Senate Education and Employment Legislation Committee [Part 2], , 3:03:29 to 3:17:07
The reduction of apprenticeship incentives for small businesses and the modeling used for these decisions are discussed. Officials provide an update on the proposed Skilled Migration Commissioner role.
Topics: Employment, Government spending, Education
Speakers: Anna Faithfull, Senator Jacinta Nampijinpa Price, Jennifer Wedinger, Senator Penny Allman-Payne, Unknown Speaker
that the National Center for Vocational Education and Research are able to depart. Um the questions to you will be placed on notice. Hope that's good news, not disappointing news for you. Um we'll continue in this outcome. Thank you, Senator Nipper Price.
uh we spent some time during the June budget estimates um hearing on Labour's 20 $266.2 million in cuts to Australian apprentichip incentives where from January 2027 the key apprentichip program employer incentive will be reduced by $1,000 for small businesses and removed altogether for larger businesses. I'm interested to know what advice specifically the department provided to the government to justify the thousand cut to the key apprentichip program employer incentive for small businesses.
Uh thank you senators. So um the department uh in the as the first basis relied on the strategic review into Australian apprenticeships incentives which found that uh particularly for larger businesses there was a a greater level of capacity or or less influenced by the incentive in terms of influencing their hiring decision. isions for apprentices. Uh the other consideration was our mapping of particularly in those priority occupations and particularly in construction. Uh it's 99 98% of the construction uh employers in the apprenticeship system arememes. And so that was another factor that went into uh the the policy analysis that supported the decision making.
so to reduce it then um for small businesses that was that was the justification behind that for small businesses. Can you point to any economic circumstances that indicate a reduction to the employer incentive um uh that is justified from January 2027?
the in the context of a constrained fiscal environment um uh the government made a decision uh uh in to target and sharpen the focus of incentives tomemes and to priority occupations uh and also to key the key apprenticeship program which focuses on construction and net zero. Uh that was a decision that was made in the context of a a a tightening fiscal environment. Uh and uh supported by evidence that indicated that uh incentives uh you know small to medium enterprises are do uh uh do feel the benefit of incentives. uh large enterprises have more capacity uh and in particularly in construction where there's such a majority ofmemes are the the main employers of apprentices. I I suppose
though that any small business in this country will tell you that the cost of doing business is getting pretty tough. Um and having to find an extra thousand per apprentice certainly going to make
know to totally appreciate what you're saying in the context ofmemes. So uh from 1 January uhmemes in priority occupations oh sorry in uh who are participating in the key apprenticeship program will have access to $4,000 per apprentice andmemes that um are uh participating as with a priority occupation will have access to $2,500 per apprentice. Um that's in addition to other loans and supports. So supports for apprentice with disability. Um uh so there and all all payments to date will be grandfathered as well. So if you've got apprentices that are currently in the system, uh there will be a grandfathering of all of those payments.
Okay. Um we also heard which industries will see the greatest reduction in support as a result of these apprenticeship incentive cuts. And the department's advice was that everything on the priority occupation list um from manufacturing through train trades will be affected. Did the department undertake any analysis or modeling of the number of affected apprentices in each priority occupation?
Senator uh we we do we do do uh we we look at our historic data uh and we do use that as a proxy to do um some modeling of impact. So yes uh we would have uh done modeling to understand the projected impact based on our historic data.
So are you able to provide um that
>> So Senator there's this
>> relies upon I suppose the decisions relied upon.
>> Well what I would also say though is that our analysis is also underpinned by a policy discussion around the various factors that influence the apprenticeship system the employers and the apprentices decisions. Those factors uh uh include the macroeconomic um factors such as uh unemployment levels. It includes terms and conditions. It includes culture within the uh appren within the workplace. There are r it includes career choices and
>> are you able to provide that on notice
>> we can take that on notice.
>> Okay. Thank you. In June, the department estimated the number of affected large businesses to be 1,800. Um, how many apprentices and trainees did those 1,800 businesses take on in 2025? And how many does the department expect them to take on in 2027?
so sorry, Senator, could you repeat the question for me?
>> Uh, in in June, the department estimated the number of affected large businesses to be 1,800. uh how many apprentices um and trainees did those 1,800 businesses take on in 2025 and how many does the department expect them to take on in 2027?
>> So, Senator, um based on the time that the decision was made, uh the um data showed that of those uh employers that you you mentioned, there was around 20,635 commencements um that were uh related to those businesses and uh as Miss Faith Hall has pointed out it's it's difficult for us to uh extrapolate what that will turn into in terms of future commencements but uh I would say that um we did rely heavily on research that showed that during the the back and CAC period uh large businesses um were relatively um unresponsive to the incentives. Um and that a significant um a significant proportion of the incentives um were were being used by small and medium businesses, 98% and 95% respectively to take on new workers as opposed to um 29% for large businesses. So you won't see um I guess what I'm saying you won't see an equal reduction in um in uh employers taking on apprentices as a result of incentives because we know they're relatively inelastic to the use of them.
>> So we'll just have to wait till we get to that point in time to receive that data. Um can the department provide an update on the recruitment of the government's proposed skilled migration
>> Uh certainly senator. So the budget decision was for the government to scope and consider options on whether to establish a skills commissioner. So uh what I would say is that department the the government hasn't made a decision as to whether or not it will establish a skills commissioner. It's in at the beginning of a process to consult on the the why you might have a skills commissioner. what those options would look like, what the functions might be, and what problems you're trying to solve by establishing this role.
>> Okay. So, um I suppose during the last estimates hearing, I did raise concerns about the function of this commissioner, what what it would serve given the obvious um potential for duplication in this role. Um you were consulting back then. You're still consulting. Um we're told this would be worked through has so a position description hasn't been created for the role yet or a list of
duties anything like that. No no
>> um so when will a decision be made I suppose.
>> Uh so we're currently uh consulting with states and territories given the complexity of the system and in particular the role of states and territories uh in local responses to supporting migrants into work. uh but also the nexus of this work with uh the treasurer's work on uh linked to um the council uh for federal financial relations. And so uh through treasurers with states and territories, we're just undertaking that consultation at that state and territory level. And then from there we'll work out the next phase of consultation in terms of
>> So no no firm date as yet.
>> No firm date. No essentially.
>> Okay. Um, I'm happy to rotate the call.
>> Thank you. >> Um, that that that would just be back to yourself, I believe. So, I think we're in a position >> to move on. >> Thank you. Thank you so much, senators. Um, in that case, uh, thank you to officials from outcome 2. You're free to depart and we'll just suspend for a moment as I call officials from comare all officers from Comare including its