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senate vote 2014-07-14#11
Edited by
mackay staff
on
2015-01-16 11:49:57
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Title
Bills — Trade Support Loans Bill 2014, Trade Support Loans (Consequential Amendments) Bill 2014; in Committee- Trade Support Loans Bill 2014, Trade Support Loans (Consequential Amendments) Bill 2014 - In Committee - Increase repayment income threshold and lower repayment rates
Description
<p class="speaker">Lee Rhiannon</p><p>By leave—I move Greens amendments (1) and (2), and (4) to (7) and request (3) on sheet 7497.</p><p class="italic">(1) Clause 5, page 5 (line 17), omit "$20,000", substitute "$10,000".</p>- The majority voted against [amendments](http://www.openaustralia.org.au/senate/?gid=2014-07-14.167.1) introduced by Greens Senator [Lee Rhiannon](https://theyvoteforyou.org.au/people/senate/nsw/lee_rhiannon).
- ### What were the amendments?
- Senator Rhiannon [explained](http://www.openaustralia.org.au/senate/?gid=2014-07-14.167.1) that the amendments would have "increase[d] the repayment income threshold and provide[d] for lower repayment rates".
- ### Main idea of the bills
- The bills create the Trade Support Loans Programme that will give apprentices access to a $20,000 loan, like the loans already available for university students under [HECS](http://en.wikipedia.org/wiki/Tertiary_education_fees_in_Australia#HECS).
- ### Background to the bills
- Prime Minister [Tony Abbott](https://theyvoteforyou.org.au/people/representatives/warringah/tony_abbott) [promised to create](http://www.abc.net.au/news/2014-07-27/apprentice-loan-promise-check/5519824) this new loan programme during the [2013 election campaign](http://en.wikipedia.org/wiki/Australian_federal_election,_2013).
<p class="italic">(2) Clause 5, page 7 (line 2), definition of <i>TSL debt indexation factor</i>, to be opposed.</p><p class="italic">(3) Page 18 (after line 26), at the end of Division 4, add:</p><p class="italic">25A Additional payment</p><p class="italic">(1) If the Secretary must pay an instalment of trade support loan to a person on a day, the Secretary must pay an additional amount to the person on that day under this section.</p><p class="italic">(2) The amount of the additional payment is equal to the amount of the instalment.</p><p class="italic">(3) The additional payment is to be paid to the credit of the same bank account as the instalment (see section 25).</p><p class="italic">(4) To avoid doubt, the additional payment is not <i>trade support loan</i>, and is not repayable.</p><p class="italic">(5) Part 4.3 (Overpayment debts) applies in relation to an additional payment under this section in the same way as that part applies in relation to payments of trade support loan.</p><p class="italic">(4) Clause 30, page 21 (line 8), paragraph (a), to be opposed.</p><p class="italic">(5) Clause 31, page 21 (lines 22 to 28), omit subclause (1) (not including the method statement), substitute:</p><p class="italic">(1) A person's <i>former accumulated TSL debt</i>, in relation to the person's accumulated TSL debt for a financial year, is the amount worked out using the following method statement:</p><p class="italic">(6) Clause 32, page 23 (line 19) to page 24 (line 12), to be opposed.</p><p class="italic">(7) Clause 34, page 25 (lines 1 to 3), to be opposed.</p><p>As we are just coming back to this debate, it is worth, now we are in committee stage, reminding ourselves this is another attempt by the government to shift the costs, the funding needs of our public education sector onto students—in this case, onto apprentices. It is about the government saving itself a lot of money.</p><p>Abolishing the Tools for Your Trade scheme will save the coalition about $1 billion over the forward estimates. To put it in context, what we are talking about here is an ugly aspect of the policies that flow out of the budget where the government makes up the savings but they are savings at the cost of ordinary people and at the cost of quality education for our next generation of skilled workers.</p><p>Our amendments would lower the cap on the total loan available from $20,000 to $10,000. As senators would remember, the essence of this bill is that it turns the Tools for Your Trade $20,000 into a $20,000-loan. This is not the Green's preferred position but it is a way to deal with it that, I think, does bring forward a reasonable compromise. The loan would then be dropped from $20,000 to $10,000 and the difference would be made up by matching with direct government financial assistance dollar-for-dollar up to $10,000. Effectively, apprentices would get a $10,000-loan and they could also then get a grant. This is a simple measure and, we would argue, a very beneficial measure because it reduces the debt burden.</p><p>Let's reflect back on the debate because there were some interesting contributions. I very much congratulate senator Deborah O'Neill. She spoke with a real knowledge about the practical realities for apprentices and how important Tools for Your Trade is. She made the important point that we cannot trust the government and that is certainly the case. I hope that Labor, when they reflect on these amendments that the Greens are bringing forward, remember the words that many of their senators brought into this debate. The debt burden that the bill will place on apprentices, if it goes through in its current form, will really be an appalling way to start life. Very young people have not got a clear idea about how to manage their finances, what it means to go into debt and will be, all of a sudden, saddled with a huge debt. Let's remember some of Senator O'Neill's words: she talked about how it is 'miserly' and 'mean', and how it would deliver a debt-ridden future to apprentices. It would be provide a debt to hang around their necks. I very much endorse those comments and I think that it is a real reminder that we need to modify the scheme that is presented in this form that we have in the bill before us.</p><p>I commend the Greens amendment. It is a responsible way to go forward. There is still a burden of debt there, which—I have said and I will say again—the Greens are not fully happy with it. We were hoping we could get a compromise so that would not be such a heavy debt burden but still with that element of a grant, so that young people going into the first stages of their careers as apprentices can manage their finances more successfully. I commend the Greens amendments to the Senate.</p> <p class="speaker">Mathias Cormann</p><p>I thank Senator Rhiannon for her contribution. The government will not be able to support these proposed Greens amendments. These amendments would have a significant impact on expenditure. The first amendment, in addition to amendment (3), reduces the amount of trade support loan payments that will be treated as an income contingent loan. This reduction is supplemented by the introduction of an additional payment equal in value to the loan payment and paid at the same time. It effectively turns trade support loans into 50 per cent loans and 50 per cent grant payments. Changing the payment structure in this way is contrary to the clear and stated public policy intention of the government.</p><p>The second amendment clause 5, page 7, line 2, in relation to the definition of TSL debt indexation factor, can also not be supported. This amendment removes any indexation, CPI or otherwise, from being applied to a person's trade support loan debt. This substantially changes the treatment of trade support loans from other government income contingent loans and will also have significant impacts on expenditure. So do all of the other amendments in relation to lifetime limits and other indexation related amendments. On that basis, the government is not in a position to support those amendments.</p> <p class="speaker">Zed Seselja</p><p>Thank you, Senator Cormann. Before I go to Senator Xenophon, I want to return to Senator Rhiannon's request. Is it the wish of the committee that the statements of reasons accompanying the requests be incorporated in <i>Hansard</i> immediately after the request to which they relate? There being no objection, it is so ordered.</p><p> <i>The </i> <i>statement</i> <i> read as follows—</i></p><p class="italic">Trade Support Loans Bill 2014</p><p class="italic"> <i>(Amendments, and requests for amendments, to be moved by Senator Rhiannon, on behalf of the Australian Greens, in committee of the whole)</i></p><p class="italic">Statement pursuant to the order of</p><p class="italic">the Senate of 26 June 2000</p><p class="italic">—————————</p><p class="italic">The amendment provides for an additional payment to be made to persons to whom trade support loan is paid.</p><p class="italic">On the basis that the additional payment will result in increased expenditure under the standing appropriation in clause 104 of the Bill, amendment (3) should be moved as a request.</p><p class="italic">Trade Support Loans Bill 2014</p><p class="italic"> <i>(Amendments, and requests for amendments, to be moved by Senator Rhiannon, on behalf of the Australian Greens, in committee of the whole)</i></p><p class="italic">Statement by the Clerk of the Senate pursuant</p><p class="italic">to the order of the Senate of 26 June 2000</p><p>————————</p><p class="italic">Amendment (3)</p><p class="italic">The Senate has long followed the practice that it should treat as requests amendments which would clearly, necessarily and directly result in increased expenditure under a standing appropriation.</p><p class="italic">If, as stated, this amendment would result in increased expenditure under the standing appropriation in clause 104 of the Bill, it is in accordance with the precedents of the Senate that this amendment be moved as a request.</p> <p class="speaker">Nick Xenophon</p><p>I have a preliminary question. I did not get to my feet in time to ask a broader question about the bill and the legislation. My question, Senator Cormann, is this: in terms of what is being proposed with respect to apprenticeships, has the government done any modelling as to the likely impact on the number of apprentices? We have seen a dramatic decline of apprentices; in my home state over several years there has been a 35 to 40 per cent decline in the number of apprentices. What does the government say will happen to the number of apprentices and the take-up of apprenticeships?</p><p>What does the government say will happen when the money for tools is taken away? It could be viewed as almost retrospective: you have started your course; you expect to get a certain amount of money; you went to your course in good faith, with respect to this money and your tools; and then it is taken away from you. But you have already committed to the apprenticeship.</p><p>Firstly, does the government concede that there is an element of retrospectivity in terms of taking away money for Tools For Your Trade? Young people have made a commitment to undertake a trade; they have made a massive, life-changing commitment, expecting to get some support from Tools For Your Trade, and that has been snatched away from them.</p><p>Secondly, has the government undertaken any modelling in respect of the impact these measures will have on the number of apprentices, and did that modelling or its assumptions rely in part on consultation with the TAFE sector and other interested stakeholders?</p> <p class="speaker">Mathias Cormann</p><p>I thank Senator Xenophon for those questions. I advise the Senate of something the Senate probably already knows, which is that I am not usually the representative minister in this portfolio. It is usually Senator Ronaldson. I am relying heavily on the advice provided by officials here in the Senate with us. 'Has there been any modelling?' I am advised that, yes, there has been and that the modelling in relation to the measures that are part of this bill has indicated that those measures will drive an increase in completion rates of about five per cent. There are of course other support measures that the government continues to put in place, which will seek to boost that further. We do not accept that the changes that are part of this legislation are retrospective. The changes apply to existing apprentices, but they only apply prospectively as per the provisions in the legislation that is before the Senate.</p> <p class="speaker">Nick Xenophon</p><p>I thank the minister. In relation to the issue of modelling, will the minister advise whether the modelling will be tabled here and now? It is pertinent to the very basis upon which the government says it is undertaking this course of action. Secondly, in relation to the issue of taking away the money from the Tools For Your Trade for apprentices, does the government concede that there are some apprentices who commence their apprenticeship on the understanding that they will be able to get funding for their tools; only to find in subsequent years that that money will no longer be there?</p> <p class="speaker">Mathias Cormann</p><p>Apprentices currently in training will be able to switch to the new arrangements but they do not have to. It is just that they will not get any further payments in the future, which is transparently put forward as part of our budget measures. Obviously what we have put forward in our judgement is a superior scheme which is why we are recommending it to the Senate. In terms of whether I could table the modelling, obviously I am not here and now in a position to do so but I am happy to take that on notice. I will confer with my good friend and valued colleague Minister Macfarlane and check with him if there is anything else I can share in relation to that modelling.</p> <p class="speaker">Nick Xenophon</p><p>If I may assist the minister, some time ago when Minister Cormann was in opposition, I learnt the value of his pushing for orders for the production of documents, so I have learnt from the master the importance of orders for the production of documents. I foreshadow that there will be an order for the production of documents in relation to the modelling and I hope my crossbench colleagues and the opposition could indeed support that, because we want to see the base for this process. Even though the government does not acknowledge that it is retrospective, the question has been answered and I thank the minister for his frankness. Effectively, you are saying that there will not be the money that was promised earlier. You have to take out a loan for it. I reckon that is a bit rough. It seems that the government is willing to tackle apprentices head-on for their budget savings but will not, for instance, tackle anyone who has $10 million or $20 million in their private super account.</p> <p class='motion-notice motion-notice-truncated'>Long debate text truncated.</p>
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