices with their No. 1 cost: tools. It was a good program, and there are lots of other good programs like the National Partnership Agreement on Training Places for Single and Teenage Parents, and the Australian Apprenticeships Mentoring Program. There are a lot of programs that have been cancelled by this government which were there to help not just the recipients of the schemes but also employers.

Trades in Wakefield have always been a topic of a lot of discussion. We have the Roseworthy Campus at Adelaide University, which is a working campus, where people learn professions. They go to work on farms as vets and previously on vineyards and the like. It is very much a university campus which is linked to work. Our view of higher education and technical education has always been about that link to work. If you look at the schemes that used to exist in the electorate at Holden, DSTO or many of the textile factories in this area, it was very much where you trained to get a trade. It was the height of work in many ways. There was never any snobbery or inverse snobbery towards trades. It was properly seen as a very important part of our economy and it continues to be.

Places like St Patrick's Technical College, which has always done a very good job, emerged from what was a troubled program, the Australian Technical Colleges program, under the Howard government, but it was always a very good school and that is why it found support from the previous government and the Catholic education system. It is a good school that trains about 300 students who do school based apprenticeships in years 11 and 12. On their website today, I saw that Geoff Goodfellow, a workplace poet, rather famous in South Australia, had visited the young students, the apprentices, and given them a different view of work. We know that that school does a really good job in the local area.

Likewise Craigmore High School—and I cannot speak more highly of this program—has got school based apprenticeships which are linked directly to jobs like SA Power Networks. They have been very supportive of a program that links young people who are at school with real work opportunities in the electricity power network to the extent that that school has got a Stobie pole—a very famous thing in South Australia—out the back for young people to train on. When you see young 15-, 16- and 17-year-old apprentices and students training on the pole with proper harnesses, learning what it is like to be at work, getting a feel for being a linesman, I know that this is a program which directly benefits not just the school but SA Power Networks.

Likewise at Balaklava high, which is a country high school in my electorate, the students there drive very modern tractors on their parents' farms at harvest time. When they went to school under the Howard government, they had to drive a tractor that was probably 20 or 30 years old. It had no GPS or any mod cons. It was an anathema to modern farming. One of the important things that that school did with its trade school program was to buy a new, modern tractor so that they could train students in modern practices. That school still has the old stooking machines—I reckon I might have been one of the last hay stookers around Kapunda. Those days have happily gone and now farmers work in a more efficient and more modern way.

We hear a lot from those opposite about the minister's comments about Tools For Your Trade. It travelled a long way. You can see their denigration of apprentices and of the trades. The minister's denigration of apprentices and the trades was repeated over and over again in this House during this debate. He said that the Tools For Your Trade program was somehow misallocated, misused or abused. It travelled as far as the Daily Mail. The headline was 'Tattoos, parties and cars: how apprentices are spending $1 billion in government grants for tools on "whatever"'.

That is a damaging message for a minister to put out there. It is a really damaging, nasty message for those opposite to put out there. And it is an unfair message because the reality is that most apprentices are very happy to get their apprenticeships and the completion rate has nothing to do with the sort of anecdotal garbage we hear from those opposite on this matter. It has to do with wages, how you are treated at work and whether the apprentice has the perception of a fair deal between the employer and themselves. All of that is outlined in the occasional paper 'Understanding the non-completion of apprentices' by Alice Bednarz from the National Centre for Vocational Education Research. I know other speakers on my side of the House have talked about various reports, but I recommend this to those opposite because there is not one mention in this of tattoos, fast cars, parties or any of that. There is a lot of talk about the way apprentices feel in their first year of work, about whether they are welcomed and about whether they are properly mentored.

We know that in most cases the completion rate is higher with big employers and the completion rate is low with small employers, so we have to help small employers with those completion rates. We know from these sorts of reports that mentoring, wages and how you are treated at work are terrifically important. The idea of mutual obligation between the apprentice and the employer is tremendously important. This paper talks about the nature of that deal and says:

Apprentices will put up with a lot, including low wages, if what they get in return is fair … If they don’t get a fair deal, then any aspect of the apprenticeship—like pay, repetitive work or a lack of workmates—can become a source of dissatisfaction and restlessness and impact on their commitment and likelihood of completion.

That is on page 19 of this very good paper. I think it goes to the heart of some of those issues.

We need to have an honest debate about completion rates. Some of the programs Labor put in place were about having an honest debate to try to address the reasons why people do not complete their apprenticeships. This government has cut all of those programs—not just Tools For Your Trade but the others I mentioned: all the mentoring programs and the programs where a small business might get some assistance in helping an apprentice in their first and second years. They are the things that have been savagely cut in this budget. What have they been replaced by? A loan. Those opposite might hail this loan as a great deal, the best loan that someone will ever get and all the rest of it, but we know what is going to happen to that loan. Slowly over time those conditions will be removed and an onerous interest rate will be put on, the loan book will be sold to a private provider and apprentices will be pursued by debt collectors and the like. It will be a very unfair system.

As I said before, what it will be all about is loading individuals up with debt. If they cannot take on that debt or do not have any capacity to service that debt, it will delay them entering the middle class, buying a home, beginning a family and starting a business. That will be the practical effect of these loans and these debts. That will be the practical effect of the Abbott government's intentions in this area not just in relation to those on the tools but those undertaking a higher education degree. Often there is a misnomer put about by those opposite that you can do either trades or a degree, but we know in the modern world so many people often do both. That is a good thing, not a bad thing, and that should be encouraged.

What we have got is the Abbott government damaging trades, shifting the obligation onto young apprentices, making the deal worse, making that idea of mutual obligation worse, not addressing the real issues in relation to completion rates and delaying people's entry into the middle class. This is a particularly savage thing for the government to do. Like with so much of those opposite's rhetoric, beneath the thin veneer of gloss there is endemic rust on the middle class of Australia. It is savage and wrong. We should not put up with it. We are going to support these bills but we do not support where this government is going in relation to apprenticeships, higher education and the entry of people into the middle class of this country.

Debate adjourned.