Australia’s apprenticeship incentive system is set to go under the microscope after the Commonwealth Government announced a review of the system.

On Monday, Commonwealth Minister for Skills and Training Brendan O’Connor announced that former Federal Court of Australia Judge Justice Ian Ross AO and former senior Australian public servant Lisa Paul AO PSM will conduct strategic and in-depth review of the Australian Apprenticeships Incentive System.

The review will consider:

• How the Incentive System and complementary services are performing in helping the take up and completion of apprenticeships and traineeships.
• The impact that cost-of-living pressures is having on apprentices and trainees.
• How the Apprenticeship System can best support high quality apprenticeships and traineeships, including the roles of government support, workplace conditions and culture, and employers.
• Whether or not the current system is creating a training environment that is encouraging women, First Nations people, people with disability and people in regional, rural and remote communities into apprenticeships and traineeships.
• How the Incentive System can be aligned with the priorities in the 2023 Employment White Paper and the Australian Government’s broader economic objectives.

Whilst incentives to employ apprentices have been in place since 2006, the current Australian Apprenticeship Incentive System was introduced by the former Coalition Government in the 2022/23 budget and has been in place since July 2022.

The scheme provides support for employers and apprentices in two phases.

The first phase has been in place since1 July 2022 and is set to run to 30 June 2024.

This provides support through:

• hiring incentives of $3,500 for employers of apprentices in non-priority occupations
• wage subsidies of 10 percent for first and second year apprentices (up to $1,500 per quarter) and 5 percent for third year apprentices (up to $750 per quarter) for employers of apprentices in occupations on the Skills 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.

The second phase will run from 1 July 2024.

This will provide a more limited form of up-front support that is given only for apprentices who are employed in occupations which are on the Priority List.

Support will be 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.

The review comes as data from the National Centre for Vocational Education Research (NCVER) indicates that apprenticeship commencement numbers have dropped back to levels which were considered to be normal prior to COVID.

This followed a surge in apprenticeship commencements that occurred as a result of especially generous incentives which were put in place at the onset of the pandemic as part of COVID stimulus measures.

In 2022/23, the number of apprenticeship commencements across all industries dropped from a record high of 277,895 in 2021/22 (the peak that resulted from the stimulus surge) back down to 166,375.

That number, however, remains higher compared with pre-pandemic commencement numbers of 155,635 in 2018/19.

The review also comes amid ongoing concern about apprenticeship dropout rates.

Across all occupations, separate data released by NCVER last September indicates that apprenticeship completion rates for those who commenced their apprenticeship in 2018 stood at 55.8 percent for all occupations. (Trade completion rates stand at 53.4 percent whereas non-trade completion rates stand a little higher at 58.2 percent).

This means that almost half of those who commence their apprenticeship are failing to complete their apprenticeships.

Whilst it is understandable that a certain portion of those who commence apprenticeships will find that their chosen occupation is not suitable for them, concern remains that too many apprentices are not being given adequate support.

Building industry lobby groups welcomed the review.

Master Builders Australia CEO Denita Warn said the apprenticeship system is in need of review.

Wawn said the building industry needs many more apprentices to meet long-term demand.

She called on the government to adopt subsidies to be paid to the employer of 30 percent of apprentice wages for the first year of an apprenticeship and 10 percent in the three years after.

In addition, Master Builders would like financial incentives paid to apprentices to assist them with the costs of living whilst completing their apprenticeship and the costs of doing their apprenticeship.

This includes things such as tools, vehicles and training materials.

Finally, Wawn said it is important that the apprenticeship system guides people into what a real career in this industry can look like and breaks down misconceptions that a career in trades is second-rate compared with those in professions.

“The building and construction workforce is facing significant shortages,” Wawn said.

“Without an increase in apprenticeship starts and completions, the industry will not be able to keep up with demand in coming years.

“Master Builders estimates that we need to attract around half a million new workers over the next five years to deliver on much needed housing and infrastructure.

“It is vital that incentives to bring people into this industry actually provide the value they are looking for and provide appropriate support for employers.

“Government must increase the number and value of apprentice wage subsidies in building and construction for both apprentices and their employers. The cost of taking on an apprentice, especially in that first year of training, is huge.

“A subsidy program like that means more builders – who are already time poor and under the pump – can justify taking on an apprentice and taking time to show them the ropes.

“Master Builders also called for financial incentives to assist with the increasing cost of living and costs associated with doing an apprenticeship – like tools, vehicles and training materials – that would be paid to the apprentice.

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

“The myth that a VET-based career is subpar to a higher education-based career must be dispelled.”

Meanwhile, unions say that more needs to be done to support apprentices.

Speaking particularly from the viewpoint of electricians, Electrical Tates Union Secretary Michael Write said that apprentices were facing below minimum wage incomes and a lack of industry based mentoring support.

He said the Australian Apprentices Network Support System is non-industry based and is largely ineffective.

Wright said a complete overhaul of the was necessary.

“The rapid transition to renewable energy sources is creating a worldwide surge in demand for electricians,” Wright said.

“It simply won’t work to rely on the same lazy solution of importing temporary skilled migrants.

“We need a robust, well resourced, industry-led training effort and it needs to start immediately. Apprentices need to be supported at every step of their time, we can’t afford for anyone to be slipping through the cracks.

“Rather than allocating funds to programs that fall short of expectations, it’s crucial for the Government to collaborate closely with people who are actively involved in energy.

“The current Government inherited a complete mess from its predecessor but this review cannot afford to cast backwards. It needs to delve immediately into how we design an apprenticeship system that lifts completions. Industry knowledge and higher wages must be at the centre of this review.

“There is a pressing requirement to reinvigorate vocational education, broaden the scope of TAFE, and enhance the appeal of teaching within the sector.

“This review is an enormous opportunity to begin building the workforce of the next twenty years. If we get this right in the energy sector, we not only bridge the existing skills gap but also open the door to rewarding and high-paying career paths for countless Australians.

“Rekindling a strong training ethos is our pathway to establishing ourselves as a leading force in the energy arena. This review must succeed if Australia is to have any hope of meeting its carbon emission targets.”

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