This Bills Digest replaces an interim Bills Digest published on 31 May 2023.

Key points

• The Trade Support Loans Amendment Bill 2023 (the Bill) amends the Trade Support Loans Act 2014 (the Act) to facilitate the expansion of the Trade Support Loans Program, which is currently available only to apprentices in priority trade occupations, to apprentices and trainees in a broader range of priority occupations, including non-trade occupations, such as aged care, disability support and child care.
• The Trade Support Loans Program aims to increase completion rates among Australian Apprentices in priority areas, by providing financial support to eligible apprentices to assist them with the costs of living and learning while undertaking an apprenticeship. This is achieved by offering concessional income contingent loans (up to a lifetime maximum of $22,890 for 2022–23), which are paid back when the taxable income of the apprentice reaches the repayment threshold. For the 2022–23 income year, the compulsory repayment threshold is $48,361.
• The Bill will facilitate wider access to these loans, which will be renamed Australian Apprenticeship Support Loans.
• The Student Loans (Overseas Debtors Repayment Levy) Amendment Bill 2023 makes consequential amendments to the Student Loans (Overseas Debtors Repayment Levy Act) 2015.

Introductory Info

Date introduced: 25 May 2023
House: House of Representatives
Portfolio: Employment and Workplace Relations
Commencement: The earlier of Proclamation, or 6 months after Royal Assent.

Purpose of the Bill

The purpose of the Trade Support Loans Amendment Bill 2023 (the Bill) is to amend the Trade Support Loans Act 2014 (the Act) to expand the Trade Support Loans Program, which is currently available only to apprentices in priority trade occupations, to apprentices and trainees in a broader range of priority occupations, including non-trade occupations, such as aged care, disability support and child care.

Structure of the Bills

The Bill is divided into 3 parts:

• Part 1 proposes general amendments to the Act
• Part 2 proposes consequential amendments to bankruptcy and taxation legislation to reflect the terminology changes made to the Act
• Part 3 sets out transitional provisions.

The Student Loans (Overseas Debtors Repayment Levy) Amendment Bill 2023 makes consequential amendments to the Student Loans (Overseas Debtors Repayment Levy Act) 2015 to reflect the renaming of the Program.

Background

Trade Support Loans

The Trade Support Loans (TSL) Program (the Program) provides income-contingent loans to eligible apprentices to assist with everyday costs while completing their apprenticeships. Loans provide payments up to a TSL lifetime limit, paid monthly in arrears. The lifetime limit is indexed annually on 1 July. As at 1 July 2022, the lifetime limit is $22,890.[1]

As outlined in the Trade Support Loans Program Guidelines, apprentices apply for a TSL through their Australian Apprenticeship Support Network provider. To minimise the risk of apprentices accruing large debts unintentionally, apprentices are required to reapply (or ‘opt in’) to receive loans every 6 months for a further 6 instalments.[2]

The Program is structured so that loan amounts are higher in the early years of an apprenticeship to compensate for lower wages (see Table 1).[3] To encourage completions, apprentices who successfully complete their apprenticeships receive a 20% reduction in their loan obligations.[4]

Table 1      Structure and payment amounts for Trade Support Loans

Apprenticeship year	Proportion of TSL lifetime limit	TSL yearly rate	TSL payments per month (2022–23)
1st year	40%	$9,156	$763.00
2nd year	30%	$6,867	$572.25
3rd year	20%	$4,578	$381.50
4th year	10%	$2,289	$190.75

Source: DEWR, Trade Support Loans Program Guidelines, (Canberra: DEWR, 2022); DEWR, Trade Support Loans – At a Glance, fact sheet, (Canberra: DEWR, 2022), 1.

TSL debts are repaid through the taxation system. Compulsory repayments are made at the same repayment rates and income thresholds as other study and training loans, including Higher Education Loan Program (HELP) loans. In 2022–23, the minimum repayment threshold is $48,361.[5]

TSL debts are indexed on 1 June by a TSL debt indexation factor (section 32 of the Act), which is based on the Consumer Price Index (CPI), using the same method for calculating indexation as is used for other study and training loans. In 2023, the indexation rate is 7.1%.[6]

According to the Department of Education, Skills and Employment’s (DESE) 2021–22 Annual Report, in 2021–22:

• 16,655 TSL applications were approved
• 50,428 apprentices received a TSL payment
• a completion discount was applied to 12,612 apprentices who successfully completed their apprenticeship.

Since the Program commenced in 2014 until 30 June 2022, 159,139 TSL applications have been approved and $1.4 billion in payments have been made to eligible apprentices.[7]

Currently, only apprentices in trade-related apprenticeships listed on the Trade Support Loans Priority List (TSL Priority List) are eligible for the loans. The TSL Qualifications List sets out the qualifications leading to occupations on the TSL Priority List and for which apprentices may be eligible for TSLs. The TSL Priority List and TSL Qualifications List are made under sections 5 and 6 (respectively) of the Trade Support Loan Priority List 2014, a legislative instrument under the Act.

The Bill aims to expand access to Trade Support Loans to a broader range of apprentices and trainees, including in non-trade occupations by providing for the TSL Priority List to be replaced with a new Australian Apprenticeships Priority List. The Explanatory Memorandum gives early childhood, aged care and disability as examples of sectors that may benefit from this expansion.[8]

The expansion of Trade Support Loans to include occupations in the care sector was proposed by the former Government in the March 2022–23 Budget, as part of a new Australian Apprenticeships Incentive System.[9]

Study and training loan debt

As noted above, like other study and training loans, TSL debts are repaid through the tax system and are indexed annually. Concerns have been raised recently about the high rate of indexation applied to study and training loans, with debts increasing by 7.1% on 1 June 2023.[10] While compulsory repayments are not required until a person’s income reaches the repayment threshold, higher loan debts increase the length of time it takes to repay loans.

In relation to HELP debts, a recent report examining Gender, Equity and Policy Neglect in Student Financing of Tertiary Education noted that:

The last 34 years has resulted in large amounts of HELP debt being accumulated, particularly against occupations traditionally held by women. These occupations employ large numbers of people, and many have incomes that result in debt not being repaid or repaid slowly. These levels of debt do not exist for the many occupations traditionally held by men which require VET sector training and result in comparable levels of income.[11]

The TSL Program aims to minimise the risk that apprentices will unintentionally accumulate large debts through the lifetime limit and opt-in arrangements. However, given the Bill’s aim of increasing accessibility of support loans to apprentices in sectors such as early childhood, aged care and disability, which are traditionally female-dominated and low-paid, there is potential for the loans to have long-term implications for those who take on the debts. A recent media article, which stated that women would benefit most from the expanded student loan plan, also noted concerns by Professor Andrew Norton, a higher education policy expert, that:

it was “yet another income-contingent loan debt without any obvious analysis of the implications for either the students or public funds”.[12]

Committee consideration

Senate Standing Committee for the Scrutiny of Bills

At the time of writing this Bills Digest, the Bill had not been referred by the Senate Standing Committee for the Selection of Bills to Committee for inquiry and report.

Similarly, the Senate Standing Committee for the Scrutiny of Bills has not reported on the contents of the Bill.

Policy position of non-government parties

In the second reading debate in the House of Representatives on 1 June 2023, Shadow Minister for Industry Skills and Training Sussan Ley indicated the Coalition’s support for this Bill, stating that they ‘are sensible reforms which the Coalition developed whilst in government’.[13]

Position of major interest groups

At the time of writing, no major interest groups have commented on the measures proposed in the Bill.

The Explanatory Memorandum states that consultation on the Bill with parties outside of government was not undertaken, with one of the reasons given that ‘consultation was undertaken before the Act was introduced’.[14]

Financial implications

The Explanatory Memorandum states:

The Bill and the Levy Bill would have minimal financial impacts beyond the Program’s existing financial impacts. […] It is not possible to provide an exact estimate of the long-term financial impacts due to the demand driven nature of the Program’s take-up.[15]

The March 2022–23 Budget released by the Morrison Government included $22.5 million to:

expand eligibility for the Australian Apprenticeship Support Loans (formerly the Trade Support Loans Scheme) to align with the Australian Apprenticeship Priority List, and enable backdating of payments to provide immediate support to recipients.[16]

Statement of Compatibility with Human Rights

As required under Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 (Cth), the Government has assessed the Bill’s compatibility with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of that Act. The Government considers that the Bill is compatible.[17]

Parliamentary Joint Committee on Human Rights

At the time of writing this Bills Digest, the Parliamentary Joint Committee on Human Rights has not commented on the Bill.

Key issues and provisions

The purpose of the Bill is to expand the scope of the Trade Support Loans program and the eligibility for income-contingent loans to more apprentices and trainees. It replaces the existing Trade Support Loans with Australian Apprenticeship Support Loans and the existing Trade Support Priority List with a new Australian Apprenticeships Priority List. The majority of the Bill’s amendments implement the expansion of the scope and the change of the Act’s title, by changing the name of ‘trade support loans’, or its acronym ‘TSL’, to ‘Australian apprenticeship support loans’, or its acronym ‘AASL’, wherever they occur. Most of these changes are not discussed individually here.

Key provisions discussed below include those to:

• amend the title of the Act
• replace definitions
• enable the Secretary to extend the date for an apprentice to apply for a loan
• provide for the Minster to determine the Australian Apprenticeships Priority List by legislative instrument.

Item 2 proposes to change the short title of the Act, replacing ‘Trade Support Loans’ with ‘Australian Apprenticeship Support Loans’.

Items 8, 10, 12, 14 and 16 repeal definitions relating to TSLs set out in section 5 of the Act. Items 7, 9, 11, 13 and 15 insert new corresponding AASL definitions.

Section 10 of the Act provides for the payability of TSLs. Currently, a person can be paid a TSL for an instalment period if the person:

• is qualified for a TSL on the final day of the instalment period—paragraph 10(1)(a)
• was undertaking a qualifying apprenticeship for the whole of the instalment period—paragraph 10(1)(b), and
• the person made an application for the TSL on or before that final day—paragraph 10(1)(c).

Item 29 proposes to repeal paragraph 10(1)(c) and replace it with a new provision relating to the timing of the application. Proposed subparagraph 10(1)(c)(i) retains the timing of making an application for a loan on or before the final day, while proposed paragraph 10(1)(c)(ii) enables the Secretary to allow for a later day.

Item 30 inserts a proposed new subsection 10(1A) to provide for the Secretary to allow a later day under proposed subparagraph 10(1)(c)(ii) only in circumstances prescribed by the rules. The Explanatory Memorandum gives administrative errors—such as an applicant being provided with incorrect advice—or exceptional circumstances—such as serious illness—as examples of the circumstances which might be prescribed by the rules.[18] The Explanatory Memorandum further states that the purpose of item 30 when read with item 29 is to improve accessibility, while also ensuring appropriate oversight and clear communication about the circumstances under which extensions may be made. It states:

The rules should include appropriate criteria or considerations in relation to the exercise of the power. Those criteria or considerations should only be prescribed in the rules (and should not be contained in policy documents).[19]

The current Trade Support Loan Rules 2014 is a legislative instrument made under section 106 of the Act.

Section 105 of the Act sets out provisions for the TSL Priority List. Item 125 repeals provisions that the Minister must, by legislative instrument, establish and maintain the TSL Priority List and replaces it with provisions that the Minister may, by legislative instrument, determine the Australian Apprenticeships Priority List which specifies occupations or qualifications leading to occupations for which skilled persons are a priority in the opinion of the Minister. On commencement, this item will cause the TSL Priority List to lapse.[20]

The Bill’s Explanatory Memorandum states:

Because the Program has, to date, been about ‘trade’ support, the TSL Priority List has only ever specified priority occupations, or qualifications leading to priority occupations, in the ANZSCO [Australian and New Zealand Standard Classification of Occupations] ‘technicians and trade workers’ major group.[21]

Item 127 inserts 3 new subsections at the end of section 105. Proposed subsection 105(6) requires the Minister to take all reasonable steps to ensure that a legislative instrument is in force under subsection 105(1) at all times.

Proposed subsection 105(7) requires the Minister to have regard to advice given by Jobs and Skills Australia (JSA) under section 9 of the Jobs and Skills Australia Act 2022 (JSA Act) in relation to either:

• Australia’s current and emerging labour market, including advice on workforce needs and priorities—proposed paragraph 105(7)(a)
• Australia’s current, emerging and future skills and training needs and priorities—proposed paragraph 105(7)(b).

Section 9 of the JSA Act sets out the functions of JSA. The Jobs and Skills Australia Amendment Bill 2023, which proposes to amend the JSA Act, including in relation to section 9, is currently before Parliament.[22]

Other provisions

• Part 2 of the Bill provides for consequential amendments to other legislation to reflect changes proposed by the Bill and update references to the title of the Act and defined terms.
  • Item 129 amends the reference to the Act’s title in the Bankruptcy Act 1966
  • Items 130–1 amend the references to the Act’s title in the Income Tax Assessment Act 1936
  • Items 132–136 amend references to the Act’s terms and title in the Income Tax Assessment Act 1997
  • Items 137–148 amend references to the Act’s title, terms, definitions and acronyms in the Taxation Administration Act 1953
  • Items 149–155 amend references to the Act’s title, terms, definitions and acronyms in the Taxation (Interest on Overpayments and Early Payments) Act 1983.
• Part 3 of the Bill sets out transitional provisions.
• The Student Loans (Overseas Debtors Repayment Levy) Amendment Bill 2023 proposes consequential amendments to the Student Loans (Overseas Debtors Repayment Levy Act) 2015, updating the title of the Act in sections 3 and 5.