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Monday, 15 June 2009
Page: 5950


Dr SOUTHCOTT (7:16 PM) —I will not detain the House long in speaking to the Social Security and Other Legislation Amendment (Australian Apprentices) Bill 2009. This bill seeks to exempt incentives paid to apprentices from treatment as assessable income for taxation, social security and veterans affairs purposes. These amendments will ensure that apprentices retain the entire amount of the financial incentives paid to them. This will bring these new payments into line with the tax treatment afforded to previous incentives. It is a sensible measure that the opposition support.

The first of these payments is the Skills for Sustainability for Australian Apprentices. This is a pilot program aimed at encouraging apprentices to undertake sustainability related training, by granting a payment of $1,000 on completion of a required level of training. Discussions about sustainability related training have been around in this space for some time. We welcome this pilot program and we will be interested to see how it develops.

The second payment is a rebadged payment called the Tools for Your Trade incentive. In fact, it is not even rebadged, because the old incentive was also called Tools for Your Trade. This measure will combine three existing incentives into one. Whilst the opposition will be supporting the bill, we do have a couple of issues here. First of all, the new incentive is not set to be payable until 1 January 2010, and there is an issue for apprentices and trainees who commence between 12 May 2009—that is, budget day—and 1 January 2010. There is a real question as to whether those people will be eligible for the Tools for Your Trade incentive or whether they will fall through the gap in the merging of these three programs. So we do have an issue in that, in moving from the old Tools for Your Trade to a newer, simplified incentive, a cohort of apprentices will miss out.

The second issue is that a detailed examination of the budget papers reveals a pea and thimble trick in the incentives being paid to apprentices. Incredibly, at a time when the Australian economy needs to support employers, apprentices and people staying in their apprenticeships, the Rudd government is taking a net $197 million out of the pockets of apprentices. This is classic sleight of hand: a number of things are going. The biggest one is the apprenticeship training fee voucher. Labor had a policy to fund $800 for out-of-pocket payments, which they announced in December 2006. They have not stuck by that, and in fact they have abolished the apprenticeship training fee voucher, which was introduced in the 2007 budget. In their 2007 election policy document Skilling Australia for the future the Labor Party promised that all subsidies and payments to employers and apprentices would be retained. When you look at the fine print in the budget, you can see that this is not extra money for apprentices. In the middle of what is leading to $188 billion in net debt and $315 billion in gross debt you can see that they have taken $197 million out of the pockets of apprentices.

When we have a look at the latest figures from the NCVER on apprenticeships and trainees—and bear in mind that these figures are six months behind—we see that between the March 2008 quarter and the December 2008 quarter apprenticeship commencements in traditional trades fell by 10 per cent. That is really before a lot of the impact came from the slowdown in the economy. As we have heard, at the same time that we are seeing commencements falling the Rudd Labor government has abolished the apprenticeship training fee vouchers, which provided up to $1,000 to apprentices to help pay for their training. As I said, apprentices who commence after 12 May 2009 will not have access to the Tools for Your Trade funding because this has been put on hold until 1 January 2010.

The opposition have been vocal in their support for small business and apprentices during this economic downturn. As one example of this, during the leader of the opposition’s budget reply, we put up a proposal to bring forward the incentives for employers for traditional trades into the first two years of the apprenticeship. As the OECD noted in its review of vocational education and training in Australia and policy relating to it, most of the incentives for employers are actually back-ended towards the end of an apprenticeship. We believe that it makes sense to bring them forward to a time in those first couple of years when the apprentice is not as productive and when the cost of hiring them is something that all businesses will take into account. Bringing forward those incentives for employers will also help to boost cash flows at a time when employers need this assistance most. The bill is a modest proposal designed to help employers retain their apprentices and take on new apprentices, especially apprentices whose employment is in jeopardy. It provides a very good example of how a modest, targeted proposal can be more effective than massive waves of extravagant cash splash—the $22 billion in cash splash, the $42 billion in economic stimulus and other examples.

The opposition will be supporting this legislation. We are disappointed that the Rudd government have taken $197 million from the pockets of apprentices. We are also disappointed that they were not able to time it a bit better. It seems that apprentices who commence between 12 May 2009 and 1 January 2010 will miss out on the government’s Tools for Your Trade incentive, but we do support exempting these new incentives as assessable income for taxation.