An ongoing slide in apprenticeship numbers highlights the vital need for the State Government to restore the payroll tax exemption for apprentices and trainee positions, according to Business SA.

With South Australia recording the sharpest decline nationally of apprenticeship and trainee numbers – down 28 per cent against the Australia-wide average decline of 21.9 per cent in the year to December 2014 – Business SA has reiterated its call for urgent action in next week’s state Budget.

The latest National Centre for Vocational Education Research (NCVER) analysis published recently shows that apprentice and trainee commencements in the year to December fell in South Australia from 17,300 in 2013 to 12,500 in 2014.

The downward trend follows rises in commencements from 2010 to 2012 – when commencements peaked at 25,600 – while the payroll tax exemption was operating.

The tax exemption was abolished in the 2012-13 Budget.

In its pre-Budget submission, Business SA said a 2012 survey of its members “found that if the payroll tax exemption for apprentices and trainees had remained in place, three quarters of respondents would have employed more apprentices, and almost two thirds of respondents would have employed more trainees”.

“These survey results accord with the actual reported level of apprenticeship commencements which have decreased from approximately 7,000 per quarter as at July 2012 to approximately 3,000 per quarter as at December 2014,” the submission says.

Business SA director of policy Rick Cairney said there is a very clear “cause and effect” relationship between the exemption of payroll tax on apprentices and trainees and the  hiring practices of small and medium sized businesses.

“The latest NCVER data clearly establishes that the payroll tax exemption is a significant incentive for companies to take on more apprentices and trainees,” Cairney said.

“The evidence is unequivocal and we urge the State Government to restore this very beneficial exemption of payroll tax.

“The cost – previously estimated in the order of $30 million a year – is a relatively small price to pay towards getting our young people into skills training and sustainable employment at a time when we have the dubious distinction of leading the country in youth unemployment.”