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Thursday, 21 June 2007
Page: 182

Senator CARR (6:46 PM) —The incorporated speech read as follows—

The Social Security Amendment (Apprenticeship Wage Top-Up for Australian Apprentices) Bill 2007 legislates for additional financial support for first and second year apprentices to be exempt from assessment as income for tax and social security purposes.

Such additional tax-free funding for apprentices is welcomed.

Labor has long acknowledged the importance of encouraging more people into traditional apprenticeships and has been calling for a Trade Completion Bonus for apprentices since 2005. As a consequence, Labor is critical of the Government’s delay in addressing ongoing skills shortages in the economy.

This Bill exempts the value of the $2000 top-up payments for Australian Apprentices who are under thirty and are undertaking an Australian Apprenticeship in a trade occupation identified as experiencing national skills shortages, from assessment as income.

After a decade of underinvestment in the vocational education and training sector leading to nationwide skills shortages, it is heartening to see Labor’s message about the need for greater investment in education at every level including vocational education and training is being heard by the Government, even if it is only because there is an election just around the corner.

The Apprenticeship Wage Top-Up payments will be made to apprentices who are under 30 years of age and who are undertaking Australian Apprenticeships in areas of skill shortage as defined by the Migration Occupations in Demand List.

This additional financial support for apprentices acknowledges that the first and second years of an apprenticeship can be particularly difficult, when wages are at their lowest. It also acknowledges how important these people are to our continued economic competitiveness, performance and growth.

Under the Apprenticeship Wage Top-Up payment, apprentices under the age of thirty who are undertaking an Australian Apprenticeship in a trade occupation listed on the Migration Occupations in Demand List will be eligible to receive a $500 payment at the 6, 12, 18 and 24 month points of their training.

Full-time apprentices will receive $1000 per year, $2000 in total, while part-time and Australian School-based Apprentices will receive $500 annually over a longer time frame totalling $2000.

Completion Rates

This measure is about keeping people in apprenticeships and comes two years after Labor began calling for additional payments to apprentices in the traditional trades in the form of a $2000 Trade Completion Bonus for Apprentices.

The latest annual figures show that in 2005, over 128,000 apprentices and trainees cancelled or withdrew from their courses. That is a staggering 49 per cent of all those who commenced apprenticeships or traineeships that year.

While the Government often talks about the 400,000 apprentices in training, they fail to mention that only 140,000 of these apprentices are completing their training, or the fact that less than a quarter of those in training are undertaking traditional trade apprenticeships.

Over its 11 long years in office, the average number of traditional trade apprenticeships under the Government has been about 120,000 a year. The average achieved by the previous Labor Government was 13 per cent higher, at 137,000.

When you look at completion rates for these traditional trade apprenticeships, those areas where Australia faces the most dire shortages, the Government’s record is even worse with only 24,700 traditional apprentices completing their training in 2005.

Over the term of the Howard Government, completion rates for traditional trade apprenticeships have fallen from 64 per cent in 1998 to only 57 per cent in 2005. This is significantly less than Labor’s last year in office, when Australia had an apprenticeship completion rate of more than 70 per cent.

The Government’s constant claims that there are 400,000 apprentices in training is an attempt to disguise what is really happening: less than 25,000 traditional trade apprentices are completing their training each year.

And this comes as no surprise.

In 1997 the Howard Government cut funding to TAFEs, reducing Commonwealth investment in vocational education by 13 per cent in the three years to 2000. Furthermore, Commonwealth investment only increased by 1 per cent between 2000 and 2004.

According to data from the National Centre for Vocational Education Research, real expenditure per hour of TAFE curriculum has fallen by nearly 24 per cent since 1997.

In this context, the expenditure on apprentices in the budget only begins to undo some of the damage done to vocational education and training by this Government. This Bill is welcome, but it is clearly belated.

Labor’s Trade Completion Bonus

In May 2005, Labor called for the budget to include a Trade Completion Bonus for apprentices to address the skills crisis, and while it has taken the Government two years to accept Labor’s positive policy proposal, it is better late than never.

Labor’s plan involved two payments of $1000 to be made to apprentices in traditional trades on the National Skill Shortage list. The payments were to be exempt from taxation or classification as income for social security purposes.

While the Government’s Apprenticeship Wage Top-Up is to be paid in the first and second years of an apprenticeship, Labor’s trade completion bonus would make one payment of $1000 half way through an apprentice’s training, and a further $1000 payment at the completion of their apprenticeship.

The Government has, disappointingly, not taken up this key element of Labor’s proposal or recognised the need to target this extra payment towards the completion of an apprenticeship rather than simply the first two years of training.

Labor’s trade completion bonus was targeted to increase the rate of completions of traditional trade apprenticeships by providing payments to reward those who continued with their training beyond the first year, and again to those who completed their apprenticeship.

Income Support

This Bill allows for the Apprenticeship Wage Top-Up payments to be tax-free and not count as income for determining eligibility for income support such as Youth Allowance or Austudy.

Labor strongly supports this measure, as it means that not only will the apprentice receive the full $2000, but that the top-up will not prevent eligible apprentices from receiving additional, ongoing income support or push them into a higher tax bracket.

This tax free element of the Apprenticeship Wage Top-Up is welcome, however, it draws attention to the Government’s poor record on providing income support to Australian apprentices.

Despite making income support through Youth Allowance and Austudy available to apprentices for 2005, the harsh participation requirements for these payments have meant that only a small number of apprentices are benefiting from this support.

Of the 60,000 apprentices the Department of Education, Science and Training estimated would receive Youth Allowance in 2005-06, only one quarter of this number, or 15,000 apprentices, actually received income support.

The Department’s explanation for the low take up rate was that apprenticeship and parental incomes were higher than anticipated, yet the Government acknowledges through this Apprenticeship Wage Top-Up measure that these wages need supplementing.

Along with the failure to provide adequate financial support for apprentices and to address the shocking completion rates, particularly in the traditional trades, the Government has presided over 11 long years of neglect and underinvestment in the vocational education and training sector.

Skills Shortages and the ATCs

Over the past decade the Government has slashed investment in vocational education and training and we are now paying a high price in the form of acute skills shortages across the country.

The Government’s own estimates show Australia facing a shortage of more than 200,000 skilled workers over the next five years.

The Government’s cynical political response to this national skills crisis, has been to spend half a billion dollars on a standalone network of Australian Technical Colleges that at best, will only produce 10,000 graduates by 2010.

While the Government has been in power, the TAFE system has turned away over 325,000 people and is crying out for additional recurrent funding and much needed investment in infrastructure.

Instead, the Government is establishing 30 duplicative Australian Technical Colleges across the country.

Of the 20 colleges that are currently open, two thirds are not registered training organisations and are being forced to use the facilities of the existing TAFE system due to delays and implementation problems.

Three years after the Colleges were announced, they are yet to produce a single graduate.

Labor’s Positive Approach

In order to seriously address the magnitude of the current skills crisis, Australia must focus on the areas of maximum impact, including:

  • TAFEs which are responsible for the substantial majority of post-secondary VET;
  • VET in Schools; and
  • On-the-job trades training.

That is why Labor has already announced a 10 year, $2.5 billion Trades Training Centres plan aimed at the 1 million students in Years 9, 10, 11 and 12 in all of Australia’s 2,650 secondary schools.

The plan will provide secondary schools with between $500,000 and $1.5 million to build or upgrade VET facilities in order to keep kids in school, enhance the profile and quality of VET in schools and provide real career paths to trades and apprenticeships for students.

As well as providing infrastructure to improve vocational education and trades training in secondary schools, last week the Federal Labor Leader, Mr Rudd and I announced Labor’s plan to introduce a Job Ready Certificate for all vocational education and training in school students. This Certificate will assess the job readiness of secondary school students engaged in trades and vocational education and training.

Students will obtain the Job Ready Certificate through on the job training placements as part of Labor’s Trades Training Centres in Schools Plan.

The Job Ready Certificate will be a stand alone statement of a student’s readiness for work and will be in addition to a Year 12 Certificate and any separate vocational education or trades training qualification.

The certificate will provide students who complete secondary school with an increased focus and awareness of the skills necessary in the modern workplace.

It will also provide employers with a tangible reference, indicating whether students are capable and ready to work.

The Job Ready Certificate will demonstrate that students possess basic workplace skills, including:

  • Communication
  • Initiative & Enterprise
  • Self-management
  • Technology
  • Team Work
  • Problem Solving
  • Planning & Organisation

At present, there is no requirement for education and training providers to formally issue a statement of employability skills.

This has been an ongoing issue for industry, with repeated calls from the Business Council of Australia (BCA), the Australian Industry Group (Ai Group), and the Australian Chamber of Commerce and Industry (ACCI).

As early as 2002, the Howard Government in response to these calls developed an Employability Skills Framework, its implementation, however, has stalled.

Federal Labor is committed to making education and training more responsive to the needs of industry.

Australia’s ability to meet the growing need for skilled employees across the country is crucial to ensuring our future prosperity.

The Job Ready Certificate is a key part of Labor’s 10-year $2.5 billion Trades Training Centres in Schools Plan—which includes $84 million to ensure students involved in trades training received one day a week of on-the-job training for 20 weeks a year.

It will be implemented in cooperation with industry, States, Territories and schools.

By making VET a viable option for all our secondary students, Labor’s plan will make a real and significant dent in the current skills shortage.

The longer the Government pretends a few technical colleges will make up for more than 11 years of complacency and neglect in vocational education and training, the more damage he will do to the prospects of our children and our economy.