Trade Support Loans Bill 2014
As many in the House know, before I joined this place I was a school principal. I am also the mother of three sons, two of whom have been apprentices. As a teacher and principal, I worked with students and my own children to plan and secure work placements that would build their skills and give them the best chance at securing a trial for an apprenticeship.
This meant writing to or ringing local tradespeople, sometimes up to 40 plumbing companies. I worked to enrol students in VET and TAFE courses to pursue training, work placements and certification to boost their chances of securing an apprenticeship. As a year-level and senior-years co-ordinator, I was responsible for cohorts of students' pathways and work-experience engagements, trade tasters and work-ready programs. I saw the pride in the young students I taught when they secured an apprenticeship. As a mother I shared, in a much more personal way, the excitement and promise an apprenticeship creates. An apprenticeship was their pathway to the future, a secure qualification that set them up.
I know too, first-hand, that being an apprentice is hard. The minimal trainee wage is hard to live on. Most continue to be supported by their families whilst an apprentice. The families in Lalor work hard, often for a modest wage, but they are mostly happy to support their children in this way, where they can. In addition to receiving a training wage, apprentices often have other financial pressures placed upon them. They made need to contribute to the cost of their TAFE courses, incur travel costs and purchase tools.
The Tools For Your Trade program went some way to addressing the monetary pressures faced by apprentices. No-one really likes lending their tools! Small businesses found it difficult to ensure the apprentices had the right tools to make a useful contribution. Tools that are for general use are often not cared for like tools you may own yourself. That is why this program was so valuable. I know from my own home the excitement this program created—the message it sent to young people that their work, their commitment to their trade, was valued by the community, that the community had a vested interest in their success and completion.
A young carpenter, mechanic, landscaper, electrician and pastry cook, to name a few, all rely on specialist tools to do their work. The Tools For Your Trade program meant that apprentices could purchase tools whilst training. These tools enabled them to become more productive employees and also to value and care for their tools. We know there is a skills shortage in Australia and that is why we must ensure a vibrant and active apprenticeship system is in place.
It is not easy to take on a young trainee in a small business. It places an administrative responsibility on the business, and not every apprentice ends up being a good fit for an employer. Over the years there have been lots of programs to support businesses and apprentices to make the skilling pathway easier. We have seen, in recent years, an over-reliance on the 457 visa to fill skill shortages. Surely this reliance could be reduced if we ensured our young people were skilled in the employment areas we need. Programs like Tools For Your Trade went some way to assist.
While there is some merit in having the training costs picked up through a HECS style loan, why does this have to come at the cost of the Tools For Your Trade program? As a school principal and mother, I saw the pride in securing an apprenticeship. I also saw students return to school after six or so months when apprenticeships did not work out. I remember one young student who suffered terrible bullying in the workplace. This all came to a head after he was shot in the shoulder with a nail gun. A terrible situation, you will agree.
Sometimes these young apprentices need support. The Australian Apprenticeships Mentoring Program was one such support program. It largely focused on the first year of an apprenticeship, the time when most dropouts occur. The Australian Apprenticeships website proudly lists the benefits of this program and provides a list of successful case studies, showing how a mentor program assists the business and apprentice to work through issues. There is, however, one very sad line on the program website. In a section titled, 'Who can apply for funding?', it states:
The Australian Apprenticeships Mentoring Program is now closed to new applications. No further projects will be funded under this Program.
It is a similar scenario with the Australian Apprenticeships Access Program and the Apprentice to Business Owner program, also now scrapped. These are further examples of this government's lack of real support for training. You can make noises about the young needing to learn or earn, but if there are no jobs and no training support, I am not sure how this can happen.
Those opposite cite low wages as the main reason for non-completion and, in its place, want to put debt. I am not sure this will convince apprentices that they are earning more. And how will that debt be recouped? What will happen if an apprentice fails to complete their traineeship? Hopefully, from my experience, they will return to school. The trade support program means many will have accumulated a debt for a part-skill they are unlikely to use. They will end up leaving school with a debt already hanging over their heads.
There is another group that has the potential to leave school with a debt. Some young Australians are actually lucky enough to commence their pathway to work through a school based apprenticeship. The trade support loans mean that someone as young as 16 may get saddled with a loan before they have even left the school gate. Why am I concerned with the young acquiring these debts? There is no provision in the legislation for them to have a parent or an adult with them when they sign up for the debt. This cannot happen at a bank or credit union, so why should these young people be put at risk without some form of protection? And with the government considering outsourcing the debt management to private providers, who knows how many may get caught up with a $20,000 loan and be left in the hands of private debt collectors, not all of whom are known to have compassion as part of their remit.
There is also confusion within the government about the loan scheme, with government ministers showing confusion recently about the implementation. When asked about the scheme in question time on 2 June 2014, Minister Macfarlane said:
There is no doubt that the loans are interest free. It gives me an opportunity to highlight the great regard and delight from industry in relation to the trade support loans. The loans, as the shadow minister knows, are indexed annually with CPI.
He mentioned two loan interest measures in the same sentence. The department's website and the budget papers make it clear that loans will be indexed. I quote from Budget Paper No.2:
Trade Support Loans will be provided at concessional interest rates and capped at $8,000 in the first year of the apprenticeship, $6,000 in the second, $4,000 in the third and $2,000 in the fourth.
Loans will be indexed by the Consumer Price Index and repaid on an income-contingent basis through the taxation system, similar to the way HELP loans are repaid.
This is not the only example of the government not being across the detail of budget initiatives. If they are not across the detail, how can we have faith in their ability to deliver the program? Some apprentices who drop out may never return to training and study, leaving them to a working life, most probably on a low income, with this trade debt always there. Some will never achieve a wage that allows them to repay the debt.
There is another aspect of these trade loans that not many have mentioned: they are only available to those apprentices who are training for a skill on the National Skills Needs List. As discussed earlier, we do have a skills shortage in Australia. Most skills on the national needs list are weighted to the traditional male dominated industries—building, mining, telecommunications and the like. There is some call for hospitality and hairdressing, but with the list so heavily weighted to the male dominated industries, our young female trainees will not have access to the trade loan scheme. I also note that the skills list changes over time. So it is very difficult for careers guidance counsellors and schools to help prepare students for what will be supported and what will not.
The government has already ceased the fee exemptions for childcare trainees. They have taken childcare support away from the mainly young mums wanting to return to study, and now young women are effectively being blocked from accessing this initiative, as poorly designed as it is.
Last week, I met with the National Growth Areas Alliance, a group of councils that represent the high-growth communities across Australia. They drew to my attention the 2014-15 State of the Regions reportfrom the Australian Local Government Association. This report should sound the alarm to Minister Macfarlane about investing in skills and workforce development, particularly for young people in regional areas. The report identified the areas with the highest youth unemployment rate. It highlighted that youth unemployment is a persistent problem, particularly in regions in transition.
It is more important than ever that the federal government supports our young people on their pathways to employment. We know that the trade loans scheme was an election promise, but we did not know that it would result in the minister decimating support to apprentices by taking the axe to other programs such as the Tools for your Trade payments program, the Australian Apprenticeships Access Program, the Australian Apprenticeships Mentoring Program and the Apprentice to Business Owner Program. I know, from my own experience, how excited young people get in the first and second years of their apprenticeship about the potential for them to become small business owners. I know that that program, and the support given to those young people to make that transition, was critical in them continuing in their trade beyond their apprenticeship.
This government also axed the Youth Connections program which helped to give vulnerable young people a second chance to obtain training and employment. I have seen firsthand the success of this program on some of the most vulnerable in our community. Combined, despite the loan scheme, these cuts to programs are just not fair. On top of that, the Liberal state governments are implementing savage cuts to TAFE which have resulted in fees rising, courses being cut and the closure of TAFE campuses.
The Abbott government is insisting that young people need to earn or learn, yet they are ripping away all the programs to support our young people into apprenticeships, employment and education. I suggest that the minister needs to look at supporting our young people on their pathways to employment instead of axing the mentoring and access programs that support them.
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