Senate debates

Monday, 14 July 2014


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

8:16 pm

Photo of Mathias CormannMathias Cormann (WA, Liberal Party, Minister for Finance) Share this | | Hansard source

I thank all senators who have participated in the second reading debate on this bill, the Trade Support Loans Bill 2014 and related bill. It gives effect to the government's 2013 election commitment to better support Australian apprentices through the introduction of the Trade Support Loans program. This 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 their apprenticeship.

The Trade Supports Loans initiative signals an approach of targeted investment in key trades where skills shortages exist. We need to ensure that we are achieving the best value for money in our skills expenditure, which is why this program will target trade occupations in priority areas such as plumbers, diesel mechanics, electricians and fitters. Loans will be available to Australian apprentices undertaking qualifications leading to these occupations.

Currently, there are around 149,000 apprentices training in high-priority qualifications and a further 70,000 commencing each year. We know that about half of those who begin an apprenticeship in these qualifications drop out and most of these are within the first two years of training. More needs to be done to improve this outcome. The program will provide a stronger incentive for young Australians to take up the opportunity that an Australian apprenticeship offers and lift the number who finish their training and become productive members of the workforce. To increase completion rates, a further incentive will be provided through a 20 per cent discount on the amount of a trade support loan borrowed by apprentices who successfully complete their trade. For example, if an apprentice borrows $20,000 over the course of their apprenticeship, which they successfully complete, they will only need to repay $16,000.

We have heard from those in this chamber who are worried the trade support loans will not in fact be the better deal for apprentices. Yes, there are big changes but they are changes designed to give support where it is most needed and we are helping apprentices to transition to this new way of support. The program is being administered through a network of organisations that are already working with apprentices and employers and that understand the training system and what apprentices and employers need. We have also heard that some in this chamber are worried we are unnecessarily burdening young apprentices with debt and not restricting the apprentices in how they spend their loans. The trade support loans are not compulsory but are there to help with when an apprentice needs to make a decision on whether to spend some money now to enable them to succeed in the field of training they have chosen. This will enable them to do whatever they need to do, to help them in their apprenticeship, including finding a place to live that is closer to their workplace, buying a car or ute that can get them to work earlier or purchasing some tools or educational aids that will help them achieve the best they can in their training.

Our apprentices are our future workforce and so we are supporting them through concessional loans when they need it most. They will start paying off their loans when they join that workforce as well-paid, qualified trades men and women. As well as concerns, we have also heard from senators on both sides of the chamber who have benefited themselves from taking on a trade and becoming qualified. This loans scheme will enable more kids from all backgrounds to choose an apprenticeship. We have also heard that lump sum payments would be more helpful. As you would understand, we need to ensure that the apprentice is sure they want to take on the debt and plan for the bigger purchases. This program has been designed to have front-loaded support, with bigger payments coming in the early years when they need them most. Several senators have suggested there is not enough protection of personal information. That is untrue. There are strong protections provided by the Privacy Act. In line with our promise to cut unnecessary and costly legislation and regulation, we are not going to replicate existing legislation and other privacy requirements in this bill.

The government is committed to ensuring that regulation is never adopted as the default solution. There has been a lot of commentary on the misuse of payments that occurred under the previous Tools For Your Trade scheme. Sarina Russo, an Australian apprenticeship centre contracted by the government, in their submission to the Senate inquiry into this very bill, said:

In our experience some apprentices did not use their $5,500 Tools For Your Trade funding to buy tools.

A person will think more carefully about what they spend a loan on, compared to how they might spend money that is just thrown at them. We believe in apprentices and their ability to choose when they wish to receive support to meet their individual circumstances. Members of the opposition have tried to insinuate that we are not looking after apprentices who are aged under 18 or who are still at school. This is also untrue. Great consideration has been given to the position of those under the age of 18. A range of additional materials, including specialised application forms, fax sheets and information for parents have already been developed. We concede that trade training is not a lesser avenue to that of studying at university and it should stop being treated as such. With the introduction of trade support loans, we recognise the barriers young apprentices face, and, in the same way the Higher Education Loan Program has assisted university students, trade support loans will assist apprentices in overcoming those barriers and transitioning into meaningful work as qualified tradespeople.

We are looking at ways we can strengthen industry investment and engagement and ensure that the skills delivered are of high quality and what industry requires. We are also looking at the inconsistencies across the system in qualifications and length of training and how training is defined within the system, and we will streamline our approach for a simpler, more efficient system that enables training solutions that fit employer needs. Improvements to Australian Apprenticeships will be underpinned by the introduction of new support service arrangements for apprenticeships from 1 July 2015 to provide better support for employers and apprentices throughout the period of training.

I commend the Trade Support Loans Bill to the house, but, before I close, I might just make a few comments on behalf of the government on the second reading amendment foreshadowed by Senator Lines. The government will not oppose the opposition amendment flagged by Senator Lines regarding parental consent for minors. The government has already given great consideration and put great care into designing the scheme to ensure that those under 18 are fully informed. A range of additional detailed materials, including specialised application forms, fact sheets and information for parents have been developed. Australian Apprenticeships Centres, who are contracted to deal with apprentices, must take due care in ensuring all apprentices who apply for trade support loans are aware of the obligations and implications of taking on an income contingent loan, in particular any apprentices 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 a loan and to make sure they understand the full implications of entering into a trade support loan, including the obligation to repay when they start earning more than $50,000 a year. There will be space on application forms for parents and/or guardians to acknowledge the commitment that their child is entering into, and supplementary information will also be available for parents and guardians to ensure they are aware of the requirements and obligations their child may take on. Additionally, the availability of trade support loans for under 18s is consistent with other income contingent loans, such as the HELP scheme. With those few comments, I commend the bill to the Senate.

Photo of Stephen ParryStephen Parry (President) Share this | | Hansard source

The question is that the second reading amendment moved by Senator Carr be agreed to.

8:31 pm

Photo of Sue LinesSue Lines (WA, Australian Labor Party) Share this | | Hansard source

As I foreshadowed this morning, and as has been circulated in the chamber, I move the amendment standing in my name:

At the end of the motion, add:

  but the Senate calls on the government to determine a method for achieving parental/guardian approval for apprentices under 18 years of age, in particular school based apprentices, at the point of signing up for loan amounts.

Question agreed to.

Photo of Stephen ParryStephen Parry (President) Share this | | Hansard source

The question now is that the motion, as amended, be agreed to.

Question agreed to.

8:32 pm

Photo of Lee RhiannonLee Rhiannon (NSW, Australian Greens) Share this | | Hansard source

Mr President, I seek your guidance. We wanted to divide at that point and I was not clear what was happening. Could you put the question, again, please?

Photo of Stephen ParryStephen Parry (President) Share this | | Hansard source

Senator Rhiannon, I will put us to the mercy of the Senate. Let me just clarify that I did call for those of that opinion to say aye and I had one voice and then those of that opinion to say no and I heard no voices. I can only be guided by the chamber. If, by leave—and I am sure that the Senate will agree—I can put that motion again, I will ask for clarity in the voices and if there is a division required I will abide by that. Do I have the concurrence of the Senate to do this?

Photo of Penny WongPenny Wong (SA, Australian Labor Party, Leader of the Opposition in the Senate) Share this | | Hansard source


Photo of Stephen ParryStephen Parry (President) Share this | | Hansard source

The question is that the motion as amended be agreed to. The motion we are amending is the motion to read the bills a second time.

Bills read a second time.