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Abbott touts interest free loans for tradies
New government’ s HECSstyle scheme offers up to $ 20,000 for apprentices. By Antonia Maiolo
Newly elected prime minister Tony Abbott’ s campaign included the announcement of an interestfree loan scheme for apprentices of up to $ 20,000, starting from next year.
The HECS-style system would help apprentices pay for their training, buy tools and equipment and otherwise support them in completing their apprenticeships. Those eligible for the loans include plumbers, diesel mechanics, electricians and fitters.
The Coalition says the loans will be repayable through the tax system at the same threshold as FEE-HELP loans for a university student, which is $ 51,309 for 2013-14.
As an added incentive, apprentices who successfully complete their apprenticeships will receive an immediate 20 per cent discount on their loan.
In the first year, tradies are expected to receive up to $ 8000 to be paid in quarterly instalments of $ 2000. In their second year they will be offered up to $ 6000, with $ 4000 in their third year and $ 2000 in their fourth.
“ All too often, young apprentices do not complete their training because they cannot afford the costs associated with undertaking an apprenticeship,” Abbott said.“ Our loans scheme will provide real support for current apprentices to complete their skills training and provide a stronger incentive for young Australians to become apprentices.”
TAFE Directors Australia welcomed the Coalition’ s loan scheme. TDA CEO Martin Riordan said those in the VET sector had been financially disadvantaged compared with those attending university.
“ This policy places trades careers on a more even footing with higher education, and provides an incentive for those who face financial difficulties in the early years of their training,” Riordan said.“ University students have had a head-start when it
8 | Issue 9 2013 comes to income-contingent loans to assist them in their study and training; it is long overdue that those studying apprenticeship-level courses be provided the same advantage.”
Riordan also pointed to data the National Centre for Vocational Education Research( NCVER) released this year that shows completion rates are increasing for trainees but not for trade apprentices.
Individual completion rates increased from 55.4 per cent for trainees who started in 2007 to 57.1 per cent for those who started in 2008. By contrast, individual completion rates for trade apprentices have decreased slightly, from 56.3 per cent for 2007 commencements to 55.8 per cent for those who started in 2008.
NCVER and other industry-sponsored research showed that a major issue affecting those apprentices not completing their trade course was lack of funding to cover the cost of living, transport and other financial pressures.
Group Training Australia( GTA) CEO Jim Barron, a peak body representing apprentices and trainees throughout Australia, also welcomed Abbott’ s policy proposal.
“ There is currently an unacceptably high apprentice drop-out rate of approximately 50 per cent across all traditional trades,” Barron said.
He said the proposed loan scheme acknowledged apprentices need up-front money as well as the capacity to repay down the track.
Meanwhile, the Greens have warned that the scheme is just another way to push costs onto students and that it would not deliver the skilled workforce Australia needs.
“ Loans are a disincentive to young people starting their training,” Australian Greens leader senator Christine Milne said.“ It looks like the Coalition is testing the waters to see how big a HECS fee increase they could get away with for TAFE students.”
Milne said Abbott should increase TAFE funding, saying“ it is not much use having tools if there are no quality training courses available”.
She said the Coalition should commit to retaining the Tools For Your Trade system – tax-exempt cash payments that assist apprentices with the purchase of tools.
Greens higher education spokeswoman Lee Rhiannon said the party did not support any moves to a HECS-style university loans scheme for TAFE students.“ The top priority in vocational education and training must be an overhaul of the current VET funding arrangements, which have directed billions of dollars to private training providers ahead of TAFEs,” Rhiannon said. n