Senator CARR (11:15 AM) —I move:

The Social Security Amendment (Extension of Youth Allowance and Austudy Eligibility to New Apprentices) Bill 2005, as its title describes, firstly seeks to extend various payments to new apprentices. It provides some $410 million over three years for that purpose. Secondly, it seeks to provide $84 million for the new Commonwealth Trade Learning Scholarship program. The scholarship will provide payments of $500 each year to new apprentices in trades where there are skill shortages upon successful completion of their first and second years of apprenticeship training. Thirdly, the bill seeks to provide some $73.9 million for new Tools for Your Trade tool kit payments of $800 in specified trades where there are said to be skill shortages.

The Labor Party will be supporting this bill. However, we want to take this opportunity to draw attention to some of the fundamental questions that are now abundantly clear for all to see in regard to the way in which this government has failed in its responsibility to maintain an effective training system within this country. Labor believe that all Australians who are engaged in education and training should be supported by liveable levels of income, whether they are at school, university or TAFE. We take the view that, in terms of vocational education, especially within an apprenticeship, there ought to be appropriate levels of remuneration. Unfortunately, many young people are discouraged from taking on apprenticeships because it is all too clear that wages are far too low for people to have reasonable standards of living. Currently, full-time new apprentices are not able to access youth allowance because they have been classified as being in full-time employment. To have access to youth allowance, a person must be either unemployed or a full-time student. Likewise, apprentices are not currently able to access Austudy as they are not undertaking approved tertiary education qualifications.

This bill—and I am concentrating essentially on those matters that go to income support—sets a new precedent in terms of vocational education in that we find in it the use of income support payments to supplement wages. This is, as I said, an unprecedented position for governments to take because, traditionally, income support payments have been provided by governments to people who are not able to provide for themselves. Common reasons behind this include unemployment, disability, old age or being a sole parent. Income support payments generally have their origins in the welfare system, which is provided through the Social Security Act. The government has not been averse to providing income support measures for employers, farmers and a whole series of others in the form of subsidies for many a generation, but it has not sought to provide that for workers. So this measure is to be welcomed in that regard.

However, as I said, there are a number of major deficiencies in the way these arrangements are to be made. This bill seeks to introduce a generic definition of ‘new apprentice’ into the definitions in the Social Security Act and then amend the relevant qualifications sections to include new apprentices as a class of people eligible for youth allowance or Austudy. Under the proposals contained within this bill, new apprentices will be treated the same as full-time students for the rates payable. Income and assets of parents and the like will also apply, as will the classification of a person as independent. Rent assistance arrangements will also be provided on the same basis as current arrangements.

The rates payable range from $178 to $326.50 a fortnight, depending on an individual’s circumstances. This is not a great deal of money. The truth of the matter is that, for many apprentices, this sum of money will not be received. There are nearly 400,000 apprentices—or ‘new apprentices’, as the government refers to them—in the system. It is estimated that only 75,000 of them will receive any money at all. Very few will get the full rate. This is because the allowance begins to taper off at an income of just $236 a fortnight for people under the age of 18 who are living at home. At $514 a fortnight the money cuts out altogether. For independents over 18, the allowance cuts out at $725 a fortnight.

Some pretty simple arithmetic can be applied here. Under the Victorian ETU award, a first-year apprentice electrician earns too much, because they get $351 per week. In their second year they get $501 per week, in their third year they get $678 per week and in their fourth year they get $796 per week. Even their first-year rate of pay puts them almost $200 over the limit for any allowance at all. In further years, the apprentices are not able to qualify for assistance in any of the categories. That same provision applies to a whole range of other trades. In the Metal, Engineering and Associated Industry Award we see a similar scene. A first-year apprentice earning a minimum award wage gets nothing at all from this new arrangement.

For the majority of trades in the skilled trades area, this measure will not provide any assistance. Particularly in those areas which are well organised and well defended by appropriate unions, wages have been kept at a higher level—and so they ought be, because that is how you actually attract people into the trades: you pay them decent rates of pay. Those areas will not be able to attract the income support that this government is proposing through this measure. You will find that this measure will go towards those trades in which there are fewer skills shortages. It will go to the burger flippers; it will go to the cappuccino makers. It will go to those areas where the skills shortages are not as pronounced. In the hospitality industry, there is very high turnover and extremely high wastage rates in terms of noncompletions. People in that industry are the people who these sorts of measures are aimed at. This is another example of this government failing to understand the social conditions into which it is seeking to intervene.

We do not have to go very far—we can look at the last round of estimates, for instance—to see that the government’s incentive payments to employers are now around $587 million per annum. That is what drives the vocational education system: the incentive payments to employers, not to workers. That $587 million goes primarily to the areas of non skill shortage. Only a third of that money is going to areas which are on the national skills shortage list.

The traditional trades have been wound back for years by this government. It has concentrated on the cheap and nasty end of the training regime. In a systemic sense, this government has failed to address the skills shortage question in this country. It has failed to address that because it has concentrated on the hospitality industries, along with various other industries. Those industries are worthy of and are entitled to support, but the wage subsidy program which the government has used through these employer incentives has been aimed at those areas which are not on the skills shortage list. On top of that, the extraordinary rates of noncompletions have meant that a great deal of this money has been wasted.

A recent study undertaken by the University of Western Sydney through Dr Phillip Toner shows that the training rates in traditional trades have been in ‘statistically significant and sustained decline’ for the last 15 years. That is in comparison to the period prior to the New Apprenticeships system being introduced in 1996-97 by Dr Kemp. Given that the whole labour market has grown, the annual rates of growth in the traditional trades have been much lower than they have been in other areas of training. This is particularly the case in the metal, electrical and construction industries, where quite substantial declines relative to the other areas have been experienced. The only exception is the food group area. The training rate in most of these important areas has been essentially static. The traditional trades have not been able to replace the numbers of people who are leaving as we get an ageing work force. If this process continues, we are likely to see a shortage in skilled trades of some 130,000 people over the next five years.

This is not a new position. This Senate has drawn attention to this in an important report, Aspiring to excellence, which was published in November 2000 by the Senate Employment, Workplace Relations, Small Business and Education References Committee. These various trends were identified as far back as the year 2000. It is quite apparent from that report that, especially in regard to the non-completion rates, the rates of wastage in the New Apprenticeships system may well have been—and the estimates vary, because this is a complex area—as high as 50 per cent. Various studies have highlighted this. This is substantially more than the government officially recognises.

What we have is a new measure that seeks to increase the amount of money that is available to individuals, but it is not particularly well targeted. It is a provision that we support, but we say that it will not address those fundamental problems because it fails to deal with the systemic problems within the training system, which has been overlooking the whole issue of skills shortage since its inception in 1996-97.

There is also the new measure of an income credit bank, which is designed to allow Youth Allowance recipients to accumulate a proportion of their fortnightly income-free area. This is a provision which allows for workers who are in new apprenticeships to store some of their income so that arrangements can be evened out. The maximum that can be accrued by a student is about $6,000. Unemployed job seekers will be able to get a maximum working credit level of about $1,000.

The government has not provided any explanation as to why it has not decided to treat these people in the same way that it treats full-time students. The government has in my judgment given workers in New Apprenticeships a raw deal in that regard. It has not identified how people actually live. It has not identified properly how people earn money in the current labour market. The government’s failure to deal with the skills shortage and its failure to identify the effects of the new arrangements in terms of the New Apprenticeships system mean that we now have a situation where skilled vacancies have increased by 0.2 per cent over the last month. The growing shortages in the electrical trades are matters of particular concern.

There has been an increase of some 4.2 per cent over the past month and 13.8 per cent over the past 12 months in skilled vacancies in electrical and electronic trades. Vacancies in the metal trades are up by 4.4 per cent over the past 12 months, vacancies in printing are up by 9.9 per cent and vacancies for chefs are up by 2.5 per cent. Skilled vacancies in professions are up by 0.8 per cent over the past month and 6.3 per cent over the past 12 months, and there has been a massive 15 per cent increase in health vacancies. If we look at associated professionals, in terms of the medical and scientific areas, we see that there has been a six per cent rise in vacancies in the past month and a 36 per cent increase over the past 12 months.

There is a much deeper problem here which the government has failed to confront. It goes right back to schools, whereby the government, in terms of its maths and science education programs, has not been able to provide the basic prerequisites that underwrite the skills training system in this country. This cuts across every level of traditional trades, including the advanced trades skills areas, right through to the paraprofessionals and various workers who have to underwrite the innovation system within this country.

We have 270,000 people seeking to get into the TAFE system who are not able to get a place. An estimated $833 million will go towards what is called the skills deficit. The government has failed to meet its obligations in terms of the proposed new vocational education and training agreement with the states. The government has failed to meet its obligations not only to young Australians but to the economy at large. The failure to address those fundamental issues has meant there is now a damping down of the level of economic growth and jobs growth, and it makes it more difficult to attract significant investment with regard to advanced industries.

The government’s own research findings—which they fought desperately to keep away from the parliament and which they now, somewhat cavalierly, say become their evaluations—which are essentially market surveys of the New Apprenticeship system, show that 35 per cent of people who completed their apprenticeships were looking for work in the same area. Twenty-one per cent of apprentices surveyed said that the skills that they had learned in the apprenticeship were not useful. One-third of people who completed an apprenticeship but were not working in that industry said that the apprenticeship was of little or no use, and 30 per cent of existing workers who completed their new apprenticeship said that the apprenticeship did not improve their job security.

The National Centre for Vocational Education Research, the NCVER, are telling us that the number of apprenticeships and traineeships actually fell by four per cent during 2004. Their December 2004 quarter figures show that the numbers of apprentices and trainees in training are at the lowest level since December 2002. In the 12-month period ending December 2004 there were 133,000 withdrawals and cancellations, compared to 139,000 completions over the same period. Worse still, the number of cancellations in the three months ending in December 2004 was 37,500, the highest on record.

The NCVER statistics also show that the number of apprenticeship commencements fell from 277,900 to 263,100 over the 12 months ending December 2004. The five per cent drop in commencements nation wide is shocking news for businesses who are crying out for skilled workers. It is shocking news for the future of workers in this country, because we know that this is the area in which people are able to secure better jobs, higher paid jobs and of course more productive jobs. They are able to take greater control over the way in which they are able to enter the labour market and the way in which they perform through economic enterprises in the country. So it is extremely important for both ends of the production cycle—employers and workers—and this government has failed both groups. It has failed both groups hopelessly because, while businesses are crying out for skilled labour—there is a desperate need so that we can move up the value-adding chain of our productivity growth in this country—there is an increasing shortage of workers able to perform the task that is required by an advanced economy. And what has this government done? It has poured millions and millions of dollars into a scheme which has not met the contemporary needs of our society or our economy.

We support this measure, but it has to be seen in the context of the government’s abysmal failure when it comes to vocational education and training in this country. It is a shame that this has occurred, and I ask the Senate to support our second reading amendment which identifies those problems so clearly.