Apprentice mechanics and their employers will see their government support suddenly halved. (Source: Supplied/Getty)
Australia’s automotive industry is warning the country faces further skill shortages in critical areas as a key payment to incentivise young tradies is set to halve in the coming weeks. Despite the need for more mechanics, those entering the profession, as well as those training them up, are about to get less government support.
Under newly announced changes taking effect from January 1, 2026, both employer and apprentice incentives for a number of priority occupations will be halved. The Motor Trades Association of Australia (MTAA) is warning it could have severe consequences for the automotive industry’s ability to address critical workforce shortages across the country.
When it comes to taking on new trainees, “employers will disengage further than what they are already due to the costs,” Nigel Muller, the Executive Manager of Training at the Victorian Automotive Chamber of Commerce, told Yahoo Finance.
RELATED
From next year, the Priority Hiring Incentive will drop from $5,000 to $2,500, while the Australian Apprentice Training Support Payment will also fall from $5,000 to $2,500.
However, for clean energy trades, including for those working on electric vehicles, the payments will remain at the same current levels.
“It’s a bit of a surprise. We thought they’d put them on hold at the very least, not reduce them,” Muller said.
“People keep thinking it’s a wage subsidy. It’s not a wage subsidy, it’s actually a training subsidy.
“The supervision it takes for an employer in a workplace to spend time with an individual and train them up, that’s all a cost to a business.
“These incentives have been crucial in encouraging businesses to take that step, and halving them sends the wrong signal entirely.”
MTAA Interim Executive Director Peter Jones said the government’s move comes at a terrible time for the auto industry.
“Employers across Australia are facing unprecedented challenges in finding qualified automotive technicians. Cutting the incentives that help make apprenticeships viable will only compound this crisis,” he said.
“These incentives have been crucial in encouraging businesses to take that step, and halving them sends the wrong signal entirely.”
MTAA Interim Executive Director Peter Jones has hit out at the newly announced changes. (Source: Supplied/Getty)
The decision comes after the federal government conducted a strategic review of the country’s Apprenticeship Incentive System, with a final report handed down in October.
According to that report, “the current incentive system is not in alignment with Australia’s economic priorities and social equity objectives”.
The Australian Industry Group this week welcomed the fact that apprenticeship incentives for the housing and new energy sectors will remain unchanged. The Albanese government has extended the payments, with some apprentices in the construction and renewable energy fields eligible for $10,000 payments. But it also expressed concern about the reduction for other priority occupations, such as traditional mechanics.
“Also of concern is that these changes have been announced only a month before their implementation,” it said.
READ MORE: Push for new levy to boost tradie apprentice numbers amid major ‘collapse’
Speaking to Yahoo Finance, Muller said he did expect more apprentices to opt for EV training due to the change from next year.
“But if we have a shortage of generalised technicians, it’s going to be replicated right throughout the system,” he said, adding that a vast majority of work and demand is still related to traditional vehicles.
“We’re still only at a very low adoption rate (of EVs). The average vehicle is around for something like 13 years, so we still have a fair amount of time.”
The government’s review in October noted that trainee commencements have been declining since 2012 and the rate at which apprentices complete their apprenticeship has also been decreasing.
With the rising cost of living, young Australian tradies are moving away from apprenticeships in record numbers, in favour of higher-paying labouring jobs which require less training.
Mechanic apprentice Jake, from NSW, said he’s likely going to drop out of the traineeship due to cost-of-living pressures. (Source: Supplied)
Young tradie Jake, from Mittagong in the NSW, told Yahoo last year he was seriously considering walking away from his apprenticeship to find better-paying work.
“With the cost of fuel and other expenses there’s no money left,” he said. “Everything is expensive at the moment. Life is expensive now, decisions are made for me based on what I earn, over what I’d really like to do.
“Ideally, I would love to finish my trade. The salary as a qualified mechanic is really good. The problem is house prices and other dreams I have are getting more expensive by the day so to hold back for three more years makes the dream even further away.”
Get the latest Yahoo Finance news – follow us on Facebook, LinkedIn and Instagram.