Explanatory Memorandum
(Circulated by the authority of the Minister for Skills and Training, the Hon Brendan O'Connor MP)Attachment B: Current Payments Under the AAIP
Support available to employers
Standard and targeted incentives
The Australian Government provides financial incentives to employers at the time of commencement, during and at completion of eligible Australian Apprenticeships. Standard incentives are up to $4,000 ($1,500 on commencement and $2,500 on completion) for eligible apprenticeships and are often complemented by a range of state and territory payments (which vary by jurisdiction). In addition, the Australian Government provides targeted employer incentives for:
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- Apprentices with a disability;
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- Australian School-based Apprentices;
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- Mature-aged workers;
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- Rural and regional skills shortage; and
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- Adult apprentices.
A full list of payments available under the AAIP is available at the table below.
Additional Identified Skills Shortage incentive
In the 2019-20 Budget, the Australian Government committed $156.3 million to establish an AISS incentive payment to boost the supply of skilled workers in ten occupations identified as experiencing national skills shortages (AISS occupations).
Eligible employers receive $2,000 at the 12-month point of the apprenticeship and an additional $2,000 at completion of the apprenticeship. To be eligible for this payment employers must be able to demonstrate that the Australian Apprentice is in addition to their usual apprentice intake. Apprentices that attract an AISS payment for their employer must also be new to the business (not already having worked for their employer for more than three months full-time equivalent) and undertaking a qualification leading to one of the ten AISS occupations.
AISS incentive also provides payments for apprentices - see below under Support available for Australian Apprentices.
AISS incentive payments are additional to any payments the apprentice or employer may be eligible for under Australian Government programs.
Australian Apprenticeships Wage Subsidy trial
The Australian Apprenticeships Wage Subsidy (AAWS) trial which commenced in 2019, was capped at 3,260 new Australian Apprentices employed in rural and regional areas and was limited to occupations on the NSNL. With two phases in the trial, to be eligible employers needed to have signed-up and commenced their Australian Apprentices from 1 January 2019 (Phase 1) or from 1 July 2019 (Phase 2). Take up of places on the trial was rapid, and the trial is fully subscribed.
AAWS wage subsidy is based on minimum award wages under which an apprentice is employed for the first three years as follows:
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- 75 per cent for the first year;
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- 50 per cent for the second year; and
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- 25 per cent in the third year of the apprenticeship.
Disabled Australian Apprentice Wage Support Program
Under DAAWS, employers receive a $104.30 wage subsidy per week per full-time apprentice or trainee with a disability (pro-rata for part-time apprentices). Assistance is also provided to RTOs at a rate of $38.50 per hour (up to $5,500 per eligible apprentice or trainee per annum) for tutorial, mentoring and interpreter services for apprentices experiencing difficulties with the off-the-job component of their training.
COVID-19 economic response measures
The SAT and BAC wage subsidies were introduced in 2020 as short-term measures to support and protect apprenticeships during the COVID-19 pandemic. These wage subsidies provide support for 50 per cent of apprentice or trainee wages (up to $7,000 per quarter), paid to employers quarterly in arrears. These interventions recognised that apprentices and trainees are often the first to lose their job during times of economic downturn and that many businesses are reluctant to take on new and/or inexperienced workers during uncertain economic situations.
Introduced in March 2020, the SAT is a retention measure designed to shield apprentices and trainees from the economic fallout of the COVID-19 pandemic. The estimated $1.4 billion expended on SAT contributed to retaining around 134,500 apprentices since its introduction. Early program data shows apprentices whose employers attracted the SAT wage subsidy were around 65 per cent more likely to complete and were twice as likely to resume their apprenticeship or traineeship from suspension than those eligible for SAT but who did not claim it. [69] The SAT ceased on 31 March 2021.
Announced in October 2020, the BAC wage subsidy is targeted at encouraging apprenticeship commencements during the COVID-19 economic recovery period and seeks to create apprenticeship pathways and new opportunities for school leavers, job seekers and those looking to change careers. The BAC is a broad-based wage subsidy available to apprentices and trainees undertaking Certificate II or higher qualifications in both trade and non-trade areas and can be accessed by employers taking on new workers or seeking to reskill and upskill their existing workforce.
Since the introduction of the BAC in October 2020, the number of Australian Apprenticeship commencements has increased significantly - in the first 3 months of the BAC, commencements more than doubled (71,335 commencements compared to 28,705 October to December 2019) [70] . In 2021 the program continued to support an increase in commencements. The most recent NCVER report on Australian Apprentices and Trainees shows a 59.5 per cent increase in commencements for the 12-month period ending 30 June 2021 when compared to the previous year. [71] The BAC will close to new commencements on 31 March 2022.
Completing Apprenticeship Commencements
In October 2021, the Australian Government announced the CAC wage subsidy to ease the transition for all BAC eligible employers by providing transitional support for the second and third year of an Australian Apprenticeship.
Under this measure, eligible employers will receive a wage subsidy of 10 per cent of wages paid to an eligible apprentice or trainee in the second year of their apprenticeship, to a maximum of $1,500 per quarter, per apprentice. In the third year, eligible employers will also receive a wage subsidy of five per cent of wages paid to an eligible apprentice or trainee to a maximum of $750 per quarter, per apprentice.
Support available for apprentices and trainees
Living Away From Home Allowance
LAFHA is a tax exempt, weekly allowance payable to Australian Apprentices who must move away from their parents' or legal guardians' home for the first time, or travel significant distances to take up or retain an Australian Apprenticeship. Currently, eligible recipients can claim payments ranging from $77.17 per week in their first year, to $25 per week in the third year. LAFHA is also available to Australian Apprentices who are homeless.
Additional Identified Skills Shortage Payment for Apprentices
All Australian Apprentices, commencing in a qualification leading to an AISS occupation, with an AISS eligible employer, are able to receive $1,000 at the 12-month point, and $1,000 at the successful completion of their apprenticeship, regardless of whether they are additional to the employer's usual hiring practice, as long as they are new to the business and not an existing worker.
AISS payments are additional to any payments the apprentice or employer may be eligible for under Australian Government programs.
Trade Support Loans
TSL was introduced in July 2014 to replace the Tools For Your Trade program. It is administered through the Trade Support Loans Act 2014 (rather than the AAIP) to encourage more young people to take up and complete a trade qualification. TSL supports apprentices to meet everyday costs while undertaking their training and provides up to $21,542 (2020-21 lifetime limit) in income contingent loans. Loans are repaid through the Australian Taxation Office (ATO) once an apprentice earns above a minimum repayment threshold ($46,620 for the 2020-21 income year). Apprentices who successfully complete their apprenticeship receive a 20 per cent discount on their loan amount.
Table 13: Employer incentives available under the AAIP
| Employer Incentives | ||
| Payments available at Commencement | ||
| Commencement Incentive | $1,250 | Available where an employer commences a new worker Australian Apprentice deemed to be part of a nominated equity group at the Certificate II level qualification. |
| $1,500 | Available where an employer commences a new worker or existing worker Australian Apprentice in a Certificate II or IV level qualification that leads to an occupation on the NSNL (including part-time Australian Apprenticeships and Australian School-Based Apprenticeships). | |
| $1,500 | Available where an employer commences a new worker Australian Apprentice at a:
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| Rural and Regional Skills Shortage Incentive | $1,000 | Available where an employer commences a new worker or existing worker Australian Apprentice in a Certificate III or IV qualification that leads to an occupation on the NSNL in a rural or regional workplace. |
| Declared Drought Area Commencement Incentive | $1,500 | Available where an employer who holds a current Exceptional Circumstances Drought Area certificate and commences a new worker or existing worker Australian Apprentice deemed to be part of a nominated equity group, in an eligible Certificate II level qualification. |
| Mature Aged Workers Commencement Incentive | $750 | Available where an employer commences a new worker or existing worker Australian Apprentice in a Certificate II or higher level qualification who is a disadvantaged person aged 45 years or more. |
| Australian School-based Apprenticeship Commencement Incentive | $750 | Available where an employer commences a new worker or existing worker Australian Apprentice in a Certificate II or higher level qualification in an endorsed Australian School-based Apprenticeship. |
| Payments available for Retention | ||
| Australian School-based Apprenticeship Retention Incentive | $750 | Available where an employer continues to employ a Certificate II or higher level Australian School-based Apprentice for at least 12 weeks after the student has completed secondary school. |
| Payments available at Recommencement | ||
| Recommencement Incentive | $750 | Available where an employer recommences a new worker or existing worker Australian Apprentice in a Certificate III or IV level qualification that leads to an occupation on the NSNL (including part-time Australian Apprenticeships and Australian School-based Apprenticeships). |
| $750 | Available where an employer recommences a new worker Australian Apprentice at a:
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| Payments available at Completion | ||
| Completion Incentive | $1,500 | Available for employers of a new worker or existing worker part-time Australian Apprentice who successfully completes a Certificate III or IV level qualification that leads to a Priority Occupation. |
| $1,500 | Available for employers or new worker Australian Apprentices who successfully complete a part-time Australian Apprenticeship. | |
| $2,500 | Available for employers of new worker or existing worker Australian Apprentices who successfully complete a Certificate III or IV level qualification that leads to an occupation on the NSNL (including part-time Australian Apprenticeships and Australian School-based Apprenticeships). | |
| $2,500 | Available for employers of a new worker Australian Apprentice who successfully completes a:
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| $3,000 | Available for employers of an existing worker Australian Apprentice who successfully completes a:
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| Group Training Organisations Certificate II Completion Incentive | $1,000 | Available for Group Training Organisations that support Australian Apprentices deemed to be part of a nominated equity group, to successfully complete a Certificate II level Australian Apprenticeship. |
| Declared Drought Area Completion Incentive | $1,500 | Available for employers of Australian Apprentices deemed to be part of a nominated equity group, who successfully complete an eligible Certificate II qualification and who attracted a Declared Drought Area Commencement Incentive. |
| Mature Aged Worker Completion Incentive | $750 | Available for employers of an Australian Apprentice who successfully completes a Certificate II or higher level qualification and who attracted a Mature Aged Worker Commencement Incentive. |
| Adult Australian Apprentices | ||
| Support for Adult Australian Apprentices | $4,000 | Available to employers of adult workers to upgrade their skills through an Australian Apprenticeship at the Certificate III or IV level in an occupation on the NSNL
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| Australian Apprentice Wage Subsidy trial | ||
| Australian Apprentice Wage Subsidy | Available to employers who employ a new worker Australian Apprentice undertaking a full-time Certificate III or IV qualification that leads to an occupation listed on the NSNL in a rural or regional workplace.
Based on the award wage rate (modern award) under which an Australian Apprentice is employed and provides support in the first three years of an Australian Apprenticeship as follows: 75 per cent of the first year wage; 50 per cent of the second year wage; and 25 per cent of the third year wage. There are two phases of the Australian Apprentice Wage Subsidy Trial:
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| Additional Identified Skills Shortage Payment | ||
| Employer Payment | Available to employers of Australian Apprentices new to the employer, commencing a Certificate III or IV level qualification leading to an occupation on the AISS list. Employers will only be eligible to claim the Additional Identified Skills Shortage payment for apprentices that qualify as being additional, that is over and above the employer's usual apprentice intake.
Eligible employers will receive $2,000 at the 12 month point from commencement of the apprenticeship and an additional $2,000 at the completion of the apprenticeship. |
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| Apprentice Payment | Available to apprentices new to the employer commencing a Certificate III or IV level qualification leading to an occupation on the AISS list.
Eligible apprentices will receive $1,000 at the 12 month point from commencement of the apprenticeship and an additional $1,000 at the completion of the apprenticeship. |
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| Assistance for Australian Apprentices with Disability | ||
| DAAWS | Provides additional assistance to employers who employ an Australian Apprentice with disability in a Certificate II or higher level qualification.
Paid at a rate of $104.30 per week for a full-time Australian Apprentice, and on a pro-rata scale according to the hours worked for a part-time Australian Apprentice. |
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| Off-the-job Tutorial, Mentor and Interpreter Assistance | Assistance for Tutorial, Mentor and Interpreter Services is available to Registered Training Organisations to support Australian Apprentices with disability who are experiencing difficulty with the off-the-job component of their Australian Apprenticeship because of their disability. | |
| Payments to Australian Apprentices | ||
| LAFHA | Australian Apprentices undertaking a Certificate II or higher level qualification may be eligible if they have to move away from their parental/guardian home for the first time to commence or remain in an Australian Apprenticeship, or are homeless.
Australian Apprentices may be eligible for up to 12 months of LAFHA at the first year rate of $77.17 per week, a further 12 months assistance at the second year rate of $38.59 per week, and a further 12 months assistance at the third year rate of $25 per week. |
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