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… writes VACC CEO Peter A. Jones
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.
From 1 January 2026, the Priority Hiring Incentive dropped from $5,000 to $2,500, whilst the Australian Apprentice Training Support Payment will similarly be reduced from $5,000 to $2,500.
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.
Keeping up
For automotive employers, particularly small and medium-sized businesses operating on modest margins, apprenticeship incentives are not simply a bonus – they are often the difference between being able to afford to train someone or not.
Taking on an apprentice requires substantial investment: wages, supervision time, training resources, and the productivity loss that comes with teaching someone new to the trade.
Many of our members have been blindsided by this decision.
They have planned their 2026 workforce strategies based on existing support structures, and this sudden change undermines their capacity to follow through on training commitments.
More concerning still is the impact on young Australians leaving school this year, who will now find fewer opportunities available in an industry that should be expanding its workforce, not contracting it.
Needed spark
The government has chosen to maintain the Key Apprenticeship Program incentive for clean energy trades, and whilst we support the transition to cleaner vehicles, the policy creates an imbalance that does not reflect market reality.
Electric vehicles currently account for around 10 per cent of new car sales in Australia. Most vehicles on our roads today – and for years to come – are conventional petrol and diesel models requiring traditional automotive skills.
By maintaining higher incentives exclusively for clean energy apprenticeships whilst cutting support for conventional automotive trades, the government is betting on a future workforce whilst ignoring present-day needs.
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The result will be longer wait times for vehicle servicing, delayed repairs, and ultimately higher costs for Australian motorists as the skills shortage deepens.
This is not just an industry problem – it is a consumer problem.
When workshops cannot find qualified technicians, every Australian who relies on their vehicle for work, family commitments, or daily life feels the impact.
Reducing apprenticeship support during an acknowledged skills shortage is a false economy that will cost the community far more in the long run.
Injecting support
The VACC and the state motor trade associations have invested heavily in promoting automotive careers and demonstrating to young Australians that the industry offers strong employment prospects and diverse specialisation options.
We have worked to show that automotive trades provide secure, well-paid careers with genuine advancement opportunities. Our members have stepped up, ready to train the next generation.
But goodwill and promotional campaigns can only achieve so much when the policy settings work against us.
We are not asking for preferential treatment.
We are asking for policy consistency that recognises the skills Australia needs right now, not just the skills we might need in a decade’s time.
We are asking for support structures that align with the government’s own skills shortage analysis.
The automotive sector is ready to play its part in building Australia’s workforce. We simply need government policy that enables us to do so effectively.
Cutting incentives while simultaneously acknowledging critical skills shortages sends the wrong message entirely and will have consequences that extend well beyond our industry.
The government still has time to reconsider this decision. For the sake of Australian employers, young people seeking careers, and motorists across the country, we hope they will.