Australia’s peak national employer body has warned that a decision in last week’s Federal Budget to strip many employers of apprenticeship incentives will deepen the country’s skills shortage and cut off pathways to training for thousands of Australians.
Innes Willox, chief executive of the Australian Industry Group, said financial incentives for employers had been a cornerstone of Australia’s apprenticeship system for many decades, helping to offset the real costs of bringing on new entrants (including wages, supervision time, administration and reduced productivity) and forming a critical part of the economic case for businesses of all sizes to hire apprentices and trainees.
From 1 January 2027, employers with more than 200 staff will lose access to all incentives entirely, while many small and medium-sized businesses will also see their support reduced.
Willox described the outcome bluntly: thousands of employers across the country will now receive less assistance to take on apprentices than at any point in recent decades.
The timing could hardly be worse. National data for the year to September 2025 shows trade apprenticeship commencements fell by almost 10 per cent, while non-trade commencements, traineeships, dropped by just over 18 per cent.
These figures are the latest instalment in a sustained downward trend that predates this Budget decision and does not yet capture the impact of earlier incentive reductions that took effect in January this year.
Australian Industry Group research from 2025 found that around half of surveyed employers said they would reduce their apprenticeship and traineeship activity if financial incentives were removed.
That finding lends weight to concerns that this Budget measure will have direct and measurable consequences.
Larger employers are central to the system’s functioning.
Businesses with 200 or more staff hired nearly 40 per cent of all apprentices who commenced in the year to 30 September 2025, and many run structured programs supporting dozens or hundreds of trainees simultaneously.
Apprentices employed by larger businesses have historically recorded the highest completion rates, supported by wraparound resources that incentive payments help fund.
There are also equity dimensions to the decision.
Larger employers are significantly more likely to take on female apprentices in male-dominated trades, as well as apprentices who are Indigenous, from non-English speaking backgrounds, or based in remote and very remote communities.
Willox argued that the Budget represented a missed opportunity to address the growing cost and complexity that employers across all sectors face when taking on apprentices and trainees.
Those challenges, he warned, will only intensify under the current trajectory.
The core principle, he said, remains straightforward: without an employer willing to take on an apprentice, no apprenticeship exists.
Australian Industry Group has published research on these issues, including its 2025 report on apprenticeships from the employer perspective and a 2026 research note on the urgent need to reverse declining commencement numbers.
