Federal Budget reinforces role of GTOs while raising concerns on apprentice commencements
The 2026–27 Federal Budget has reinforced the role of Group Training Organisations (GTOs) in supporting apprenticeships, while introducing changes to employer incentives that are expected to impact commencements across the system.
The Government has confirmed that from 1 January 2027, the Key Apprenticeship Program (KAP) employer incentive will be reduced from $5,000 to $4,000, with incentives removed for large employers. Financial support for apprentices will remain unchanged.
MEGT CEO Matthew Hick said the Budget delivers a positive outcome for the GTO sector, alongside challenges for the broader apprenticeship pipeline.
Recognition of the GTO model
A key feature of the Budget is the continued recognition of the GTO model, with GTOs exempt from the removal of incentives for large employers.
“The GTO model is well placed to continue providing stable pathways for apprentices, including through partnerships with employers of all sizes,” Mr Hick said.
This reflects the important role GTOs play in supporting employers, improving completion rates and managing employment risk.
Impact of reduced employer incentives
The reduction in employer incentives is expected to influence hiring decisions across the apprenticeship system.
From 2027, the KAP employer incentive will be reduced by 20 per cent, from $5,000 to $4,000, and removed entirely for large employers (200+ employees).
“Based on Government modelling, we anticipate a five to eight per cent decline in commencements in response to the reduced employer incentives,” Mr Hick said.
“As these changes take effect, it will be important to monitor how they influence employer participation and ensure apprenticeship opportunities remain strong across the economy,” Mr Hick said.
“We will continue to work closely with the Government to mitigate the impacts of these changes through improving retention and completion rates.”
Support for apprentices remains
The Budget maintains financial support for apprentices, helping to offset cost-of-living pressures and sustain participation.
Looking ahead
As the new settings come into effect from 2027, maintaining confidence across employers and the broader training system will be critical.
MEGT will continue supporting employers and apprentices while working with government and industry to ensure the apprenticeship system continues to deliver the skilled workforce Australia needs.