Bills Digest no. 173 2008–09
Social Security and Other Legislation Amendment
(Australian Apprentices) Bill 2009
WARNING:
This Digest was prepared for debate. It reflects the legislation as
introduced and does not canvass subsequent amendments. This Digest
does not have any official legal status. Other sources should be
consulted to determine the subsequent official status of the
Bill.
CONTENTS
Passage history
Purpose
Background
Main provisions
Concluding comments
Contact officer & copyright details
Glossary
| Abbreviation |
Definition |
| ACF |
Australian Conservation Foundation |
| ACTU |
Australian Council of Trade Unions |
| AMWU |
Australian Manufacturing Workers’ Union |
| CTLS |
Commonwealth Trade Learning Scholarship |
| CPRS |
Carbon Pollution Reduction Scheme |
| DEEWR |
Department of Education, Employment and Industrial
Relations |
| DEST |
Department of Education, Science and Training |
| ETS |
Emissions Trading Scheme |
| ITAA |
Income Tax Assessment Act |
| NSNL |
National Skills Needs List |
| SSA |
Social Security Act |
| TFYT |
Tools For Your Trade |
| VEA |
Veterans’ Entitlements Act |
Passage history
Date
introduced: 25 May
2009
House: House of Representatives
Portfolio: Education
Commencement:
1 July 2009
Links: The
relevant links to the Bill, Explanatory Memorandum and second
reading speech can be accessed via BillsNet, which is at http://www.aph.gov.au/bills/.
When Bills have been passed they can be found at ComLaw, which is
at http://www.comlaw.gov.au/.
The purpose of this Bill is to
amend the Income Tax Assessment Act 1997 (ITAA), the
Social Security Act 1991 (SSA), and the Veterans
Entitlements Act 1986 (VEA), to exempt, as taxable income,
payments made to Australian Apprentices under the Skills for
Sustainability for Australian Apprentices program and the
Tools For Your Trade (TFYT) program.
An additional $23.6 million of additional funds will be invested
over four years in the TFYT for Australian Apprentices program,
making up a total investment of $670.1 million. Under this program,
three existing payments will be combined into a single, extended
TFYT payment. This new payment will be paid in five instalments to
apprentices in trades experiencing skills shortages, as well as to
apprentices working in agricultural and horticultural occupations
(where these are in rural and regional areas). The total payment to
apprentices over the five years will be $3800. The new eligibility
rules will extend the entire payment to apprentices who were
previously only eligible for certain programs, and not eligible for
others.[1]
Skills for the Carbon Challenge will provide $26.9
million over four years, to respond to key priorities from the
Productivity and Sustainability streams of the 2008 Australia 2020
Summit.[2] These priorities include the improvement of both
the capacity of industry, as well as of the vocational education
and training sector, to respond to the exigencies of climate
change. This is a pilot incentives program, which will provide
support for Australian apprentices engaged in occupations
experiencing skills shortages, according to the National Skills
Needs List (NSNL).
TFYT is to be paid under the auspices of the Australian
Apprenticeships Incentives program and is aimed at
streamlining payments that were previously payable under three
separate programs. Under the Sustainability for Australian
Apprentices program, tax-free payments of $1000 will be made
to Australian apprentices who have undertaken a required threshold
of sustainability training. Approximately 5000 apprentices will be
eligible for this payment.[3]
The TFYT payment is currently made under the broader
Australian Apprenticeships Incentives program and is the
subject of a restructuring effort under this Bill. This restructure
is intended to deliver savings, presumably through a reduction in
administration costs, which will be redirected into areas where
perceived skills shortages are present, thereby allowing the
Government to maintain current expenditure levels overall.[4]
The Australian Apprenticeships Incentives program
provides a range of different incentives for apprentices and
employers. The program has evolved, since 1996, with the addition
of incentives for which individuals must meet different eligibility
criteria.[5] This Bill allows for the simplification and
streamlining of three of these incentives, as well as for the
expansion and simplification of the eligibility criteria.
The three incentives currently available to Australian
apprentices that will be abolished to make way for the new TFYT
payment are the:
- Commonwealth Trade Learning Scholarship
- $800 Tools For Your Trade voucher program, and the
- Apprenticeship Wage Top-Up.[6]
The Commonwealth Trade Learning Scholarship (CTLS) and the
current TFYT voucher program were introduced as part of the Howard
Government s 2004 election campaign. These initiatives sought to
increase the number of apprentices in areas of identified skills
shortage (according to the NSNL),[7] by providing incentives to both
employers and would-be apprentices.[8]
The CTLS, introduced in the 2005-06 Budget, was paid through two
tax-exempt $500 payments, and was available to all Certificate III
and IV New Apprentices undertaking qualifications in trades
experiencing skill shortages with a small to medium business. The
Scholarship was payable to apprentices at the end of each of the
first and second years of their new apprenticeship.[9]
The TFYT initiative, also introduced in the 2005-06 Budget,
supplied eligible apprentices (also in trades experiencing skill
shortages) with tool kits with a value of up to $800, upon
completion of their first three months of training.[10]
The Apprenticeship Wage Top Up incentive was introduced in the
2007-08 Budget as part of the Realising Our Potential
Initiative. The payment was made to apprentices under 30 years
of age who were undertaking Australian apprenticeships in trades
experiencing skill shortages. The tax free payment was available as
two $1000 payments made in the first and second years of the
apprenticeships.[11] The payment was made to attract potential
apprentices who may otherwise have been discouraged by the low
level of wages during their first two years of apprentice
training.[12]
The new TFYT payment amalgamates these three separate payments
and aims to streamline eligibility criteria across the three
payments. This new payment is forecast to increase by 14 000 the
number of apprentices receiving support.[13] The new TFYT
initiative will involve the payment of $3800 in five separate
instalments, over the life of the Australian apprenticeship. For
apprentices who began their training on or before 12 May 2009,
transitional arrangements will ensure that they will still be
eligible for their tool kit after three months, as per arrangements
under the previous program.[14]
Skills for Sustainability is a pilot program that falls
under the auspices of the Skills for the Carbon Challenge
initiative.
Skills for the Carbon Challenge has been established in
response to proposals delivered at the 2020 Summit held in April
2008. The development of a world-class climate change education
program was put forward as one of the key initial ideas by the
climate change group within the Population, Sustainability,
Climate Change, Water and The Future of our Cities stream. It
was envisaged that such a program would involve the
development of green economy skills and investment in technology,
infrastructure and industry skills .[15] In this context, the
Skills for Sustainability program is intended to
accelerate the response of industry to climate change, by
encouraging the participation of Australian apprentices to a
threshold level of training in sustainability and environmentally
sustainable work practices.[16] The pilot program is envisaged to
provide support for around 5000 apprentices engaged in occupations
under the NSNL.[17]
Occupations that will receive a special focus through this
program are those most impacted upon by climate change, including
plumbing, heating, ventilation and air-conditioning.[18]
Both programs will be paid for through annual appropriations.
TFYT for Australian Apprentices is estimated to cost
$670.1 million over four years. Skills for Sustainability for
Australian Apprentices is estimated to cost $20 million over
four years. Like the programs being replaced, the payments through
these new programs will also remain tax-free.[19]
Since this is a demand-driven program, with an uncapped number
of apprentices eligible for the program, the financial implications
of the income-tax exemptions are unable to be estimated as they
will be dependent upon the numbers of apprentices who fulfil the
eligibility criteria.
The Skills for Sustainability component of this Bill
aims to equip current and future apprentices with skills to prepare
them for the requirements of industry under the climate change
Bills currently being considered by the Parliament, and that have
been referred to a number of Senate Committees.[20]
A recent report released by the Australian Council of Trade
Unions (ACTU) and the Australian Conservation Foundation (ACF)
argued that, with the right policy settings, we [Australia] have an
opportunity to turn action to combat our environmental challenges
into growth of the green economy .[21] Specifically, the
report, entitled Green Gold Rush: how ambitious environmental
policy can make Australia a leader in the race for green jobs,
identifies six green collar industries that will be central to
these policies. Alongside tertiary education needs, it argues
strongly for the green skilling of the current workforce .[22] The
Commonwealth Scientific and Industrial Research Organisation
(CSIRO) projects the creation of 2.5 million jobs by 2025 and
argues that these new jobs will require green skill sets that are
not currently held by the majority of the skilled
workforce.[23]
In a Joint Statement released prior to the 2009 Budget, the ACF
and ACTU, in coalition with the Property Council of Australia, The
Climate Institute, the Australian Green Infrastructure Council and
the Australian Council of Social Service, called for the promotion
of green skills :
Australia needs to prepare its workforce for
the low-carbon economy of the 21st century. We call for an
immediate 40,000 productivity places to be allocated for green
skills development, and for Skills Australia to lead a national
Green Skills package.[24]
The Australian Manufacturing Workers Union (AMWU) makes similar
arguments in its response to the Federal Government s Carbon
Pollution Reduction Scheme (CPRS) Green Paper. It warns that, in
the case of an Emissions Trading Scheme (ETS), workers will need to
be adequately supported in the shift to a clean energy economy.
Among the series of recommendations generated as part of the AMWU s
review of the issues surrounding climate change mitigation efforts,
it was proposed that the Federal Government:
Assist workers, communities and industries
affected by the impacts of global warming and by the transition to
the new economy with industry/regional development programs and
adjustment support, including re-skilling, education and training
programs and income support.[25]
The Australian Greens have consistently argued for the green
skilling of the Australian workforce and criticise both the
Government s CPRS and the scale and nature of efforts made towards
the creation of a new green workforce :
Sharan Burrow is happy to accept the meagre
tally of 23,000 jobs promised under Mr Rudd s failed CPRS when in
fact her own Green Gold Rush report showed we could create 800,000
jobs if we stop bowing to polluters and move to ambitious emissions
reduction targets, renewable energy feed-in tariffs, comprehensive
energy efficiency plans and start training workers for the new
economy.[26]
New climate change-related policies (such as an ETS) are
predicted to result in a shift in the types of goods and services
demanded in the future, and this, in turn, means that different
skill sets will be demanded of employees. The Garnaut climate
change review, which has played an important part in the
development of the Government s climate change policies has
argued:
The structural changes that will emerge in a
low-emissions, growing economy will change requirements for human
capital. In Australia, a history of skills development has been
inherent in a globally successful resources sector. Australia
should be structurally well-placed to apply such skills to new
activities The need to supply appropriately skilled people is in
addition to the need to develop new knowledge and skills in
existing roles and sectors around the issues that emerge from the
implementation of climate change policies.[27]
There has been little commentary specifically related to this
Bill. However, the ACF , while critical of some of the carbon
reduction initiatives announced in the Federal Budget, has
nevertheless heralded the Green Skills development initiatives as
part of the Skills for the Carbon Challenge program as
good news .[28]
Main
provisions
Item 1 amends section 11-15 of the ITAA by
adding an extra class of recipients whose payments will be exempt
from taxation. These recipients include those eligible for the
Skills for Sustainability for Australian Apprentices payment, as
well as the Tools For Your Trade payment (under the Australian
Apprenticeships Incentive Program). These changes are made to
reflect the amendment made by item 2 (below).
Item 2 inserts two new payment types [M1] into the table at the end of
section 51-10. This adds the two payments (Skills for
Sustainability for Australian Apprentices, and Tools For Your Trade
(under the Australian Apprenticeships Incentive Program)) to the
list of education and training amounts that are exempt from income
tax.
Item 3 allows the above amendments
(items 1 and 2) to apply to income assessments
from the 2009-10 income year, as well as to later income years.
Item 4 inserts paragraphs 8(8)(tb) and
8(8)(tc)) into the SSA. These insertions allow for payments made by
the Commonwealth under the Skills for Sustainability for Australian
Apprentices program and Tools For Your Trade (under the Australian
Apprenticeships Incentive Program to be exempt from being defined
as income under the Act.
Item 5 inserts paragraphs 5(H)(8)(xac) and
5(H)(8)(xac) into the VEA. These insertions allow for payments made
by the Commonwealth under the Skills for Sustainability for
Australian Apprentices program and Tools For Your Trade (under the
Australian Apprenticeships Incentive Program to be exempt from
being defined as income under the Act.
The Bill should help to streamline existing incentive
arrangements for both Australian apprentices and their employers.
It should also promote the participation of select employers and
Australian apprentices in sustainability-related training. As part
of a broader effort to tackle climate change, this Bill will assist
employers and apprentices to prepare for the changing needs of
buildings, technologies and industries. The expansion and
simplification of the proposed TFYT program will reduce the
administrative costs associated with the previous program and
improve equity of access for apprentices, allowing for a greater
number of apprentices to be eligible for the available
assistance.
Members, Senators and Parliamentary staff can obtain further
information from the Parliamentary Library on (02) 6277 2479.
Danielle Chubb
Peter Yeend
17 June 2009
Bills Digest Service
Parliamentary Library
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