New report finds apprenticeship subsidies are failing — even as the government extends them

Despite millions spent in government subsidies, measures to boost apprentices and traineeships during COVID-19 appear to have failed, according to a new report.

Australia’s vocational education and training (VET) sector is showing signs of erosion, fragmentation and dysfunction, research from the Australia Institute’s Centre for Future Work suggests.

The report paints a grim picture of the system, especially given that several government announcements during the pandemic were designed to specifically address skilled labour shortages and help more businesses take on apprentices.

It comes as the government pledges $365.3 million to extend its Boosting Apprenticeships Commencements scheme, which sees 50% of an apprentice’s wage for the first year paid by the government, up to $7,000.

Announced ahead of the federal budget this week, the move is intended to create another 35,000 apprenticeship places.

The report, Fragmentation & Photo-Ops: The Failure of Australian Skills Policy Through COVID, notes that new supports announced during the COVID-19 pandemic boosted government VET funding by $1.6 billion in the 2019-20 financial year alone.

However deep and long-standing problems with Australia’s VET system have not been resolved — and in some cases they have worsened.

Wage and subsidy programs implemented during the pandemic, at the cost of several billion dollars, have decentralised course content and delivery, the report says. Meanwhile, more TAFE institutes have been closed and enrolments have declined.

The report suggests the new initiatives have only incentivised apprentice churn, wasting public investments and failing to address the crisis in skills.

“There is no evidence the skills pipeline has been either protected or replenished under current government VET policies. Short-form, piecemeal units of study have expanded, while accredited quality training has collapsed by more than 500,000 enrolments since 2015,” the report reads.

“Shockingly, all VET enrolment growth over the last five years has been in non-accredited programs, which have grown by almost 70,000 enrolments since 2015.”

Meanwhile, it suggests TAFE staffing and funding has eroded further, as federal VET subsidies are diverted in favour of private for-profit providers.

Failed market-based policies and TAFE defunding have seen more than 8800 full-time-equivalent TAFE positions cut since 2012 across five states and territories.

According to Alison Pennington, senior economist at the Australia Institute’s Centre for Future Work and author of the report, failures in VET policy reflect broader failures of economic policy to encourage far-sighted investments of any kind in the economy: physical capital, innovation or skills.

“Continued decline in enrolments and eight years of declining apprenticeship completions make it very clear: Australia’s domestic skills pipeline is in disarray,” Pennington said in a statement.

“Government COVID-era skills policies throw money at employers taking on apprentices and trainees, but have failed to fix the training system.

“There is no evidence the skills pipeline has been either protected or replenished under current VET policies.”

Pennington also points out that industries with women-led workforces, and with the most pressing labour shortages, continue to see weak participation in accredited programs, traineeships, and apprenticeships.

In the 12 months to June 2021, three in five new apprentices and trainees were men.

“Once again, women’s jobs and demands have been deprioritised in favour of the optics of high-vis photo-ops,” Pennington said.

The report recommends a stronger focus on a more proactive, hands-on approach to workforce training and planning, and a commitment to rebuilding the TAFE system, suggesting this could help build and bolster innovative, sustainable industries.

It also proposes that a minimum of 70% of public VET funding be reallocated through the TAFE system.