The current skills gap crisis will only be overcome by a constant and increasing supply of highly trained workers. The Vocational Education and Training (VET) sector is the main vehicle for developing many of these workers, with 38 per cent of skills shortages in occupations with a VET pathway, including electrical and care.

The need for skills delivered by the apprenticeship and traineeship system is stronger than ever. Yet the apprenticeship system is facing three critical challenges:

• Falling completion rates.
• Lack of diversity.
• Strained capacity and capability within the VET sector.

We need an apprenticeship and traineeship system that is seen as an attractive and valuable pathway to employment, has the confidence of industry, and builds a pipeline of skilled workers who can adapt to future labour market needs. A well-designed, targeted and effective incentive program is essential to this system.

The Strategic Review of the AAIS presents an opportunity to examine and reshape the existing incentive system, and to move the needle on both these fronts.

The BCA proposes a suite of recommendations designed to attract a greater number of high-quality candidates and improve conditions and support systems in workplaces to raise completion rates. We need to recognise and leverage the success of large businesses to deliver apprenticeships that have a ~90% completion rate. We need to incentivise businesses and Group Training Organisations (GTOs) to take on – and appropriately support – diverse apprentice cohorts, including First Nations, adult apprentices, women in male-dominated industries such as construction, and men in female-dominated sectors such as care.

To do this, we recommend the government re-structure the existing Apprenticeship Incentive Scheme to be employer-centred rather than role-centric (via the Priority Skills List). We propose an incentive system that:

a) has clear targets to raise quality commencement rates
b) enhances assistance for apprentices and incentives for employers to improve completion rates and commencement diversity
c) incentivises large businesses to expand successful pastoral care programs to support the broader supply chain of workers.

We recommend wage subsidies for small and medium sized businesses, and grant funds for large businesses.

Wage subsidies that encourage and reward an employer’s apprentice supervision, support and diversity practices – rather than if the apprentice is in a priority trade – will improve the work environment and lead to higher commencement and completion rates. This is particularly the case for small and medium businesses that manage the vast majority of the apprentice cohort.

For large businesses, apprentice intake is based on business need rather than wage subsidy incentives. Their investments in training, support, mentoring and diversity cohorts are examples of industry best practice. Yet to expand these programs to benefit the supply chain apprentice cohort, they require government support through project-specific grant funds.

A two-tiered incentive system would therefore leverage what is currently working, such as the support systems that lead to a 90% completion rate in large businesses, and improve the provisions for, and completion rates of, a vast yet diverse apprentice cohort in small and medium businesses.

Read our full submission here.