House of Representatives

Explanatory Memorandum

(Circulated by the authority of the Minister for Education, the Honourable Julia Gillard MP)

Outline and financial impact

Outline

This Bill exempts the value of the payments, made under the Skills for Sustainability for Australian Apprentices and Tools For Your Trade (under the Australian Apprenticeships Incentives Program ), from treatment as assessable income for taxation, social security and veterans' affairs purposes. The amendments ensure that eligible Australian Apprentices receive the full benefit of the payments made under the two new programs, and are consistent with the taxation treatment of previous programs that have paid personal benefits to Australian Apprentices.

The Skills for Sustainability for Australian Apprentices payment is a pilot program within the Skills for the Carbon Challenge initiative. This initiative is an outcome of the Australia 2020 Summit which aims to accelerate industry's and the tertiary education sector's response to climate change. To encourage Australian Apprentices to undertake sustainability-related training, the payment of $1,000 will be provided to eligible Australian Apprentices who have successfully completed the required level of training which teaches skills in sustainability and environmentally sustainable work practices.

The Tools For Your Trade payment, within the broader Australian Apprenticeships Incentives Program , combines and extends three administratively complex programs previously available to Australian Apprentices into one payment. The new payment comprises five separate cash payments totalling $3,800 paid over the life of the Australian Apprenticeship. The new arrangements reduce the administrative burden on employers, broaden eligibility criteria (benefitting more Australian Apprentices) and ensure that Australian Apprentices in skills shortage trades are eligible for the same level of financial support regardless of age and employer size.

These two new programs represent significant measures that encourage Australian Apprentices to develop skills in sustainability in order to participate in a workforce that is ready to meet the rising demand for sustainable buildings and industry, and to ease the financial burden for Australian Apprentices undertaking Australian Apprenticeships in areas of national skills shortage.

Financial impact

Payments for both programs are to be funded through annual appropriations. Skills for Sustainability for Australian Apprentices is estimated to cost $20 million over 4 years. Tools For Your Trade for Australian Apprentices is estimated to cost $670.1 million over 4 years.

It is not possible to estimate the financial impact of the income exemptions as this will be determined by the number of Australian Apprentices who qualify for the payments.