BILLS - Trade Support Loans Bill 2014, Second Reading

Ms BIRD (Cunningham) (16:13): I rise to speak on the bills before the House and indicate to the House that the bills are designed to establish the Trade Support Loans program for Australian premises. The loans will be concessional and income contingent, with a lifetime limit of $20,000 indexed from 2017. The loans are repayable when the individual's income reaches the Higher Education Loan Program, known as HELP, repayment thresholds. The bill also provides for a 20 per cent discount to be applied to the loan incurred when an Australian apprentice has successfully completed their apprenticeship.

The bill seeks to implement an election commitment the current government made in the campaign period. It should be noted that this was the only statement and commitment made on skills at the time of the election by the then opposition. Unfortunately for apprentices what the Prime Minister did not tell them before the election was that the trade support loans would come at a cost. What the Prime Minister failed to tell apprentices was that he would axe the Tools for Your Trade program, taking $1 billion from the pockets of apprentices. This has massive implications for apprentices. Under Tools for Your Trade apprentices were provided $5,500 over the course of their apprenticeship to help with their costs. Apprentices face many significant costs, including items such as tools, uniforms, safety equipment and also travel and day-to-day expenses.

I indicate that I will be moving an amendment to the bill at the conclusion of my contribution.

My colleagues and I have been contacted by many apprentices who are angry and very upset that they have been deceived. Prior to the election, in their 'real solutions' 2013 election booklet, the Prime Minister told them that the coalition 'will provide better support for Australia's apprentices'. What he has actually done is axe the $5,500 that Labor provided to our apprentices to help them with the cost of their tools or for their training and so forth. He has replaced that payment with a debt. Apprentice electricians can no longer buy expensive voltage testing equipment and other safety equipment, without taking out a loan. Apprentice chefs can no longer buy the expensive knives and other equipment they would need, without taking out a loan. Apprentice plumbers can no longer buy their expensive toolkit and safety equipment, without taking out a loan. Apprentice hairdressers can no longer buy their scissors, hairdryers, straighteners and curlers, without taking out a loan. Apprentice mechanics cannot buy their toolkits, without taking out a loan.

What was the minister's answer to this? His answer was to tell apprentices that it did not matter, because they were spending their Tools for Your Trade money on 'tattoos and mag wheels'. We have seen no evidence of this. It is a pity the minister chose to take cheap shots at apprentices. It just demonstrates how out of touch the minister is with the situation facing apprentices. After bagging the apprentices about spending these funds on tattoos and mag wheels the minister introduced the Trade Support Loans Bill and it has absolutely no restrictions on what they can spend their loans on. The minister is more concerned with taking these cheap—and I have to say unsubstantiated—shots at both us and apprentices rather than providing the support that is necessary.

Apprentices now will have no choice except to sign up for the loan, even school-based apprentices who are under 18 years of age. Because the government has left no other financial support in place, and therefore has left no other option for apprentices, Labor will not oppose the Trade Support Loans Bill, but we will move a second reading amendment. I will move at the conclusion of my contribution that all words after 'that' be omitted with a view to substituting the following words:

Whilst not declining to give the bill a second reading, the House notes that the government has failed to:

(1) advise apprentices that they would be abolishing the Tools for Your Trade program, thus leaving Trade Support Loans as the only form of assistance for the purchase of tools;

(2) adequately explain in clear language the interest rates and full liability of these loans;

(3) offer adequate protection for school based apprentices aged under 18;

(4) offer fair and reasonable transition arrangements for current apprentices;

(5) put in place adequate privacy protections for the large volumes of information that will be acquired through the Trade Support Loans Program; and

(6) offer apprentices the option of lump sum payments in order to purchase expensive items.

The first point of our amendment goes to the dishonesty of the government in the lead-up to the election. The Prime Minister did not tell apprentices that he would be axing the Tools for Your Trade program. He did not tell them that he would be leaving them no other option but a debt. In his election statement he said, 'The Coalition will provide better support for Australia's apprentices.' I would submit to the House that apprentices will be perfectly legitimately within their reason to have assumed from that that they would be getting these loans as an addition, as another option available to them, to support them during their apprenticeship, and not that the better support was based on taking away a major payment that they relied on. He did not say, 'We will give you a loan, but we will take away $5,500.' This is really a mean and tricky approach to election campaigning on this issue, and it is why apprentices are angry about it, as are many employers of apprentices who have contacted us to express their anger about this decision.

The second point of our amendment goes to the importance of clear and simple information on how the loans will operate. The minister, despite repeated requests in media releases, in question time and in Senate estimates, has still failed to explain in clear language exactly how these loans will work. In the budget papers it says that apprentices will be charged a 'concessional interest rate', and the minister has been saying the loans are 'interest free' and that they are 'indexed by the CPI'. The minister is refusing to give clear and concise advice to apprentices. Firstly, the minister has accused them of not being responsible with their money, and then he refuses to give them clear details of their liability under this program. I am sure that many in the House would agree that, when extending a loan option to young people, it is very important that the information that they will be using to make their decision on needs to be clear and full and give them an accurate picture of what they are signing up for. It was also disclosed in Senate estimates that the minister had a plan to explore the outsourcing of these Trade Support Loan debts. What this means for any apprentice is completely unclear and the question remains what exactly the minister is considering in doing this.

The third part of the amendment addresses the protection of school based apprentices—children under the age of 18. Indeed, some could be as young as 15 signing up for a school based apprenticeship. The minister has failed to explain whether children will require a parent or guardian to supervise the application and undertaking of these loans and who will be explaining the terms and conditions and ensuring school based apprentices know that they will be entering into a large debt arrangement. In Senate estimates the government admitted that it only has the 'gist of legal advice' about whether a parent will be responsible, for example, for a 16-year-old's $20,000 Trade Support Loan. The minister needs to clarify this and ensure that parents and children are fully informed about their liability.

The ACTU in their submission to the Senate bill inquiry also outlined their concerns on this issue. Their submission states:

For example, one concern is that young apprentices starting out could find themselves under pressure to access these loans in order to pay for costs of the apprenticeship that should be borne by their employers, or to forego wage increases because a loan is available to meet their costs. The potential for abuse and misuse of the scheme is real but there is no indication of what resources, if any, will be directed towards educating and supporting apprentices in such situations, given that existing support programs have been abolished.

That, of course, refers to the fact that there was a program in place, the Apprentice Mentoring Program, that provided tradespeople with experience in the field that the apprentice had enrolled in as a mentor and adviser to the young apprentice. It could have been, for example, envisaged by the government that that role could be utilised to provide clear and independent advice and support to young people in these circumstances. But they will not be there anymore because the scheme was abolished in the budget.

The fourth part of the amendment is about apprentices who signed up and made their plans to be an apprentice under the existing Tools for Your Trade program. Many apprentices have made financial commitments based on the anticipation of continuing to receive these moneys. Without warning and without any grandfathering arrangements, the goalposts have been completely moved by a mean and tricky decision of this government.

The fifth part of the amendment is about privacy. The explanatory memorandum notes that 'a large amount of personal information will likely be acquired' through the operation of the Trade Support Loan program. The ACTU again raised some valid concerns about the collection of personal information and privacy provisions—and I quote again:

Under clause 75 of the Bill, a person only has to take an oath or affirmation to protect information they receive from apprentices. There do not appear to be any repercussions for a breach of these provisions or for failing to adhere to an oath or affirmation. By contrast, under the Higher Education Support Act 2003 the person/officer dealing with personal information has more onerous obligations to meet and the penalty is two years’ jail.

So the question remains with the proposed passage of these bills whether the minister will be putting any measures in place to ensure that an apprentice's personal information is appropriately protected.

The last part of the amendment regards the fact that it has now become apparent that the instalments of this money are going to be paid monthly in arrears. By paying apprentices monthly this will effectively be a wage supplement and will mean that apprentices will have difficulty in purchasing expensive items, such as tools, vehicles, uniforms and fees, without potentially borrowing the money commercially and repaying the loan with their monthly in arrears payments—in effect, repaying a loan with a loan.

Submissions to the Senate Economics Committee inquiry on the bill by both the Master Plumbers and Mechanical Contractors of New South Wales and Sarino Russo Apprentices welcomed the loans on the basis that apprentices would have the advantage of an income contingent loan rather than a commercial loan to buy something like a car or ute. The problem is the payment method envisaged in the actual bill would not make this possible. Apprentices should be given the opportunity to take their loans as a monthly payment or as a lump sum each year.

Sadly, this, as I have indicated, was not the only attack on apprentices. In addition to axing the Tools for Your Trade program, the minister has also axed the Australian Apprenticeship Access program—a program that provided a sort of pre-vocational entry to apprenticeships for the most disadvantaged to give them an opportunity to get an apprenticeship. They also axed the Australian Apprentices Mentoring program, which I have mentioned, and the Apprenticeship to Business Owner program, which gave some small business training to apprentices post completion of their trade to enable them to go out and operate their own small business.

So, while the government is telling our young people to earn or learn, it is in fact taking away the very support, particularly with apprenticeships, which is one of the most successful training methods we have for young people to be able to actually achieve that. If the intention of this policy is to improve retention and completion rates for apprentices, it is inexplicable that the government would at the same time be abolishing programs specifically designed to properly recruit and prepare apprentices and to offer them and their employers the advantages of a mentoring program.

This view of support for schools and training is unsurprising, given the actions that have been taken by conservative state governments, who in fact have been slashing TAFE—for example, closing campuses, cutting courses, sacking staff and increasing fees. I was however pleased to see today in New South Wales the opposition leader, John Robertson, and the shadow minister for education and training, Ryan Park, announce Labor policies to protect TAFE and to make TAFE courses more affordable and announcing that they are looking to introduce legislation immediately to block fee increases.

As I indicated, I would like to formally move the amendment in the terms given and circulated. I indicate to the House that we will not be opposing the bills, but I ask the government to very seriously consider the amendment that the opposition is putting forward to make the scheme work effectively and fairly for apprentices that this legislation is intended to target. I move:

That all words after "That" be omitted with a view to substituting the following words:

"whilst not declining to give the Bill a second reading the House notes that the Government has failed to:

(1) advise apprentices that they would be abolishing the Tools for Your Trade program, thus leaving Trade Support Loans as the only form of assistance for the purchase of tools;

(2) adequately explain in clear language the interest rates and full liability of these loans;

(3) offer adequate protection for school based apprentices aged between 16-18;

(4) offer fair and reasonable transition arrangements for current apprentices;

(5) put in place adequate privacy protections for the large volumes of information that will be acquired through the Trade Support Loans Program; and

(6) has failed to offer apprentices the option of lump sum payments in order to purchase expensive items."