Senate debates

Monday, 14 July 2014


Trade Support Loans Bill 2014, Trade Support Loans (Consequential Amendments) Bill 2014; Second Reading

12:40 pm

Photo of Christopher BackChristopher Back (WA, Liberal Party) Share this | Hansard source

It is my pleasure to rise to speak in support of the apprentice trades loans scheme as it has been put forward to the Senate today in the Trade Support Loans Bill 2014 and the Trade Support Loans (Consequential Amendments) Bill 2014. The starting point in all of these activities is that, if it is broken, then you have got to fix it. We know the apprenticeship scheme around Australia at the moment is broken. Why do we say that? Because, firstly, there are not enough apprentices going into training; secondly, there are not enough who are completing their training; and, thirdly, those of them who do complete their training, and those who fall by the wayside, generally are dissatisfied because of the conditions under which they went into those programs and because expectations may not have been met.

My colleague Senator Lines, also from Western Australia, mentioned the Australian Apprenticeships Access Program. One of the failures of the access program was that, with a KPI of 40 per cent, it was only achieving 25 per cent—just half what its expected outcomes were. That gives you an indication of why this government had to make changes—and make changes we have. From my own background in business, I am very proud to say that I have employed apprentices at every opportunity. Sometimes they have stayed with us on completion. Other times, bigger companies have snaffled them, which has always been a cause of complaint to me. But I am proud to say that, almost without exception, those who started apprenticeships with me did conclude them and I was able to employ them.

This scheme is an investment of some $1.9 billion, following up support of some $476 million in the Industry Skills Fund. How is it being structured? It is being structured around a skills needs list, which I have in front of me, of over 70 areas that have been identified for apprenticeships. That does not take into account agriculture and horticulture, which, as you would expect, Mr Acting Deputy President, I would be very pleased to speak to separately. But, as part of my contribution, I do want to speak about school based traineeships and the success of this program and indeed how this new scheme is going to interleave with these school based programs. And, unless I am interrupted by my colleagues, I hope to get to what I believe to be very exciting information, which has only come to me in the last 30 minutes, from the director of the Kwinana Industries Council, on the industrial strip in Western Australia.

But let us go back and reflect. Why did the old Tools For Your Trade program, of $5,500, fail? I do not know whether you did the old course in bricklaying, as I did, Mr Acting Deputy President, but the cost of tools for bricklaying is meagre compared to the cost of tools required in other trade areas. It is sufficient to say that the quality of my bricklaying led me not to that trade but eventually into the Senate, but nevertheless it does make the point that the funds required for different trades are so substantially different that the figure of $5,500 is excessive for some and meaningless for others. So what does this program do? First of all, it has a loans scheme for up to $20,000. It is structured as $8,000 paid on a monthly basis, some $666, in the first year of an apprenticeship. It reduces from $8,000 to $6,000 in the second year, then to $4,000 and then to $2,000. I make the point that it is not compulsory to take out this loan.

We hear comparisons being made by my colleagues on the other side going on about low-paid apprenticeships et cetera. They seem to overlook the fact that, when somebody is a student—studying a diploma, a higher diploma, a pre-university bachelor degree or a degree itself—they are not working at all unless they work during vacation time. Whilst an apprentice's wage may be low, it is infinitely higher than the nil wage of somebody who is studying for a diploma or a degree. So, in many instances, the need for a loan may not be there—or, indeed, they may not need to borrow the full $20,000 over the four years. But it gets better, as the repayment of these moneys during their traineeship or apprenticeship is nil—nothing; no money at all. Even if the person did not need the $20,000, at the interest rate that they will eventually pay—currently at 3.75 per cent—who would not take it out? Who would not take the loan at 3.75 per cent, when a personal loan at the moment is nine per cent or 10 per cent?

It is so generous that, during their period of training, there is zero cost initially. Only when they have concluded their traineeship or apprenticeship will they actually start repaying this loan—but only when their salary or their wage gets to, at the moment, some $53,000 a year. Of course, with CPI, that figure will increase—probably to $56,000 to $57,000 a year when a young apprentice starting out today would be likely to conclude, and they will not have to pay any of that back until that time. It has been estimated that, once they are fully qualified, the payback period would be about five years. I travel around the world a bit, and I do not know of any other scheme in existence where somebody can borrow with absolutely no impost on them at the time, pay nothing on graduation, upon completion, and only start paying back, under the tax regime, according to their income earned once they are on about $53,000 a year—or soon to become about $56,000 a year.

Who is eligible for this? Those doing apprenticeships or traineeships at certificate III or IV qualification leading to an occupation, as I mentioned, amongst the 70-plus occupations on the National Skills Needs List. What that does is focus the attention of young people into areas which have been identified by industry, by employers and by governments of both persuasions as being necessary—which, you would therefore expect to lead to not only employment but also useful, enjoyable careers for them. How tremendous is that perspective. Of course, an alternative is an apprenticeship or a traineeship at certificate II, III or IV levels in the agriculture and the horticultural sectors. Again, in that instance, there is no limit.

Mr Acting Deputy President Gallacher, you know my very keen interest in the field of agriculture, agribusiness and horticulture. I had the pleasure of chairing a Senate inquiry in 2010 into higher education and skills needs in the agriculture and agribusiness sectors of this country. At that time we identified very, very significant needs. It was always a great disappointment to me that at the time Labor Party ceased in government in September 2013 they still had not, under parliamentary and Senate custom, responded to the report of and the recommendations from that inquiry. I hope that is not an indicator of their lack of interest in regional and rural and, particularly, agriculture and agribusiness employment.

The interesting point that came out of that exercise was the need for traineeships rather than apprenticeships in agriculture and horticulture and the need for modules of learning and skills development which somebody could interleave around the demands of the working place—around seasonal conditions, seeding, harvesting, fruit picking et cetera. Traineeships were, by far and away, the more preferable avenue for those people. I completely applaud Minister Macfarlane and his staff for their initiative in allowing certificate II, III or IV level qualifications in the agriculture and horticulture sectors—and I would hope that they would extend to the agricultural machinery sector. In my home state of Western Australia and in other states, they are screaming out for young people to go into the agricultural machinery world. Time does not permit me today to reflect on the excellence of Australia's contribution to agricultural machinery development—going back to the stump-jump plough and the original McKay harvester. We have an incredibly proud history in this country of developing agricultural machinery that provide jobs and employment opportunities not only in this country but also around the world. I am very hopeful and I would expect that the agriculture and horticulture sector would extend to agricultural machinery training and apprenticeships for young people.

The conditions of this program include an opt-in provision. Every six months, the apprentice or trainee, and/or their parents if they are under the age of 18—and I intend to come back to that to address Senator Lines' frenetic and ill-founded criticisms that she spoke about a few moments ago—receive information as to the status of their loan. As I say, it is to be repaid equivalent to the higher education HECS-HELP scheme. Minister Macfarlane must have been predicting Senator Lines' concerns—and I quote:

Can school-based apprentices or trainees access the loan? The answer of course is yes, they can, including those under the age of 18 years. Australian Apprenticeship Centres will soon have information for apprentices and their parents to ensure they understand the responsibilities associated, consistent with other loans such as HELP.

But here is the point:

Note: When a minor (under the age of 18 years) signs up for an apprenticeship, their national training contract is co-signed by their parent or guardian, as the contract is a common law contract between an employer and an employee formalising the terms and conditions. Having co-signed the training contract, a parent will be aware that their child is in training and could be eligible for apprenticeship incentives.

I have vastly more confidence in 16-year-olds than Senator Lines appears to have when it comes to understanding these matters. I do not think there are too many 16-year-olds these days that do not have a credit card or do not have a mobile phone or do not have a mobile phone debt. If it was good enough for me in 1967 as a 16-year-old to sign a cadetship in veterinary science, I think 46 years later most 16-year-olds can, with their parents, sign the contract and understand what it is all about.

I speak if I may on the question of the possibility for these programs to include students still at school. As I mentioned earlier, I would like to share with the Senate a wonderful program which this particular trade loans scheme will feed directly into—that is, one given to me by the director of the Kwinana Industries Council in Western Australia, Mr Chris Oughton. It is a scheme that has now been undertaken for the last 15 years by participating engineering companies up and down the Kwinana strip south of Perth in WA. It involves full-time students at the Gilmore College in Kwinana and training undertaken by the wonderful Challenger colleges in WA.

Mr Oughton told me less than an hour ago that they have had, over the last 15 years, a 98 per cent success rate. Students who start the program in year 11 go through the program to the end of year 12. At the end of that period of time, if my mathematics of multiplying 14 per year by 15 years is accurate, that is 210 students. Better than 200 of those 210 have found employment in the engineering area up and down the Kwinana industrial strip. For those of you who are not familiar with Kwinana, it is one of the highest unemployment areas in Australia. Confounding, isn't it, when you think of our industry south of Perth such as BHP, BP, Alcoa the big shipbuilding industries associated with Henderson. Yet it has been through the intervention of the Kwinana Industries Council, the Gilmore College, the students themselves and the Challenger college along with employers that this program has been undertaken.

Mr Oughton, when I explained to him that school based trainees will be able to participate, said to me that this is critically important. I will tell you why—and I hope I have recorded it accurately. He said to me that if a student is participating in a school based traineeship then the cost of the TAFE component of the program is met whereas if they are only on a work placement then they or their families have got to pay the cost of the TAFE training component. Look how this program is going to feed into that exercise. It has been a fact that there has been a dropping off of enthusiasm by some people. Some employers have not been in a position with the downturn of the economy to actually pay these students on their one day a week. In other instances the students themselves have required financial support.

Minister Macfarlane's program is going to open this up far more widely to that cohort of students. In a high-unemployment low-socioeconomic area, you can see where the coalition is focusing all of its training, its apprentice programs, its pre-degrees, its degrees and its higher-degree programs. But it gets even better as a result of what Mr Oughton told me. I think this will be a catalyst to accelerate. He had only just come out of an important meeting in Perth a few minutes ago—discussing this very matter as it happened—but he told me that they are going to extend this beyond engineering to include telecommunications technology, processed plant operations, business activities, hospitality and IT. So we are going to see in this area of enormous need for trades and other training the benefit of this program initiated by Minister Macfarlane and actually see this focused even further for school based trainees.

Exactly in line with the area I speak of in IT, several of our colleagues recently had the opportunity to see demonstrations by the 3D company here in Parliament House of the use of new printing technology. This technology—as you would be aware but others may not be—actually allows the printing of tools. It allows the printing of a home. In Holland recently, a complete house was built by printing technologies. They told me the other day that in New York this year, in the four days of the car show—Senator Mason is already booking his ticket—they are going to build a motor car and drive it away from the show.

As a veterinarian, I have an interest in tissue reproduction and I have an interest very much in the whole question of the availability of organs for transplant. Our wonderful Professor Fiona Wood in Perth, largely as a result of the shocking circumstance of the Bali bombings, and her team have developed a technique now of taking skin, growing that skin tissue in the laboratory, producing it as a spray and spraying it on to badly burnt victims. They were telling me the other day—and this is very relevant to our discussion—that for a person requiring a kidney transplant, they will be able to take that person's kidney tissue, grow a new tissue by printing and put that kidney back in. Why is this relevant? They said to me the biggest limit to us remaining right out there in the forefront, where Australia happens to be at the moment, will be trained technicians. And they are already focussing on upper primary and secondary so that we can move into the skills development area because we will be needing thousands of young Australians to be trained in this particular technology. Don't worry about the future; the future for Australia has never been better. But we need to recognise that apprentices and apprenticeships and trainees and traineeships are as important to this country as higher degrees and graduate degrees. I for one think that the government is absolutely on the right path when it comes to elevating apprentices and trainees through the scheme we are discussing today.


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