Monday, 14 July 2014
Trade Support Loans Bill 2014, Trade Support Loans (Consequential Amendments) Bill 2014; Second Reading
It is quite a curious debate we having today, because I could have sworn from Kim Carr's speech that the Labor Party were opposing the legislation. He was relentlessly negative in his attacks on it. I understand the Labor Party will not be opposing the legislation, and that is a good thing. Perhaps it was just relentless negativity—opposition for opposition's sake—all the while acknowledging in his heart of hearts that it is actually a good thing and that he has to vote for it. I am pleased that, despite his strong, harsh words and criticism of what the government has proposed, Kim Carr and the Labor Party will be voting for it. We thank you for that.
We had an interesting contribution from Senator Rhiannon. It is a curious debate in which the government is proposing a scheme where we would have many, many more places in higher education—something like 80,000 more places—and Senator Rhiannon starts by saying that the government is on the warpath regarding access to higher education. It is difficult to see in what kind of topsy-turvy world that is in fact the case. So we had another bizarre contribution from the Greens that we are on the warpath. Not only are we not on the warpath when it comes to higher education except to reform it and make it more accessible as is clear but these trade support loans are, again, about access to apprenticeships, making it easier and providing them to many, many more Australians. That has got to be a good thing.
Australian apprenticeships are incredibly important and play a key role in providing people with valuable and robust skills that will serve them well for the rest of their lives. We all know learning a trade skill is invaluable to the individual, the community and the economy, but there is no shirking away from the fact that learning a skill can also be an expensive endeavour.
Australia' future productivity and competitiveness depend on maintaining our highly skilled and highly trained workforce. A strong workforce is paramount and integral to ensuring that we are able to respond to the changing economic and labour market needs of our nation. It is in recognition of the importance of Australian apprentices and those undertaking a trade and in order to ensure that we further develop our highly skilled and highly trained workforce that we are seeking to implement these Trade Support Loans for up to $20,000 over a four-year apprenticeship.
The Trade Support Loans program was an election commitment from the coalition and will work to complement the Industry Skills Fund that aims to streamline training and deliver close to 200,000 targeted training places along with training support services.
Our Trade Support Loans will provide additional financial assistance to support those who are learning a trade to meet everyday costs. The loans have been designed to provide financial support for apprentices to cover their costs of living and learning whilst in training. These loans will be provided at concessional rates indexed annually. Like the HELP loans provided to university students, these loans will only be repaid via the Australian taxation system once the individual's income reaches a sustainable level, the HELP payment threshold.
In order to provide support where it is needed the most, the loan payments have been heavily weighted to the first two years of the apprenticeship where wages are at their lowest and need for financial support is at its highest. We believe that this is the best and fairest method for providing support to those learning these skills.
According to Australia-wide statistical data provided by the National Centre for Vocational Education Research, in the December quarter 2013 there were 392,200 apprentices and trainees in training. Of a labour force of more than 11.5 million people, this represents a significant number of people who are building the skills to secure a career and transition into long-term employment. This is a successful pathway. The Australian Industry Group report from June 2013 notes that 92.9 per cent of graduates who undertook their training as part of an apprenticeship or traineeship in a trade occupation course were employed after training.
What we do need to look at, however, are the statistics that we see coming from this NCVER data. In the 12 months to 31 December 2013 compared with the previous year, commencements decreased by 25.9 per cent to 244,700, completions decreased by 1.4 per cent to 189,800 and cancellations and withdrawals decreased by 16.4 per cent to 119,900. State and territory data for the 12 months to 31 December 2013 compared with the previous year also showed that here in the ACT commencements fell by 23.8 per cent. According to NCVER data, as at 31 December 2013, the ACT has 9,023 apprentices and trainees in training. For the 12 months ending 31 December 2013, the ACT had 3,158 completions, 4,458 commencements and 2,249 cancellations and withdrawals. Whilst these withdrawals are decreasing, the decreasing commencement and completion data is still indicative of the need to provide additional support to convince those currently training to stick with it and finish their apprenticeships; and to say to those looking to undertake this sort of training that we value their commitment and want to support them through it.
It is unfortunate that many apprentices do not complete their training. I am certain that in many instances this is related to the costs and financial burden associated with doing so. This is something that the Trade Support Loans program aims to address. There are considerable implications for industry if this trend is to continue. Master Builders Australia CEO Wilhelm Harnisch has indicated that Master Builders is concerned that the latest drop in apprentice commencements continues a worrying trend which will impact on the industry over the next five to 10 years. He also indicated that a review of measures to restore business confidence and initiatives to enhance the attractiveness of the apprenticeship system to both apprentices and employers is urgently required.
We need to look at what we can do to address this. I believe the most effective way to help provide this support is by making available the Trade Support Loans program, similar to the HECS-HELP system offered to students at university. This legislation places a great deal of importance on helping people finish their training. In fact, to provide further encouragement to apprentices to complete their training, their repayment amount will be reduced by 20 per cent on successful completion of their training. We want them to succeed. Senator Rhiannon had a bizarre critique of that particular part of the legislation, saying that it was somehow an acknowledgement that the scheme is not fair or is not a good scheme. It is nothing of sort. It is an incentive to finish. Those who finish will get a 20 reduction on their loan. Surely that is a good thing; surely that is something that should be supported. The program is more sustainable than the Tools For Your Trade program, which provided tax-exempt grants up to $5,500. Of course, due to the debt left by Labor we could not afford to keep this program. We had to ensure that our support for apprentices was sustainable over the long term.
It was timely to review apprentice programs following the Fair Work Commission's decision to increase apprentice wages, with some employers providing tools for their apprentices and with most awards including a tool allowance. These loans will help to ease the financial burden associated with undertaking an apprenticeship and ultimately assist in increasing completion rates. They are a helping hand, not a handout. In the interests of flexibility and in order to meet the needs of the individuals undertaking an apprenticeship or trade, these loans will be able to be applied for at any stage during the four-year apprenticeship. The flexibility is such that an apprentice can opt in for six months to buy their tools and then opt out for any further payments. If circumstances change, they are able to opt in at a later year for the payment schedule for that year.
Trade Support Loans say to apprentices that we value them, the work they are undertaking and the skills they are building. Trade Support Loans provide them with additional support when apprentices need it the most. The program aims to ease financial burdens that apprentices may face while they are learning. Ultimately, this program allows them to invest in their future and allows us as a nation to do the same. We value the hard work that they do and the skills that they learn. This should be recognised through additional support for them. We are committed to building a high quality and nationally consistent Australian apprenticeship system, one which supports apprentices and responds to their needs, to employers and to the economy. I commend the bill to the Senate.