New support for young tradies to complete apprenticeships in 2022 Federal Budget

The government has announced billions in funding to help tradies complete their apprenticeships, and to reward employers for hiring them.

Treasurer Josh Frydenberg has announced a fresh $2.8 billion in federal government spending aimed at helping young Australian tradies complete their apprenticeships.

The multi-billion dollar investment, spread out over the next five years, will seek to upskill apprentices, reward employers for hiring them, and simplify the current system of incentives, which the government believes is too complex.

“We have already invested $13 billion in skills and training, with a record 220,000 Australians now in a trade apprenticeship – the highest level since records began in 1963,” Mr Frydenberg said in his budget night speech.

“Tonight we go further, with a new $2.8 billion investment to increase take-up and completion rates. Providing $5000 payments to new apprentices and up to $15,000 in wage subsidies for employers who take them on.”

An apprentice installs handrails in an office refurbishment.

The government will introduce a new, “streamlined” Australian Apprenticeships Incentive System. This is intended to establish a pathway to better develop apprentices in “priority trades”, while moving away from the current system, which includes more than 30 different payments for employers and apprentices.

There will be an additional 2500 in-training support places for eligible young apprentices, and expanded access to trade support loans for priority occupations, including aged care trainees.

What does this mean in practice? The budget papers point to a case study: a young apprentice carpenter on a starting salary of $34,000 per year, studying a three-and-a-half year certificate.

Because carpentry is an occupation on the Australian Apprenticeship Priority List, the apprentice’s employer would receive up to $8750 in wage subsidies throughout the duration of that certificate.

The apprentice himself would receive $5000 in training support payments to help him with cost of living expenses. And he would be eligible for up to $20,691 in Australian Apprentice Support Loans.

The budget papers also note that the federal, state and territory governments are currently “working towards” establishing a new National Skills Agreement, which would lead to large boosts in funding for skills training in priority areas.

The Commonwealth is offering a $3.7 billion increase in funding, which it says could create 800,000 more training places and lower student fees.

“In this budget, we also lay the foundations for national skills reform with a $3.7 billion investment, supporting an additional 800,000 training places. Ensuring businesses get the skilled workers they need,” Mr Frydenberg said.

“Skilling Australians is part of our plan for a stronger future.”

Treasurer Josh Frydenberg. Picture: Gary Ramage/NCA NewsWire

The budget also includes further support for small businesses to upskill their employees, with Mr Frydenberg describing them as being “at the heart” of the Australian economy.

“The government has backed small businesses with the lowest tax rates in 50 years and record investment incentives. Tonight we go further, rewarding small businesses that invest in skills and new technology,” he said.

Small businesses with an annual turnover of less than $50 million will be given access to a new bonus 20 per cent tax deduction for the cost of external training courses, provided those courses are delivered by providers registered in Australia.

The hope here is that small businesses will feel incentivised to invest in the skills of their employees, or to train their new hires. More skilled employees will hopefully lead to gains in productivity and higher growth.

“No one knows better than a small business owner what skills they need in their employees,” the Treasurer said.

The deduction will apply to eligible spending incurred between tonight and June 30, 2024.

So, for example, a company with a turnover of $30 million might pay $200,000 for its employees to do supply chain training one year, and then logistics training at a cost of $400,000 in subsequent years.

It could then claim a bonus deduction of $120,000, reducing its tax bill significantly.

Small businesses will also be able to earn bonus 20 per cent tax deductions for spending money on digital technologies, such as cloud computing, eInvoicing, cyber security and web design.

Treasury estimates 3.6 million small businesses will be eligible for that boost, which expires on June 30, 2023.