A $1.2 billion extension to the scheme offering apprentice wage subsidies to employers is wide open to rorting and may not deliver long-term skills for all young workers, critics have argued.
At least 70,000 new apprentices and trainees are expected to be subsidised under a 12-month extension of the Morrison government’s JobTrainer package announced on Tuesday.
But with the program open to larger businesses there are concerns many of the subsidies will flow to shorter traineeships in the retail and hospitality sectors that don’t guarantee longer-term job security.
Taxpayers have already spent about $1.2 billion supporting 100,000 jobs under the program, but figures cited by the government on Tuesday revealed there were almost twice as many workers in low-paid retail and hospitality jobs (11,000) as apprentice electricians (6000).
Alison Pennington, senior economist at The Australia Institute’s Centre for Future Work, said the extension will deliver many more of these shorter traineeships in the retail and hospitality sectors, contrary to the government’s focus on trade apprentices.
Ms Pennington said the scheme does not require employers to retain staff after the subsidies end, even if they complete their required training courses.
“There’s nothing blocking employers from enrolling entry-level workers, including young people, in shonky traineeships for 12 months to claim the 50 per cent subsidy,” she told The New Daily.
It defeats the entire purpose of investing in skills.’’
Unveiled last year, the apprenticeship subsidy program pays half of a business’ wage bill for new staff undertaking Certificate II qualifications or above.
Although apprenticeships are typically three-to-four-year commitments, many training certificates only last between six and 12 months.
Applications for the expanded program will run until September and will offer taxpayer support to eligible businesses or Group Training Organisations (GTOs) for 12 months, capped at $7,000 per qualifying worker each quarter.
Prime Minister Scott Morrison said on Tuesday it was “difficult to predict” how many apprentices would complete their training, though he believes businesses will look to retain their staff after the subsidies end.
“I don’t think they [businesses] see this as a short-term measure,” he told the AFR’s Business Summit.
Peter Hurley, a policy fellow at Victoria University’s Mitchell Institute for Education and Health Policy, welcomed the extension, saying the subsidies had supported apprenticeship numbers during COVID-19.
The $2.4 billion worth of subsidies will support the same number of commencements – about 170,000 – that would typically occur in a normal non-pandemic year, Dr Hurley told TND.
We feared a complete collapse in commencements,’’ he said.
Dr Hurley supports measures to ensure businesses retain workers and can’t rort the system, though, saying there had been a “history of misuse” of vocational training subsidies, particularly by retail businesses.
The Morrison government came under fire in 2019 when its PaTH internship program, which provided employment subsidies for workers undertaking training, was used by large retail chains like Hungry Jacks and Grill’d to employ low-paid workers at below minimum wage.
But Paul Bennett, chief executive of MEGT, Australia’s largest apprenticeship network provider, said a worker retention rule would be difficult to enforce.
Mr Bennett told The New Daily that even trainees who were let go after the 12-month subsidy period would be in a better position than those who took no part in the scheme.
“Sure, an apprenticeship of a standard four years is a substantial commitment, but the reality is that this subsidy is for a 12-month period,” he said.
Meanwhile, Ms Pennington said the inclusion of private training providers, despite their chequered history, demonstrated a “blind adherence” to the market.
“This is both a wage subsidy to those employers, but it’s also a free kick to the private VET sector,” Ms Pennington said.
“We have emerging skills shortages in Australia within technical and trades occupations and that is related to the decline of TAFE, the historic deliverer of apprenticeships in Australia.
“It’s not a surprise to me that the government has failed to invest in the actual institutions that are going to provide the training.”
A spokesperson for Employment Minister Michaelia Cash said the government intends to strengthen the relationship between employers and apprentices or trainees through the most resource intensive period of their training.
“On this basis, the Government has not sought specific assurances from participating businesses,” the spokesperson said.