Will Apprentices Need To Repay A Loan With A Loan?

The hurried and chaotic introduction of the Trade Support Loans Bill 2014 has now raised even more questions regarding the operation of the government’s Trade Support Loans scheme which will saddle young apprentices with up to $20,000 in debt.

In introducing the Bill today, Ian Macfarlane indicated the Trade Support Loan instalments will be paid monthly in arrears.  This is more like a wage supplement and doesn’t explain how an apprentice will be able to pay upfront for expensive equipment such as tools, vehicles, uniforms and fees without potentially borrowing the money commercially, and repaying a loan with a loan.

The Minister also said that this loan is similar to HECS-HELP loans but he has not guaranteed apprentices that their Trade Support Loan terms and conditions won’t suddenly change in the future as his Government has now done to university students.

The introduction of the legislation still has not answered a number of previously raised questions for young apprentices:

  • Are agricultural and rural and regional horticultural students who have lost their Tools for Your Trade grants eligible for Trade Support Loans?
  • Will parents be responsible for a 16 year old school based apprentice’s $20,000 Trade Support Loan? What protections has the Government has put in place to ensure that young apprentices don’t come under pressure from their employers, particularly given the Minister’s comments in the House this morning that “these loans were a good opportunity for companies to take advantage of apprenticeships”. 
  • In Senate Estimates the Government confirmed that they are looking to outsource debt management for Trade Support Loans.  Is the government happy to potentially saddle young apprentices with $20,000 debts and leave them in the hands of private debt collectors?

Many of the difficulties raised by the Trade Support Loans have arisen because the Abbott Government has cut Labor’s important Tools for Your Trade program. This means that the loans are not simply an option, they have now become the only opportunity for apprentices to fund their tools, equipment, uniforms and fees.