Apprentices who work in new home construction are set to receive up to $10,000 in incentive payments from July next year.

On Friday, the Commonwealth Government released its initial response to the Australian Apprenticeship System Review.

In a key announcement, the government says that it will double the amount of incentive payments which are available under the scheme for apprentices who work specifically in new home construction.

As a result, apprentices who work in new home construction will be able to access payments of up to $10,000 over and above their wages across the life of their apprenticeship.

This is double the current $5,000 worth of payments which is currently available to apprentices who work in occupations that are listed on the Australian Apprenticeships Priority List.

Report released

The announcement comes as the government has released the final report from its inquiry into the Australian Apprenticeship Investment Scheme.

Introduced in 2022, the scheme provides apprenticeship support for both workers and employers in relation to ‘priority’ occupations which are listed on the aforementioned priority list.

Under the current system, apprentices who work in occupations that are on the list can receive support payments of up to $5,000 over and above the wages which they receive.

This is paid in instalments over the first two years of their apprenticeship.

In addition, employers whose apprentices work in priority occupations can receive priority hiring incentives worth up to $5,000 in the first year of an apprenticeship. This is paid over two instalments.

In its report, the review found that challenges in respect of current apprenticeship arrangements exist across several areas.

All up, it made 34 recommendations.

Key recommendations included:

• Reframing the gateway for incentives in a way which ensures that priority is given to occupations that align with Australia’s longer term social and economic challenges and objectives.
• Targeting incentives to where they are most efficient and effective, including by restricting incentives to small and medium sized enterprises (see below).
• Developing a framework that assesses the performance of training organisations to enable governments, apprentices and employers to direct selection choices toward higher performing providers.
• Greater financial assistance and support for apprentices to undertake and complete their apprenticeships.
• Strategies to positively influence wider community attitudes about the value and prestige of apprenticeships by better promoting apprenticeships and improving pathways into apprenticeships through experience and pre-apprenticeship programs.
• Removal of incentives for employers who persistently fail to provide safe, inclusive and positive workplaces for apprentices or who fail to provide adequate apprentice training.
• An independent review of the apprenticeship support delivery model and the performance of Apprentice Connect Australia Providers within two years.
• Better support for certain apprentice cohorts. This includes women (in male dominated trades), First Nations Australians, those from culturally and linguistically diverse backgrounds, those with disabilities and those in regional and remote Australia.
• Better supporting transitions from apprenticeships into careers by making it easier for apprentices to have their skills and knowledge recognised as they progress through training and further education.
• Working to address gaps in apprenticeship data to better support evidence-based policy designs.
• Development of a strategy to evaluate outcomes for apprenticeship programs and initiatives and to share learnings.

In terms of payments provided to apprentices, the report recommended an immediate increase of $600 in the amount of direct support provided to apprentices all apprentices who are employed in priority occupations. This would account for the effect of inflation since July 2022,

The report also recommended that payments be indexed to the Consumer Price Index and regularly reviewed to ensure their adequacy.

For employers, the report recommends that the current scheme remain in place until 1 July this year.

At that point, it recommends that the current gateway to the incentives system be reframed in such a way that priority is given to those occupations which are most needed in order to meet oncoming social and economic challenges.

This would replace the current approach of priority occupations being determined primarily by current worker shortages.

The report also recommended that employer incentives – which it says should be paid quarterly – be restricted to small and medium sized employers with fewer than 200 employees.

This is the case as feedback during the review uncovered that larger employers are unlikely to hire apprentices based specifically on financial incentives.

The report also recommends that incentive amounts be differentiated in such a way that higher incentives are offered for employers who engage apprentices in trade occupations as opposed to non-trade occupations.

This reflects the fact that trade apprenticeships are typically longer in duration compared with non-trade apprenticeships.

Doubling incentives for housing apprentices

As mentioned above, the government has provided an initial response to the inquiry.

It will consult with stakeholders to inform its response in regard to longer term reforms – a response in regard to which is unlikely to be published until after the election.

Under last week’s announcement, the government will establish a special Housing Construction Apprenticeship stream that will apply specifically to trades and occupations which are involved in new home construction.

Under this stream, eligible apprentices who work in housing construction will receive $10,000 in incentive payments, on top of their wages, over the life of their apprenticeship.

Payments worth $2,000 each will be made at six, 12, 24 and 36 months as well as at the completion of their apprenticeship.

As mentioned above, the $10,000 is double the $5,000 amount which is currently received by apprentices in other priority occupations.

Meanwhile, the government will also extend the operation of the existing $5,000 apprentice support payment and the $5,000 employer priority hiring incentive programs by six months until December 31 this year.

Previously, these incentive payments had been due to expire in June.

Finally, from 1 July 2025, the government will increase the Living Away From Home Allowances and the Disability Australian Apprentice Wage Support payments, which provide financial assistance to apprentices who need to live away from home or who have disabilities.

Applause from Builders

The latest announcement comes amid growing recognition of the need to grow apprenticeship numbers and workforce capacity across the housing construction sector if the nation is deliver upon the national housing target of completing 1.2 million new homes over the five years from 1 July 2024.

As things stand, trade shortages are evident in the industry notwithstanding that the sector is not delivering anywhere near the number of homes which are required to achieve this.

Building industry lobby groups welcomed the announcement.

Master Builders Australia CEO Denita Wawn said that the new incentives – coupled with recent government funding of fee free vocational education and training – are welcome.

But she added that support is also needed in other areas of construction sector in which shortages are also evident.

This includes civil construction sectors such as roads, railways and sewerage that are needed in order to support new home delivery.

Master Builders has also called for better support for employers who employ construction related apprentices.

But the Independent Tertiary Education Council Australia (ITECA) says that the measures ignore other areas that also need skilled workers outside of residential construction.

Whilst support for residential construction is welcome, ITECA Chief Executive Troy Williams says that the announcement ignores sectors outside of residential construction where skills shortages are evident.

These include agriculture, health and aged care, vehicle report, ICT, tourism, hospitality and resources.

“This initiative is a welcome boost for apprentices entering residential construction and clean energy careers, but it does little for people aspiring to work in industries outside these sectors, where the skills gap is just as urgent,” Williams said.

“Both businesses (outside of residential construction) and aspiring apprentices will miss out.”

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