Ms LE (Fowler) (11:55): I rise to speak on the Trade Support Loans Amendment Bill 2023 and the related bill. Following the federal budget release, I have been highly vocal about the need to ease pressures on students with HECS-HELP student loans, especially with the 7.1 per cent indexation increase. This is such an important issue that affects the young people in my electorate of Fowler and probably also across other low socioeconomic, disadvantaged electorates. These students are struggling to meet their day-to-day expenses and are now facing further financial hardships. As you would have seen in various media reports, student debt indexation is projected to have a lifelong impact on students’ borrowing capacity, as student debt will be factored in when applying for any loans with financial institutions. This would mean that your children, nephews, nieces, siblings or cousins may be crippled by further debt following the 7.1 per cent indexation. This percentage of government-initiated indexation is much higher than the wage growth of three to four per cent that many Australians have received right now. Therefore, I move the amendment circulated in my name:

That all words after “That” be omitted with a view to substituting the following words:

“whilst not declining to give the bill a second reading, the House:

(1) acknowledges that Australia is experiencing skills shortages, and measures must be implemented to support these in demand occupations;

(2) welcomes the Australian Apprenticeships Priority List to be expanded to capture critical non-trade occupations (including childcare, disability and aged care sectors);

(3) notes that unprecedented high indexation on loans applicable under the Australian Apprenticeships Priority List may be a deterrent for disadvantaged individuals pursuing the high-demand occupations; and

(4) calls on the government to revert indexation of Australian apprenticeship support loans back to the 2022 rate of 3.9% to allow disadvantaged apprentices to work full time, pay down their loan and meet the cost of living needs”.

Naturally, I’m concerned with some of the unintended consequences of this loan. Vocational education and training are instrumental to Australia’s growing economy, and supporting the development of these skills through our legislative bills is critical. Nearly 13,000 people in my Fowler electorate are currently in some form of tertiary education. Almost 12 per cent of employed people aged 15 years and over are currently in technician and trade work. The introduction of the trade support program in 2014 has allowed for Australian apprentices, including those in Fowler, to obtain a loan of up to $22,890 in total for the 2022-23 year, paid monthly in arrears to meet everyday living costs. Branded as interest-free loans, apprentices are not required to repay the loan until they are earning an income above the minimum repayment threshold of $48,361, as of this year. Apprentices who complete their apprenticeships will receive a 20 per cent reduction on the trade support loans.

At face value, this appears enticing to apprentices in trades to assist with the growth of in-demand occupations. In practice, however, there are some shortcomings with this piece of legislation that I’m not convinced are being holistically addressed in this bill. I have concerns that these trade support loans, which are now being revamped as the Australian apprenticeships support loans, could trap more hopeful students in further debt. After unpacking this bill, I understand that it will have the following key effects if implemented: It will lapse the TSL priority list and replace it with the Australian apprenticeships priority list to expand eligibility to other high-priority occupations that are non-trade, such as aged care, disability, child care, nursing, personal assistants, therapy et cetera. The minister will be empowered to have regard to any relevant advice by the minister responsible for Jobs and Skills Australia for the AAPL. I acknowledge that these developments will bring forward some positive changes, such as better access for women who want to pursue non-trade occupations, and I applaud the government for including women in this bill. Given the fluidity of this list, though this change, I hope this will keep Australia in check as our country and economy evolves and our priorities change.

I understand that the minister is not prevented from having regard to other advice. So I urge the minister to actively obtain advice from fellow MPs across the entire political spectrum, especially those with low-socioeconomic electorates, to ensure that the occupations are aligned with not only the needs of Australia’s economy but also will pave a pathway for disadvantaged communities to gain meaningful and fruitful employment.

However, this bill is a double-edged sword. Whilst I welcome the expansion of the loans to other critical occupations, specifically in the childcare and aged-care sectors, I ask the government to consider whether there are sufficient incentives to encourage individuals to engage in the Australian apprentice support loans and make this bill a success. According to a recent report by the Australian Financial Review, about one billion dollars are outstanding in trade support loans, and one in every two trade apprentices drop out before completing the course. This is not a small figure. Despite the incentives of the discount of 20 per cent on completion, not all individuals are inclined to finish their apprenticeships, as other jobs may actually pay more.

The same article reports that first year apprentices and trainees can earn as little as $13 an hour, totalling $520 a week. The current cost-of-living pressures prevalent in Australia, particularly experienced within the Fowler electorate, may further deter individuals from wanting to enter the professions in demand because of the earnings. People have families to provide for, and it may not be realistic to survive and live off the poverty earnings of just $520 a week, especially in major population centres and including the increasingly high rents that we’re experiencing at the moment. Just consider food expenses. A bag of sliced wholemeal bread was $1.80 in 2018 and now is a minimum of $2.70 depending on the brand of bread. Let’s consider the commuting cost for apprentices to travel to and from work. If an apprentice were to travel from Cabramatta Station to Central Station, it’s about $3.79 one way and a total of $7.58 return. The apprentice commutes five days a week, which would equate to about $37.90. While the difference may not appear blatantly drastic, every cent adds up for families who are disadvantaged—not to mention the amount of tolls and the cost of fuel for those who drive.

Whilst these loans are branded as interest free, they do not actually come for free. The Australian apprentice support loans under this program are still indexed according to the Consumer Price Index to meet the real market value of the loan. This is essentially the same issue as other accumulated study and training loans. If you consider this against the cost-of-living crisis, this is an obvious issue for those who are disadvantaged. One young local professional told me that her HECS debt has increased by $4,400 just this year, yet she only entered the workforce four years ago. After sharing her experience to other young hopefuls in her community, most are deterred from studying her profession given the accumulated debt and indexation. This is no different to other hopeful Australian apprentices looking to enter their chosen professions, only to be disillusioned by the anticipated debt and indexation. To think how much this will build up year on year is unfathomable. Will our young people and future generations be able to break the debt cycle?

I ask the government, especially its members from Western Sydney and those representing low-socioeconomic electorates: how can you realistically slug students and apprentices with an index increase of seven per cent plus, which is much higher than the current average wage increases? At a time with soaring interest rates and stubbornly high house prices, how can aspiring first home buyers take out home loans when their borrowing capacity is impacted by the dark mark of a bigger study and training debt? Our youth are the future of Australia. The people that will be assisting with rebuilding the economy are our future. By not addressing the indexation within this bill, we are continuing to handicap the brightness of their potential.

For a Labor government that in its history proudly announces the Whitlam government’s introduction of free education, this current indexation is certainly a vast step backwards. History will judge this. It is certainly not in the tradition of compassion and support that is needed in this current cost-of-living crisis. If we cannot revert to 1974 and provide free education then we should, at the bare minimum, do something about indexation for students and apprentices. Who would not be deterred when they hear that they should expect 7.1 per cent indexation just off this year for entering a profession that they are passionate about and which could be one that Australia needs to drive the economy? It is simply not enough that we are opening the categories of occupations eligible for these loans and offering a 20 per cent discount on completion.

While speaking with a few aspiring early childhood educators within Fowler, it was noted that they would prefer, at the minimum, the indexation to revert to the 2022 rate of 3.9 per cent for loans under the Australian apprenticeship support loans scheme, and an increase of the discount to reflect at least a quarter of their loan amount. In my view, this is a more attractive incentive which should be drafted into this bill. It’s more in line with the current economy and living standards.

If this bill is intended to create better access and opportunities, especially for women entering the care sector for employment, the bill must be curated with this intention at the forefront. The government can do much more to support individuals who are seeking to rely on this loan and enter the demand-labour workforce. Therefore, I call on the government to consider reverting indexation for Australian apprenticeship support loans and indexation back to the 2022 rate of 3.9 per cent and to freeze it at this rate, perhaps for at least three years, upon earning the minimum repayment income. This would allow disadvantaged individuals to work full-time, pay down their loans and meet the cost-of-living crisis in their living needs.

I would like to take this opportunity to thank Senator Mehreen Faruqi, who has put the interests of apprentices and students at the forefront since the announcement of the indexation. While it’s a long conversation on reducing indexation, and perhaps abolishing it altogether, I look forward to seeing the future changes that may be proposed in this area of concern. We need to give young people a kickstart in their careers, beyond just a loan. There should be a safety net where they know they can engage in a demanding profession without being hit by a mountain of incrementally growing debt.

The DEPUTY SPEAKER ( Mr Goodenough ): Is the amendment seconded?

Dr Ryan: I second the amendment and reserve my right to speak.