"It is becoming clearer that the decision in last week's Federal Budget to remove access to apprenticeship incentives for many employers will further entrench debilitating skills shortages and limit access to apprenticeship opportunities for Australians," said Innes Willox, chief executive of the national employer association, Australian Industry Group.
"Financial incentives for employers have been a consistent feature of Australia's apprenticeship system for many decades. They help to balance the costs of training a new entrant – wages, training costs, supervision time, administration and lower productivity – and form an important part of the economic equation for employers of all sizes in employing apprentices and trainees.
"From 1 January 2027, employers with more than 200 staff will lose access to all incentives and the incentives received by many small and medium sized employers will reduce.
"Put simply, thousands of employers across the country will now receive less support to employ apprentices than they have in decades.
"Australia needs an urgent and sustained step change in numbers of apprentices and trainees to achieve our national priorities. Yet the latest national data shows that in the year to September 2025, trade apprenticeship commencements were down almost 10%, while non-trade commencements (traineeships) were down just over 18%. This is the latest decline in a clear downward trend in commencements that has been underway for several years.
"The headwinds for businesses in employing apprentices and trainees are increasing. This Budget decision makes matters worse, as it comes on top of previous reductions to incentives that came into effect in January this year and are not yet reflected in the latest commencement data.
"The impact of this decision is clear. In 2025, around half of employers surveyed in our research reported that their employment of apprentices and trainees would reduce if they no longer received financial incentives.
"Shortages of skilled trades workers are already impacting many industries. Given the critical role of apprenticeships in delivering the skills needed to lift productivity, deliver housing and infrastructure, build sovereign manufacturing capability and deliver high-quality services, this decision is astounding.
"Businesses with 200 or more staff play a critical role in the overall system, hiring almost 40% of apprentices that commenced in the year to 30 September 2025. Many are employing and training dozens, or even hundreds, of apprentices and trainees at any one time.
"Apprentices and trainees employed by larger employers traditionally have the highest average completion rates. This is often due to the significant resources invested by these employers in wraparound support, which is commonly enabled by the financial incentives they receive.
"There are also important equity considerations. Larger employers are significantly more likely to employ female apprentices in male-dominated trades. They are also more likely to employ apprentices who are Indigenous, from non-English speaking backgrounds and in remote and very remote locations.
"There is a simple fact about apprenticeships that must be clearly understood – without an employer, there is no apprenticeship. The only way to increase apprenticeships, and the pathway to good careers they provide, is to encourage and enable more employers to employ more apprentices.
"Employers of all sizes consistently report that the cost and complexity of employing apprentices and trainees is increasing. This Budget presented an opportunity to tackle these challenges to strengthen our apprenticeship system, but instead we have a blunt cut that only makes the situation worse.
"Now more than ever, a sharp focus is needed on addressing the cost and complexity faced by employers in employing apprentices and trainees to ensure these pathways remain a cornerstone of our skills development system," Mr Willox said.
Australian Industry Group has published extensive research on the need to increase apprenticeship and traineeship commencements and the importance of employer incentives, including:
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