Changes to the Federal Government’s key apprenticeships incentives has been met with some optimism, but significant concern for its overall impact on the skills shortage.
From January 1 2026, both the Priority Hiring Incentive and the Australian Apprentice Training Support Payment will drop from $5,000 to $2,500.
However, the $5,000 apprenticeship incentive will remain in place for electric vehicle technicians until December 2026, according to the MTA NSW.
What the MTA NSW has said
“While we appreciate the government’s commitment to supporting the electric vehicle transition, we’re deeply concerned about reducing support for the rest of the automotive sector,” MTA NSW CEO Stavros Yallouridis said.
“This $2,500 reduction will act as a handbrake on small businesses looking to take on apprentices in a tight economic environment.
“For many of our members, that difference is decisive in whether they can afford to invest in training the next generation.”
“Without adequate apprentice numbers, we cannot maintain the productivity growth our sector and the broader economy desperately need,” he added.
“Fewer apprentices means reduced productivity, longer wait times for consumers, and higher costs for vehicle servicing and repairs.
“Every freight truck, regional service van, and family car depends on this workforce. Without qualified technicians, the costs flow to everyone through higher repair times, business downtime, and reduced freight efficiency.”
“We need a balanced approach that recognises both today’s automotive industry and the transition ahead. Our members are committed to training Australia’s future workforce, but they need consistent policy settings and adequate support to make that possible.”
What Apprenticeships Are Us Ltd (ARU) has said
“Automotive trades are already on the Government’s own National Skills Needs List, yet the very incentives designed to attract and retain apprentices in these critically short trades are now being cut in half,” ARU Managing Director Michael Wentworth said.
“It is a policy contradiction that cannot be justified.”
“The Government is actively calling for skilled migrant mechanics because our local workforce cannot meet demand. Yet at the same time, it is withdrawing the incentives needed to train mechanics locally. It makes no sense, and it places workshops in an impossible position.”
“The pipeline of young talent is shrinking. Cutting incentives right when Year 10 and Year 12 graduates are deciding their future sends the message that trades, despite being essential, are not valued.”
“This is not a skills shortage; it is a policy shortage. Australia cannot fix critical workforce gaps while pushing essential trades outside the circle of Government support.”
SEE MORE: Car news
According to MTAA and NCVER data:
- Australia faces 30,000+ unfilled mechanic and automotive technician roles
- Apprenticeship and trainee numbers fell 8.3 per cent in the past year
- Automotive apprenticeship commencements are in long-term decline
- Workshops report job vacancy periods extending six to nine months
The consequences are widespread and growing:
- Higher vehicle repair wait times
- Increased insurance costs due to longer downtime
- Higher operating costs for SMEs and fleet operators
- Reduced productivity for transport, delivery, trades and emergency services
ARU is calling on the Federal Government to:
- Immediately halt the January 2026 incentive cuts
- Conduct an urgent independent review of the KAP model
- Extend equal support to all trades listed on the National Skills Needs List
- Develop a national apprenticeship strategy that prioritises evidence over politics
What the MTAA has said
“When the Federal Government recently released its updated Skills Priority List, it confirmed what many in the automotive industry have known for years: Australia faces a critical shortage of qualified technicians,” MTAA CEO Peter Jones said.
“Numerous automotive occupations featured prominently on that list, reflecting the urgent need for skilled workers across the sector.
“So, it is particularly difficult to understand why, just a short time later, the same government has decided to halve the financial incentives that help employers take on apprentices in these very same identified shortage occupations.
“This represents a significant reduction in support at precisely the time when we need to be encouraging more young Australians into automotive trades.
“The government acknowledges we have a skills shortage. The government knows which occupations are affected. Yet the policy response is to reduce the support available to address it.
“The contradiction is stark.”