Budget 2022: New $2.8 billion funding pledge promises to subsidise apprentice wages in high-demand fields

The federal government has pledged $2.8 billion in funding for an overhauled apprenticeship incentive scheme, promising to grow the ranks of qualified tradespeople by subsidising the wages of select apprentices and trainees.

The proposed measure, revealed in Tuesday’s 2022 federal budget, is backdropped by widespread complaints of a skills shortage constraining the ability of SMEs to hire and retain qualified talent.

The Coalition plan hinges on the creation of the new Australian Apprentices Incentive System, a development the Coalition says will update and refine the 30-odd payments already available to employers and apprentices.

From July 1, 2022, the Australian Apprenticeships Incentive System will provide wage subsidies to businesses that take on trainees in priority fields.

Employers will be eligible to claim up to $4,500 in the first year of the system, budget documents show.

Hiring incentives will also be made available for firms that employ apprentices in “non-priority” occupations.

To sweeten the deal for workers, the Coalition says it will furnish priority apprentices with $5,000 in training support payments, split into half-yearly instalments over two years.

The new system will intensify its focus on coveted industry skills in its second “phase”, according to Minister for Employment, Workforce, Skills, Small and Family Business Stuart Robert.

“As the new system matures, it will shift to supporting occupations in demand or skills need, with a hiring incentive of up to $4,000 to be provided for employers in priority occupations, as well as a new Australian Apprentices Training Support Payment of up to $3,000 paid directly to apprentices in priority occupations,” Robert said in a statement.

What fields, exactly, qualify as “in demand” will be determined by a new Australian Apprenticeships Priority List, which will account for both current and expected future demand.

That list will be based on findings from the National Skills Commission, and will be updated annually, Robert added.

A new system for apprentices

The proposed system will replace the Boosting Apprenticeships Commencements (BAC) and Completing Apprenticeship Commencements programs.

Those funding pathways, which provided employers with wage subsidies for taking on apprentices, were last week extended by three months, to the end of the June 2022, at a cost of $365.3 million.

That scheme subsidies half of an eligible apprentice’s wages in their first year of employment, up to $7,000 a quarter.

The announcement of a revamped apprentice employment incentive system comes days after industry groups called for a major expansion of the BAC program.

In a pre-budget statement, the Australian Chamber of Commerce and Industry (ACCI) said the three-month BAC extension was “insufficient” to address Australia’s current and future skills shortages.

“If we are to lock in these gains, a three-month extension is simply not enough,” ACCI chief executive Andrew McKellar said.

Promises of a new Australian Apprentices Incentive System are backdropped by a broader budget pledge to implement a fresh National Skills Agreement between the Commonwealth and state and territory governments.

The federal government is prepared to contribute $3.7 billion to the plan in the hopes of supporting 800,000 new training places, Treasurer Josh Frydenberg said in Tuesday’s budget address.

Once ironed out, the plan “will transform the way all governments support vocational education and training by ensuring greater national consistency,” Robert claimed, with all investment decisions being “transparent, evidence-based and linked to skills need.”