Migration Changes for Skilled Workers

The Australian Government announced an overhaul of the skilled worker schemes in April 2017 which included axing the 457 visa, announcing a new Temporary Skills Shortage (TSS) visa, increased visa processing charges, abolishing the current minimum training requirements and introducing a new training levy of up to $8,000 to commence in March 2018.

Legislation to support the proposed changes was introduced into Parliament late last year. Legislation to give effect to the training levy (known as the Skilling Australians Fund), however, is currently before the Senate and will not be considered until after 19 March when the Senate resumes.

The SAF is intended to be a $1.2 billion fund to be allocated to the states/territories in lieu of the previous Australian Government funding for vocational education and training (VET).

There are over 35,000 businesses that currently recruit overseas skilled staff and meet the requirements to spend at least 1 per cent of their payroll on training: this requirement was put in place to ensure that employing overseas skilled visa holders is not seen as an alternative to training Australians.

For those businesses, however, that have been ‘locked out’ of engaging overseas skills workers because they did not meet the 1 per cent training requirement, the TSS visa is welcome: rather than train their staff all they need to do is pay the Government $8,000 for each overseas skilled worker.

For those business that train their staff and engaged apprentices, however, the training levy will be a significant impost.

It is presumed by the Government that businesses will continue to pay training wages (around $21,000 in first year) plus superannuation and supervision (total investment per year is well over $27,000) for an apprentice that may or may complete their apprenticeship (attrition rates are around 50 per cent) and will also pay an additional $8,000 for each overseas worker their recruit to meet their short term skills needs.

Many businesses are now concerned that the Government’s flagship funding model for VET will actually lead to a decreased commitment to training by business and even further reduce apprentice recruitment.

The proposed training levy has now established an indicative ‘floor price’ on training of $8,000 over four years for a skilled worker.

It will not be long before accountants brief business owners that $8,000 for each overseas worker is more cost effective compared to investing well over $27,000 per year for an apprentice that may or may be available after four years.

Businesses as diverse as car dealerships and universities are pushing the Government to retain the current arrangements for those businesses that meet the training requirement and to only introduce the training levy for those businesses that are unable to do so.

This flexibility seems a reasonable solution for business, rather than introduce a ‘one size fits all’ approach designed to assist businesses that have not traditional spent at least 1 per cent of their payroll on training.

By Tony Mitchener