Treasurer clarifies complexities around new training requirements

Wednesday 10 May, 2017

In the 2017 Federal Budget announcement, Treasurer Scott Morrison clarified new training requirements.

Previously, if a business sponsored a foreign worker under the 457 visa they were required to pay one per cent of payroll expenditure on training their own Australian and permanent resident employees every 12 months.

If a business failed or did not train their staff, they were required to pay two per cent of their payroll expenditure into any Australian Training Fund each year of sponsorship.

Under the new changes proposed the Federal Government has scrapped the one per cent, two per cent system due to it being hard to police and monitor tangible benefits for upskilling Australian workers. The new system is a flat fee structure of payments.

skilled migration table

These price hikes are higher than expected by industry and are tying businesses up with further red tape when they are already struggling due to skill shortages impacting business viability.

The addition of a new training payment for the Employer Nomination Scheme and Regional Sponsored Migration Scheme will hit regional employers hard, with small mum-and-dad businesses required to fork out an additional $3000 per employee.

A Chamber of Commerce and Industry Queensland (CCIQ) member flagged concerns post Budget delivery. They said the $3000 levy “is too expensive for businesses to afford, especially when they are not operating at peak capacity due to crippling labour market shortage”.

CCIQ has been watching this space closely since April 18, when Australian Prime Minister, Malcolm Turnbull made a shock announcement, on Facebook, abolishing the Temporary Work (Skilled) visa (subclass 457).

Some changes to the visa were executed within 24 hours of the announcement, as the whole program was announced to be overhauled and replaced with a new visa, the Temporary Skills Shortage visa (TSS), with tighter restrictions and higher fees.

Fast forward almost a month and very little else had been announced, leaving small businesses in limbo forcing industry to halt recruiting, having flow-on effects to business productivity, viability and the economy.

Mr Turnbull in one breath announced “Australia is the most successful multicultural nation in the world. We are an immigration nation, but the fact remains: Australian workers must have priority for Australian jobs. So we’re abolishing 457 visas, the visas that bring temporary foreign workers to our country”. 

On May 7, Federal Labor launched its “Employ Australians First” campaign after Mr Shorten claimed changes to the 457 program were insufficient, calling the announcement a “con-job”. Unfortunately for Mr Shorten the ad campaign was met with swift ridicule and objection due to optics (a nearly all-white group behind him).

The war on immigration has become a political hot topic both in Australia and abroad. Currently both major parties seem to be racing to the bottom, while not acknowledging the huge benefits to Australian small businesses and the economy skilled migration has provided.

Skilled migration should fill the gaps in businesses where local supply is not sufficient. CCIQ is aware the 457 visa required some improvement. CCIQ supports any program that will allow small businesses to access the workers needed to allow business to grow and thrive. However, the nature of the snap announcement has had unintended consequences.

Another business owner provided feedback to CCIQ after the government cut the number of eligible occupations from 635 to 426.

They explained how their niche manufacturing business relies on an occupation cut from the list. The specialised skill they require is not taught in Australia, meaning the only option is to employ highly skilled foreign workers. Their products are used in crucial scientific processes across the agriculture and medical industries.

This story is not unique as more niche industries are finding themselves cut off from the skilled workers they need.

CCIQ has corresponded with both Minister Peter Dutton’s office and the Department of Immigration and Border Protection to ensure further details are provided to small businesses as soon as possible.

The newly announced increase of training fund payments will go towards the Skilling Australians Fund, projected to earn $1.5 billion over four years. The fund will be used to train apprentices across the country with a focus on rural and regional areas.

This is another example of revenue and expenditure matching in the Federal Budget.

Skilled migration is key to small business growth and viability. Increasing costs and red tape, albeit to boost Australian education, will have an impact and the government should be prepared to expect a shortfall in their estimates of contributions towards the Skilling Australians Fund as some small businesses may be forced to shut or take their businesses elsewhere, especially in regional Queensland. 

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