CHANGES by the federal government to the employer incentives for priority apprenticeships will seriously worsen the nation’s critical skills shortage in the automotive sector.

The Victorian Automotive Chamber of Commerce (VACC) and the Motor Trades Association of Australia (MTAA) this week have expressed serious concern over the government’s decision to halve employer incentives for priority apprenticeships.

VACC CEO Peter Jones

The government plans to cut the ‘priority hiring incentive’ from January 1, 2026 from $5000 to $2500.

It will also halve the Australian apprentice training support payment from $5000 to $2500.

The priority hiring incentive is a payment for employers of Australian apprentices training towards an occupation and qualification at a certificate level III or above, as listed on the ‘Australian Apprenticeships Priority List’ published and updated annually.

Hundreds of apprenticeship training courses are listed, including automotive-related certificates including technicians in electrical, EV, diesel, motorcycle and mechanical fields, panel beating, painting, trimming and body building.

Employers can be eligible to receive the incentive of up to $5000 in the first year of an apprenticeship, paid over two instalments of $2000 (at six months) and $3000 at 12 months (full- time); or $1000 at six months and $1500 at 12 months (part-time).

VACC CEO Peter Jones said the timing of the cuts was particularly troubling given the automotive industry is competing with other industries experiencing similar skill shortages.

“At a time when our industry faces one of the most acute skills shortages in recent history, reducing support for employers who are willing to invest in training the next generation is counter-productive,” he said.

“These incentives help offset the substantial costs employers bear when taking on apprentices. 

“Halving this support will make many businesses think twice about whether they can afford to train new entrants to the industry.”

Mr Jones said that the VACC acknowledged the government’s continuation of the key apprenticeship program incentive for clean energy trades. But he said this created an unintended imbalance.

“We support the transition to cleaner vehicles, but the reality is that electric vehicle uptake in Australia remains modest,” he said.

“The vast majority of vehicles on our roads today – and for years to come – require traditional automotive skills.

“By maintaining incentives for clean energy apprenticeships whilst reducing support for conventional automotive trades, we risk creating a skills gap that will directly impact everyday motorists through increased wait times and higher costs for vehicle servicing and repairs.”

Mr Jones, who is also the interim executive director of the MTAA, said EVs only account for about 10 per cent of new car sales.

He said that “maintaining higher incentives exclusively for clean energy apprenticeships, whilst cutting support for traditional automotive trades, creates a policy misalignment that doesn’t match the reality of what Australian motorists need right now.”

The MTAA and state motor trade associations across the country have been working to highlight career opportunities in the automotive sector and encourage young Australians to consider trades as a viable professional pathway. 

“Together, these organisations have invested considerable resources in demonstrating that automotive careers offer strong employment prospects and diverse specialisation options,” he said.

“Australian automotive businesses have responded to calls to train more apprentices, but this policy change undermines their efforts.”

In Victoria, the VACC said it has worked extensively with the state government to promote automotive careers and demonstrate the industry’s viability as a long-term employment pathway. 

It has also invested significantly in campaigns showcasing the diverse opportunities available in the modern automotive sector.

“Our members have stepped up to address the skills shortage, but they need adequate support to continue offering apprenticeships,” Mr Jones said.

“Many employers have been blindsided by this decision and are now questioning their capacity to take on new apprentices in 2026.

“Businesses have made commitments to training based on the existing incentive structure, and this abrupt change affects their ability to plan and budget effectively. 

“The real concern is the knock-on effect for 2025 school leavers who will now face fewer employment opportunities in the automotive sector at a time when we should be expanding pathways into the industry.”

Mr Jones emphasised that the skills shortage has real consequences for Australian consumers.

“When workshops can’t find qualified technicians, it means longer wait times for servicing, delayed repairs, and ultimately higher costs passed on to consumers,” he said.

“Reducing training incentives during a skills crisis will only make this situation worse.”

Mr Jones said that the VACC will now call on the federal government to reconsider the incentive reductions and ensure automotive apprenticeships receive equitable support alongside clean energy trades.

“We need a balanced approach that recognises both the automotive industry of today and the transition we’re working towards,” he said.

“Our industry is committed to training the workforce Australia needs – we ask for consistent policy settings that enable us to do so.”