Announcement date
12 May 2026
Link to announcement
Budget.gov.au | Budget 2026–27
Problem being addressed
The 2024 Strategic Review of the Australian Apprenticeship Incentive System (Strategic Review) considered how effective and efficient the Australian Apprenticeship Incentive System is in encouraging the take up and completion of apprenticeships, and how it aligns with Australia’s skills needs and the Australian Government’s economic priorities and social equity objectives.
The Strategic Review found that barriers in the apprenticeship system have contributed to overall apprenticeship commencements and completion rates declining since 2012. The Strategic Review concluded that the operation of the Australian Apprenticeship Incentive System could be improved to better reflect Australia’s skills needs in a more efficient and effective manner. It also looked at non-financial factors that impact commencements and completions, such as workplace safety, apprentice wellbeing, perceptions of Vocational Education and Training, and IT system inefficiencies.
Proposal
The Australian Apprenticeships Reform proposal aligns with and addresses four of the Strategic Review’s recommendations.
The proposal seeks to tighten the focus of the apprenticeship system and target investment towards apprentices, SMEs and Group Training Organisations (GTOs) in sectors of national priority. At the same time, the proposal looks to cultural and systemic reforms to address persistent barriers to quality, safety and completions in the apprenticeship system.
Specifically, this Impact Analysis Equivalent (IAE) proposes to:
- Revise the Australian Apprenticeship Priority List methodology to align with government’s economic and social equity priorities. Incentives would be focussed on apprentices, SMEs and GTOs in sectors critical to government priorities, while large employers would not be eligible for incentives for apprenticeships from 1 January 2027.
- Extend the Key Apprenticeship Program (KAP) Employer Incentive to June 2029, in line with KAP for apprentices. Eligible SME and GTO employers would continue to receive $4,000 per apprenticeship. Incentives for other priority occupations would continue at $2,500 per apprenticeship for eligible employers and apprentices.
- Introduce Jobs and Skills Councils (JSCs) led tripartite pilot projects to provide industry with ways to support longer-term structural and cultural change across the apprenticeship system.
- Improve the Apprenticeships Data Management System through in-house User-Centred Design programs to improve efficiency and usability.
Under the proposal, apprentices in priority occupations, SMEs, GTOs, and critical industries will benefit. Evidence from the Strategic Review indicates that SMEs, in particular, respond more strongly to incentives compared to larger employers. Incorporating fiscal sustainability and responsibility into the proposal mitigates risks to the Government’s future capacity to provide financial support, ensures investment is allocated where it is most needed and is responsive to inflationary pressures.
While these changes are expected to impact large employers and may reduce overall apprenticeship commencement numbers, targeted protections such as an extension of the KAP employer incentive for SMEs and all GTOs helps mitigate risks to commencements and completions in priority occupations.
Further longer term cultural and system reforms including work with JSCs to improve quality, safety and completions for apprenticeships will also enhance the user experience.
Assessed Impact Analysis outcome
Impact Analysis Equivalent
Assessment comments
The Office of Impact Analysis (OIA) does not assess the quality of reviews and documents used in lieu of an Impact Analysis (IA). IAEs are assessed by OIA for relevance to the recommended option(s) and for the coverage of the seven Impact Analysis questions.
For this IAE, the Department of Employment and Workplace Relations (the Department) has drawn on the Strategic Review of the Australian Apprenticeship Incentive System along with additional analysis. The OIA assessed that the options analysed in the IAE materials are sufficiently relevant to the proposal.
Regulatory burden
The Department notes that the proposal will result in no change in the average regulatory costs to business, community organisations or individuals.