Skills training

Budget Review 2017–18 Index

Carol Ey

Skilling Australians Fund

The centrepiece of the Government’s announcements on skills training in the 2017–18 Budget is the proposed creation of the Skilling Australians Fund (‘the Fund’).[1] The Government will provide $261.2 million in 2017–18 for this Fund, with additional funding of up to $390.0 million per year being provided from the levy to be applied to the temporary and permanent skilled migration programs (for more details on the levy see the Budget Review 2017–18 article ‘Immigration and border protection overview’).[2] These budget measures are expected to provide total funding of $1.5 billion over four years.

The Fund, together with matching funding from the states and territories, will support up to 300,000 more apprentices, trainees and higher level skilled workers over the next four years. Priority will be given to apprenticeships and traineeships in: industries and sectors of future growth; occupations in high demand; occupations with a reliance on skilled migration pathways; and, regional and rural areas.

A new National Partnership on the Skilling Australians Fund will be established to distribute the Fund. State and territory access to funding will be dependent on meeting eligibility criteria developed by the Commonwealth, including matching funding and providing up-to-date data on performance and spending.[3] This National Partnership will replace the National Partnership on Skills Reform, which provided some $1.7 billion to the states and territories over the five-year period 2012–13 to 2016–17, including $516.3 million in 2016–17.[4]

While the Fund will prioritise apprenticeships and traineeships in occupations with a reliance on skilled migration pathways, of the 68,000 visas granted in 2016 under the 457 program, only 11,600 were at skill levels 2 and 3, which represent trade-level and equivalent qualifications, while 24,300 were at skill level 1, which is associated with completion of a bachelor degree or higher qualification.[5] Similarly, only 17.7% (10,780) of the places in the skilled migration stream in 2015–16 were technicians and trades workers, compared to 64.7% in the professional stream.[6] This suggests that the new Fund will only go a small way to removing reliance on migration to fill skill shortages.

The imposition of a levy on the skills migration streams will require legislative approval, while the new National Partnership will need the agreement of the states and territories.

Other program changes

Industry specialist mentoring service

The Government will provide $60.0 million over two years to establish an industry specialised mentoring service to complement existing services under the Australian Apprenticeship Support Network. The program is expected to provide support to some 45,000 apprentices and trainees, particularly during their first two years of training, in order to improve completion rates.

An evaluation of the former Australian Apprenticeships Mentoring Program (AAMP), which was ceased in the 2014–15 Budget, suggested that, on average, mentoring programs improved retention rates by around five per cent, and were particularly important in improving the retention of those most at risk of non-completion.[7]

Implementation of this program will not require legislation.

Program efficiencies

Savings of $112.4 million over five years from 2017–18 will be achieved through ‘efficiencies’ in the Skills for Education and Employment program, which provides language, literacy and numeracy training to eligible job seekers. The Government expects the program to continue to meet its objective of training 22,500 people.

Savings of $43.3 million over six years will be achieved by reducing uncommitted funding from the Industry Workforce Training (IWT) program. The IWT funds projects such as the Skills Service Organisations, Alternative Arrangements for Apprenticeship Delivery, the Programme for the International Assessment of Adult Competencies and Adult Learners’ Week.

These changes do not require legislation.

Changes to student support arrangements

Reduced access to social security payments

The Government proposes to limit access to student payments for vocational education and training (VET) courses at diploma level and above, generating savings of $181.2 million over five years from 2016–17. At present, all students undertaking accredited full-time VET courses at a registered training provider are eligible for student income support.[8] For those studying at a diploma level or above, it is proposed that access will be limited to those students who are studying courses approved for VET Student Loans.[9]

Existing student payment recipients will be grandfathered for the duration of their current course. The measure will commence from 1 January 2018. It is estimated that 5,000 students each year will no longer qualify for student payments.[10]

Proposed changes to the Pensioner Education Supplement (PES) and the Education Entry Payment (EdEP) are expected to achieve savings of $94.7 million over five years. PES is available to recipients of certain income support payments who are undertaking at least 25% of a full-time study load, with half rate payment for students with study loads below 50%. The EdEP is a one-off payment for recipients of some payments when they commence full- or part-time study.

Under the new arrangements, the payment rates will be aligned with the study loads undertaken by recipients. In addition, PES will not be paid during semester breaks and end-of-year holidays. The Government has also announced that it will not be proceeding with measures to cease both the PES and EdEP, which were proposed in the 2014–15 Budget.[11]

Both these measures will require legislation.

Changes to loan repayment arrangements

VET Student Loans and Trade Support Loans are subject to the same repayment arrangements as loans under the Higher Education Loan Program (HELP). Therefore they will be affected by the proposed changes to HELP repayment thresholds and payment rates. For more information on these changes see the article ‘Higher education reform’ elsewhere in the Budget Review 2017–18.[12]

[1].          Information and figures in this brief have been taken from the following document unless otherwise sourced: Australian Government, Budget measures: budget paper no. 2: 2017–18, 2017.

[2].          J Phillips and H Spinks, ‘Immigration and border protection overview’, Budget Review 2017–18, Research paper series, 2016–17, Parliamentary Library, Canberra, 2017.

[3].          Australian Government, Federal financial relations: budget paper no. 3: 2017–18, 2017, p. 35.

[4].          Council of Australian Governments (COAG), National Partnership Agreement on skills reform, COAG, 2012, p. 10.

[5].          Department of Immigration and Border Protection (DIBP), ‘Temporary Work (Skilled) visa (subclass 457) Programme’, website. For an explanation of the skill levels see Australian Bureau of Statistics (ABS), Information Paper: ANZSCO - Australian and New Zealand Standard Classification of Occupations, cat. no. 1221.0, ABS, Canberra, 2005.  

[6].          DIBP, Migration Programme report: Programme year to 30 June 2016, DIBP, n.d., p. 12.

[7].          Deloitte Access Economics, Australian Apprenticeships Mentoring Package interim evaluation, report for the Department of Industry, Canberra, June 2014.

[8].          Student Assistance (Education Institutions and Courses) Determination 2009 (No. 2)

[9].          Approved courses are listed in the VET Student Loans (Courses and Loan Caps) Determination 2016.

[10].       Department of Social Services (DSS), Welfare—other measures, Factsheet, DSS, Canberra, May 2017, p. 5.

[11].       Australian Government, Budget measures: budget paper no. 2: 2014–15, 2014.

[12].       C Ey, ‘Higher education reform’, Budget Review 2017–18, Research paper series, 2016–17, Parliamentary Library, Canberra, 2017.


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