Strategic Review of the Australian Apprenticeships Incentive System

Energy Skills Australia
Submission to the Strategic Review of the
Australian Appren ceship Incen ve System

For Department of Employment and Workplace Relations

6 May 2024
Table of Contents

Introduc on ............................................................................................................................................ 1
Overview ................................................................................................................................................. 2
Encouraging increased take up and comple ons ................................................................................... 3
Cost of Living Pressures........................................................................................................................... 4
Culture and Condi ons ........................................................................................................................... 5
Underrepresented Groups ...................................................................................................................... 5
Increasing Employer Par cipa on .......................................................................................................... 7
Summary of Recommenda ons .............................................................................................................. 8
Summary ................................................................................................................................................. 9
Contact .................................................................................................................................................... 9
Introduction

Established by industry for industry in 1995, Energy Skills Australia (ESA), has been represen ng the energy sector for over 29 years and is an independent, not for profit, bipar te company commi ed to suppor ng high quality training and workforce development within and beyond the energy industries.

Providing industry stewardship, we exist to ensure Australia’s energy sectors have access to a highly skilled and effec ve workforce in following energy related industry sectors:

 Electrotechnology,
 Electricity Supply Industry - Genera on
 Electricity Supply Industry -Transmission, Distribu on and Rail
 Gas
We provide advice and exper se to industry and government bodies such as electrical regulatory bodies. Addi onally, we oversee a suite of learning and assessment resources and accredited courses designed to provide quality and consistent outcomes for appren ceship and post-trade training.

Our membership and board are made up of various industry bodies such as the Na onal Electrical and Communica ons Associa on (NECA), Master Electricians Australia (MEA), the Electrical Trades
Union of Australia (ETU) and the Australian Services Union (ASU). Our highly experienced board members provide ESA with the necessary direc on, governance and oversight needed to ensure we are well placed to represent the views of industry.
ESA has established strong working rela onships with key industry stakeholders, Governments, the
Voca onal Educa on and Training (VET) sector and regulatory authori es within Australia and interna onally.

Cri cally, it is these rela onships and deep connec on to industry that allows us to support employers and workers as they grapple with the current workforce challenges across the growing clean economy.

ESA commends the government for commissioning the Strategic Review of the Australian
Appren ceship Incen ve System (the Review) to explore the current and future incen ve models and approaches to ensure the incen ve regime supports the challenges of a modern economy and achieves a greater uptake and comple on of appren ceships, adding to our pool of skilled workforce par cipants.

We welcome the opportunity to contribute to the review led by the Department of Employment and
Workplace Rela ons (DEWR) and look forward to further engagement should the DEWR require.

ESA Response - Strategic Review of Australian Appren ceship Incen ve Systems 1
Overview
Incen ves, in the form of wage subsidies and payments, to both appren ces and employers, have been provided by the Australian Government since the 1960s1.

Incen ves can be financial and non-financial and are usually designed to support employers with the costs associated with employing an appren ce and appren ces with the cost of living, par cularly in the early years when their training wage is the lowest.

Current Commonwealth incen ves, which commenced on 1 July 2022 are focussed on targe ng skills shortage areas and improving comple on. In turn, industry is equipped with highly skilled and effec ve workers, whilst workers can access secure valued jobs with opportuni es for fulfilling career advancement.

At a me where government funding for Voca onal Educa on and Training (VET) is at an all- me high2, there is a correla on between offering employer incen ves and increased numbers of appren ces and trainees in training.

However, in 2022, DEWR stated that "Despite renewed interest in the appren ceship model,
Australia’s appren ceship system faces three cri cal challenges: falling comple on rates, a lack of diversity and growing skills shortages”.3

The energy industry is undergoing significant change as it evolves through technological advancements, the increased uptake of renewable energy, ba ery storage systems and electric vehicles as well as consumers priori sing energy efficiency through electrifica on and automa on of homes and businesses.

The electrical sector will be vital in achieving Australia’s emission reduc on targets.

To meet the Powering Australia Plan commitment to achieve emission reduc on targets of 43% by
2030 and net zero by 2050, it is es mated that over 64,000 direct and 600,000 indirect jobs will be created by 2030, with trade-based technical posi ons such as electrical, u li es and plumbing occupa ons the most in demand.

The Clean Energy Genera on: workforce needs for a net zero economy report, undertaken by Jobs and Skills Australia states “Australia will likely need 32,000 more electricians in the next seven years…”.4

Despite the increased demand for electricians, subsidies such as the New Energy Appren ceships
Program,5 somewhat miss the mark. Largely because of the requirement that you must be working in the clean energy sector to be eligible. The current and projected workforce demand for electricians, who will all be involved in energy efficiency and renewable energy at some stage of their careers, suggest that this incen ve, should not be restricted to those currently working in renewables.

1
h ps://www.dewr.gov.au/australian-appren ceships/resources/australian-appren ceship-services-and- supports-discussion-paper
2
h ps://www.ncver.edu.au/news-and-events/media-releases/government-vet-expenditure-at-record-high
3 Australian Appren ceship Services and Supports Discussion Paper, Department of Employment and Workplace Rela ons,
2022, pg. 2
4
The Clean Energy Genera on | Jobs and Skills Australia, pg.17
5
New Energy Appren ceships Program Flyer

ESA Response - Strategic Review of Australian Appren ceship Incen ve Systems 2
It’s important that we get the support and assistance correct to ensure any incen ves results in achieving more appren ces in training, and more importantly, more appren ces comple ng so that our skilled workforce is grown and results in the required number of workers needed.

Encouraging increased take up and completions
Energy Skills Australia acknowledges that incen ves are an important component in suppor ng employers to take on appren ces and trainees, as well as for appren ces and trainees to complete their training. We also acknowledge that low comple on rates have been an ongoing and systemic issue for the Australian VET sector and Industry, which needs to be urgently addressed.

Incen ves (both financial and non-financial) should con nue to be focussed on occupa ons that align with economic and social requirements, clean energy targets and current and future skill requirements to ensure Australia’s ongoing compe veness.

Recommenda on 1 - Con nue to focus incen ves (employer and appren ce) on priority
occupa ons.

Recommenda on 2 - Con nue Employer wage subsidies for up to 3 years.

Recommenda on 3 - Introduce other non-financial incen ves such as reduced or no pay roll tax.

Recommenda on 4 - Con nue appren ce training support (first 2 years) for Cer ficate III and
above qualifica ons on skills priority list.

We do know that disengagement from appren ceships, par cularly in tradi onal trades, occurs in the first two years of training. The Na onal Centre for Voca onal Educa on Research (NCVER) reports that of those who do not complete, 60% occur in the first year while 80% occur in the first two years6.

There are many reasons why appren ces do not complete their chosen field of study, workplace issues, low pay, poor advice before entering, low Language, Literacy and Numeracy levels (LLN) and dissa sfac on with the work to name a few.

The electrical industry understands the well-researched correla on between providing entry level skills, pastoral support, industry mentoring and increased comple on rates of electrical appren ces.
Simply put, be er prepared and supported appren ces, do be er in training and comple ng their appren ceships.

This has been proven in the electrical sector, by various industry specific and focussed programs designed to increase comple on rates of appren ces. For example, the Energy Industry
Appren ceship Progression Management System (EIAMPS), funded by the Australian Government and administered by Energy Skills Australia between 2012-2015 showed that with the right tools, overwhelming improvements to reten on and comple on rates of appren ces can be obtained. The
EIAMPS project, saw reten on rates of electrical appren ces climb from around 60% to 93%.

6
h ps://www.ncver.edu.au/research-and-sta s cs/publica ons/all-publica ons/understanding-the-non-comple on-of- appren ces

ESA Response - Strategic Review of Australian Appren ceship Incen ve Systems 3
Addi onally, employers who have these components in-built, such as Group Training Organisa ons, have comple on rates consistently around 90% (compared to 59% for electrical appren ces not employed by a GTO).

Key components of successful models include the below features:

- Robust pre-selec on (ap tude tes ng)
- Mentoring (with mentors with industry backgrounds)
- Quality training
- Employer support

Recommenda on 5 - Introduce non-financial appren ce supports such as industry mentoring and
support for all trade appren ces.

Recommenda on 6 - Fund readiness assessments for poten al appren ces as a mandatory entry
requirement and provide remedial supports to ensure those entering have the ap tude to succeed.

Energy Skills Australia suggests that comple on incen ves should also be introduced and proposes this review considers the introduc on of an Appren ceship Comple on Incen ve (ACI) program. A one- me financial bonus awarded to appren ces upon the successful comple on of their appren ceship program.

The ACI will provide financial incen ves to appren ces upon successful comple on of their training, thereby encouraging persistence, enhancing skill levels, and contribu ng to a more qualified workforce.

Recommenda on 7 - Introduce an Appren ce Comple on Incen ve.

Cost of Living Pressures
Cost of living pressures are affec ng many Australians economy-wide. Although there are great career opportuni es and earning poten al for most trade occupa ons once trained, training wages are par cularly prohibi ve when poten al appren ces are making decisions about entering an appren ceship. This is compounded for mature aged appren ces or people undertaking a career change, who may already have a family and significant financial obliga ons and commitments.

The situa on calls for a nuanced understanding of the economic barriers prospec ve and current appren ces face, along with an evalua on of exis ng incen ves and support mechanisms provided by the Commonwealth, States, and Territories.

While there are appren ceship incen ves and these ini a ves provide cri cal support, more targeted measures could further alleviate the impact of cost-of-living pressures:

 Bridging the wage gap for Senior and Junior Appren ces: Ensuring appren ceship wages
reflect the real cost of living, poten ally through a ered system that accounts for years of
experience and progression.
 Increased Awareness and Accessibility: Many poten al and current appren ces might not
be aware of the support available to them. Increasing awareness and simplifying the
applica on processes for support programs could improve uptake. This can be through a
na onal mentoring scheme.

ESA Response - Strategic Review of Australian Appren ceship Incen ve Systems 4
 Trade appren ce registra on discount: Introducing a vehicle registra on discount for trade
appren ces who use their cars for work could alleviate some financial pressures on
appren ces and support their commitment to comple ng their training.
 Tools for your trade incen ve: Help appren ces afford the necessary tools and equipment,
which can be a significant financial burden.

Recommenda on 8 - Provide financial support based on ered systems that accounts for mature
age appren ces.

Recommenda on 9 - Reintroduce ‘Tools for your trade’ incen ve.

Recommenda on 10 - Provide financial support for Trade appren ces on vehicle registra on,
thereby suppor ng their mobility and ensuring they can a end job sites and training centres
reliably.

Culture and Conditions
As stated previously, incen ves should be priori sed and focussed on occupa ons that align with the economic and social requirements of the current and future skills requirements to ensure ongoing compe veness. Incen ves should be targeted and funnelled to occupa ons in most need and cri cal for our future.

The Powering Australia Plan es mates that over 64,000 direct and 600,000 indirect jobs will be created by 2030, with trade-based technical posi ons, such as electrical, u li es and plumbing occupa ons the most in demand.

Incen ve to a ract and retain appren ces in these cri cal sectors will be paramount if we have any chance of mee ng our emission reduc on targets.

Recommenda on 11 - Redefine the ‘New/Clean Energy’ Sector to ensure all electrical appren ces
are eligible for the New Energy Appren ceship Support Payments.

Skilled occupa ons in tradi onal trade areas are built off passing informa on from a tradesperson to an appren ce. It is essen al that we con nue to create and support a training system which recognises and values appren ceship training and we reward employers who exhibit this training culture.

Recommenda on 12 - Consider a levy on employers who don’t train appren ces (par cularly large
employers with workforce and resources to support training)

Underrepresented Groups
Women and First Na on

To help meet Australia emission targets, boos ng skills through par cipa on, and be er pathways into energy trades from underrepresented groups will be crucial for crea ng a diverse, skilled, and resilient workforce. It requires a comprehensive approach that addresses barriers, fosters inclusivity, and provides targeted support.

ESA Response - Strategic Review of Australian Appren ceship Incen ve Systems 5
Na onally, First Na ons have the lowest par cipa on in the energy appren ceships of all industries, whilst women have the lowest par cipa on in the energy workforce and appren ceships of all industries7.

NCVER data reveals that females make up around 4.6% and first na ons 3.1% of appren ces in training (5 year average).

There are many examples of successful programs that have been implemented over the years in increase participation from these underrepresented groups.

All these models have a common characteristic, which include:
 Targeted programs;
 Long term approach;
 Industry led; and
 Industry Mentors and support

Although we have made significant steps to improve and change workplace prac ces and cultures to support diversifica on of the workforce there is s ll more to be done.

Recommenda on 13 - Con nue to provide non-financial support for women such as wrap around
support, pastoral care, career advice and industry mentoring.

Recommenda on 14 - Provide non-financial support for First Na ons appren ces such as wrap
around support, pastoral care, career advice and industry mentoring.

Engaging electrical appren ces from rural regions

Engaging appren ces from rural regions of Australia presents unique challenges, including geographical isola on, limited access to training facili es, and fewer employment opportuni es compared to urban areas. However, strategic approaches can help overcome these barriers, ensuring that appren ces in these areas receive the support and opportuni es they need to succeed in their careers.

 Mentoring: Implemen ng a blend of face-to-face and virtual mentorship programs
that connect rural appren ces with experienced electricians and trainers, providing them
with guidance, support, and career advice through video calls, messaging, and online forums.
 Travel and Accommoda on Subsidies: Offer subsidies or reimbursements for travel and
accommoda on costs for rural appren ces who need to a end training sessions or work
placements outside their local area.
 Engagement with Renewable Energy Employers and Group Training Organisa ons:
Providing pathways and opportuni es for local employment and training of electrical
appren ces.

Recommenda on 15 - Con nue Living Away From Home Allowance.

Recommenda on 16 - Create a local employment program for rural regions through renewable
energy companies and Group Training Organisa ons.

7
Powering Skills Organisa on, Energy Pathway Roadshow Event Presenta on, 2024.

ESA Response - Strategic Review of Australian Appren ceship Incen ve Systems 6
Increasing Employer Participation
If we are to train the additional skilled labour force required to meet our emission reduction targets, we don’t just need more apprentices in training and completing, we also need employers to employ and train them.

In offering an apprenticeship position, an employer agrees to make a significant contribution (in time and resources) toward the development of a fully qualified tradesperson, in order to meet an identified enterprise need.

A better supported apprenticeship system with inbuilt pre-selection aptitude testing, industry mentoring, and tailored support to underrepresented groups will develop confidence with employers take on an apprentice as there is an increased likelihood the apprentice will complete their qualification.

It will also improve access for underrepresented or disadvantaged groups, as they will be better supported and therefore more likely to remain in training and therefore complete.

Employers need to be empowered and informed to invest in their businesses and train the increase apprentices numbers. An integral component of the training contract, the influence of the employer cannot be overstated. With employment related issues, such as poor employment experience, concerns with employment arrangements and feeling under supported, are reported as the main reason for not completing an apprenticeship (all trades). Employers with high completion rates tend to be larger in size and well organised systems for managing and recruiting apprentices.

Employers need to be aware of best practice recruitment and retention strategies, including pre- selection aptitude testing to ensure any potential apprentice they take on has the aptitude required to success in the electrical apprenticeship and are more likely to complete.

Increasing the number of employers will be vital to achieving the growth in apprentice numbers required to meet our emission reduction targets.

Recommendation 17 - Provide support to employers around recruitment, training, culture and
industrial relations responsibilities and support.

ESA Response - Strategic Review of Australian Appren ceship Incen ve Systems 7
Summary of Recommendations

Recommenda on 1 - Con nue to focus incen ves (employer and appren ce) on priority occupa ons.

Recommenda on 2 - Con nue Employer wage subsidies for up to 3 years.

Recommenda on 3 - Introduce other non-financial incen ves such as reduced or no pay roll tax.

Recommenda on 4 - Con nue appren ce training support (first 2 years) for Cer ficate III and above qualifica ons on skills priority list.

Recommenda on 5 - Introduce non-financial appren ce supports such as industry mentoring and support for all trade appren ces.

Recommenda on 6 - Fund readiness assessments for poten al appren ces as a mandatory entry requirement and provide remedial supports to ensure those entering have the ap tude to succeed.

Recommenda on 7 - Introduce an Appren ce Comple on Incen ve.

Recommenda on 8 - Provide financial support based on ered systems that accounts for mature age appren ces.

Recommenda on 9 - Reintroduce ‘Tools for your trade’ incen ve.

Recommenda on 10 - Provide financial support for Trade appren ces on vehicle registra on, thereby suppor ng their mobility and ensuring they can a end job sites and training centres reliably.

Recommenda on 11 - Redefine the ‘New/Clean Energy’ Sector to ensure all electrical appren ces are eligible for the New Energy Appren ceship Support Payments.

Recommenda on 12 - Consider a levy on employers who don’t train appren ces (par cularly large employers with workforce and resources to support training).

Recommenda on 13 - Con nue to provide non-financial support for women such as wrap around support, pastoral care, career advice and industry mentoring.

Recommenda on 14 - Provide non-financial support for First Na ons appren ces such as wrap around support, pastoral care, career advice and industry mentoring.

Recommenda on 15 - Con nue Living Away From Home Allowance.

Recommenda on 16 - Create a local employment program for rural regions through renewable energy companies and Group Training Organisa ons.

Recommenda on 17 - Provide support to employers around recruitment, training, culture and industrial rela ons responsibili es and support.

ESA Response - Strategic Review of Australian Appren ceship Incen ve Systems 8
Summary
The Australian Voca onal Educa on Training sector is vital to ensuring we con nue to have a quality and highly skilled workforce for the future.

Given the significant investment made by all governments including incen ves, it is cri cal that they contribute to a system that creates and results in meaningful improvements to our skilled labour force.

Financial and non-financial incen ves should be focussed on priority occupa ons and structured around increasing a rac on, reten on and comple on of training for all appren ces regardless of your gender, geographical loca on or cultural background.

Contact

Mark Burgess
CEO Energy Skills Australia

Unit 8, 44 O'Hanlon Pl
Nicholls, ACT, 2913

ESA Response - Strategic Review of Australian Appren ceship Incen ve Systems 9