• Federal Budget 2020-2021

Apprenticeship wage subsidy

As a part of the ‘job-centric’ 2020 Budget, the Government will provide $1.2 billion from 2020-2021 to increase the number of apprentices and trainees employed. This investment will be made over four years and is accessible to businesses of any size.

In July 2020, the Government released the Economic and Fiscal Update which detailed COVID-19 response packages aimed at upskilling workers and fostering apprenticeships. This update introduced the Supporting Apprentices and Trainees (SAT) wage subsidy. Eligible businesses were to be reimbursed with up to 50% of an apprentice’s or trainee’s wage. These subsidies were capped at $7,000 per quarter, per eligible apprentice or trainee. Notably, only small and medium sized businesses had access to this subsidy.

The 2020 Budget has introduced the JobMaker Plan. Within it, the Boosting Apprentices Wage Subsidy has been introduced to replace the SAT subsidy. This new subsidy is accessible by businesses of all sizes and will be available from 5 October 2020 to 30 September 2021 for those apprentices and trainees commencing employment during this period. Eligible businesses will be reimbursed with up to 50% of the apprentice or trainee’s wages worth up to $7,000 per quarter. This subsidy is capped at 100,000 places.

In order to minimise disruptions to these new apprentice arrangements, the commencement of the Incentives for Australian Apprenticeships Program will be delayed until 1 July 2021.

BDO Comment

The introduction of the rebranded SAT subsidy is a great incentive for businesses to harness the human capital of young Australians. However, without an increase in the spending appetite of Australian businesses and individuals, there may be a lot of apprentices with very little work to do. It is also unclear how this wage subsidy will interact with other facets of the JobMaker Plan – it is not clear whether employers will be free to double dip with hiring incentives and the continuing wage subsidy. Clarity on this point, and how the 100,000 place cap will be administered, is vital.