Apprenticeship incentives

Budget Review 2022–23 Index

Dr Hazel Ferguson

The Government continues its focus on apprentice support in the 2022–23 Budget, with $1.3 billion over 5 years from 2021–22 provided to extend wage subsidies, provide additional in-training support, and introduce a new Australian Apprenticeships Incentive System (AAIS) in place of current arrangements from 1 July 2022 (Budget measures: budget paper no. 2: 2022–23, pp. 76–77).  

Apprentice wage subsidies

A central element of the Government’s response to the COVID-19 pandemic in skills training was the introduction of two apprentice wage subsidies:

Trends in apprenticeship numbers (Figure 1), suggest the wage subsidies have contributed to a substantial turnaround in the number of apprentices in training. The latest data from the National Centre for Vocational Education Research, for September 2021, shows 352,020 apprentices and trainees in-training—an increase of 33.2% from September 2020. However, this data also shows early signs that increased uptake may be resulting in increasing cancellations and withdrawals, with these reaching 25,205 in September 2021, up by 51.9% compared with 2020.

Figure 1       Apprentices in training, trade and non-trade occupations, September quarter, 2002–2021

Chart - Apprentices in training, trade and non-trade occupations, September quarter, 2002–2021

Source: National Centre for Vocational Education Research, VOCSTATS, extracted 30 March 2022.

New BAC enrolments were scheduled to cease at the end of March 2022. On 27 March, the Government announced that the program would be extended to the end of the 2021–22 financial year. Budget paper no. 2 (p. 77) provides $365.3 million for this purpose, and for support beyond the year of commencement through Completing Apprenticeship Commencements (CAC).

According to the Department of Education, Skills and Employment (DESE), if an apprentice is engaged before 30 June 2022, the employer will be able to access:

  • a 50% wage subsidy, up to $7,000 per quarter, for 12 months through BAC
  • a 10% wage subsidy, up to a maximum of $1,500 per quarter, for the second year of the apprenticeship, through CAC
  • a 5% wage subsidy, up to $750 per quarter, for the third year of the apprenticeship, also through CAC.

A new Australian Apprenticeships Incentive System

Wage subsidies were introduced to a system of existing apprenticeship incentives provided through the Australian Apprenticeships Incentives Program (AAIP), which has been in place since 2006. The AAIP provides a range of incentive payments to support training in Priority Occupations (Aged Care, Child Care, Disability Care Workers and Enrolled Nurses) and occupations on the National Skills Needs List. A variety of different payments are provided through the AAIP, including employer payments for commencement, retention, recommencement, and completion.

In 2019, the Strengthening skills expert review of Australia’s vocational education and training system (the Joyce Review, p. 78) observed that the AAIP has been ‘subject to multiple changes to the eligibility criteria and the incentives amounts, particularly for existing workers in 2012 and 2013’ (the marked effect of these changes is evident in Figure 1, especially in relation to non-trade occupations). The Joyce Review found that the complexity of the AAIP can act as a barrier for apprentices and employers and recommended revamping and simplifying apprenticeship incentives to increase their attractiveness to employers and trainees. The Government’s response, delivered in the 2019–20 Budget, provided funding for this purpose.

However, with the onset of the COVID-19 pandemic, the July 2020 Economic and fiscal update (July Update, pp. 119–120) announced that the introduction of new incentive arrangements would be delayed, and planned changes have still not been implemented.

This Budget announces that from 1 July 2022, a new Australian Apprenticeships Incentive System (AAIS) will commence in place of the wage subsidies and the AAIP, replacing changes to apprentice incentives previously announced in response to the Joyce Review. In place of the National Skills Needs List and Priority Occupations, the AAIP will be based on a new Australian Apprenticeships Priority List (the Priority List) which includes Technician and Trade Workers and Community and Personal Service Workers occupations assessed by the National Skills Commission as being in national skills shortage.

According to the Australian Government’s Australian Apprenticeships website, introduction of the AAIS will take place in two phases:

  • phase 1, which will run from 1 July 2022 to 30 June 2024, will provide support via:
    • hiring incentives of $3,500 for employers of apprentices in non-priority occupations
    • wage subsidies of 10% for first and second year apprentices (up to $1,500 per quarter) and 5% for third year apprentices (up to $750 per quarter) for employers of apprentices in occupations on the Priority List (with additional subsidies available for employers in rural and remote areas)
    • a direct payment of up to $5,000 over 2 years for apprentices in occupations on the Priority List.
  • phase 2, which will run from 1 July 2024, will provide support for occupations on the Priority List only, in the form of:
    • a hiring incentive of up to $4,000 for employers
    • a new Australian Apprentices Training Support Payment of up to $3,000 for apprentices.

Payments are administered through Australian Apprenticeship Support Network providers.

In order to align eligibility for the Trade Support Loans (to be renamed Australian Apprenticeship Support Loans) with the new arrangements, the Trade Support Loans Act 2014 will need to be amended to ensure all apprentices in occupations on the Priority List are eligible (Australian Apprenticeships Incentive Reform fact sheet and Education, skills and employment portfolio budget statements (PBS) 2022–23, p. 13).

Additional support for apprentices

A small amount of funding is also committed in the Budget to provide additional support for apprentices during their training:

  • As part of the major package of changes to incentives, $2.8 million is provided for an additional 2,500 in-training support places in 2022–23 for 15 to 20-year-olds.
  • As part of the Women’s budget statement (p. 44) $38.6 million over 4 years from 2022–23 is provided for additional support for women who commence an apprenticeship in a trade occupation on the Priority List. Gateway support services and in-training support places will be guaranteed for these women in non-traditional trades.

Stakeholder response and concluding comments

This Budget grapples with the dual challenges of maintaining recent momentum in apprenticeship uptake, while providing sufficient support to ensure those who enter the system can complete their training.

The National Apprentice Employment Network has welcomed the extension of the BAC wage subsidy, and supplementation of this incentive with the CAC program in the second and third year of an eligible apprenticeship, stating this ‘will help address possible drop-outs after the first 12 months’.

However, the Australian Chamber of Commerce and Industry has pointed to possible challenges transitioning to the AAIS, as the less-generous wage subsidies make taking on an apprentice less cost effective for employers than in recent years.


All online articles accessed April 2022

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