The big decrease in this Program is a result of the 1996-97 Budget decision to reduce grants to higher education institutions by 1% in 1997 and 3% in 1998, and a further 1% in 1999. However, the forward estimates also indicate that these grants will decline by 3% in 1999-2000. This would seem to indicate the funding reductions will continue after 1999, or will be of a greater magnitude than 1% in 1999.
The restructuring package included in this year's Budget follows from a commitment made in the 1996-97 Budget to assist those smaller institutions which might have difficulty in adapting to the new financial arrangements.
Under the Commonwealth Industry Places Scheme (CIPS) the Commonwealth and students (through HECS) contribute 60% of the cost of a higher education place while the balance is funded by industry. The 1997 target for CIPS places was 3235 at a cost to the Commonwealth of $14.9 million. The abolition of the scheme will hit some campuses harder than others, in particular Charles Sturt University (1076 places), Deakin University (505 places) and Swinburne University of Technology (528 places). The Chancellor of Charles Sturt University has claimed that the end of CIPS could result in the loss of 70-80 staff unless alternative funding is found.
The Commonwealth provides annual funding to the States for vocational education and training (VET) which is allocated by the Australian National Training Authority (ANTA) in the form of grants. In 1996-97 an efficiency dividend on Commonwealth own-purpose outlays resulted in a 5% reduction of funding provided to ANTA. In 1997-98 the Commonwealth will reduce annual funding to the States and Territories appropriated under the Vocational Education and Training Funding Act 1992, to provide an incentive to the States to achieve efficiency gains in their VET operations through benchmarking against the most cost-effective States. The reduction, which takes effect from 1 January 1998 and is anticipated to be carried into subsequent years, is estimated to be $20 million in the 1998 calendar year.
The process/methodology for the distribution of grants to provide incentives to achieve benchmarked efficiencies is to be developed and negotiated with the States. Although there have been attempts to derive relative measures of efficiency in the form of unit costs expressed as cost per annual curriculum hour, these are problematic insofar as they have not been adjusted for factors such as population densities, provision to disadvantaged groups and remote locations.
In the 1996-97 Budget the Commonwealth announced improved targetting of employer incentive payments for business to take on and retain apprentices and trainees. This was to be achieved by concentrating assistance on small and medium enterprises considered by the Government to be in greater need of training assistance and to offer greater prospects for employment growth. This decision has been reviewed.
The 1997-98 Budget restores large employer eligibility for these incentives. In addition, a number of other changes have been made to the incentives package including the abolition from 1 January 1998 of the tax exemption for payments under the Commonwealth Rebate for Apprentice Full-time Training (CRAFT), the introduction of a completion payment of $1500 and the abolition of the $250 additionality payment. The value to employers of the discontinued tax exemption for CRAFT incentives has been replaced by the new completion payment. These measures are therefore presented as a tax expenditure saving, and will be reflected in outlays under the new incentive arrangements.
As reported in Budget Brief 1996-97, substantial changes to the delivery of employment assistance are being introduced over 1997. These involve the replacement of the Commonwealth Employment Service (CES) with a Commonwealth Services Delivery Agency (CSDA) and greater use of private sector agencies to provide job search and assistance. The CSDA will provide services currently delivered by the Department of Social Security and the Department of Employment, Education Training and Youth Affairs, and other agencies. The impact of these changes will reduce staffing for Program 4 from 6552 staff years in 1996-97 to 4037 staff years in 1997-98.
This Sub-program covers the operations of the CES for functions such as job brokerage and client servicing, the Disability Reform Package and the Jobs, Education and Training (JET) Program.
The estimated outcome in respect of outlays is $168.8 million. in 1997-98, a marginal decrease from the $169.2 million of the previous year. In terms of staff years, there has been a large decrease since 1995-96, which had 3074. The estimated outcome for 1996-97 is 2336.7 and the estimate for 1997-98 is 371.9 as resources are transferred to the CSDA.
This Sub-program provides many of the labour market programs such as JobStart and SkillShare. The four services to be provided hereon in Sub-program 4.2 include:
It is expected that when the new employment services market commences operation in March 1998, most of the labour market programs will cease. Programs expected to continue are Advanced English for Migrants Program and a small element of the Job Seeker Preparation and Support Program.
The Portfolio Budget Statement notes that the reduction of funding is brought about by the transfer of resources to the CSDA and the employment services market.
This Sub-program no longer covers schemes for apprenticeship and traineeship assistance provided under Entry Level Training and Support, which has been transferred to DEETYA's Program 3, Vocational Education and Training. The 1996-97 Budget forecast that an Enterprise and Adjustment Program would subsume the following activities of this Sub-program: Employment Regional Strategies, Training and Skills program (TASK), the New Enterprise Incentive Scheme and Area Consultative Committee support funding.
The Sub-program now covers
Aboriginal Employment and Training Assistance (TAP) provides for a variety of assistance measures for people of Aboriginal or Torres Strait Islander descent, who identify as such. The aims of the Program are to increase the level of vocational skills and knowledge of participants, to increase their numbers in employment, to improve their longer term employment prospects and to achieve a greater distribution of employment across a range of occupations.
Assistance is provided through Direct Assistance and Employment Strategies. Direct Assistance incorporates Skills Development arrangements, Transition Assistance and Formal Training. It is proposed that applications for assistance under this component will cease to be approved after March 1998. It is proposed that the Employment Strategies component will shift focus from predominantly public sector activities to the private sector and the Employment Strategies component will continue beyond March 1998. This component seeks placements for clients in industry, and infrastructure projects and health improvement initiatives funded by the Commonwealth and the States may be a future source of employment opportunities.
Employment Assistance Australia (EAA) is the public provider of case management services for unemployed individuals. It has worked in competition with contracted case managers whose contracts are negotiated with Employment Services Regulatory Authority. Case management addresses personal and labour market barriers encountered in job search and details a path forward. The steps identified by the case manager may be incorporated in a Case Management Activity Agreement, the breach of which may result in the forfeiture of social security benefit. Over 400 000 clients participate in case management provided by about 2000 case managers. Details of the services provided in 1996-97 will not be available until later in the year.
On commencement of the employment services market in March 1998, the Sub-program will be subsumed within Employment Assistance under Sub-program 4.7.
This Sub-program provides the funds for the operation of Employment Services Regulatory Authority (ESRA) and contracted case management (CCM). It was intended that contracted case managers would win about 20% of placements (i.e. the client has the choice of pursuing case management with the EAA or with a contracted case manager). DEETYA's 1995-96 Annual Report notes that after the first 12 month's operation of ESRA the share of placements going to CCMs surpassed its target, reaching over 25% of placements (86 000 placements in 1995-96).
ESRA is to be abolished in 1997-98. Some functions will be taken over by DEETYA, others will be discontinued. On commencement of the employment services market in March 1998, this Sub-program will be subsumed within Employment Assistance in Sub-program 4.7.
This is a new Program and is intended to become effective from March 1998. It is proposed to deliver five services to eligible clients, in some cases through contracted service providers:
If enacted, the Reform of Employment Services Bill will allow the CSDA to enter into an agreement with the Employment Secretary. (This Bill is currently before the Senate's Employment, Education and Training Committee). Under such an agreement (including another agreement with the Social Security Secretary) the CSDA would be able to:
Also under this Sub-program, provision is made for the establishment of the Public Employment Placement Enterprise (PEPE). It is intended that the PEPE replace the services currently performed through the Commonwealth Employment Service. A total of $111 million has been appropriated for the PEPE's start up, as well as $293 million to be transferred from other sub-programs to the employment services market. It is intended to establish the PEPE under the Corporations Law in 1997-98.
Finally, a new Community Support Program will assist disadvantaged job seekers who are assessed by the CSDA as being not ready to benefit from employment assistance. Measures to be provided under CSP include referral to services such as drug and alcohol programs, counselling and literacy and numeracy courses.
In the 1995-96 Budget it was decided that from 1 January 1997 students who turned 25 while undertaking a course would continue to be assessed as dependent unless there were relevant criteria other than age. The Government has since decided that all students will now gain independent status at age 25 if they have not qualified earlier on other grounds. This change was accomplished by Regulation No. 261 of 1996.
The second AUSTUDY measure listed above doubles the dependent student deduction in the parental income test where the family has two or more dependent students living away from home.
The changes to ABSTUDY include stricter limits on incidentals and travel allowances, income tests for postgraduate students and a closer alignment of the ABSTUDY income test with that for AUSTUDY. The current ABSTUDY income test contains no abatement rate, so that the maximum allowance is payable up to the cut-off point.
The 1996-97 Budget announced that a new Youth Allowance would be introduced from 1 January 1998. This would replace the existing range of income support programs for young people and would result in significant rationalisation and simplification. The 1997-98 Budget makes no provision for the introduction of the Youth Allowance in 1998, but states that it is still being considered by the Government.
Back to Budget Review 1997-98 Contents
