2022 Australian Federal Budget

Training and employment are a major focus of 2022 Budget

With the federal government facing a do-or-die election, the Budget left nothing to chance.

Treasurer Josh Frydenberg squeezed every ounce of government largesse to soothe the pain from the rising living costs, tepid wages growth and looming interest rate increases.

The headline assistance measures include:

  • A one-off cost of living tax offset of $420 from 1 July 2022
  • A one-off cost of living payment of $250 to pensioners and welfare recipients
  • A temporary cut in fuel excise from 44.2 cents per litre to 22.1 cents

The Budget is framed around a remarkably positive economic outlook:

  • Real GDP expected to grow by 4¼ per cent in 2021-22 and by 3½ per cent in 2022-23
  • Unemployment forecast to fall to 3¾ per cent by September and remain at that level until 2024‑25
  • Wage growth forecast to increase from 2¾ per cent in 2021-22 to 3¼ per cent in 2022-23
  • Inflation to rise to 4¼ per cent by the June quarter of 2022
  • A budget deficit of $79.8 billion, about $20 billion lower than previously forecast

Apprentice incentives overhauled

One of the surprises was a major overhaul of apprenticeship incentive payments.

Last weekend, the government released a Budget snippet with the news that the highly successful Boosting Apprenticeship Commencements (BAC) and Completing Apprenticeship Commencements (CAC) wage subsidies would be extended for three months to 30 June 2022.

Programmed Trainees, WA

However, the Budget went much further. From 1 July 2022, BAC and other apprentice support programs will be replaced by a streamlined (and much less costly) Australian Apprentices Incentives System (AAIS).

Much of the focus of the new AAIS will be on improving completions, addressing skills shortages, and boosting the number of women in the trades. The AAIS will effectively replace the Australian Apprenticeships Incentives Program and will be introduced in two phases.

The first phase from 1 July 2022 will provide wage subsidies for employers in “priority occupations” and hiring incentives for employers in non-priority occupations.

Employers of apprentices in priority occupations will receive a wage subsidy of 10 per cent for first and second year apprentices, and 5 per cent for third year apprentices. Employers of apprentices in non-priority occupations will receive a $3,500 hiring incentive.

Apprentices and trainees in priority occupations will receive a direct payment – the new Australian Apprentices Training Support Payment – of up to $5,000, comprising $1,250 paid every six months over two years.

The second phase of the AAIS will commence 1 July 2024 with a different payment structure, based on a hiring incentive of up to $4,000 for employers in priority occupations, and a payment of up to $3,000 for apprentices in priority occupations.

The revamped system will be underpinned by a new Australian Apprenticeships Priority List which will be developed and overseen by the National Skills Commission (NSC). The list will detail the occupations with an apprenticeship or traineeship pathway and those with strong future demand, and will be updated annually.

The Government will also provide $22 million to expand eligibility for the Australian Apprenticeship Support Loans (formerly the Trade Support Loans Scheme) to align with the Australian Apprenticeship Priority List, and enable backdating of payments to provide immediate support to recipients.

All new apprentices will receive a follow-up call within three months of commencing to ensure any issues are identified. The government will fund 2,500 more in-training support places for young apprentices.

Skills policy opens up a political gap

Skills policy is now emerging as one key difference between the Coalition and Labor. While the Coalition will use the NSC for its priority occupations list, Labor has promised a new independent agency, Jobs and Skills Australia. Labor can also be expected to place a different emphasis on the priority skills that will attract government funding, while it will emphasise TAFE ahead of private RTOs.

Labor supports the government’s plan for a series of Industry Clusters to transform the development of training products, but it says unions must be part of the tripartite structure, along with industry and government.

More women in the trades

The government will provide $39 million to encourage more women into non-traditional trade apprenticeships through guaranteed Gateway Service places provided by the Australian Apprenticeship Support Network (AASN).

This will entail the AASN providers delivering pastoral care, career and industry mentoring, counselling and mediation, and personalised advice and information on career options and apprenticeships pathways.

An additional $4 million will be provided to assist more women to take up roles in the digital technology sector. The program will provide free tailored online digital training including coaching and mentoring to pursue a mid-career transition into the tech workforce.

National workforce strategy

A central piece of the post-COVID-19 environment is a new National Workforce Strategy that aims for a “more coordinated and joined-up approach” to workforce issues. The strategy will operate across Commonwealth agencies and has a goal of facilitating mobility in regional areas to meet workforce demand.

The strategy is aligned to the government’s broader commitment to the regions, including a $38 billion infrastructure spend and the $2.5 billion Modern Manufacturing Strategy.

The idea of revitalising manufacturing has become an article of faith after COVID-19 exposed serious gaps. With almost a third of manufacturing activity in the regions, there will be big opportunities to rebuild and grow.

The government is starting the process with $200 million in a regional accelerator program which will invest in skills, education infrastructure, export market development and supply chain resilience in the regions.

Tax deductibility for training and technology

Small businesses will have access to a new 20 per cent bonus deduction for eligible external training courses for upskilling employees, commencing from Budget night.

A similar arrangement will apply for small business investment in digital technology. Small businesses will be able to deduct an additional 20 per cent of the cost of expenses up to $100,000 on items such as portable payment devices, cyber security systems, subscriptions to cloud-based services and website development.

Kickstarting a national skills agreement

The stalled National Skills Agreement between the Commonwealth, states and territories receives a $3.7 billion injection aimed at delivering an extra 800,000 training places over five years. The agreement was due to be finalised last year but so far, no state or territory has signed up. 

The government has added almost $50 million over two years to support additional 15,000 free and low-fee JobTrainer positions in aged care.

The focus on the human services sector sees a new National Care and Support Workforce Strategy with funding of $249 million to address workforce pressures. The scale of the challenge is revealed in the Budget papers which show spending on the National Disability Insurance Scheme expected to overtake spending on defence by 2024-25, with expenditure having blown out by $40 billion over the forward estimates.

Boosting jobs and industry

ReBoot, a new pre-employment program for young people aged 15-24, will aim to build the capacity of disadvantaged youth.

A total of $53 million over five years will be provided to Workforce Australia to work with community organisations with the aim of assisting 5,000 young Australians on a pathway to work.

The challenge of finding workers for agricultural and harvest work sees funding for the AgMove program extended until the end of this year.

Harvest workers need to complete 40 hours of agricultural work over at least a two-week period to be able to claim up to $2,000 for Australians and $650 for eligible visa holders.

The reimbursement rises to $6,000 for eligible Australian workers and $2,000 for eligible visa holders if they complete at least 120 hours of work in a minimum four-week period.

Defence will see a five-year commitment of $20 million for the Skilling Australia’s Defence Industry Grant Program which will provide training and skilling opportunities for the defence industry.

A race to the polls

As would be expected of a Budget just weeks out from an election, the document paints a generally upbeat picture.  Australia has certainly performed better than most countries in sustaining economic and employment growth.

It is quite remarkable to consider that employment has recovered to pre-pandemic levels at such a rapid rate. Yet, there’s no escaping the significant risks flowing from global events, most notably the Russian invasion of Ukraine.

As the Budget papers note: “There will be significant spillover effects globally, with risks to commodity trade generating sharply higher energy and agricultural prices and further strain on global supply chains.”

As an energy and food exporter with limited trade exposure to Russia, Australia is better placed than many other countries to absorb these impacts.

Prime Minister Scott Morrison will be hoping for no big surprises. He has now laid the last major plank in his re-election strategy and will be heading off to see the Governor-General as early as this weekend.


Unless stated otherwise, information was sourced from the Commonwealth Budget 2022 documents, ministerial statements, media releases and portfolio papers budget.gov.au/. This is general information only and should not be taken as constituting professional advice from Programmed. Programmed is not a financial adviser. You should consider seeking independent legal, financial, taxation or other advice to check how the information relates to your unique circumstances. Programmed is not liable for any loss caused, whether due to negligence or otherwise arising from the use of, or reliance on, the information provided.

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