By CASEY NEILL
NEW $20,000 Trade Support Loans could land young jobseekers in significant debt unless they receive more career path guidance.
This was the warning from Beacon Foundation’s Duncan McKimm in the wake of the 2014-’15 Federal Budget announcement that the program would be introduced from 1 July.
The not-for-profit organisation provides pathways and opportunities for students from schools in disadvantaged communities.
“This proposed change is perfectly reasonable,” Mr McKimm said.
“As long as it is coupled with strengthened efforts to educate young people about their pathways and provide them with opportunities to experience the workplace before they start generating debts for training.”
The loans will replace the Tools For Your Trade Payment initiative.
“It goes from getting tax-free money to spend on tools, to being a loan they have to pay back, so obviously apprentices aren’t going to be over the moon about it,” Mr McKimm said.
“The government’s argument is it’s better to have apprentices afforded a cheap line of credit to assist them with whatever expenses – not just tools – they face, as their wages can be very hard to live on in a lot of circumstances.”
Mr McKimm said his concern was for young people who generated debt through the scheme but failed to complete the apprenticeship.
The loan amount to be repaid will drop 20 per cent for apprentices who complete their studies, and repayments are to start once they’re earning a sustainable income.
“They’ll be carrying the debt they incurred while training if they don’t finish, and potentially generating significant amounts of debt before they find the right qualification,” he said.
“Changing pathways will become an increasingly expensive exercise.”
He said about one third of people who started an apprenticeship didn’t complete it, and this figure had been steady for the past 10 years.
“Experience in the workplace, or lack thereof, is a key factor in this low completion rate,” he said.
“If this is the system we’re going to be working under, we need to be absolutely sure we’re educating young people about the pathway they’re undertaking before they start.”
South East Melbourne Manufacturers’ Alliance (SEMMA) executive officer Adrian Boden said the move, which is similar to the loan system for university students, was “a good sign of everybody being equal”.
“If someone’s learning a trade they’re as valuable as someone getting a degree – in some cases more valuable,” he said.
“We need the people with the hands-on skills.
“The negative is the changes to the repayments of those loans and the costs of those loans.
“There’s a lower threshold so they have to repay earlier. That doesn’t help people save money.
“I’m just worried that they’ll end up with another huge debt.”
