Budget 2014: Support for apprentices slashed
Tuesday, May 13, 2014/
The federal government has dramatically slashed its support for apprentices, in a move that will contribute more than $475 million in savings to the budget bottom line.
The government will cut the Australian Apprenticeships Incentives Program, known as ‘Tools for your Trade’ from July 1, reducing its spending by $914.6 million over four years.
In its place, the government will introduce a new program to support apprentices which is based on a higher education loan-style model. The new program will cost $439 million over four years, with funds to come from the Department of Industry and the Australian Tax Office.
Whereas the ‘Tools for your Trade’ program gave cash to apprentices to buy equipment needed for their work, the new Trade Support Loans Program will give apprentices a loan of up to $20,000 over a four-year apprenticeship.
The loans will be provided at concessional interest rates and will be staggered across the four-year period, with up to $8000 available in the first year of an apprenticeship, $6000 in the second, $4000 in the third and $2000 in the fourth.
The loans will not be tied to particular spending requirements and recipients will be required to pay back the loan when their income exceeds the minimum repayment threshold of $53,345. Those who complete their training will receive a 20% discount.
In a statement accompanying the budget papers, Industry Minister Ian Macfarlane said the loans scheme will “encourage more young people to take up a trade and complete their qualification”.
“All too often, young apprentices do not complete their training because they cannot afford the costs associated with undertaking an apprenticeship,” said MacFarlane.
“These loans will ease the financial burden,” he said.
Macfarlane said the scheme will be targeted at occupations on the National Skills Needs List, including plumbers, diesel mechanics, electricians and fitters, and has been designed so “maximum support is provided in the initial years when most needed”.
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