Andrew Giles (Scullin, Australian Labor Party) Share this | Link to this | Hansard source

I am pleased to have this opportunity to make a contribution to the debate on the Trade Support Loans Bill 2014 and the Trade Support Loans (Consequential Amendments) Bill 2014. In doing so—and I assure you, Deputy Chair and members, that it will be a brief contribution—I think I need to touch on one aspect of the previous speaker's contribution where he characterised the previous government's approach to trades training and skill development as lose-lose.

As this debate has already shown, nothing could be further from the truth. He made particular reference to the trades training centres and characterised them in a manner which indicated that they were not meeting the needs of industry or of young people. I know from the experience that I had with the Outer Northern Trade Training Centre in Lalor that nothing could be further from the truth in terms of matching the aspirations of some talented young people to viable career paths and getting some terrific engagement with significant local employers.

These bills before us establish an income-contingent loan program for apprentices undertaking qualifications leading to occupations in respect of which there is a skills shortage. I note that they are intended to provide incentives to address barriers preventing people from otherwise undertaking apprenticeships and that loans will be available in amounts up to $20,000 to cover tuition and living expenses.

If the question before us is, 'How do we meet skills shortages while giving all young—and perhaps not so young—people every chance to pursue their chosen trade?' then that is a serious matter worthy of a considered response in this place and in the community. But, notwithstanding elements of this package like the completion discount, I am not sure how this loans approach answers that question. We should be asking, for example, about the evidence around this challenge. In this regard, there is no clear evidence to the effect that financial considerations are presently a barrier to taking on or completing apprenticeships. If the government has any evidence, it has not adduced it.

The loans will, unfortunately—and this goes to the heart of this issue—replace the Tools For Your Trade program. This is a program providing up to $5,500 tax free and making a real difference as a real incentive to keep people earning and learning effectively—a matter dear to this government at a rhetorical level, but very little in evidence in its decision making to date. Supporting and opening up trades training is vitally important to families in Scullin, and it is important to me, but these bills before the House carry with them some significant concerns.

At their core, these bills represent yet another example of this government saying one thing prior to the election and doing quite another after it. I refer, in this regard, to the scrapping of Labor's billion-dollar Tools For Your Trade program. Let us think about what that means for apprentices and their families who thought, quite reasonably, in the course of the election campaign, that they may have been able to access an optional loan on top of the Labor program—on top of the $5,500. It is a very big difference for these apprentices and their families to now see this loan program as the sole means of financial support provided. Indeed, let's think about our apprentices and give them a voice in this debate—those who in Victoria have also been hit by closing TAFEs and significant increases to fees.

I was struck by a discussion I had a few days ago with an electrical apprentice, Greg, someone who started his trades journey at a mature age, having undertaken university studies at an earlier juncture. He started his trades journey at a point in his life when he had young children. He left me in no doubt how important the Tools For Your Trade program was in giving him every opportunity to meet his aspirations—to do the job, to acquire the skills he wanted to. He took me through the cost of the tools he needed; and, as someone who is a long way from being a trades training kind of guy, it was quite an eye-opener to understand the real cost to him of being in a position to undertake his training and to do his job first as an electrical apprentice and then as an electrician.

His passion for his trade and for the pathway it should offer others struck me. In response I assured him that Labor stands for removing barriers to skills, for equity and for maximising our productive capacity, the challenge that I set out earlier in this contribution. When he says, 'Those speaking of rims and tatts haven't worked on $7.50 an hour and tried to raise a family,' I listened. I hope members opposite do too. He also reminded me and pressed upon me the inconsistency in this government's message to young people. On the one hand they lecture them and, indeed, us on the dangers of debt while on the other burdening young people with just that as they start their working lives—in trades training, of course, and also in universities.

He also spoke to me—and I think this is important in the context of this debate as we consider the circumstance of people as they start their journey in workplaces and the power relationships that govern their working lives—of the difference his union had made to his working life as an apprentice electrician. I say this because it is important to recognise the great work that unions do, keeping people safe at work in dangerous trades and ensuring a fair day's pay is received for hard work done and that workers can have their say in their workplaces. They should also be heard in this place. So I speak for Greg in this debate, and I hope to do justice to his cause and his concerns.

In the seemingly long remaindered Real solutions policy document, the now Prime Minister committed the coalition to 'provide better support for Australia's apprentices'. I guess now we know that this can be filed with the rest of the coalition's election promises along with 'no cuts to health and education, no cuts to the ABC or SBS, and no changes to pensions'—no new taxes as well, of course.

Support for apprentices has been seriously, severely cut under this government. On top of the actions of conservative state governments in attacking TAFE—I think of the pressures on NMIT in my own electorate and the proposed sell-off of the Greensborough site—the Abbott government has also axed a number of important programs, including the Australian Apprentices Access Program, the Australian Apprenticeships Mentoring Program and the Apprentice to Business Owner Program.

I am aware it has been suggested in the course of this debate by members opposite that the Tools For Your Trade scheme would be replaced under the coalition. That comes as some news to me. Let me just say this: can the minister assist me, apprentices in the Scullin electorate and their parents by adducing evidence for his colleague's claim? I suspect he cannot, but I look forward to his contribution at the conclusion of this debate.

On the other hand, I am all too aware of the sneering remarks directed at this program after the election, wilfully mischaracterising apprentices as well as this important program, which has been effectively providing tools for your trade. Of course, there is a wider context here that we must be mindful of. This is a government that will not invest in our future. We see this in the attacks on higher education, which sit all too neatly with attacks on apprentices. Indeed, through the education system, from child care to high-level university research, we see this government undermining access and achievement. Back to the future appears to be the watchword. Of course, when we think about this government and young people, for those under 30 we think about the harsh regime, the six months of no income support, that is put forward for many in circumstances where youth unemployment is high and forecast to continue to be high.

It has been a while since we've heard a member of this government refer to the age of opportunity. Funny that. I guess it shows there are limits to the Orwellian language members opposite like to hide behind. There is no longer any pretence around opening up life opportunities, and this is shameful.

I turn briefly to a few other matters. I place on the record that I share the concerns of the ACTU about the relative vulnerability of some apprentices vis-a-vis their employers and in this regard the possibility of people being pressured into taking out loans to pay for items that properly should be paid for by others. And, of course, the adequacy of the proposed privacy provisions and protections is a matter that requires proper attention and assurance. These are things that have not been done to date. What does the government have to say to assuage these concerns? Again, very little, I suspect.

Having made these remarks and expressed my concerns about some elements of these bills but, more fundamentally, the attitude of this government towards trades training and opportunities for young people, I indicate formally to the House that I support the amendments moved by the member for Cunningham and I support this government being kept to its word, which was to offer more support to Australia's apprentices. To date they have done the reverse. For all the rhetoric of 'earn or learn', this has not been matched by any commitment of this government to young people. It is not enough and it is a breach of faith.

Fiona Scott (Lindsay, Liberal Party) Share this | Link to this | Hansard source

I rise tonight to speak in support of the Trade Support Loans (Consequential Amendments) Bill 2014. These loans are designed to invest in the skills of our workforce, enabling more young people to start and ultimately complete their trade training. The Australian government has an economic action strategy designed to build a stronger economy, create new jobs and bring Labor's debt and deficit disaster under control. Australia's productivity and competitiveness depends on a highly trained workforce. Trade support loans will help more apprentices complete their training and get the skills they need to fill the jobs that businesses want.

Today within the electorate of Lindsay some nearly 3,000 people are currently training as an apprentice. Having more apprentices in the Australian workforce means we can boost productivity and meet the changing needs of the diverse Australian economy. Therefore, it is important the federal government supports Australian apprentices. Unlike the previous Labor government, this responsible coalition government understands we can better support industry by providing a hand-up and not just a hand-out.

Despite promising employment prospects and earning potential, many young people find the first few years of an apprenticeship financially difficult. We know around 20 per cent of trade apprentices drop out by the end of their first year and, in fact, 30 per cent by the end of their second year. This is such an opportunity lost. Apprenticeships provide an opportunity to secure a career. It does not mean they will be in that career all their lives, but by dropping out they miss the opportunity of that first step towards employment and the long-term ability to earn a wage. I am particularly passionate about this concept of career development as in my own professional journey I pursued other training opportunities before gatewaying into university and eventually building my career. And let me assure the House, as I know from firsthand experience, training opportunities which come with a certificate III or IV are instrumental in shaping the long-term career of so many young Australians. It is that first step towards employment and the long-term ability to earn a wage. In my opinion, this strengthens the Australian workforce.

Trade Support Loans are concessional, income-contingent loans which function in a similar manner to FEE-HELP loans received by university students. The program provides for a loan of up to $20,000 over four years directly to apprentices undertaking an apprenticeship in a priority occupation or qualification. It is anticipated the loans will alleviate some of the financial pressures faced by young apprentices and will improve the completion rates I mentioned previously. Further, to encourage apprentices to complete their training, the loan amount received by an apprentice will be reduced by 20 per cent when they successfully complete their training. This is a wonderful inducement to ensure that people not only start their trades but finished them. Similar to FEE-HELP, loan repayments commence when the apprentice is receiving a sustainable income of around $50,000.

What is so appealing about this program is that it not only encourages young Australians to consider the impact of the decisions they make but to also show fiscal responsibility. Under the Tools For Your Trade scheme money was directly deposited into an apprentice's accounts but there was no incentive to encourage them to spend this money on their trade or to further their career prospects. Comparatively, the Trade Support Loans will encourage apprentices to spend the money responsibly because it does require a repayment. Further, through apprenticeship centres financial advice will be encouraged and ongoing by the apprentice being required to opt in every six months.

I can understand why those opposite would not support these measures, because if the last six years have taught us anything it is that they know very little about fiscal responsibility. The claims from all the members opposite about this government encouraging young Australians to be in debt is ridiculous. As mentioned previously, I did take out a HECS debt—I took out a FEE-HELP debt to complete my master's, a debt I am still repaying to this day. I believe that it is my responsibility to pay my own way. I do not believe it is the responsibility of the taxpayer to be solely responsible for my career development. I believe young apprentices will consider their Trade Support Loans in a similar light. Our Trade Support Loans are a responsible investment in the nation's future and the future of our tradespeople everywhere. I commend the bill to the House.

Tony Zappia (Makin, Australian Labor Party, Shadow Parliamentary Secretary for Manufacturing) Share this | Link to this | Hansard source

In speaking on this legislation I support the amendments moved by the member for Cunningham. There are two specific aspects with respect to this legislation that I want to go to first, and that is to make the two points that are essentially covered by the legislation. The first is that the government is going to provide a HECS-type loan to apprentices to help them pay their apprenticeships costs—a loan of up to $20,000. The second matter is that the $5,500 Tools For Your Trade funding, which was previously available to apprentices and made available by the previous Labor government, will be cut. Just as importantly, that cut will take effect from 1 July 2014. For many apprentices that will be part way through their training. These are apprentices who made their decision in the full knowledge that they would be reimbursed $5,500 in the course of their apprenticeship and perhaps made the decision based on that understanding. Yet part way through their apprenticeship the $5,500 that was previously available to them as a direct grant is going to be cut.

The parliamentary secretary said earlier today that the Abbott government had made it clear prior to the election that the Tools For Your Trade program would be replaced. I do not ever recall hearing that statement in the election campaign, and I think I monitored the statements made by the opposition at the time pretty carefully, because I was contesting that election. If the government did make it clear prior to the election then I say to the parliamentary secretary or to his minister: produce some evidence that it was made clear to the people of this country and in particular to apprentices that the $5,500 would be cut if they were elected.

The government wants to create a perception that by replacing the Tools For Your Trade program with a Trade Support Loans program that apprentices will be better off. That is absolute nonsense. A close analysis of the change will expose it for what it really is: it is another piece of government deception and, even worse, another example of how this government is attacking students, young people and now apprentices by squeezing them even further.

There was a long list of government members who jumped to speak on this legislation—albeit, I accept, they probably had their time cut short by the leader of government business. It is one of the few pieces of legislation that I noticed government members jumping up to speak on, because clearly there is not much else within the Abbott government budget that they feel comfortable enough to get up and speak about. But even when they speak about this legislation they are totally wrong. Either they misunderstand what is ultimately going to happen as a result of this legislation, or they are trying to pull the wool over the eyes of the Australian people.

Labor will support the provision of a $20,000 loan. We do not have a problem with that. If it had been kept with the $5,500, as it should have been, it would have been an additional level of support provided to apprentices. But that is not the case. Contrary to what the government has tried to purport from day one—that the loans are interest-free—the reality is that the loans will have an interest rate attached to them or, as the government has changed the language, the loans will be 'indexed'. If you look at Budget Paper 2, page 172—and I want to quote directly from it, given that so many members opposite, even in the course of this debate, have said that this will be an interest-free loan—you will see:

Trade Support Loans will be provided at concessional interest rates—

I will repeat that: '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.

That is a direct quote from their own budget papers. More importantly, whether you use the words 'interest rate' or 'indexation', it effectively means the same. It means that there will be an interest rate applied to the loans.

Looking at its budget papers, you will see what the government is really doing: cutting $475 million of direct assistance to apprentices from their budget. Cutting $475 million of direct assistance to apprentices is the net effect of this decision.

Providing a loan is helpful, but when it has to be repaid and the $5,500 Tools For Your Trade program has been cut, then you end up worse off if you are an apprentice. On that figure alone, if an apprentice were to complete their apprenticeship, and if they were entitled to the full amount of the $20,000 loan that they might have taken out and the full 20 per cent discount, that would give them a net direct benefit of $4,000. As it currently stands, they would still be $1,500 worse off as a result of that. That is before you even go to the fact that the apprenticeship courses themselves are increasing in cost, and before you factor in the interest or indexation that will accumulate on the loan that someone has taken out. I ask the question: just as you cannot trust this government on so many matters, how can you trust the government that the indexation will remain at CPI forever and a day? I do not believe you can.

There are many types of skills and occupations where, even after you have completed your apprenticeship, it is unlikely that you would have reached the income of $50,000 plus that you will require before you have to start paying the money back. So that loan will sit there for years and years. And as it sits there, it will accumulate additional interest. By the time an apprentice, having completed their apprenticeship, is earning money and in a position to pay it back, one wonders how much they will ultimately be paying back. So the $4,000 that is referred to is an absolute nonsense.

I will also make this point about the $4,000, because members stand there and say, 'Look, we're giving apprentices $4,000 if they complete their apprenticeship and they've taken out a loan.' There are not too many apprenticeships that will cost $20,000. It is unlikely that many of the young apprentices will take out a full $20,000 loan. If they do not take out a full $20,000 loan and they complete their apprenticeship, they are only entitled to 20 per cent of what they borrowed. If they do not borrow $20,000, they do not get back $4,000. The likelihood is that most of them never will. So the perception that they are being granted $4,000 if they complete their apprenticeship is also absolute nonsense.

Many of the apprentices that I speak to work for family-owned businesses, where one of their parents is themselves a skilled person, has set up a small business and gone on to employ a family member—quite often a son or daughter—in their business as an apprentice. I cannot imagine too many of those small business people asking their child to take out a loan so that they can in turn become an apprentice in the family business. I would expect that those parents would probably say, 'If we need to take out a loan, we will just go to our own bank and grab an overdraught or whatever the case is, but we don't want to saddle our kids who want to be apprentices with a loan as well once they complete their apprenticeship.' If a young person, whether it is for those or other reasons, decides that they will take out no loan whatsoever, then there is nothing in this proposal for them at all. In other words, if you do not take out a loan, you do not get 20 per cent back if you complete your apprenticeship, you do not get the Tools For Your Trade allowance that you previously got—you get nothing. The only person who might get something out of this is someone who takes out a loan, completes their apprenticeship and then looks for the rebate based on the figure of 20 per cent.

If this government were serious about supporting apprentices in this country, there are lots of other things that it could do that would support apprentices. In particular, it could support initiatives that ensure that those apprentices, having completed their apprenticeships, actually have a job to go to. Regrettably, we are seeing this government, in the very areas where most of the apprentices are likely to be, such as in manufacturing, already walking away from that—

Debate interrupted.