Fresh government review to tackle apprentice completion rates amid skills shortage

What can Australia do to improve its apprenticeship completion rates?

That’s the core question to be answered by a new federal government review, tasked with assessing existing incentive schemes and how to best support trainees and employers alike.

AAP reports Minister for Skills and Training Brendan O’Connor has announced a fresh review of Australia’s apprentice incentive scheme, as low completion rates contribute to skills gaps in the workforce.

For apprentices and trainees who started in 2018, only 55.8% completed their apprenticeship or traineeship in 2022, according to data from the National Centre for Vocational Education Research (NCVER).

Completion rates remain stubbornly low, despite big-ticket support measures revealed in the Coalition government’s 2022-2023 federal budget.

That budget introduced the Priority Wage Subsidy scheme, granting businesses that employ eligible apprentices 10% of their wages paid back to them by the government, with extra hiring bonuses for businesses that pick up a new or recommencing apprentice.

Apprentices themselves can also access a suite of direct payments, including the Australian Apprentice Training Support Payment, and the Labor government’s New Energy Apprentice Support Payment for apprentices in green energy-related fields.

Additionally, the Labor government has committed $54.3 million over five years to “a new non-financial support model” for Australian apprentices, in the hopes of boosting completion rates.

Nevertheless, getting to the bottom of the completion shortfall — and tailoring Australia’s support system to benefit apprentices and workplaces alike — is necessary, O’Connor said.

“Getting the best outcomes for apprentices and trainees is vital to ensuring we have the skills our economy needs,” he said.

The review comes after long-running concerns from O’Connor about the effectiveness of Australian apprenticeship pathways.

“There is also no point in boosting the number of apprenticeships if apprentices already in the system are not properly supported and leave before they get their qualification,” O’Connor told the Australian Chamber of Commerce and Industry in October 2022.

“We need to fix the leaks in the bucket before we turn the tap on harder.”

Review to cover apprenticeship diversity

Beyond the makeup of the incentive system and the cost of living pressures facing young Australians considering an apprenticeship, the review will also consider the makeup of Australia’s trainees.

Jobs and Skills Australia analysis showed women made up just 12.2% of all ‘traditional’ trade apprentices in 2023.

Aboriginal and Torres Strait Islander peoples, who comprise around 3.8% of the population in 2021, accounted for 6% of apprenticeship completions in 2023.

The review will consider how to further strengthen those opportunities for Aboriginal and Torres Strait Islander communities.

Submissions to the review will be open to public comment in the coming weeks, with the cut-off date set for May 15.

It will be helmed by former Fair Work Commission president Iain Ross, and University of Canberra chancellor and former secretary of the Department of Education and Training Lisa Paul.

Ross last year assisted the Victorian government with its own review of apprenticeship pathways.

Industry groups want continued financial support

The review announcement arrives ahead of the 2024-2025 federal budget, which leading industry groups hope will include more big-spending support for apprentices and the businesses that hire them.

In its pre-budget submission, the Housing Industry Association (HIA) has called on the Labor government to extend the Priority Wage Subsidy scheme, which is currently set to close to new applicants on June 30 this year.

“Programs of this type have demonstrated the efficacy of wage subsidies in lifting apprentice numbers,” the submission says.

Its continuous payment model should be maintained instead of switching to a commencement and completion model, the group argues.

The federal government should also consider a $1,000 grant for new apprentices to stock up on tools, the HIA says, reflecting cost-of-living pressures making it hard for young workers to invest in their careers.

Master Builders has welcomed the new government review while advocating for continued financial support to businesses employing apprentices.

The sector will need to introduce around 500,000 workers in the next five years to meet housing and infrastructure needs, CEO Denita Wawn said, making business support essential.

“The cost of taking on an apprentice, especially in that first year of training, is huge,” she said.

Master Builders is advocating for a 30% wage subsidy to be paid to the employer in the first year of an apprenticeship, followed by 10% subsidies each year thereafter.

Like the HIA, it also calls for a tool and training allowance for apprentices themselves.

“Financial incentives and subsidies are a fantastic start to bringing more people to building and construction apprenticeships, but the program needs to go further,” Wawn said.

“It must help young people – and those who guide them – see what a real career in this industry can look like in 2024 and beyond.”