Extend incentives or risk collapse in apprentice numbers, business groups warn

Leading business groups have written letters to Jim Chalmers and five ministers urging them to include a two-year extension to expiring apprenticeship incentives.

Business groups are worried that the end of more generous incentives for apprentices and their employers will trigger a plunge in commencements. Picture: Luke Marsden

Leading business groups have written to Jim Chalmers and five other ministers warning that the end of generous financial incentives for apprentices and their ­employers from July risks a collapse in the number of Australians entering into traineeships.

In the letters, ACCI’s Andrew McKellar and Ai Group’s Innes Willox urged the Albanese government to include a two-year ­extension to existing incentives in the May budget, saying the nation could not afford to lose the future skilled workers that the apprentice system delivers.

ACCI chief executive Andrew McKellar told The Australian ­“incentives for employers to hire priority apprentices and trainees must continue beyond July”.

“Incentives are a critical part of investing in skills and training for young Australians,” he said. “Several significant initiatives across the government, including housing and net-zero commitments, require the recruitment of thousands of skilled workers. These commitments need a skilled workforce to succeed.”

From July 1, employer incentive payments under the Australian Apprenticeships Incentives System will reduce by up to 70 per cent for occupations such as electricians, carpenters and aged-care workers deemed as a priority by the Albanese government.

The payments to apprentices and trainees will also be reduced by 40 per cent in priority occupations, while there will be no funding for employers of apprentices in areas not considered a priority.

“Incentives fill a vital role in making the business case for ­employers to take on an apprentice,” the business groups argue in their letters, which were sent to the Treasurer, Finance Minister Katy Gallagher, Energy Minister Chris Bowen, Housing Minister Julie Collins, Infrastructure Minister Catherine King and Skills Minister Brendan O’Connor.

“We have seen the impact of the decrease of subsidies previously. Post-2012, the last time subsidies were significantly ­decreased, there was a steady ­decline in the number of commencements.

“This occurred during a time when the Australian economy remained relatively steady. Removing incentives during a time of economic uncertainty could see commencement rates plummet.”

The government in February launched a review of the AAIS, led by former Fair Work Commission president Iain Ross and ex-secretary of the Department of Education and Training Lisa Paul.

BCA chief executive Bran Black said the big business group supported the review, and ­believed “the current program should be extended by one year while that review is under way”.

“Australia is facing a skills crisis across many sectors and it is vital that there are education and training incentives to help bridge the gaps,” he said. “Any funding reductions ahead of the review could compromise our ability to secure workers in a number of key occupations, including electrical and aged-care work. The potential risks are immediate and would have a deeply troubling impact on the skills pipeline.”

The growing concerns about achieving the workforce of the ­future come after data showed 166,000 Australians started an apprenticeship or traineeship in the 12 months to June 2023, a drop of 111,000, or 40 per cent, against the previous year.

The National Centre for Vocational Education Research figures also showed cancellations and withdrawals continued to ­increase to the highest levels seen in the past decade.