Sharon Bird (Cunningham, Australian Labor Party, Shadow Minister for Vocational Education) Share this | Link to this | Hansard source

I thank the parliamentary secretary for his summing up. I think it is fair to say that there are two arguments going on here which are clashing and, I hope, not consuming the importance of the concerns that we raise in our second reading amendment. I am keen to give the parliamentary secretary the opportunity in this part of the debate to give some clarity around the matters that we were seeking to deal with in the second reading amendment.

The government's proposal for trade support loans is not something that this side of the House opposes. It is not the provision of the loan in and of itself that causes us a problem. There are some things we would seriously like the government to think about, because you cannot equate these trade support loans directly with the HECS-HELP scheme, because they are going to be provided to school-based apprentices. I think, genuinely, those opposite, as parents, would understand the concern that members of the community are raising about credit being offered to school-aged apprentices.

In the interests of making this work in the way that I am assuming the government wants it to, and as part of those amendments on the second reading, I would like to give the opportunity to the parliamentary secretary to put on the record some assurance to this House—and, therefore, to apprentices, their families and carers more broadly—that an extra level of diligence will be applied to the work that is done in making this option available to school-based apprentices. Parents have contacted us saying that the first they knew about this was when the apprenticeship centre sent a letter to their apprentice— the young person in their family—saying that the Tools For Your Trade program was no longer proceeding but they now had access to a loan.

Anybody on that side of the House, like myself and many of my colleagues, who had a son or daughter in year 11 or 12 would be very concerned about a government letter coming to them saying that they can access credit. And you would expect that that would be managed at a much higher level of diligence than might be the case when young people are enrolling at university and signing up for HECS-HELP arrangements. That is what the nature of those concerns go to.

I really would ask the government to understand that we are not opposing the loans. We have not, by voting, opposed the bills. But we seriously do want the government to put extra thought into the diligence that is required in these circumstances.

The parliamentary secretary made the point that indexation will be applied. He will excuse us for being a bit confused because the budget paper actually uses the term 'concessional interest rate'; it does not say 'indexation'. It is important that we get that clarified and on the record. The parliamentary secretary has indicated that it will be CPI indexation, but he further went on to say, 'as happens with the HECS-HELP'. The HECS-HELP rules changed after people had signed up to them, and I think it would be good to make some guarantees to apprentices—particularly young people in school based apprenticeships—at the time they are signing up to these, that those rules will not change for them over the lifetime of that loan.

The other thing I would put to the parliamentary secretary is that there are a lot of indications that the good thing about the loans is that they will provide the opportunity for apprentices to buy, for example, a ute. One of my colleagues had an example of an apprentice who does 1,200 kilometres a week. It would seem a sensible and worthwhile thing for that apprentice to buy a ute. An apprentice may have to relocate to take up their apprenticeship, put down a bond and get some furniture for a new place. That is where I think something like the Trade Support Loans scheme would be a good initiative and something they could use. But if you are paying it monthly in arrears you are actually defeating the purpose of it.

Many of the government's own members gave those sorts of examples. The submitters to the Senate legislative inquiry put exactly the same sorts of examples. So, one of our amendments was to suggest that the government look at an alternative way of paying the loan, which would allow young people to get what is available in the first year, up front. So they could go and buy a ute or they could relocate. I hope the government sees those amendments as proposals that are quite constructive. They are actually about achieving the outcomes that have been described by those opposite.

There were some issues around the parliamentary secretary's comments about the trade support loans providing the money when it is needed most. I suggest that a more flexible way of payment would be a better option to provide the money when it is needed most. (Extension of time granted)

The parliamentary secretary has made the point, over and over again, that the Tools For Your Trade was not spent on what it was intended for. Examples were given of people wanting to go on holidays or to pay for parties, tattoos, or mag wheels. You are now offering them credit to do those things instead of a payment. (Time expired)

Keith Pitt (Hinkler, National Party) Share this | Link to this | Hansard source

I thank the parliamentary secretary for this opportunity. As a former electrician—and a currently qualified tradesperson—and a person who used to own and operate a registered training organisation in the VET sector, I wholeheartedly support the Trade Support Loans Bill.

I would like to give some practical examples of what it is like to be an apprentice. An apprentice is someone who does not earn a great deal of money and who has to get to the end of four years. It is relatively difficult. Some time has passed since I was an apprentice. Back in the days when I first started, they had this wonderful thing, which I did not know existed, which was a nine-day fortnight. On the four-day week you would get a day's less pay than on a five-day week. And as a first-year apprentice that meant $60 week for me and up to about $78 on a long week. Fortunately, many apprentices—including me—still lived at home. My mother suggested that I pay board of $20 a week. I thought that was reasonable contribution. That left $20 for fuel and a little bit left over if I wanted to go and have a look around on the weekend.

When I got to second year my pay rose and my board moved proportionally, which was a little bit of a shock to me as a second-year apprentice. However, it really did not hurt me. It was a great opportunity. Today, young people still find it financially difficult to undertake a trade. The award wage for a first-year apprentice is currently 55 per cent of the fully-qualified rate. We must recognise the significant contribution that trades workers make to economic growth in Australia.

The purpose of this bill—and a lot of the points in this debate reflect this—is about balance. We do not need a nation of university graduates. I am a university graduate. It was a wonderful opportunity and it has certainly been helpful in terms of my career and other opportunities but I would have been quite happy to be an electrician. Certainly, we need more tradespeople. We need balance in our workforce and we need skilled tradespeople to do the work which is coming up in the next few years, particularly with the infrastructure Prime Minister's plans.

So, from 1 July the coalition will provide an estimated $1.9 billion in loans over the next four years to people who are undertaking a priority trade. I will tell you why it is important. There is an organisation in my electorate called Geoff Hall Projects. Geoff started off as a single tradesperson and he built a business over many years, starting in the mid-eighties. He is a gentleman I know well. Like all contracting businesses, Geoff has had his ups and downs, and he has certainly had some challenges. But in the time between 1986 and now he has trained 39 electrical tradespeople in his small to medium enterprise. And he provided other opportunities such as cabinetmaking and those sorts of things.

Geoff rang me a few weeks ago and he was devastated. He said, basically, that he will not train another apprentice—it is as simple as that—because there is far too much red and green tape. It is just too difficult. The rates are so hard that it is difficult for them to be competitive. He was very disappointed that he has now lost something that has endured for so long. I think it is fantastic that he has trained 39 tradespeople in his small to medium enterprise in regional Queensland.

And he is not alone. I have spoken to a number of other local small businesses—they have one or two employees—who would usually train one apprentice every four years. They will not continue to do that. So we need to make these changes. It is important that we make apprenticeships financially viable so that apprentices get through to the end of their time, because we are losing 50 per cent of people who start their journey on an apprenticeship. Fifty per cent do not complete. That is simply not acceptable to me.

It is important that people taking out a trade support loan have choice. That is important because each trade is different. Compare a gyprocker to someone who is a diesel fitter, for example. A diesel fitter needs tens of thousands of dollars worth of tools to be effective. If, for example, they are going to work in the mining industry at the end of their apprenticeships they will need that equipment. This is an opportunity for those people to build up their tools over a period of four years at a very competitive rate. It is only going to increase with CPI. Once again, if I could go back to being a younger, smarter self and I had this opportunity, I would say take the money because it is a great opportunity. To be able to kit yourself out—to be ready for the end of your time—is a wonderful opportunity that is being provided by the taxpayer. We should not forget that it is being provided by the taxpayer. As a young apprentice, quite simply I had to borrow those tools. As anyone in this room who knows tradespeople knows, they will tell you they are the things that are almost as precious to them as their children. So I thank the people I used to work with; it was great that they gave me the opportunity.

This bill is important for Australian training. It is important for Australian apprentices and it is one I wholeheartedly support.

Matt Thistlethwaite (Kingsford Smith, Australian Labor Party, Shadow Parliamentary Secretary for Foreign Affairs) Share this | Link to this | Hansard source

I wish to inform the House of an email I received from a local tradesperson on 19 May this year. It reads:

I am a small electrical contractor from Maroubra. I employ a number of electricians and apprentices and just received this attached email from an organisation who provide training for some of my electricians to get their qualifications upskilled, to be ready for the NBN. Seems Mr Abbott is changing the Tools For Your Trade scheme. I am not sure if this will affect my apprentice electricians as well, as they rely on the yearly grants to keep their tools up to scratch as they progress through their training, but it will definitely affect the guys doing the NBN training and may make them reconsider completing the course. This will result in our company not being able to claim the finalising grant, and considering this year I will have outlaid over 40 grand in training fees to a private provider and TAFE New South Wales, this may actually be the straw that breaks the camel's back. If I somehow survive this blatant backflip (broken promise) from the government, I believe it will result in some of the apprentices dropping out of the trade at a time when we need to get more tradespeople training, not less.

That is the view of a local electrical tradesperson in Maroubra of what this government is doing to trade and apprenticeship support in this country.

As the shadow minister has pointed out, prior to the 2013 election Tony Abbott announced the Trade Support Loans scheme—but what he did not tell apprentices was that they were going to scrap Labor's $1 billion Tools For Your Trade apprenticeship program, which provides up to $5,500 support for apprentices to keep their tools up to date.

This means that what was an optional loan, available in addition to the Tools For Your Trade payment, is now the only financial support offered to apprentices. As the tradesperson I just mentioned points out in that email, this may be the straw that breaks the camel's back for many apprentices. It will discourage them from continuing with their training. We have heard from many speakers in this debate of the huge costs associated with tools and equipment. They will now be left with the only form of assistance in subsidising those costs being through debt or credit—through taking out a loan—rather than through the government's program, Tools For Your Trade. Many apprentices who have already commenced their trade will now have the payments they were expecting to receive cancelled. This could mean up to $3,700 in future payments for a first-year apprentice has been lost. It all makes it harder for apprentices. That is the nub of what is occurring here: the government is making it harder for apprentices to get training, to complete that training and to gain an apprenticeship.

We have seen the cancellation of the trade training centres program in schools, which provided a pathway from school education into a trade. It provided that important encouragement. The taste of what it is like to be a tradesperson that was provided at schools is being cut by this government.

Labor in government did all it could to support apprenticeships and training. We supported around 21,000 building, construction and engineering apprenticeships through the Apprentice Kickstart Bonus initiative, a $57.5 million program which operated until April 2013 and which tripled incentives, in the first year, for employers to take on apprentices. There was $101 million for the mentoring of up to 10,000 apprentices a year and to support their progress through apprenticeships. We invested $53 million in Accelerated Australian Apprenticeships, which meant that apprentices were qualified once they could do their job, not just after a set period. We sought to invest in experience, skills recognition and training by providing up to $4,000 to help mature-age people gain an apprenticeship, and provided $19.5 million over four years for business skills training and mentoring support for individuals who wanted to start a business within two years of completing a trade related apprenticeship.

That is Labor's legacy. Labor was doing all it could to support training and encourage people to take up apprenticeships. This loans scheme and the cuts that are being made to vocational education and training simply make it harder for apprentices to complete their training. That is not in the interests of Australia or our economy. (Time expired)

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

I will summarise some of the arguments put forward by members who have contributed to the consideration in detail. I absolutely refute the argument just put by the member for Kingsford Smith that these Trade Support Loans will stop people commencing or completing apprenticeships.

The reason we have gone down this path is to increase apprenticeship completion rates. When we have a situation in some trades where two out of three apprentices are not completing—quite often, one out of two is not completing—their apprenticeships, the issue needs to be addressed.

It would be a wonderful world where the government had plenty of money and could just keep giving it away without worrying about outcomes. The reality is we have to wake up to the current situation. We have a decreasing number of young people completing apprenticeships, particularly in trades we require for our skills based future.

The member for Cunningham, during consideration in detail, asked: 'What advice will be provided to young people under 18?' I said in the summing up that the apprenticeship centres will be providing information and increased summary information to the parents and guardians of people under 18. There are people today under the age of 18 who are accessing the HELP scheme. They sign up, and there is no detailed information for them. Yet the repayment is, perhaps, fractionally more onerous under the HELP scheme that it will be under this.

In relation to the comment about providing the lump sum money when people require it the most, the whole scheme is designed around providing what, in some references, is through-life support during the apprenticeship. In the first year, $8,000 will be provided in 12 payments, monthly in arrears, of $666.67 per month. Under the previous scheme, there were five lump sums: $800 at three months, $1,000 at 12 months, $1,000 at year 2, $1,200 at year 3 and $1,500 at year 4 on successful completion. We will move to a system where, in year 1, $8,000 is received; in year 2, $6,000 is received; in year 3, $4,000 is received; and in year 4, $2,000 is received, with a $4,000 discount on successful completion of the apprenticeship.

Many speakers in this debate, and out there in 'real land', say that the problem is that the cost of living and the wages paid in apprenticeships make it very difficult for apprentices to stay in the game. The whole idea of this is to provide support on a needs basis to the individual, who can opt in every six months to receive payments to top up their income, to buy tools or to provide support with costs of living. It is about making sure that those on the lower incomes are provided with the support that they individually require.

One of the other points that was raised by the member for Cunningham was in relation to indexation. She asked whether the rules could be changed like the HELP scheme. I say to her: the legislation that was drafted for the HELP scheme was legislation drafted by the former Labor government. This legislation is along the same strain. We have put into the legislation that the loans can only be increased by the CPI, but a future government can change it. It is simple legislation; it is not doubly-entrenched legislation.

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

Order! In accordance with the resolution, the time for consideration in detail has expired.

Bills agreed to.