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

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

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

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

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

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

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

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

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

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

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

Julie Owens (Parramatta, Australian Labor Party, Shadow Parliamentary Secretary for Small Business) Share this | Link to this | Hansard source

Doesn't the Abbott government love debt! Here we have another case of it: providing access to debt to young people. We have seen it for university students—raising fees massively and then increasing interest rates, creating debt as far as the eye can see for people graduating from university—and now we see it with these training loans of up to $20,000 for people as young as 16 who are still at high school.

A country's resilience depends on the household balance sheets as much as it depends on the government's, and we see here a government that is prepared to see our young people start their lives with rising debt levels. It is an extraordinary contribution to the future of this nation by a government that claims that debt is bad, but not if they can give it to someone else. It is also worth commenting on the decision by this government to go down this path. The excuse they used in raising fees for universities and introducing these $20,000 loans for trade apprentices is that they need to address the country's deficit. Yet, if you compare the budget outlook through the forward estimates to PEFO—the Pre-Election Economic and Fiscal Outlook—that is prepared under the Charter of Budget Honesty which Peter Costello introduced, you can see that they have not managed to reduce the debt at all. In fact, the deficit is slightly larger, and we come back to surplus, on their projections, some two years later. So on the one hand they have actually increased the debt relative to the pre-election fiscal outlook, and on the other hand they are also raising debt levels for young people who are starting out in their first years as adults.

One has to wonder how much consulting they did on this to come to the conclusion that providing a $20,000 loan rather than an upfront payment to provide tools would increase the completion rates. We hear from members opposite that one of the problems is that one in two apprentices are not finishing their apprenticeship, and this providing of a loan rather than the Tools For Your Trade Payment will somehow increase that completion rate. I wonder, though, how it would have any impact at all if an apprentice is actually put off by their employer—if the employer stands them down and they are no longer in their apprenticeship. How does having a loan help that apprentice complete their apprenticeship?

They say that one of the reasons they are doing this is that apprentices have been out buying mag wheels and going on holidays with their Tools For Your Trade Payment. Where is the evidence that providing a loan will not have that result? Assuming that young apprentices do actually buy mag wheels—and I know many who do not do that—how does providing a loan change the behaviour at all? I would love to see the research for that. If, even in the first few months, an apprentice decides that the apprenticeship is simply not for them—if maybe they cannot physically do it, or they thought it was one thing and it is not—how will providing loans keep that person in the apprenticeship? And should it keep that person in the apprenticeship?

I always love this government's maths, and their maths tends to bring them down every time. One of the claims that they make on the government's side is that, by providing a 20 per cent discount on that $20,000 loan at the end of the apprenticeship, apprentices will be incentivised to complete the apprenticeship. But, again, if you look at the figures—and I doubt that the government actually has—43.9 per cent of apprentices in the trade area actually drop out in the first two years, and another five per cent drop out in the third year. In the fourth year, the percentage is very small. But 43.9 per cent drop out in the first and second years, and, by my very quick calculations, if you are taking out the loan at the rate that you are allowed—which is $8,000 in the first year and $6,000 in the second year—it is actually cheaper to drop out at the end of your second year than it is to complete the apprenticeship and get your 20 per cent discount. So if you decide that the apprenticeship is not for you, not only would you need to waste another two years to get your 20 per cent discount, but also your loan would be bigger at the end of that time, not smaller. The financially sensible thing to do under this arrangement is to drop out in those first two years if that is what you choose to do. It simply does not make sense.

In the construction sector, the figures are even more stark. Forty-eight per cent of apprentices drop out by the end of the second year and 51.8 per cent drop out at the end of the third year, and that is pretty much where it sits by the end of the fourth year. So, again, for that 48 per cent of people who drop out by the end of the second year, their cheapest option is to do exactly what they are doing. If they finish their apprenticeship and stay there for another two or 2½ years, their debt will be bigger even with the 20 per cent discount than it would be if they drop out. On the figures alone, this is not a rational decision and certainly will not achieve what the government expects it to achieve. What it will do is leave a large number of young people who decide that the apprenticeship is not for them, who lose their apprenticeship because the employer puts them off or who find that physically they just cannot do it with debt which will hinder their ability to start their lives on a firm financial basis.

One of the other issues that we raise a lot on this side of the House is the misinformation that the now government gave out when in opposition. Prior to the 2013 election Tony Abbott announced the trade support loans but did not announce that they were going to scrap Labor's $1 billion Tools for Your Trade apprentice program, which gave $5½ thousand per apprentice to help with buying tools. This now means that, as of 1 July, apprentices who enter their apprenticeship on one basis, who were planning on using a payment later on this year to pay for tools and who may already have entered into a payment plan to do that, will suddenly find that payment not forthcoming. It is usual when governments make changes like this to recognise that people have quite often made decisions based on one policy and to ease the change so that those rational decisions that people made can be followed through to their logical conclusion. But again, before the election, Tony Abbott did not tell apprentices that as of 1 July they would lose up to $3,700 for a first-year apprentice, and first-year apprentices are expecting that payment very shortly. Being young people, they may already be depending on that.

The new program—the trade support loans—are not lump sum payments. They are not payments that are designed to help young apprentices with those lumpy payments they have to make when they buy their tools. They are not designed for an apprentice who, for example, may need to buy a second-hand ute to get to a site. They are not the lumpy payments that an apprentice chef would have to make when they buy their knives. Those knives, by the way, if you have never bought a chef's knife, are incredibly expensive. They are in the hundreds of dollars per knife—incredibly expensive gear. You will find the same for carpenters if they are buying good tools. You will find the same for many apprentices. There can be very expensive, lumpy payments that come along in the early years of an apprenticeship because they have to buy tools.

These payments are actually designed as if they are income support payments: paid monthly in arrears. Again we hear members of the opposition saying that young people can save up those payments to buy their tools, but again we are talking about very young people here—people as young as 16, still in school, 18-year-olds and 19-year-olds—with not a lot of life experience or experience in managing income. In fact, this might be their first income, and they are being asked to manage saving up payments in order to buy quite expensive tools. It is really quite challenging for many young people who may be entering the workforce for the first time and receiving the first payments and who will find themselves in quite severe financial difficulties because of the low payments, particularly in the first and second year. These are young people whose wages will be very low in the first and second years—particularly the first year—because their skills are not of great use to the business employing them, and so their wages are very low in the first year. Asking a young person to manage saving up these monthly payments when they are in really quite serious financial difficulty in order to buy tools is a very big ask. It is difficult to see how this system of monthly payments will stop apprentices from spending their money on things other than tools. It may not make it easier for the odd apprentice who, as the opposition keeps saying, wants to go off and buy mag wheels, but we will probably see apprentices spending it on rent, food and all the other things they need and still not being able to buy their tools at the end of the day.

We on this side of the House will not oppose the bill. An optional loan is the government's policy and was the policy before the election—one of the few policies that they are actually following through on—but we do not believe it should be at the expense of the Tools for Your Trade scheme. We also believe that, if a loans scheme is in place, there should be appropriate advice requirements in place to ensure informed and voluntary decisions by apprentices, some of whom, as I have said, are school based apprentices as young as 16 years of age. One could come to the conclusion, for example, that a 16-year-old perhaps should have their parents' permission before entering into a loan of $8,000 in the first year. A 16-year-old is very young to be making that decision.

The bill has been referred to the Senate Economics Committee to examine the payment mechanisms, the payment of monthly instalments of the loan amount and the loan terms and conditions into the future and to consider what protection young people, particularly those under the age of 18, should have in terms of general loan advice and parental approval. These are incredibly important aspects that should really have been considered prior to this policy announcement. The level of consultation on this has been quite poor, and it shows in the poor design of the program.

Another issue of real concern to this side of the House is the government's confirmation that they are looking to outsource debt management for trade support loans. Again, placing young people who have entered into debt of up to $20,000 at a time in their lives when they are not high income earners and may not be for quite some time in the hands of private debt collectors is a worry. We do not think it is a good idea at all, but we are waiting to see what the conditions of such a thing would be. We are waiting to see how a government would regulate to ensure protection of 16-year-olds from private debt collectors.

Again, these are not people who have experience in earning a living, they are not people who have experience in handling their own money—they are learning their way through that. By the time they graduate as an apprentice they would have been through four years at least on very, very low wages. They will have, on this program, at least $20,000 in debt and they will then be, of course, going through the process of trying to find the best place to work in a sector that is increasingly contracted out and really quite volatile. We all know that construction, for example, is one of the first areas in the economy that starts to slow down. If things get bad we will probably find apprentices with their $20,000 of loan who have managed to pass the income threshold and are beginning to pay off those debts who find themselves in and out of the workforce quite frequently in their early lives and eventually have to work as contractors in order to make a living. Again, with volatile incomes which make it even harder to manage regular loan payments and potentially with private debt managers on their backs.

There are a lot of aspects of this bill that are very worrying. I go back to the initial point: this is a government that claims that debt is bad but is very, very happy to saddle very young people with debt at this level at the very early stages of their adult life. I would ask government members to seriously consult on this and see if they can find ways around some of the issues that I have raised.

Melissa Price (Durack, Liberal Party) Share this | Link to this | Hansard source

I rise today to speak on a piece of legislation that will provide the framework for the delivery of new jobs for Australian workers and for Australia's investment in the highly skilled future workforce. To do this, the Abbott government is implementing key policy measures, including the Trades Support Loans Bill 2014, which is before the House today. This is a program that directly invests in our apprentices by providing the support they need to complete their training.

One of Australia's key focuses is on ensuring our future generations are provided with a highly competitive and internationally recognised education. However, not all forms of education and training are facilitated in the classroom or at a university level. The Abbott government recognises this distinction and the need to invest in education not just for university students but for those whose employment future lies in a trade, such as carpentry or as a diesel motor mechanic—two trades that are currently listed on Australia's National Skills Needs List.

The establishment of the Trade Support Loans program was a key election commitment by the Abbott government. The Trade Support Loans program is a $1.9 billion investment by this government to support our apprentices financially, with the overall aim being to help increase training completion rates, which are currently a serious concern for Australia's future workforce, particularly in regional Australia. In fact, 20 per cent of trade apprentices drop out by the end of their first year and around 30 per cent by the end of the second year. Research has highlighted that a key reason for this high rate of dropouts is the associated wage in the early years of an apprenticeship.

The Trade Support Loans program is one measure that this government is introducing to help ease this financial burden, increase the rate of trade completions and to ensure that Australia has a highly skilled workforce in the future. From 1 July, apprentices will have the opportunity to apply for loans of up to $20,000, which will be repayable once apprentices are earning a sustainable income. Let us be clear: in the first year and apprentice can have $8000 to support themselves, $6,000 in their second year, $4,000, and $2,000 in their fourth year. Repayments will function in the same manner as Australia's FEE-HELP loans, which are received by university students. They will be repaid through our taxation system at the same income thresholds as higher education loans. Loans will be indexed annually in line with CPI and, as we know, when a loan is subject to CPI this simply means that it is adjusted based on the cost of living.

The program has also been set up with a significant incentive for apprentices to complete their trade, with a 20 per cent reduction in the amount of the loan they have accumulated throughout their apprenticeship once they complete their training. This program will effectively replace Labor's Tools for Your Trade payment, which had become an unaccountable handout under the former government.

In Durack, one group who make a significant contribution to the electorate by helping to increase the amount of people who complete their traineeships in industries such as engineering, mining, automotive, tourism and agriculture and horticulture is Kimberley Group Training. KGT achieves this by helping to establish career pathways through training, sustainable employment opportunities and support services under the stewardship of CEO, John Gummery, and board chair, Peter Stubbs. I was very pleased to recently join with the Minister for Indigenous Affairs, Senator Nigel Scullion, in announcing funding of $187,000 for this organisation under the government's Indigenous Employment Program to support Indigenous job seekers in the Kimberley to gain trade and traineeship qualifications. Despite organisations like KGT, in Western Australia there was an overall decrease in the number of apprenticeship completions in 2012-13 of approximately six per cent, while there was also a decrease in the number of apprenticeship commencements across all regions of WA of approximately 12 per cent.

However, completions in building and construction in rural WA did increase by approximately 28 per cent in 2012-13. But the same cannot be said for most other trade sectors, which saw stagnant or lower completion rates during this same period. The Trade Support Loans program is a key policy initiative by the Abbott government that focuses on improving these completion rates.

If we want a strong, highly skilled workforce for the future, especially in Durack, then we need to act now to create it. Supporting our apprentices when they need it most is how this will be achieved and should be supported by all. I commend this bill to the House.

Jill Hall (Shortland, 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. This bill establishes the Trade Support Loans program for Australian apprentices. These loans will be concessional and income contingent, with a lifetime limit of $20,000 indexed from 2017. The loans are repayable when the person's income reaches the Higher Education Loan Program—that is, HELP—repayment threshold. The bill allows for a 20 per cent discount to be applied for the loan incurred when an Australian apprentice completes their apprenticeship.

The opposition will be supporting this legislation, but there still remain a number of concerns in relation to its position as far as apprentices are concerned. This government has a record of saying one thing before an election and another thing after the election. Prior to the 2013 election, Tony Abbott announced the Trade Support Loans. He did not tell apprentices that the government was going to scrap Labor's $1 billion Tools For Your Trade Payment, which is $5,500 per apprentice. I think this was a mean and tricky trick. This is the government only telling part of the truth: 'Yes, we'll give you a loan, but, no, we're not going to pay for the tools of trade.' It is an absolute disgrace that this government says one thing before an election and another thing after the election and tries to trick the Australian people by using words with double meanings and framing all of its comments in a way that can mislead people.

I am really appalled at what this government has done in so many areas. Like many members in this parliament, I have been contacted by a number of apprentices, and even by employers who are committed to employing apprentices. They can see that this legislation is going to cause some hardship and leave young people with debts into the future. I think about one of the employers not far from my electorate, Heather, who has a hairdressing salon, Feathers. She has been employing apprentices for well over 20 years. She is totally committed to employing apprentices. She has two apprentices at the moment. One is a school-based apprentice. With no access to Tools For Your Trade Payments, this legislation forces school based apprentices—and the apprentices that Heather employs—to borrow money to buy the scissors, hair dryers and all the other equipment that hairdressers need. It forces young people into a situation where they will incur debt. I want to put on the record my thanks to Heather from Feathers for the great job that she has done and the commitment that she has made to apprentices. She is a model for employers throughout this country for the fact that she understands that, at one time, there was a hairdresser employer that gave her the opportunity to undertake her apprenticeship. She took that opportunity and is now providing that opportunity to young people in the electorate I represent. I encourage more employers throughout Australia to do what Heather does and to take on apprentices.

In doing so, I have to say that I am very disappointed with the government—particularly with the minister, when he said that young people were using the money that they received from the Tools For Your Trade Payments to buy mag wheels for their cars and to get tattoos. I was listening to the debate a little earlier today and heard one of the previous speakers in the debate saying that apprentices can borrow the money that will be available through the Trade Support Loans Bill to buy a car. On one hand, you had a situation where apprentices were getting money to purchase their tools of trade, and now they are going to be forced into a situation where they must borrow the money to access those tools of trade. To be quite frank, I do not think it is good to force young people into a position where they need to access loans to be able to purchase tools and equipment. It really puts them in a position where they are incurring a huge cost right at the beginning of their working life.

The provision of the optional loan is not opposed by us on this side of the House, but it should not have come at the expense of the tools of trade scheme. The two schemes should run together. Unfortunately, the Abbott government is showing its real commitment to apprentices by axing the tools of trade scheme, the Australian Apprenticeships Access Program, and another scheme that I am particularly supportive of, and have been over a number of years: the Australian Apprenticeships Mentoring Program. That program works to help those young people who are undertaking an apprenticeship and who may be struggling, for either financial or social reasons. They might be struggling with one aspect of their apprenticeship, and that mentoring service program allows them to get the support that they need to get through their apprenticeship. I have spoken to apprenticeship organisations, and they have told me just how important that scheme is and how so many of their apprentices have benefited from the scheme. This government is cutting those programs that have helped so many young people when they have been undertaking their apprenticeships. There are a number of issues that I don't think are very clear at this stage: the government hasn't been very clear about the financial considerations, which are a major barrier for apprentices taking up training or completing it; and the measures will have little impact on the skills shortage.

In Australia we have had a chronic skills shortage for a number of years. When Labor was in power, we addressed this shortage by putting in place a number of programs that helped young people take up apprenticeships and by targeting areas where we needed apprentices. Unfortunately, this legislation will do very little to attract young people to undertake apprenticeships.

In the Hunter and the Newcastle, many young people have undertaken apprenticeships over the years. I remember years ago when I was working in the employment area young school leavers or final-year students would come in and I would ask them what they wanted to do. A very high percentage of those young people said they wanted to be hairdressers—that tended to be the girls—boilermakers or fitters. I truly believe that young people who express a desire to undertake apprenticeships in the future will struggle to access them with this legislation.

A person taking out one of the loans will not completely repay it until they have paid back any HELP debt they have. That is pretty hard for a young person, and it has the potential to extend the time taken to repay the loan considerably. The relatively low income of many tradespeople, particularly when they first start out, is going to lead to this period being drawn out and to the possibility of there being a high default rate. This could mean that the program is going to cost the taxpayer a lot of money. The program is available to cert III and cert IV courses, and the loan must be paid to the apprentice at the completion of each instalment period.

In the shadow minister's contribution to the debate, she said that the government did not advise the Australian people before the last election that they were going to abolish the Tools for Your Trade program. Also they have not adequately explained this legislation, the interest rate or the full liability of the loans in plain English. They haven't offered adequate protection for school based apprentices under the age of 18, and that raises a question: is this government asking young people under the age of 18 to sign a contract? If not, they will need to involve their parents or guardians. They need to explain to the Australian people how this will work and make sure that career counsellors—who no longer have access to the Job Guide or myfuture, because this government is defunding those fantastic tools—in schools know how this program will operate so that they can give the right advice to the young people who are leaving school.

The shadow minister also raised the issue of fair and reasonable transition arrangements for current apprentices. This legislation is pulling the rug out from under the feet of young apprentices—those who have made decisions based on the programs that were in place. There is no grandfathering of the previous program and it is not allowing young people who have made a commitment to undertake an apprenticeship to finish their apprenticeship under the rules that were in place when they started. It is changing the rules and shifting the goalposts in the middle of a game, and that isn't good enough. The government needs to rethink that aspect of it, make sure that there is adequate privacy protection—that is, point 5 of the amendment that was moved by the shadow minister—and offer apprentices the option of lump sum payments in order to purchase expensive items.

There are a number of very short-sighted moves accompanying this program. The apprentice mentoring program and Tools for Your Trade program are ending, and this undermines the legislation. As I said at the commencement of my contribution to this debate, we, on this side of the House, will not be opposing this legislation but we certainly have a number of concerns. I hope I have outlined fully the concerns that I have for those apprentices and the employers who have made the commitment to offer young people apprenticeships. While supporting this legislation, I have some serious concerns.

Angus Taylor (Hume, Liberal Party) Share this | Link to this | Hansard source

Few issues can be more important for the future of this country and certainly the future of my electorate than the twin problems of chronic youth unemployment and chronic skill gaps. To understand the situation we have and the trade support loans bills that are before the House, it is worth going back over some of the problems created by the last government. From 2004 to towards the end of 2007, under the previous Howard government we saw 13 per cent increases in youth employment rates but between 2008 and last year we saw an eight per cent reduction in youth employment rates, whilst the overall employment market increased by eight per cent, and we saw the participation rates for people under the age of 25 falling from 71 per cent to 66 per cent, having climbed in the previous five years. We are at the point now where we have youth unemployment rates of 12.4 per cent, compared to just under six per cent for the overall economy. We are now at the point where one in three unemployed people are aged under 25 and we have hot spots of youth unemployment in places like Bernie and Devonport of over 20 per cent. So this is a very serious problem that the previous government failed to address.

Let us take a deeper look at apprenticeships and training. In the final quarter of 2013 commencements in apprenticeships dropped 19.6 per cent when compared to the previous year and completions decreased by 24 per cent relative to the previous year. These numbers are worrying but the numbers are even bleaker for trades and technical training in particular. We see—and we have heard this from previous speakers—that fewer than 50 per cent of people are finishing their courses. We are consistently seeing that now.

The Department of Employment has done some notable research in the area. In a 2013 report it demonstrated that shortages exist for a number of occupations, particularly amongst the trades. The concentration of skill shortages within trades is demonstrated by the fact that six professions were in shortage in 2013 and 18 technicians and trade worker occupations were in shortage. Some of the specific areas, which are of great concern to my electorate, include: food trades, where only slightly over 50 per cent of the positions are filled; construction trades; and resource related trades, where again slightly over 50 per cent of the positions are filled. Further, that report said, with regard to food trades:

In addition to that research, the Australian Industry Group employer survey from 2012 shows that technicians and trade workers represent the most significant areas of skill shortage. It is a much larger number than for any other occupational group, with 33.3 per cent of survey respondents noting shortages in this area. The AiG report summarises:

Completion rates for Australian Apprenticeships are unacceptably low at approximately 55.4%. This represents a significant economic cost—

and it is a great problem for the economy. Our policy, which is in the legislation in front of the House, is aimed at addressing this. I will not repeat the details of the policy. In contrast to what we heard from the member for Shortland, it is worthwhile looking at what the experts have to say about this legislation. Again the AiG, the Australian Industry Group, said:

The Trade Support Loans Scheme is a positive step, enabling apprentices to access financial support over the course of their apprenticeship. We particularly commend the completion incentive built into the loan structure.

That is a very important part of the structure of this policy because it is designed to get people to finish their courses. We know that is as big a problem as getting them to start. Finally, we heard from the NGO by the name of BUSY, whose CEO is Paul Miles:

The Trade Support Loans are a fantastic solution to ease the financial burden by providing apprentices with real support while they complete their skills training

I commend this legislation to the House.

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

It is quite amazing that the program before us is being hailed as something that is going to encourage more people to enter the trades. The primary argument appears to be that it will encourage them to continue and complete their trade training. If we look at the package in the trade support loans bills that the Abbott government is delivering, we will see results very different to that. It almost beggars belief that they could claim that a government that is cutting $5,500 from each apprentice—without any electoral mandate whatsoever—is somehow adopting a stance that is likely to encourage more apprentices into training and encourage those apprentices who are training to stay in training. It is absolute nonsense.

We are supporting the legislation here tonight because this trade support loans program is really now all that is going to be on offer for apprentices and to stimulate trade training, but we have to say it is a vastly inferior package to that that was available under Labor. Labor positively encouraged apprenticeships. We had a meeting the other day in Perth of a group of young apprentices from a whole range of trades. There were about 15 young guys there from the Princess Margaret worksite. They were appalled by the statements that had been made by ministers of this government. The Minister for Industry said that the problem with the Tools For Your Trade program that had been offered under Labor was that they all raced off and got tattooed and were not spending it on their trade training. That is completely contemptuous of these young people who have embraced trade training. Indeed, it is treating these apprentices in a way that no government would ever deal with any business. The idea that these young people have signed up to apprenticeships understanding that they were going to get, over the course of their trade training, a tax-free benefit of $5,500—having signed up and committed themselves to take on jobs that are, it would be fair to say, very modestly paid—to then find the ground rules have changed is, I believe, unacceptable. It is a bad policy. To introduce this in such a way that those people who have already made a commitment to an apprenticeship—who have started their training and entered into financial commitments—then find the ground rules have changed is particularly unacceptable.

What we are seeing happen is apprentices are now being hit twice. Not only are they losing the Tools For Your Trade scheme, they are also facing the actions of state governments. In Western Australia, in particular, I know that with the deregulation of TAFE fees the cost of doing an apprenticeship has increased very dramatically, particularly for those young people who are working for smaller employers and have to cover their own fees. This is a huge liability. We have lots of people now in their second or third year of apprenticeship and suddenly all the ground rules have changed. Not only are they losing their Tools For Your Trade assistance scheme for the life of their apprenticeship, they are also being required to pay much higher apprenticeship fees.

I will quote a few people. Mercey contacted us. He is a young apprentice carpenter from Perth in his 20s. He has two jobs: he is an apprentice during the week and he works at the local supermarket each weekend to make ends meet. In total, working that seven days a week earns him the princely sum of $870. He works for a very small employer and has to cover the cost of his own fees which are now, he tells us, some $12,000 over three years. He is absolutely stunned that the government could unilaterally take away Tools For Your Trade, which had been very much a part of his decision-making on going into his apprenticeship. To suggest that taking out a loan for $20,000, that will have to be paid back, is in any way a better deal for him is just a complete and utter fantasy.

Danielle has contacted us. She is very concerned. Her partner has finished all the coursework for his adult apprenticeship in light vehicle mechanics and was due for his final payment not long after the cut-off date. Danielle and her partner have two children and the Tools For Your Trade payment was used to purchase all the extra tools he needs to do the job that an already tight budget could not stretch to. Here you have a young man, with a young family, seeking to obtain skills. Obviously, it is hard to manage with a family on the very modest pay of an apprentice. Now the Tools For Your Trade payments have been cut it will be so much more of a struggle. How is this going to encourage more people into apprenticeships? It is absurd.

We had Erica contact us. Erica is a hairdressing principal. She said:

I have just heard from my hard-working, low paid young hairdressing apprentices that the Tools For Your Trade payment has been cancelled from July. This is a great disadvantage to them, considering they pay their own TAFE fees and have to purchase all their tools while earning under $11 an hour for their first year. A set of straighteners for a professional can cost at least $2,000.

A whole $8.30 a week! We should be supporting apprentices.

Andrew Nikolic (Bass, Liberal Party) Share this | Link to this | Hansard source

Luckily the Trade Support Loans will cover it!

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

They now need to, on their very low income, enter into a loan! Obviously this makes this a much more unattractive proposition. I find it extraordinary that you cannot see that. Of course, they can go and take out a loan!

I do not know whether you expect that hairdressers, once graduated, will be earning anything like doctors and lawyers. I suspect not. This whole proposal is predicated on treating trade training like university education because people who have university educations, the argument goes, make 75 per cent above the average earnings, so they can afford to pay these higher contributions. That is why we are asking them to repay more money more quickly.

Andrew Nikolic (Bass, Liberal Party) Share this | Link to this | Hansard source

You don't have to borrow the full amount!

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

That is just for one item. 'Just borrow it!''

If we go back to the basics, we see there is a decline in the take-up of trade training in this country. We are going to go out and stimulate that. How are we going to stimulate that? We are going to remove a tax free grant, structured over the life of the training; we are going to take that away and give them a loan. That is really going to get people fired up; that is a much better deal!

Not only that, it does not actually deal with some of the real issues around the attrition rate of apprentices. The member for Parramatta set out some very good economic arguments as to why this structure certainly will not be conducive to encouraging people to continue with their apprenticeship. One of the key things we have to do is expose young people to trades earlier. The development of trade training centres in schools was very much part of that. While they were still at school, young people in year 9 and year 10 on had the opportunity to try out different trades—to get an understanding of what it is like to work with metal, what it is like to work with machines or what it is like to work with wood—and acquire some of those cert I and cert II qualifications while they were in a structured environment.

School based, technical trade training has two real advantages. One is it gives kids an opportunity while they are still at school to get an idea of what those trade skills are like and whether or not it is something they like doing, even more so where schools have relationships with industry so kids can go out from school into structured workplace learning environments. The second thing is it allows young people of 15 and 16 to operate in the more structured environment of school, where there is a higher level of supervision and pastoral care. We had some very interesting evidence from Morley Senior High School, which is in my electorate and has been a registered training organisation for 10 years. Their trainees who do cert I and cert II through the school have a really high rate of success. They compared the environment that is offered at their school to the environment that is offered at institutes such as Polytechnic West, which is more suited to adult learners and perhaps people who do not have the same lack of development of the executive function that one might find with a normal 15- and 16-year-old. They said that introducing trade skills and doing the early certificates in the more structured school environment had been very successful, so that when their apprentices go out at the age of 17 or 18 they are much better placed and equipped to operate within an adult workplace.

I think it is highly unfortunate that we cut the trade training centres. If we were truly concerned about the lack of people going into trades and the very high attrition levels, we would have looked very closely at that model of VET being delivered in schools in those early years and seen how that can indeed augment the quality of young people taking up apprenticeships. But, no, instead of doing that we cut the trade training centres. And not only have we done that—and this is apropos a discussion I had in this place earlier in the day—we have been taking all the brakes off 457 visas, which is undercutting a requirement to have a culture of training our own people. There are many easy solutions available that involve just bringing people in, rather than training our own. As I said, we are supporting this loans scheme, but anyone that thinks that this is a superior option that will see us reverse the very unfortunate decline in the take-up of trades is greatly deluded.

Andrew Nikolic (Bass, Liberal Party) Share this | Link to this | Hansard source

As someone who comes from a family of tradesmen and who continues to interact in a tradesmen-rich environment in Launceston, I rise to speak in support of the government's $1.9 billion trades support loans. There is strong support for this scheme across my electorate of Bass. Since the budget I have given a number of speeches across my electorate. In my roles as the patron of cycling in Tassie and the patron of Northern Tasmanian Netball, I have interacted with young people at schools and talked to them about how we are expanding opportunities across our country when it comes to earning—opportunities both in pre-degree courses but also, importantly, in vocational education and training.

The response that I get is very similar to the one that I got when I arrived at the Army Recruit Training Centre as the Commandant. They used to fundraise each year and fund a scholarship for a young person studying at the local university. But it became very clear that we were only touching part of our constituency in the Riverina environment, that there were a whole bunch of people undertaking vocational education and training who never had that opportunity. So we came up with a separate scholarship which we would award each year for a three-year period for someone doing an apprenticeship. It was a very welcome initiative. The comments I got related to fairness and acknowledging that there was more than just one pathway in our society, through university, and that there were other important pathways.

The tradesmen that I have discussed this with in my electorate of Bass are similarly positive about the scheme and the fact that it will target occupations on the National Skills Needs List such as plumbers, diesel mechanics, electricians and fitters. I have a friend in Launceston who has been a plumbing contractor of 37 years. His name is Andrew Foley. He says:

It's a long time coming, and anything we can do to help kids into a trade, as we do for young people into university, is a good thing.

He acknowledges that expansion of opportunity, not just for the 80,000 young people who will get an opportunity to do a pre-degree course under the HELP scheme with the additional opportunities that provides, but for apprentices as well. Another plumber friend, John Oldenhof, who is now in his 70s but is still putting in a full day's work and a whole lot of volunteering in my Lions Club, is another fan. John sees this also as an overdue measure that acknowledges the realities in our society. John says:

It doesn't matter where they start, providing they start, and this scheme has a very powerful incentive.

What Andrew and John and many other people in northern Tasmania like best about this scheme is that it has choice at its heart.

Apprentices can choose to access the full amount or part of it. And it does contain an important incentive: upon completion of training, the loan amount will be cut by 20 per cent, up to a value of $4,000. It is called reinforcing success and encouraging our young people to start something and to finish it. All too often, young apprentices do not complete their training because they cannot afford the costs associated with undertaking an apprenticeship, so this is about providing a hand- up early in the careers of our young people to ease their financial burden by front loading that financial assistance during the initial years when they need it most. That means support of up to $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. It is a clearly superior incentive to the $4,000 tool kit grant under those opposite which had become an unaccountable handout that did little to help apprentices complete their training.

So let's put the negativity away and acknowledge that young people are over $6,000 better off in their first year with this scheme compared to the previous one. Our hope is that they will complete their training, be rewarded with the $4,000 incentive deduction, go on and have productive careers, earn good wages and raise a family, pay their taxes and contribute to a healthy, prosperous society. The trade support loans will be repayable at the same income thresholds as university HELP loans when an apprentice starts earning a sustainable wage of above $50,000. Importantly, the loans are the best sorts of loans: they are interest free and constitute an early investment in the potential of the individual.

With that, I know a lot of other speakers are keen to have a say this evening, so I will cut my remarks short. I commend this bill to the House and I look forward to its commencement on 1 July.

Rob Mitchell (McEwen, Australian Labor Party) Share this | Link to this | Hansard source

I rise to speak on the amendment to the Trade Support Loans Bill 2014 second reading motion. Firstly, I, like most Australians, am furious but, sadly, not surprised by yet another Abbott government broken promise. This is a government that is built on lies. Prior to the election, the Liberal Party was spruiking the introduction of the trade support loans, telling apprentices that the coalition would 'provide better support for Australian apprentices'. There was absolutely no mention whatsoever that the government was planning to scrap the Tools For Your Trade program.

The Tools For Your Trade program was vital to and heavily relied upon by Australian apprentices. The $5,500 provided was used to buy the necessary tools and equipment for apprentices to be able to complete their training. Depending on their field, the money would be used to purchase important safety gear, drills, uniforms, knives, scissors or hair dryers—all the items required to complete their apprenticeship. But now our apprentices have been slapped in the face, yet again, with an Abbott budget of broken promises. In fact, before the election, the coalition went on record to confirm that they were keeping the Tools For Your Trade program. For the benefit of the member for Paterson, who earlier in the chamber was unaware of this, in The Sydney Morning Herald on 26 August 2013 it was stated:

The coalition loans will be made available in addition to the commonwealth Tools For Your Trade incentive scheme …

As we know—it is the reason we are here today—this is just another in a long line of broken promises by the Abbott government.

In my electorate of McEwen, we have a large number of young people entering into trades and apprenticeships. Recently I received an email from a registered training organisation in the printing industry, explaining how the Tools For Your Trade cuts are already affecting his apprentices. He said:

Some of our apprentices have purchased tools and now they will be left out of pocket. The printing trade already has a skills shortage and this just makes it harder, especially in our regional areas.

By cutting the Tools For Your Trade program so suddenly, with no grandfathering system in place, our apprentices are now out of pocket. It has become quite clear those opposite do not understand apprenticeships. They do not understand that apprentices get a lower wage than other workers during their time as an apprentice. This means they are behind the eight ball from day one.

The sting of this funding cut is made even more painful with the Abbott government cutting other essential and important apprentice programs. For example, the apprentice mentoring program provided experienced tradies as mentors in the relevant field the apprentice had enrolled in. This program meant the apprentice would be able to ask questions and seek advice on their training from someone who knew the ropes. This program meant a higher success rate in apprentice programs because apprentices had someone to talk to about their issues—a sounding board, if you like—but the Prime Minister has scrapped this program as well. This comes at a time when an apprentice probably needs more help than ever since the government is openly turning its back on apprentices and those undertaking vocational training. Mr Abbott's Treasury spokesman is on the record saying the coalition would 'abolish' trade training centres in schools, while Labor promised all secondary schoolkids will have access to trade training centres by 2018. Right across the electorate of McEwen, these trade training centres have been delivering opportunities for kids who may drop out of school early and not take those opportunities. Mr Abbott failed to release a skills and training policy in 2010, and the so-called 'Real Solutions' pamphlet made no reference to this area, but now he is trying to pull the wool over the eyes of apprentices.

In contrast, the Labor government was already providing apprentices with the tools they need for their trade, via the Tools For Your Trade payment scheme. We also introduced a HECS style loan for VET course fees in 2009. That helped some 55,000 students in 2012. Labor has helped 70,000 Australians into an apprenticeship through Apprentice Kickstart. We announced the $35 million Step into Skills program, which would deliver foundation skills to 8,900 disadvantaged young people to boost their chances of securing a job or further training, although this has since been cut by the Abbott government. Ours is the party that is committed to skills. It was the Labor government which invested more than $19 billion in skills and training over the last five years. Those last five years have delivered more opportunities than ever before for many young people, particularly those in rural and regional areas, where job chances are slim and opportunities are not that great.

In this latest budget, almost $2 billion has been cut from support and training for Australia's apprentices and workers, including the National Workforce Development Fund, the Australian Apprenticeships Access Program, the Accelerated Australian Apprenticeships program, the Alternative Pathways Program, the Apprentice to Business Owner Program and the Step into Skills program. These are just a precious few of the programs cut by this government. If the Prime Minister really does believe he will 'provide better support for Australia's apprentices', then he has a twisted way of showing it. These loans are not a hand up; they are just a hand in your pocket.

The Trade Support Loans scheme will be supported on this side of the House in light of no other assistance programs being made available to our apprentices. However, let it be known that the amendments we would like made to the bill are essential in ensuring our apprentices are supported and not disadvantaged in any way. These amendments ensure apprentices are aware of how and when the funding and training cuts will affect them. They ensure apprentices, especially school age apprentices, are fully aware of the financial implications involved in a trade support loan. They ensure that the privacy and legal arrangements involved in a trade support loan are maintained to the highest standard.

If Australia is to go forth and improve manufacturing, improve skills, improve trades and not rely on a flood of 457 visa workers, we need to support young people and give them every opportunity through different pathways to make a career for themselves and to give them a future. It is important that we do this due to the globalisation of our economy and the need we face particularly in areas like McEwen, where you have massive housing growth and business opportunities. We need to ensure that we have tradespeople available to service those needs, to build those homes, to build those roads and to do the things that we need to do. I know, having been an apprentice in the shoe industry, which is long gone from our shores, that it is an important thing to have an apprenticeship. It was an important job opportunity to fall back on should anything go wrong. I think that it is important that we make sure kids get every opportunity, to make sure that this country can grow and develop and be the best that we can be. In supporting this bill, we want to make sure that the government knows that we will be here and watching, and making sure that we support apprentices and young people in their future.

Michael Sukkar (Deakin, Liberal Party) Share this | Link to this | Hansard source

It gives me great pleasure to speak in support of the Trade Support Loans Bill 2014. A lot of speakers on the other side of the chamber have spoken begrudgingly about the benefits of the Trade Support Loans program. I must say that offering apprentices $20,000 over the life of a four-year apprenticeship, heavily front-ended for the first and second years of their apprenticeship, is, in my view, overwhelmingly positive. I have a lot of apprentices in my electorate. Indeed, since the budget I have visited a number of training facilities and spoken to those apprentices. The $5,500 that was provided under the Tools For Your Trade program just was not enough over a four-year period. In contrast, the $20,000 that will be provided under the Trade Support Loans program will offer for those people who need it more access to greater funding. And those that do not want to take it up do not have to. The beauty of the Trade Support Loans program will be that if you are in a trade that does not require the sort of additional support, or you do not need the additional income supplement, that the Trade Support Loans program offers, you do not need to take it up.

I think members opposite, in a sense, want the status quo. Fifty per cent of the people who commence an apprenticeship not finishing—they think that is acceptable. Increasing youth unemployment—they obviously think that is acceptable because they are offering no changes to the system that has not provided the sort of solutions that we need. But business-as-usual just was not an option in our view.

The Trade Support Loans program offers incentives for apprentices to ensure that they are provided a discount when they do complete their apprenticeship: a 20 per cent discount on the face value of the loan taken out through the trade support loan—a maximum of $4,000. Offering that kind of incentive I think is going to ensure that we head in the right direction in completion rates for apprentices. But the main point—and I think this is one of the big reasons we find apprentices unable to continue and, indeed, finish their apprenticeship—is that often you are working ridiculously long hours and you are getting up at the crack of dawn but you have peers and friends who might be working at McDonald's or Red Rooster getting paid more than you. So it is very, very demotivating. It is very hard to continue working that hard for four years. I think that is one of the big reasons why our completion rates for apprentices have been getting worse.

The $20,000 Trade Support Loans program goes a long way to improving that situation. There is great flexibility for what the apprentices can put the $20,000 towards—$8,000 in year 1, $6,000 in year 2, $4,000 in year 3 and $2,000 in the final year. So it is heavily front-ended to the years where the wages in the apprenticeship are the lowest. We think that is going to assist apprentices to hang on in those first couple of years. We know that apprentices disproportionally drop out in those first and second years. So if we can help them get through that initial period and into years 3 and 4, we think that we can increase the completion rates for apprentices. That is what this program is all about.

The status quo is not working. Members opposite talk about the requirement to attract apprentices. Fifty per cent of people dropping out is not going to achieve that goal. It is hard enough to attract apprentices to start with. Once we get them in the door, we have to do everything we possibly can to ensure that they complete their apprenticeship. That is why I am very proud of the Trade Support Loans program. There is nothing that Trade Support Loans do not offer that Tools For Your Trade did. The net present value of $20,000 loan with the $4,000 discount is a hell of a lot more than the $5,500 from Tools For Your Trade. If it is simply a comparison between the two programs—which it should not be, but if it is—then this is a good news story and this is something that I think the parliament should be agreeing to, not in a begrudging way but actually happily telling our apprentices: 'We value you and we want to support you as much as we support those people entering tertiary study.'

The days of having apprentices as second-class citizens are over. People who have undertaken tertiary study have been able to access concessional loans only repayable once they earned over $50,000, or thereabouts. We are offering that same opportunity to apprentices now. So this is a fantastic good news story, and I am very pleased to support it. I understand that, given that it is such good news for apprentices, many of my coalition colleagues would like to speak on this bill, so I will end my comments there.

Tim Watts (Gellibrand, Australian Labor Party) Share this | Link to this | Hansard source

I am pleased to have the opportunity to speak on the Trade Support Loans Bill 2014. Since the federal budget there has been a lot of attention given to the plight of university students under this government—and deservedly so, given the Prime Minister's insistence on breaking yet another election promise in order to massively increase both university fees and the cost of student debt. But it is not only university students who are suffering under the Abbott government.

Australians undertaking apprenticeships and vocational education will also suffer from cost-shifting and buck-passing under this government. This bill establishes the Trade Support Loans program for Australian apprentices. The Trade Support Loans program was announced by the then opposition prior to the 2013 election. But what then then opposition leader, now Prime Minister, did not tell apprentices before the last election was that he also intended to scrap the $1 billion Tools For Your Trade program, established by the previous Labor government.

On this point, I note that the member for Paterson indicated, during his contribution to this debate, that the opposition had been upfront with the Australian people about their intent to axe the Tools For Your Trade program before the last election. But when challenged on this point by the member for Hunter, the member for Paterson declined to provide evidence for this claim. Given the recent penchant of those opposite to tell fibs about the fictions they told voters at the last election, to offer furphies about the fabrications they offered to voters, and to provide falsehoods today to justify the fraud they perpetuated at the last election, it would assist the House greatly if Minister Macfarlane could table evidence for the Member for Paterson's claim during his summing up of this debate. I call on him to do so.

The Tools For Your Trade program provided up to $5,500 per apprentice in tax-exempt cash payments to support apprentices with the costs of their training, buying tools needed for their apprenticeship, and other costs associated with their apprenticeship. In its place, the optional loan scheme that was originally intended to be made available in addition to the Tools For Your Trade payment, as a supplement for these cash payments, now remains as the only specific financial support offered by the government to apprentices.

Anyone who has had an apprentice in the family knows that many apprenticeships carry very high costs for the tools and equipment needed on the job. The financial reality for these apprentices is that as a result of the policies of the Abbott government, instead of being able to utilise government support to meet these costs, these costs will now be covered by a loan that must be repaid to the Commonwealth.

For many apprentices who have already commenced their trades under the previous government, this could mean up to $3,700 lost in future payments for a first-year apprentice. Providing loan based support for apprentices is not opposed by those on this side of the chamber. It is a useful method for providing additional support for people taking the initiative to improve their skills. But it should not have come at the expense of the Tools For Your Trade scheme that provides an appropriate level of support for people making the decision to make a long-term commitment to improving their skills and education.

Unfortunately, the Tools For Your Trade program is just one area where the Abbott government is cutting support for apprentices and shifting the costs of these apprentices to state and family budgets. Also suffering the effects of Tony Abbott's apprenticeships axe are the Australian Apprenticeships Access Program, the Australian Apprenticeships Mentoring Program and the Apprentice to Business Owner program. These programs have all been axed by a government that is telling young Australians they ought to be learning or earning, while at the same time attacking the very programs that assist them to do so.

This bill provides for the introduction of Trade Support Loans of up to $20,000 to be repaid on an income-contingent basis. Loans of this kind may well be a worthy supplement to other forms of government support for apprentices. But given that these loans will be available to school based apprentices aged 16 to 18, measures need to be put in place to protect children from the consequences of what are major financial decisions. This need is further heightened by the fact that the government intends to outsource debt management for Trade Support Loans to the private sector, potentially leaving $20,000 debts incurred by 16-year-olds in the hands of private debt collectors. It is a worrying prospect, and these bills should include provisions to ensure that apprentices—particularly school based apprentices—receive appropriate advice to ensure that they make informed decisions about loans incurred under this program.

Issues like this have driven Labor to seek an inquiry into the bill through the Senate Economics Committee. This inquiry will examine the payment, by monthly instalments, of the loan amount; loan terms and conditions into the future; future outsourcing of debt management by the government; the protection of 16- to 18-year-old apprentices; and general loan advice to all apprentices.

However, as Tools For Your Trade participants have already been notified of the program closure, Labor is minded to support this bill. Of course, all the financial support in the world for apprentices will be for naught if the learning institutions that support apprentices are not themselves funded. In this respect, the record of the Liberal Party, particularly at the state level, is extremely poor.

As I have previously informed the House, the impact of the State Victorian Liberal government's swingeing cuts to TAFE and VET funding in Melbourne's west have been particularly severe. In Melbourne's west, less than 50 per cent of the population have completed high school, and less than 10 per cent have completed a bachelor degree. We also have a very large migrant and culturally and linguistically diverse community, with over half of the resident population in Melbourne's west speaking a language other than English at home. I am talking of families like my own.

In this context, TAFEs are particularly important to Melbourne's west as providers of tailored employment training—often addressing skills gaps or deficits in basic education. The Victorian Liberal government's cut of $170 million in funding allocated to TAFEs to meet their community obligations, promote social inclusion and provide support to students from disadvantaged backgrounds, has particularly hurt Melbourne's west. One result of these cuts has been the retrenchment of more than 13 full-time youth and education support workers at Victoria University. These student support roles are particularly important for institutions like Victoria University, which support large numbers of students who are either the first members of their immediate families to engage in tertiary education or who come from disadvantaged backgrounds. These students often require a little more holistic support early on in their studies to ensure that they are able to make the challenging transition to tertiary study. These students often do not have the experienced support networks enjoyed by more privileged students and, as such, are at risk of dropping out of tertiary education early in their degrees.

More broadly, Victoria University, the primary provider of higher education in Melbourne's west, has been substantially impacted by the cuts in VET program subsidies by the Victorian Liberal government. Cuts to VU's program-subsidy funding constitute over 25 per cent of the total revenue of VU's TAFE. As a result, VU has been forced to undertake major retrenchments of its TAFE teachers and support staff. As VU is a major employer in Melbourne's west, this has also had obvious flow-on effects for the broader economy of the region. Cuts in VET fees in Melbourne's west have also had an impact on the fees faced by prospective students. When coupled with the Liberal government's decision to remove caps on VET student fees, the cuts in VET funding have had the inevitable consequence of pushing student fees higher.

TAFE providers are forced to increase fees to compensate for lost government funding in order to remain viable, with consequences for the accessibility of education for students from disadvantaged backgrounds.

A further consequence of the Victorian Liberal government's cuts to VET funding is the knock-on effect that these cuts have on the accessibility of university study in Melbourne's West. As students from Melbourne's West are statistically more likely to come from lower socio-economic status backgrounds, they rely heavily on alternative pathways to university study—including VET programs, in particular.

Of particular concern is the state Liberal government's decision to dramatically reduce funding for VET Certificate I and II courses. These courses are generally not vocational in nature, but instead are used by disadvantaged students as bridging courses to further study. Limiting access to VET programs in Melbourne's West therefore has a pipeline effect of limiting access to university study for students in the region. The cumulative effect of these changes is to further entrench educational disadvantage in Melbourne's West.

The Abbott government tells us that the age of entitlement is over and that our young people must earn, learn or starve.

Brett Whiteley (Braddon, Liberal Party) Share this | Link to this | Hansard source

Hear, hear!

Tim Watts (Gellibrand, Australian Labor Party) Share this | Link to this | Hansard source

I take that interjection from the government! Bills like this reveal the true unfairness of this prescription. The hard truth for young people in this country is that they are being asked to learn or earn, by this government, at the same time as they—the government, and their state Liberal colleagues—are making doing so that much harder.

If the government were serious about helping young Australians learn or earn, it would keep programs like the Tools For Your Trade scheme, the Australian Apprentices Access Program, the Australian Apprenticeships Mentoring Program and the Apprentice to Business Owner Program. The fact that they are pulling down the ladders at the same time as ripping away the safety net tells you all you need to know about their aspirations for the young people of this country.

Brett Whiteley (Braddon, Liberal Party) Share this | Link to this | Hansard source

It is a pleasure tonight to speak in support of the Trade Support Loans Bill 2014. This is one of the many exciting initiatives in this year's budget with an eye to the future, with an eye to ensuring that our economy is sustainable and that every person in this nation has an opportunity to get ahead. The announcement by the Treasurer, on budget night, to introduce a new student loan scheme to assist young people with the costs associated in undertaking and completing an apprenticeship represents one of the most important shifts in a generation in the way the government and the community treats young people considering apprenticeships.

These reforms will have a significant positive impact on many young people in Braddon and Tasmania. For too long, some within previous governments and the wider community have viewed those who have chosen to undertake an apprenticeship as being of less value to the economy—that those who choose to go to university hold some sort of superior status. An apprenticeship is too readily viewed as the easier, inferior option for a young person and that they only do it if they are not smart enough to go to university. This bill goes an awful long way to dispelling that myth.

Unfortunately for many young people in the past, undertaking an apprenticeship was made all the more difficult by this attitude. This attitude resulted in young apprentices not having access to deferred low-interest loans and financial arrangements similar to university students. The Trade Support Loans Bill puts an end to this act of social discrimination. This bill will reverse this damaging attitude and place apprentices on level pegging with university students—as does another great reform of this year's budget, to place more courses under the FEE-HELP scheme, in line with most university undergraduate degrees. As part of this reform, apprentices may be eligible for concessional income-contingent loans, in a similar fashion to FEE-HELP loans or the old HECS loan scheme.

Under this new arrangement, apprentices in a priority occupation can receive up to $20,000 over four years, to be repaid at the same income thresholds as university students, which are currently set at about $53,000 per annum. Under the Trade Support Loans payments will be made in arrears, with $8,000 available in the first year, $6,000 in the second, $4,000 in the third and $2,000 in the final year. In addition to providing many apprentices access to these loans, the government will also provide a 20 per cent discount on the loans—meaning apprentices will only pay $16,000 as a maximum, of the loan, when and if they complete the training.

I find it hard to accept the basis on which many of the speakers opposite have contributed tonight—that is, that there is something obviously wrong with a loan-scheme system when, in fact, the university-loan system has been working like this for years. I see this as a hypocritical approach to this particular bill and it has a slight reek of elitism.

In addition to providing many apprentices access to these loans, it is really important to understand that there is currently a 30 per cent dropout rate in the first two years of an apprenticeship and about half of all apprentices who begin an apprenticeship fail to complete it. This is another reason that makes this Trade Support Loans Bill so important. It provides increased support to apprentices in the earlier stages of their apprenticeship, when their wages are lowest and when they need it most.

Furthermore, this money can be used to assist apprentices purchase tools, attend training in other towns and help with living expenses, under those circumstances, while earning lower wages, particularly in the first and second years.

In my state of Tasmania and particularly in the electorate of Braddon, these loans will have a significant impact on the ability of the region to recover from the dearth of skills needed to meet labour-market needs. One of the common issues facing many small and medium businesses in Braddon is simply that there are not the young apprentices undertaking training in skills-shortage areas. There is a mismatch between what businesses need and what the apprentices are taking up. Often this is not their fault. In fact, this is one of the many reasons the Gillard Trade Training Centres were such a dismal failure. They set some young people up with skills and trades that were not in demand in the area where they lived. It was a lose-lose situation for both the student and the industry.

This issue was highlighted recently in a joint report by the Devonport Chamber of Commerce and Regional Development Australia—Tasmania. A key theme in the report is the need for more collaboration between the job seeker, industry and educational providers to ensure young people are undertaking skills development that is needed in the region.

Trade Support Loans will achieve this by encouraging people to undertake training in skills-shortage areas, without the need to then move interstate because the Trade Training Centre did not offer the training that local industry required. Under this program, an apprentice will be eligible for loan support if they are undertaking any trade on the skills shortage list. This may sound overprescriptive, but the list has over 60 trades, including fitters, turners, electricians, hairdressers, sheet metal workers, gasfitters, welders and mechanics—and the list goes on.

In addition to traditional trades, I am pleased to note that those undertaking a certificate II, III or IV in agriculture and horticulture will be eligible for these loans. This is hugely important for Braddon as the local dairying industry embarks on a massive expansion in coming years. There is also an expansion coming when it comes to horticulture, particularly in the area of berries. I hope that this scheme will encourage more young people to consider a life in the agricultural industry and that more of the jobs can be filled by qualified Tasmanians rather than mainlanders and workers from overseas.

In the six weeks since the budget, I have been overwhelmed by the support for this Trade Support Loans scheme from apprentices and parents, particularly parents of young people who are coming to that stage of life where they are considering what to do following school. Not only are current apprentices, future apprentices and their parents welcoming of this scheme for the financial support it provides to buy tools and to cover the cost of travelling to training courses, clothes and living expenses, but, just as importantly, it gives young people the confidence that they are making the right decision by going into an apprenticeship. They are contributing to the economy and they will be acknowledged by the government and the community for the contribution they make to the community. I thank the House.

Debate adjourned.