Saturday, August 26, 2017

In truth there's no apprenticeship 'crisis'

If we're to believe what we're told, Australia's apprenticeship system is in crisis, with plunging numbers following cuts in government support.

In last year's federal election campaign, Bill Shorten claimed the number of people "in training for an apprenticeship" – note that tricky wording – was "now at its lowest level since 2001".

Spending cuts by the Abbott-Turnbull government had "seen apprentice numbers fall by more than 120,000 since the 2013 election".

In May this year, Karen Andrews, Assistant Minister for Vocational Education and Skills in the Turnbull government, said the objective of a new government fund was to "restore the number [of apprenticeships] to 2012 levels, when Labor's withdrawal of employer incentives contributed to a massive decline".

Earlier this year, a joint statement by the three biggest business lobby groups claimed that apprenticeships had declined by 45 per cent since June 2012 and urged the Turnbull government to "take urgent action to avert an imminent crisis in our apprenticeship system".

Not to be outdone, the ACTU claimed in last year's election campaign that the Coalition had "ripped funding out of apprenticeship programs", resulting in a "catastrophic drop in the number of apprentices learning their trade".

When you remember the almighty hash that federal and state governments of both colours have made of their efforts to smarten up TAFE colleges by making vocational education and training "contestable" by for-profit training providers, it's not hard to believe that, between them, the former Labor and present Coalition federal governments have stuffed up apprenticeships.

Fortunately, however, you don't have to believe it. It isn't true. For their own reasons, the people I've quoted – Labor and Liberal, employers and unions – are seeking to mislead us about the state of the apprenticeship system.

This is clear from a report published this week by the highly regarded higher education expert Professor Peter Noonan, and Sarah Pilcher, of the Mitchell Institute at Victoria University.

Let me ask: What do you understand the word "apprenticeship" to mean? Do you take it to mean the system that's existed for decades where young people work in trades such as carpentry, plumbing, electrical, commercial cooking and hairdressing, and undertake about four years of training before becoming qualified tradespeople?

Now try this: Have you heard of the "traineeships" that the Hawke government invented in 1985 to reduce youth unemployment by providing job and training opportunities for young people in service sector occupations not covered by traditional apprenticeships?

They typically last for only a year or less, and are common in retail and hospitality, admin, childcare and aged care.

Get this: when all those people I quoted spoke of the "apprenticeship system", what they were actually referring to was those short-term traineeships.

There's been a huge fall in the number of traineeships since 2012, because the Gillard government decided to crack down on massive rorting by employers and training providers of changes in the traineeship system made by the Howard government.

There has been a modest fall in the number of traditional apprenticeships since 2012, but this is despite the absence of any change in the full funding of traditional apprenticeships.

No one would understand the distinction between apprenticeships and traineeships better that Shorten, the minister responsible, the employer groups and the ACTU.

None of them would fail to realise that the public worries a lot more about trade apprenticeships than about short-term service sector traineeships.

So when they chose to depict a crackdown on employer rorting of traineeships as a crisis in the apprenticeship system, they knew full well they were misleading us.

But how did they think they could get away with such deceit? That no Peter Noonan would blow the whistle on them?

Here's the bit you'll have trouble believing. It sounds like it's straight out of Utopia.

They thought they'd get away with it because, some years ago, some genius in the federal government decided to add the traineeship figures to the apprenticeship figures and call them all apprenticeships.

You know, add oranges to apples and call them all apples. Good one.

So far has that bureaucratic obfuscation gone, that actual figures for apprenticeships and traineeships have disappeared.

You can, however, divide the so-called apprenticeships between trade apprenticeships (the real ones) and non-trade "apprenticeships" (actually traineeships).

The number of traineeships has long been a lot greater than the number of apprenticeships, which tend to vary with the strength of the economy. Even so, commencements have increased in some categories: carpenters, plumbers and electricians.

But the number of traineeship commencements ballooned after 1998, when the Howard government took a scheme aimed at encouraging employers to hire more young people, and made subsidies available for training of existing employees, of any age.

The report says registered training organisations, apprenticeship centres and brokers "aggressively marketed" these existing-worker traineeships.

"A business model emerged whereby employers would share the incentives with registered training organisations, who then delivered training, too often of questionable duration and quality," the report finds.

By 2012, the peak year before the Gillard government's restrictions took effect, 44 per cent of all traineeship commencements were for existing workers. About 18 per cent of all "trainees" were aged 45 or older.

The Howard government also decided in 1998 to make employer incentives available for part-time traineeships and apprenticeships.

"This decision . . . also created a market in Commonwealth employer subsidies, through which firms could shift their part-time and casual youth workforces (including full-time school and university students) into part-time traineeships," the report says.

"This had a dual benefit for employers – they were able to pay trainees the national training wage (below the relevant award) while also claiming employer subsidies, with training provided fully on the job.

"Major retail firms and franchises, in particular in the fast food industries, took full advantage of these incentives."

Now why do I find that easy to believe?
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Wednesday, August 23, 2017

What you'd have to live on if you were poor

Speaking of the cost of living, how much do you need to live on? Surveys show most people's answer is: just a bit more than I'm getting at present. Trouble is, they keep saying that no matter how much their income rises.

One way to convince yourself you're not doing all that well is to compare what you earn with people of your acquaintance who're earning a lot more than you.

A better assessment would be to compare your finances with those of people a lot closer to the bottom – if only you knew any.

Not to worry. On Wednesday, Professor Peter Saunders and Megan Bedford, of the Social Policy Research Centre at the University of NSW, will publish new "budget standards" for low-paid and unemployed Australians.

The study was funded by the Australian Research Council, with a quarter of the cost covered by donations from Catholic Social Services Australia, the United Voice union and the Australian Council of Social Service.

In a painstaking exercise, the researchers have put together, and costed, the baskets of goods and services different-sized families at these income levels would need to allow each individual – adult or child – to lead a fully healthy life.

So it's not a poverty line and it does take account of prevailing community standards, but it's the minimum amount required to satisfy basic needs.

"There is no allowance for even the most modest or occasional 'luxuries' and wastage was kept to an absolute minimum. The budgets are thus extremely tight," the researchers say.

For instance, low-income families are assumed to have a car, but it's a second-hand, five-year-old Toyota Corolla, kept for five years. Unemployed people have no car.

Because it's a healthy standard, its only allowance for alcohol is a couple of glasses a week, with no allowance for smoking.

Let's see how you fancy living on these budget standards (I've rounded the figures to the nearest $10 for ease of comprehension). Each of the low-paid categories assumes one person working full-time on the national minimum wage.

A single adult would need to spend $600 a week. A couple with no children would need $830. Add a child of six and that rises to $970. Add a second child, of 10, and it's up to $1170. A sole parent working part-time, with a child, would need to spend $830 a week.

Let's take a couple with two children. Their biggest expense would be rent, $460 a week for a three-bedroom unit in an outer suburb. Then $200 for food, $140 for transport, $140 for household goods and services, $80 for recreation (swimming lessons; bit of sport for the kids), $60 for education, $40 for personal care, $30 for clothing and footwear and $20 a week for out-of-pocket healthcare.

The budget standards for unemployed families are, perforce, a lot tighter.

Whereas the low-paid were assumed to shop at Woolworths and Kmart, unemployed people in the focus groups used to check the realism of the standards said they couldn't afford such stores and went to Aldi and discount stores. They chase specials and collect discount vouchers, make things last longer and waste nothing.

Even with this frugality, an unemployed single adult needs $430 a week. A couple without children needs $660, but that rises by $110 to $770 with one kid, then by a further $170 to $940 with a second kid. An unemployed sole parent with one child needs $680 a week.

It's true that economies of scale mean a couple needs only 1.5 times as much money as a single. But additional kids cost more, partly because older kids cost more, but also because you need to rent a bigger unit.

The good news is that a single adult on the minimum wage earns about $60 a week more than they need to maintain the minimum healthy standard of living, costing $600 a week. A sole parent working part-time, with one child, gets wages and welfare benefits of $45 a week more than their minimum living costs of $830 a week.

After that, however, the news is bad. A low-paid couple with no children earns $40 a week less than the $830 they need. After allowing for family benefits, a low-paid couple (one in full-time work and one doing some part-time work) with one child is almost $10 a week shy of their $970 healthy standard, while a couple with two children is short by $90 of the $1170 a week they need.

One of the great stains on our fair-go nation's conscience is the long-running attempt by governments of both colours to starve the unemployed until they find a (usually non-existent) job.

The study finds that the dole, plus any other welfare benefits for which the jobless are eligible, falls almost $100 a week short of the much tighter minimum healthy living standard for the single jobless.

A childless couple on the dole falls short by almost $110 a week and a couple with two kids is shy about $130 a week.

In our boundless generosity, however, we go easy on an unemployed couple with one kid (short by a mere $60 a week) and a jobless sole parent with one kid, short by a piddling $50 a week.

If only you and I weren't having such a struggle to maintain our own living standards, we could perhaps ask the pollies to be a tad more munificent.
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