Sarah Henderson (Corangamite, Liberal 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. It is a great pleasure to start on a positive note, and that is that the members opposite are supporting this bill. I pay tribute to members opposite for supporting what is an excellent bill to give young men and women a fantastic opportunity. Although we have heard lots of complaints, whingeing and nitpicking—all of which is unfounded—about our proposal, the core issue is that Labor's Tools For Your Trade program was simply not working. There was $5½ thousand for tools with little accountability, but most fundamentally there was no incentive to finish an apprenticeship. Labor knew it was not working, because the drop-out rate was 50 per cent. One in two young men and women commencing an apprenticeship in this country under the previous federal government did not complete their apprenticeship. So what did Labor do? Unfortunately, it did nothing.

I know earlier in question time the Leader of the Opposition holding up our Real solutions booklet; and, yes, it is in great contrast to the no solutions we have heard from members opposite ever since we handed down our budget. The trade support loans are a real solution to what has been, frankly, a very poorly managed scheme in terms of encouraging young men and women to complete their apprenticeships.

What we are doing under our trade support loans is extremely significant. Not only are we offering a loan of up to $20,000; we are also offering a bonus of up to $4,000 for those young men and women who finish their apprenticeships. This is a very significant incentive to encourage apprentices to finish their courses. This will deliver enormous benefits for the people of Corangamite, my electorate that I so proudly represent, and for people around the nation. This is such an important initiative to combat youth unemployment.

If we look at Labor's record, it is unfortunately very dismal. We are focusing very much on building a strong and prosperous economy and turning around Labor's appalling record in unemployment—200,000 more unemployed under Labor, 130,000 manufacturing jobs lost under Labor, 519,000 jobs lost in small business. The teenage full-time unemployment rate—that is persons aged 15 to 19 and looking for full-time work—went from 19.6 per cent in November 2007 to 27.3 per cent in September 2013. Youth unemployment—that is young people aged 15 to 24—increased by some 55,000 under the previous, Labor government. So we are strongly focused on supporting young men and women getting to work and we are very proud of this program.

Of course, that is supplemented by a very important work for the dole program which has been embraced in my electorate and in the greater Geelong region because we are determined not to let young men and women languish on the couch. We want to do everything we can to get them into work, to build their confidence, to build their skills. We have some other very important programs: our Job Commitment Bonus, our relocation assistance for long-term unemployed, and of course our very strong focus on earning or learning.

Locally in Corangamite we have announced our $155 million growth fund. There is $30 million for regional infrastructure, because we know how important it is to invest in the regions—in rural and regional Australia—to get those jobs moving. We have already seen 100,000 jobs created since the beginning of this year. So we are on track for seeing the growth in employment that we committed to.

In relation to the Geelong Region Innovation and Investment Fund we spent a number of months negotiating with Alcoa and they put another $5 million into that fund. That is moving quickly to develop hundreds of new jobs, particularly in advanced manufacturing. We had a jobs fair funded by the Australian government with some wonderful partners: the Geelong Advertiser, BayFM/K-Rock, Deakin University, Enterprise Geelong and the City of Greater Geelong. We all came together to hold the jobs fair. It was such an important initiative for people right across the Geelong region, looking at opportunities and embracing new skills. There was great and positive momentum at the fair and it was a really wonderful couple of days. I particularly want to commend everyone who participated in the fair and the many job seekers who came along looking for new opportunities.

In the debate we have heard so far I note that Labor has not addressed one key issue: you cannot eat tools. The Tools For Your Trade program, yes, paid for tools, but there was no money to pay for TAFE fees. How do young apprentices pay for rent, pay for food and pay for public transport to get to work? Our Trade Support Loans program gives young men and women the funding they need to get through their apprenticeship. It is a very, very significant difference, because we are determined to reverse the dramatic drop-out rates in apprenticeships, where we see young men and women not completing their apprenticeship.

Of course, this is in contrast to some of the harebrained schemes that we have seen under the previous federal government, where we saw money thrown left, right and centre with the promise of jobs and no delivery. There are some very good examples in my electorate. There was $34 million for Ford promised by former Prime Minister Julia Gillard, who came down to Geelong in January 2012 promising 300 new jobs. Seven months later there was some 330 jobs lost. That was $34 million just thrown away like that. There was $40 million for Alcoa, promising long-term, sustainable jobs. Two years ago Labor promised the world with this $40 million and now we see Alcoa closing. Alcoa has given its workers very little notice and as a result there are many, many people in my community who are extremely worried. We are determined to invest in long-term, sustainable jobs. That is the key difference between this government and the previous government. We are very, very proud of what we are doing for apprenticeships.

We are also very proud of our positive focus on jobs in our region. I see that the Parliamentary Secretary to the Minister for Industry is in the chamber. We had a wonderful visit to Geelong recently. We went out to Ford. We embrace the fact that there are 490 people continuing to work for Ford in Geelong at the proving ground and at the research and development centre in Geelong. They are the jobs of the future. That is what we are focused on—smart manufacturing, next-generation manufacturing, embracing skills and innovation. We got into a wind tunnel. There is plenty of hot air on the other side of the chamber, but the parliamentary secretary and I saw the wonderful technological advancements going on at the proving ground. It was great to remind the people of Geelong that we have great skills, great energy and we have a great, great future.

I do want to make a small note in relation to the member for Perth's contribution to this debate. She was speaking about the pressures that hairdressers are under and she made reference to the fact that in Perth hairdressers are being forced to pay $2,000 for a pair of hair straighteners. Either there has been a terrible case of inflation in Perth for the member for Perth has got her numbers seriously wrong. I do suspect that it is the latter, because in the local hair supply shop in Geelong West I visited recently professional hair straighteners were available for around $300. So let us not cause unnecessary anxiety for hairdressers.

We understand that the cost of getting the skills that these young men and women need is very important. As I mentioned, Trade Support Loans will provide up to $20,000 over four years to support apprentices when they need financial assistance the most. The loans will be repayable when the individual's income reaches the Higher Education Loan Program threshold. At the moment that threshold is around $53,000. The loans are flexible to meet the needs of each individual. For instance, an apprentice can opt in for six months only to buy their tools, or they could save up their first year's payments to buy a second-hand vehicle then opt out of further payments. Or they can just take the full loan to cover living expenses. It is flexible because we understand that different apprentices in different trades have different needs.

Let me just correct one other issue. Recently the Greens claimed that it would take apprentices some 50 years to repay the loan. Well, we all know that when it comes to numbers the Greens cannot count—they have very little economic credibility and this is yet one more example. I will correct the record. The average time to pay off the full loan amount with the 20 per cent completion deduction will be some five years after repayments start or eight years after completing their apprenticeship. As stated in our election policy, Trade Support Loans will be repayable at the same income thresholds as university HELP loans.

We are very proud of this election commitment. This is an election commitment that will commence on 1 July 2014. It is estimated that it will deliver some $1.9 billion in loans over four years. This is so positive for young men and women, for workplace productivity, for my electorate of Corangamite and for apprentice schemes all around the nation. I commend this bill to the House.

Gai Brodtmann (Canberra, Australian Labor Party, Shadow Parliamentary Secretary for Defence) Share this | Link to this | Hansard source

Today I rise to speak on the Trade Support Loans Bill 2014 and to support the amendments moved by the member for Cunningham. I want to commend the member for Cunningham for her commitment over decades to vocational education and training. She is a former TAFE teacher and has been a champion out there leading the charge opposing those TAFE cuts on behalf of many. I commend the member for her support of VET and apprentices.

The Trades Support Loans Bill provides for new income contingent loans of up to $20,000 for apprentices undertaking qualifications leading to occupations where there is a skill shortage. As my colleagues have pointed out, Labor is supporting this legislation but we are doing so with some reluctance. These loans were an election commitment of the coalition. However, prior to the election the coalition failed to declare that they would also be scrapping the $1-billion Tools For Your Trade program.

The hugely successful Tools For Your Trade program provided a $5,500 allowance per apprentice, over the course of their apprenticeship, to spend on necessary items such as tools, uniforms, vehicles and living costs. Without the Tools For Your Trade allowance, the only financial support available for apprentices will be loans. Labor is supporting this legislation because we believe there should be some financial support for apprentices and a loan is better than nothing at all. However, we have serious concerns about giving young people who are likely to be low-income earners no other option than to enter into a substantial debt.

Why is the government scrapping the Tools For Your Trade allowance? According to the minister, it is because apprentices were spending the allowance on tattoos and mag wheels. According to the member for Hindmarsh, who spoke on this bill yesterday, they were spending it on 21st birthday parties, mag wheels and new surfboards, proving that the allowance was not needed. I would be particularly interested in where those opposite get the evidence for this. Which research are they basing these comments on? Or is it just a comment from someone down the road?

The Abbott government's cruel rhetoric shows just how out of touch it is when it comes to apprentices. Apprentices work incredibly hard on a very low wage and face many significant out-of-pocket expenses including tools, uniforms, safety equipment, TAFE fees, travel and day-to-day living costs. The fact that the Abbott government is scrapping the successful Tools For Your Trade program based on anecdotal behaviours of a handful of individuals is nothing short of ridiculous. It is nothing short of insulting, actually. The comments of the minister and his colleagues are incredibly offensive to the thousands of hardworking apprentices in this country who require the Tools For Your Trade allowance to make ends meet. The coalition's action in not revealing prior to the election that they would be scrapping the Tools for Your Trade program was deceitful. They led people to believe that these loans would be complementing the Tools For Your Trade allowance, not replacing it.

The day after the budget, I received an email from a constituent who was absolutely outraged at this deceit. He wrote:

Dear Ms Brodtmann

I am writing for you for support and as our elected Federal Representative at the request of my son who is an apprentice carpenter. He is in his third year to date. For him to become an apprentice he has had to commit to a number of financial burdens. These financial commitments are:

•   His work vehicle, he is currently paying off a $7000 loan for a hilux work ute to transport himself and his required tools of trade.

•   Tools of trade (eg, air compressors, generator, industrial heavy duty trailer, nail guns, ladders, laser levels and much much more)

•   Fuel, he is required to travel approximately 1200 kilometres per week from site to site and home.

•   Tech, required equipment (calculators, text books etc)

•   His rent (he lives away from home) $250 a week

These are just the expenses that are the big ticket ones, there are many more.

His wage is around the paltry sum of about $14.50 per hour (pretty standard award across apprentice salaries). He and all apprentices are HIGHLY dependent on the apprentice tool allowance to assist in the purchase of tools. How the scrapping of this allowance and its replacement with the disgraceful proposal of loans up to $20,000 for them to buy tools can even be considered defies belief. The privileged liberals such as Joe Hockey and Abbot have no grasp of reality and seem determined to ensure that our children cannot afford to train as an apprentice in their chosen trade (and yes I do support him financially when I can).

I ask you to consider all apprentices and understand that there is absolutely no way that my son can afford this outrageous impost of more loans if the tool allowance is lost.

If apprentices take out this ridiculous loan they are committed to a huge period of debt. We know there will be very little work for them when they finish their apprenticeships as result of the Liberals Canberra bashing and the inevitable down turn in the building industry and the local economy.

The dilemma for my son is that for him to remain in employment, he must buy the specialist tools and equipment (that are not supplied by his employer) and also has to continue to replace tools as part of wear and tear. Some of this is tax deductable, but not a large proportion.

I urge you to highlight this within the Labor Party and fight this proposal tooth and nail in support of vulnerable low income working Australians.

He closes off there. I echo the concerns of my constituent.

I have serious concerns about saddling young people, who in many cases will be low-income earners, with substantial debts. We know that, among those who work in a trade, the remuneration levels are typically lower than for university graduates. Based on the 2011 census distribution of incomes of those who were working in a technical or trade occupation, only about half would meet the minimum repayment threshold for trade support loans repayments at the point when they have finished their apprenticeship. So young people who are already low-income earners, who are already working hard to make ends meet in their chosen trade will have almost no choice but to be saddled with a massive debt.

What will this mean? Well at a time when we already have significant housing affordability issues for young people, this additional debt is going to make it even harder for apprentices to enter the housing market. They will put off buying a house. They might also put off starting a family or starting a business, and therefore put off taking on apprentices themselves.

Labor has other significant concerns with this legislation, and the amendments moved by the member for Cunningham serve to address these concerns. First of all, there is significant confusion about how these loans will function. Despite repeated requests in media releases, in question time and in Senate estimates, the minister has still failed to explain in clear language exactly how these loans will work. In the budget papers, it says that apprentices will be charged a concessional interest rate. The minister has been saying the loans are interest-free and that they are indexed by the CPI. The minister is refusing to give clear and concise advice to apprentices. It is so important that, when extending a loan option to young people, a loan that is likely to be their first ever loan, the information provided is clear and accurate, not the mixed messages that we have had from the minister.

Our amendments also address the protection of school based apprentices—children under the age of 18. Indeed, some could be as young as 15 signing up for a school based apprenticeship. The minister has so far failed to explain whether children will require a parent or guardian to supervise the application and undertaking of these loans, who will be explaining the terms and conditions and exactly how he will ensure school based apprentices know that they will be entering into a large debt arrangement. The minister has now confirmed that he is looking to outsource debt management for Trade Support Loans, but again he has failed to explain how he will protect apprentices as young as 15 from ending up in the hands of private debt collectors.

The minister must also explain what steps the government is taking to ensure that young apprentices do not find themselves under pressure from employers to access these loans in order to pay for the costs of the apprenticeship that should be borne by their employers, or to forego wage increases because a loan is available to meet their costs. The potential for abuse and misuse of the scheme is real, but to date the government has failed to give any indication of what resources, if any, will be directed towards educating and supporting apprentices in such situations.

A $20,000 loan is a serious commitment and not something that anyone, let alone a teenager, should be entering into lightly or without appropriate advice and safeguards. It has now become apparent that these loans will be paid in monthly instalments in arrears, and this also raises some concerns for Labor. Apprentices often have to pay for expensive items such as tools, vehicles, uniforms and fees. Paying apprentices monthly in arrears means loans cannot be used for large expenditure. As apprentices earn a low wage, it is unlikely they will have the savings to pay for these items and therefore they may have to borrow money commercially. So these loans may in fact be used to pay off another, commercial loan. Repaying a loan with a loan is not a habit that I think we want to encourage our young people to adopt. Labor believes that apprentices should be given the opportunity to take their loans as an annual lump sum so that they can pay for the big-ticket items they require and there is no need for them to seek a commercial loan.

It is also important to consider the context in which these loans have been developed. Those opposite have said that these loans demonstrate their support for trades and vocational education, but nothing could further from the truth. The fact is that, in addition to axing the successful Tools For Your Trade program, the Abbott government has also axed: the Australian Apprenticeships Access Program, a program that provided prevocational entry to apprenticeships for the most disadvantaged to give them an opportunity to get an apprenticeship; the Australian Apprenticeships Mentoring Program, a great program that provided apprentices with mentors who had experience in the field that the apprentice had enrolled in; the Apprentice to Business Owner Program, which gave some small business training to apprentices post completion of their trade to enable them to go out and operate their own small business—a wonderful venture; and of course, much to my despair, the Abbott government has axed Labor's $1 billion Trade Training Centres program, which allowed high school students to begin learning a trade before they finished high school. It gave them pathways.

Trade Training Centres provide students with a taste of a particular trade before they commit to an apprenticeship, supporting increased completion rates. It also gives students the opportunity to finish year 12, get a certificate I to III, as well as to, say, learn a language—that is, get breadth of experience as well as a trade. These centres were highly successful. They have been incredibly popular in my electorate with teachers, staff and students, and particularly with parents. The fact that the government have axed this program is an absolute outrage. They talk about the skills shortage in Australia, they talk about their commitment to vocational education, they talk about enhancing apprenticeships and trades, and they get rid of these fundamental, vitally important pathways that allow more young Australians to achieve a trade.

It really is inexplicable that a government that says that it is committed to trades would abolish these programs that are specifically designed to properly recruit and prepare apprentices and to offer them and their employers support throughout their apprenticeship. The Apprentice to Business Owner Program gives them the opportunity to understand what small business is all about and gives them a pathway to the next step, in terms of owning their own small business. But that is exactly what the Abbott government is doing with the axing of all these programs. Providing the right support to people in training to ensure that we have the skills we need for the future is incredibly important. That is why Labor was so committed to providing the depth and breadth of programs—a variety of access points for young Australians to get a trade, get a skill, get on with enhancing the quality of their life and get experience.

There has been a decline in the number of people undertaking apprenticeships in the last few years and it is right that the government does something to address that. However, getting rid of every piece of support provided to apprentices and leaving them no option but to take out a massive loan is not the answer. The provision of optional loans to apprentices is not opposed by Labor. There will be many apprentices who will willingly take advantage of these loans, but there will be others who will reluctantly take out loans because they have no other option. There will be others for whom the thought of entering into such significant debt in order to complete an apprenticeship will deter them from an apprenticeship altogether. The Trade Support Loans should not have come at the expense of the successful Tools For Your Trade program.

I urge the government to support Labor's amendments as moved by the member for Cunningham. These are sensible amendments that will make this a good policy and it will ensure that all apprentices have access to the support they need. Our apprentices are our future and they deserve nothing less.

Craig Kelly (Hughes, Liberal Party) Share this | Link to this | Hansard source

I rise to speak on the Trade Support Loans Bill 2014 and the Trade Support Loans (Consequential Amendments) Bill 2014. As elected members of parliament, we have the right to come into this place and argue for what we believe in. We have the right to stand up for our constituents and to rally for their cause. We have the right to use anecdotes and stories to build our case and argue our point as strongly as we possibly can. No-one should ever object to that. It is the contest of ideas that makes our parliament work. But what we should never be entitled to do is come into this place and engage in reckless scaremongering when that is likely to have adverse effects on innocent people. That is what we have seen in the debate on education, trades and learning.

We have had that much scaremongering from the opposition that I have received letters from constituents. They have listened to this scaremongering and have written to me. They think that their children's future has been ruined or their children's future has been taken away because the coalition has been cutting education, loading them up so children cannot afford to go to university anymore, doing terrible things to the trade courses and stopping them from learning a trade. We know that nothing could be further from the truth. This coalition government is increasing spending on education—eight per cent this year, eight per cent next year and eight per cent the year after.

The scaremongering we have heard that is deterring people from going to university is an absolute disgrace. All of those on that side of the House involved in that scaremongering for political purposes should hang their heads in shame. The message we should be sending to our young people is that today they can get into university without paying one cent upfront. They can take a loan to pay for their university course and the taxpayer will actually pay 50 per cent of the cost of that loan. Yes, they will have that loan to pay off in the future, but—and this is the most important 'but'—if they are able to get a university degree, they will earn over their lifetime, on average, 75 per cent higher wages than someone who leaves at year 12. Over their life that will add up to, on average, $1 million more in wages that they will earn. That is the advantage that we give to young school leavers who are thinking about going to university. That is the message that we should be giving them. We should be doing everything we can to encourage them, and that is what the coalition has done.

The policies we are introducing will create 80,000 extra places by 2018. We want to see extra people entering university and doing trade courses because that is what the future of our country needs. Every member of this parliament has an obligation to talk up the opportunities and encourage high school students to do a trade or get a higher education degree or diploma because, although there is a cost, they will be paid back many times over their career.

It is important when the government introduces legislation that it sets out what the problem is that we need to address. We do have a problem in this country with apprenticeships. We have a 50 per cent dropout rate, so 50 per cent of all the young kids who take up a trade and start an apprenticeship will not complete that apprenticeship. That is a significant problem that we need to address. One of the reasons the problem exists is that when someone works for a small business as an apprentice they get a very low wage. That is because when they start that apprenticeship they are not actually adding much value to that business. Of course, down the track they will; as their skills progress they will add more and more.

When they start they are on a training wage. In today's society it is very hard for them to live on such a wage. When apprentices see their mates earning more money than them and having money to go out to clubs and bars and to pay for a car, many people who have started an apprenticeship say: 'It's all too hard. I'm getting paid too low a wage. I'm going to throw the towel in'—and 50 per cent of them do. That is harming not only the country but them as well. The kids I went to school with who went on to do a trade—they became plumbers, carpenters and electricians—are the ones today with the biggest houses, the biggest boats and the best cars. They have all done very well.

We have to encourage them. We need to help those students get over that first hump when they start their apprenticeship and are on a low salary. Once they get set up they are going to have a very prosperous future. That is the message we should be spreading. We should be encouraging them. We should be supporting them in those first years, and that is exactly what these bills do. Previously we had the Tools For Your Trade program, under which we had a 50 per cent dropout rate, that provided apprentices with just $800 for the first three months and $1,000 at 12 months. In comparison, this program provides someone in their first year with an extra $8,000. It is frontloaded to encourage them to get into that course. That helps overcome that first year and gets them up and running, gets them started.

I want to go back to the scaremongering we have heard. Unfortunately, it has continued in this debate. There is concern about debt. I would like to quote a few comments firstly from the whingeing, whining and carping contributions of other members. The member for Parramatta complained that this will create 'debt as far as the eye can see'. She said:

… we see here a government that is prepared to see our young people start their lives with rising debt …

Hello? Where was the member for Parramatta over the last six years when the government she was a member of was running up record debt as far as the eye could see? That debt is actually owed by the people of Australia. We know that the previous government, which the member for Parramatta was a member of, delivered deficits. They went into debt and between 2008-09 and 2012-13 they had a combined deficit of $191 billion. That was all borrowed money. As far as creating debt as far as the eye can see is concerned, if nothing is done over the next 10 years, that debt will grow to $667 billion. So if there are no policy changes, that debt will be inherited by our children and our grandchildren.

Then there is the contribution from the member for Lalor. She is again complaining about debt. She says they will end up leaving school with debt already hanging over their heads. That is exactly right, that is what the previous government has done. Each Australian's share of the debt that they created is today $13,500. That is for every man, woman and child, every pensioner—people that will never have the capacity to earn money to help pay that back. That is what they have done. The member for Lalor also said, 'I am concerned about the younger acquiring these debts.' I would hope that the member for Lalor would stand up and use those same comments and support the government in the plans that we have to try and get the debt and deficit disaster that we have inherited under control.

Then there was the member for Bendigo, again carping and whining about debts. She is saying, 'The government is saying you just cannot get yourself into further debt. That is simply not good enough.' She went on, 'Saying that is fine. You can get yourself into $100,000 worth of debt. It is not good enough.' If nothing is done, the average family of four in this country will owe $100,000. The average family's share of the nation's debt will be $100,000 and interest repayments on that debt will be $5,000 a year. How in 10 years time is the average family of four going to find $5,000 to pay the interest on the debt? And that is every year. That is the burden that we are putting on our children and grandchildren to pay every single year until they start paying that debt off.

This is an important bill. We need a training system that provides the skills that industry needs and delivers real jobs. That is why we on this side of the House are committed to building a high-quality and nationally consistent Australian apprenticeship system which actually responds to the needs of employers and the economy and supports apprentices. The scheme is all about giving young Australians a hand up, not a handout. There is a big difference. Not only that, the handout that the previous Labor government was giving them was all borrowed money. We want to give a hand up to those young apprentices so that they can actually get started on their trades course, get on the way so that they can have a prosperous future.

The trade support loans that this bill refers to will provide substantial support to eligible apprentices to assist them with the costs of living and learning while undertaking an apprenticeship. The trade support loans of up to $20,000 will be available to apprentices studying in skills needed areas. The trade support loans target occupations on the national skills list such as plumbers, diesel mechanics, electricians and fitters as well as priority areas in horticulture and agriculture. The apprentices will have access to the greatest financial support in the early years when they need it most. They can access $8,000 in their first year, $6,000 in their second year, $4,000 in their third and $2,000 in their fourth. The loans are flexible to meet the needs of each individual. If you do not want to take that loan you do not have to do. For instance, an apprentice can opt in for six months only to buy their tools. They could save up the first year's payments to buy a second-hand vehicle and then opt out of further payments or they can take the full loan to cover their living expenses throughout the years of training. As an incentive to complete their training, apprentices who finish will be eligible for a 20 per cent discount on their loan, which if they take the full $20,000 is $4,000. It is like $4,000 in their pockets. That is the encouragement we are giving to make sure they get through and complete their course. The loans are interest-free but are indexed to the CPI.

Subject to the passage of this legislation, which we hope will also pass in the other place behind us, apprentices will be able to opt in for trade support loans from 1 July 2014 in line with the year of their apprenticeship. They can opt out of their loan whenever they wish if their needs change. For instance, a second year apprentice will be eligible for the second, third and fourth year payments if they wish to receive them.

We believe that apprentices, like university students, are capable of managing contingent loans. It is also very important to note that they will not actually have to make any repayments until they have a sustainable income of more than $50,000 a year. My advice to someone who is thinking about getting into a trade is to grab this with both hands, even if you use the money to get yourself up and running, get yourself started. Alternatively, put the money in, take the government's money, put it in a term deposit, take the 20 per cent credit when you finish your course, and when you have finished your trade and you have got on the ground you can use that money to start your own small business. This is a tremendous incentive for young people to take up an apprenticeship. I fully commend this bill to the House.

Pat Conroy (Charlton, Australian Labor Party) Share this | Link to this | Hansard source

Australia has a strong reputation for producing high-quality tradespeople. Apprentices are at the core of our trade workforce and that is why Labor has always supported Australian apprentices, while those on the other side just want to saddle them with debt. Tony Abbott has deceived yet another group of Australians. This time it is young apprentices. Prior to the 2013 election he announced trade support loans, but he did not say a peep—that is right, Mr Deputy Speaker, not a peep—about his plan to axe $1 billion worth of skills programs, including Labor's Tools For Your Trade program. Before the election in 2013 Tony Abbott told us that the coalition would provide 'better support for Australia's apprentices'. Nothing could be further from the truth. Removing the funding that directly pays for the tools that an apprentice requires in their day-to-day work is hardly supportive. The only option apprentices will have is a debt.

This may not seem like a big deal in the Prime Minister's electorate or that of the Treasurer. However, in the electorate that I represent, Charlton, it is a big deal. Almost 25 per cent of those living in the Charlton electorate have a TAFE qualification. Of those aged between 17 and 22, almost 13 per cent are currently enrolled in a TAFE course. So any cut in support for young tradies is a big loss in Charlton.

I would like to share with you Christina's story. Christina is a first-year apprentice hairdresser who works in a salon in Bonnells Bay. She started her apprenticeship in November last year and studies at the Tighes Hill TAFE campus. Christina tells me there is a lot of equipment to buy, from the hairdryers, clippers, scissors and thinners she uses in the salon to her uniform and the books used at TAFE. These expenses add up. Christina was fortunate to receive an $800 reimbursement for these expenses and she acknowledges that it will be hard for those who do not receive this support. She says:

Hairdressing apprentices are on such a low wage as it is, not having the help to buy the equipment you need would make it really hard.

I don't think what the government is doing is the right thing for young people.

If you are like me, and have recently left school, there are other things in your life that you need to be responsible for as well, like your phone bill and living expenses.

…   …   …

We need help to get started in an apprenticeship, and young people may think twice about doing it if they don't have family support or other financial support.

Christina's story is similar to that of so many young people in our area. Whilst not every person who undertakes an apprenticeship is a school leaver, it is arguably the most critical time to support young people as they make decisions about their future and embark on a path towards a future career.

I know that government policy provides pathways and assistance for young people to get an apprenticeship. It is so important. Labor have a proud record of supporting apprentices and we will never waver from that. Australia has a strong reputation for producing high-quality tradespeople. Apprentices are at the core of our workforce and Labor will always support them, while those on the other side will engage in empty rhetoric and will always saddle them with debt. That is their true legacy to Australian apprentices: abolishing effective programs like Tools For Your Trade, saddling them with debt, misleading them before the election about their true support and attacking industries like manufacturing or shipbuilding where they could get a job. This legislation will hurt apprentices not because of what it does but because of what it seeks to replace, the Tools For Your Trade program. I condemn the legislation.

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

Pursuant to the resolution of the House, the time for this debate has expired. I call the parliamentary secretary.

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

I rise to sum up on the Trade Support Loans Bill 2014 and the Trade Support Loans (Consequential Amendments) Bill 2014. I start by addressing the second reading amendment moved by the member for Cunningham and advise that the government will not be supporting that amendment. What I will do now is address each of the points the member for Cunningham raised in the amendment. First, she stated that we needed advise apprentices that we:

… would be abolishing the Tools for Your Trade program, thus leaving the Trade Support Loans as the only form of assistance for the purchase of tools.

Following the Fair Work Commission's decision to increase apprentices wages, with some employers providing tools for their apprentices and most awards including a tool allowance, it was timely to review apprenticeship programs. Any scheduled Tools For Your Trade payments that fall due prior to 1 July 2014 will be paid, subject to the eligibility criteria being met.

On point (2) of the amendment—'adequately explain in clear language the interest rates and the full liability of these loans'—the trade support loan amounts will be indexed to the consumer price index, CPI, from 1 July, 2017. Debts that are to be repaid through the Australian taxation system will be indexed in line with the CPI each year from 1 June 2016 to maintain the real value of the debt. An apprentice may opt out at any time if they no longer wish to receive payments. Repayments commence when a person's income exceeds the minimum repayment income, which is more than $50,000 per annum, in line with the Higher Education Loan Program.

On point (3)—'offer adequate protection for school based apprentices aged under 18'—the Australian apprenticeship centres must take due care in ensuring apprentices are made aware of the obligations and implications of taking on an income contingent loan and the need to repay it. In particular, where the apprentice is under the age of 18, additional information and references to assist apprentices will be provided to assist them to make a decision about taking on such a loan. Supplementary information will also be available for parents and guardians to ensure that they are aware of the requirements and obligations their child may take on. The availability of trade support loans for under 18s is consistent with other educational loans such as the HELP scheme.

On point (4)—'offer fair and reasonable transition arrangements for current practitioners'—the Tools For Your Trade program was intended at inception to support apprentices with the purchase of relevant tools, particularly early in the apprenticeship. Over the years, the focus of the payment has changed from providing tools directly to apprentices early in their training to general support of Australian apprentices. Most of this payment occurs late in the apprenticeship when the need to provide a payment to apprentices is actually at its lowest. We know that apprentices were not always using tool payments for the intended purposes and as payments were untethered there were no controls on the grants program. We know that payments were not always used to pay for things that supported apprentices in their training or their work.

Financial support will be available to apprentices through the trade support loans, which will provide consistent and regular payments to support apprentices with the cost of living, with learning and completing an apprenticeship, and as the apprentice determines it is required. Under trade support loans, payments are targeted where apprentices need them most: early in their apprenticeship. We want to usher in a new age of responsibility, where apprentices carefully consider the need for government support and how it can be best used to help them complete their apprenticeship and contribute to Australia's productive capacity.

On point (5)—'put in place adequate privacy for the large volumes of information that will be acquired through the Trade Support Loans Program'—the Department of Industry and the Australian apprenticeship centres are required to comply with the Privacy Act 1988, which regulates the handling of personal information. The information commissioner has powers to investigate possible interferences with privacy and has a range of enforcement powers and other remedies available. In order to ensure we do not impose unnecessary legislative or other red-tape burdens on employers or apprentices, we have chosen not to replicate existing legislation and other privacy requirements in this bill.

On point (6)—'offer apprentices the option of lump sum payments in order to purchase expensive items'—the government's new trade support loans will provide apprentices with more financial support when they need it most, while using taxpayers' money in a responsible way. The trade support loans will provide substantial support to eligible apprentices to assist them with the cost of living and learning while undertaking an apprenticeship. Under our trade support loans, up to $8,000 is available in the first year, when the apprentice needs it most.

The loans are flexible, to meet the needs of each individual. For instance, an apprentice could opt in for six months only to buy their tools; they could save up the first year's payments to buy a second-hand vehicle, then opt out of further payments; or they could take the full loan to cover living expenses through the years of their training. The loans will go a long way to supporting the individual with the very real costs of undertaking an apprenticeship. For example, a first-your apprentice on the award wage who takes out a trade support loan could potentially benefit from a 40 per cent boost to their income. A monthly trade loan support payment in the first year will go some way to covering a year of registration for a vehicle to help apprentices get to and from their workplaces and training.

In summing up the bill, the Trade Support Loans Bill 2014 gives effect to the government's 2013 election commitment to better support Australian apprentices through the introduction of the Trade Support Loans program. The Trade Support Loans initiative is a major skills initiative from the government and it signals a targeted approach to investing in key trades where the skill shortages exist. We need to ensure we are achieving the best value for money in our skills expenditure. Trade support loans will provide a stronger incentive for young Australians to take up the opportunity that an Australian apprenticeship offers. The program targets high-priority trade occupations such as carpentry and electrical trades and will be available to Australian apprentices undertaking certificate III or IV level qualifications leading to these trades.

There are currently around 149,000 apprentices in training in high-priority qualifications and a further 70,000 commencing each year. While the number of new apprentices has steadily increased over the last decade, only about one-half complete their training. Let me repeat that: only about one-half complete their training. This puts at risk the supply of trade qualified workers to the Australian economy, leading to production restraints, skills shortages and increased wages pressures. The loans scheme will provide support for apprentices to complete their skills training through access to interest-free loans of up to $20,000 over four years, to help with everyday costs during apprenticeships. To encourage those who start an apprenticeship to actually finish it, the program offers a further incentive of a 20 per cent discount on the amount borrowed for apprentices who successfully complete their trade. So, for every $500 borrowed by an apprentice under the initiative, they will receive back $100 on successful completion of that apprenticeship.

Australia's future productivity and competitiveness will depend on a skilled workforce. This bill sets in place the first step of this government's agenda for increasing our skilled workforce. We will ensure Australia has a workforce that is highly skilled, highly trained and capable of fulfilling the changing needs of a modern Australian economy. I am particularly interested in securing the capacity of the vocational education and training system to deliver high-quality training outcomes, and this program represents a major foundation stone through supporting Australian apprenticeships.

Through this debate, there have been many statements made by members opposite and the time to rebut some of those has come. The member for Richmond said she was concerned about putting debt onto young apprentices. I say to her: it was her government that was happy to introduce the HELP debts and continue to support loading up young people going to university. Is she saying that apprentices are not capable of managing their income contingent loans like their university peers? Clearly, Labor does not trust our young apprentices or give them the credit or the smarts that they deserve. With regard to concerns about saddling kids with huge debt, it is their choice as to how much they actually borrow, and that amount could be less than a few thousand dollars. Many, many will choose to opt in to the loan once, bank their money and draw on it as they need. While apprentices can access up to $20,000, they are under no obligation to borrow any more than they actually need. This is not a one size fits all approach and, unlike Labor's cash splash, our trade loans will require accountability and responsibility from the individual apprentice.

The member for Blair himself said that an apprentice wrote to him saying he was expecting to use his tool money for bills. Last time I checked, bills actually were not a tool for the trade—they were not when I was an apprentice. I do not for a moment suggest that apprentices do not need assistance with living and learning expenses, but, due to the debt and deficit disaster, taxpayers can no longer afford to cover such costs. The loan they receive is a helping hand from the taxpayer, who is then repaid for their support once an apprentice earns a sustainable income in excess of $50,000 per annum.

Members opposite might also be interested to hear that we too have received emails from apprentices about their payments being removed. One in particular that comes to mind was from a young lady who was upset that she was no longer able to go on a holiday with her tool money. I would like to say that this was a one-off, but, unfortunately, this type of story is far too common from apprenticeship centres and employers.

Despite information online and through apprenticeship centres explaining the loans and the indexation annually, the members opposite are still confused about how much interest the loans will attract. I do not know how many times we need to say that these loans are indexed with CPI to maintain their real value but do not attract any commercial interest like a bank loan would. Let me restate that: they do not attract any commercial interest like a bank loan would. If they bothered to do a Google search or have a look at the Apprenticeships website, they would have found this information all too easily.

The member for Lalor wonders what happens if an apprentice drops out of their trade training and is left with a debt. It is money that they chose to spend and it will need to be repaid. This is the same as for a university student, who repays their HELP loan regardless of whether they graduate. The suggestion that debt collectors will be knocking on their doors is just more scaremongering from those opposite. No repayments are made until the person is earning a substantial income in excess of $50,000 per annum.

The member for Lalor also misled the House when she said that the government cut the Youth Connections program. I say this: if Labor had thought the program was so valuable, then they should have budgeted for the program into the future years rather than letting the program's funding lapse in June this year. Members have demanded evidence on tool money being misspent. I say: get out into your community and talk to the local employers, talk to the apprenticeship centres who are complaining about apprentices turning up to work without tools, or chat with the apprenticeship centre who fields the calls from apprentices chasing tool payments just ahead of Christmas and New Year holidays.

The member for Melbourne is still banging on about the 34 years for a carpenter to repay his loan. Again, it is more complete and utter rubbish. We have done the estimates based on the facts, not a Greens' made-up interest rate. The average full loan amount with the discount will be repaid within eight years of an apprentice graduating. This is, of course, assuming that they have taken the full loan amount. Again, I remind the House that apprentices will be encouraged to borrow the amount that they need, which in many cases will actually be less than the $20,000.

The member for Parramatta went to great lengths to talk about apprentices' needs for lump sum payments—or, to quote her accurately, 'lumpy' payments. Under the loan scheme, by the three-month mark an apprentice would have received two payments totalling more than $1,300 and, by the end of the first year, up to $8,000. This is $500 more than the first tool payment and $6,200 more after just one year—and that is a lot of knives. The member for Parramatta then went on to claim it is a big ask for young people to save monthly payments. I say to this: we have more faith in the apprentices. If they are responsible enough to juggle work and training, they are capable of saving for their loans.

In conclusion, I want to thank all government members for their contribution to what has been, no doubt, a superior scheme than Tools For Your Trade. It is designed to deliver outcomes in completions, and, as such, a skilled future for our nation. I commend the original bill to the House.

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

The original question was that these bills be now read a second time. To this the honourable member for Cunningham has moved as an amendment to the Trade Support Loans Bill 2014 that all words after ‘That’ be omitted with a view to substituting other words. The immediate question is that the amendment be agreed to.

Question negatived.

Original question agreed to.

Bills read a second time.

Message from the Governor-General recommending appropriation announced.