Traineeship completion rates likely to fall as government scraps completion payments

Offering industry traineeships just got a little bit less attractive to employers, with the federal government scrapping the payments given to employers who see a trainee complete their training in all but a few ‘priority’ occupations.

The move was announced in Friday’s economic statement and is expected to save the government $241 million over four years.

It was one of several revenue-raising measures announced on Friday, as the government revealed its budget had blown out by $30 billion more than expected.

Unlike a lot of the tax increases or spending cuts flagged by the government, which don’t take place until after the election, the incentives payment changes began from Saturday. However, the measure is not back-dated; meaning employers with current trainees will still receive the incentive payments when those trainees complete their training.

In its economic statement, the government said the scrapping of the payments were a “refocusing” of the incentive, which will now only apply to areas of highest need, as nominated by the National Skills Needs List.

Up until the announced change, employers received $3000 for every full-time trainee who completed their training and $1500 for every part-time trainee who did the same. The incentive payments, first announced in the 2011 budget, were intended to remedy Australia’s flat-lining apprenticeship rates, which have not grown in over a decade, despite a solid rise in Australia’s population during that time. Even when apprentices and trainees start their training, one in two drops out before completion.

The vocational education sector has seen a number of changes in recent years, and these, combined, have hampered the sector’s ability to train the workers required to solve Australia’s skilled worker shortage, TAFE Directors Australia chief executive Martin Riordan tells SmartCompany.

“It’s been very damaging. There’s a sense of real alarm, which is contributing to the crisis in the Australian apprenticeship system.

“It’s caused a lot of SMEs to exit commitments in this area.”

Some occupations have been exempted from the cuts, but Riordan says they’re still hit those using industry apprenticeships in areas like retail, clerical work, and similar occupations.

“There has been quite a strong heritage in Australia for industry traineeships in a lot of these sectors,” he says. “These traineeship subsidies formed an important part of the mix. For these all to be removed, as of Saturday, is very disappointing.”

Gavan Ord, policy adviser at CPA Australia, says this policy, added to the proposed capping of self-education expenses from 2015, contributes to the “long-term detrimental impact on the skills of the Australian workplace, both at a trade and professional level.”

“This is a short-term policy fix, but it creates long-term disadvantage for Australian businesses,” he told SmartCompany.

There are over 500 occupations covered by traineeships and apprenticeships. More than 60 of these remain on the National Skills Needs List, and so will continue to receive the incentive payments for completions. These include metal fabricators, roof tilers and shearers.