In April 2017 the Commonwealth Government announced migration reforms that impacted temporary skilled migration, as well as employer nominated permanent skilled migration. The changes were designed to sharpen the focus of Australia's employer sponsored skilled migration program to ensure that it was better able to meet skills needs, increase the quality and economic contribution of skilled migrants, and address community concerns about the displacement of Australian workers.
Following this announcement, the May 2017 Federal Budget contained a commitment to establish a new $1.5 billion Skilling Australians Fund for skills training following the expiry of the Council of Australian Governments National Partnership on Skills Reform on 30 June 2017.
The Migration Amendment (Skilling Australians Fund) Bill 2017 (the amendment bill) and the Migration (Skilling Australians Fund) Charges Bill (the charges bill) provide a framework for the collection of a nomination training contribution charge from employers nominating temporary and permanent overseas workers. The nomination training contribution charge is to be known as the Skilling Australians Fund (SAF) levy. The purpose of the SAF levy is to ensure that employers seeking access to overseas skilled workers contribute to the broader skills development of Australians.
The amount of the SAF levy will depend on the size of the business, as well as the type and duration of the visa that the worker is nominated for. There will be no levy exemptions, a position which reflects the policy intent that employers seeking to access overseas skilled workers contribute to the broader skills development of Australians. Additionally, the SAF levy will be tax deductible and will not be applied retrospectively.
Information on the priorities and operation of the SAF are outlined further on in this chapter.
The amendment bill seeks to amend the Migration Act 1958 to:
require employers who nominate a worker under the temporary and permanent skilling migration programmes to pay the nomination training contribution charged imposed by the Migration (Skilling Australians Fund) Charges Act 2017 (the Charges Act). The nomination training contribution charge will offset expenditure from the Skilling Australians Fund, a training fund administered by the Department of Education and Training, to support skills development of Australians;
allow nominations to be accepted from persons that have applied to be an approved sponsor, or have entered into negotiations for a work agreement; and
allow the Minister to determine, by legislative instrument, the manner in which labour market testing in relation to a nomination position must be undertaken, and the kinds of evidence that must accompany a nomination.
The second reading speech for the amendment bill provides further detail on the charges to be paid:
It is intended that small businesses, those with annual turnover of less than $10 million, will be required to pay:
$1200 per year for each temporary overseas worker
a one off Skilling Australians Fund levy of $3000 for each permanent overseas worker
Businesses with an annual turnover of $10 million or more will be required to pay:
$1800 per year for each temporary overseas worker
a one off payment of $5000 for each permanent overseas worker.
Regarding labour market testing (LMT), the amendment bill will ensure that where LMT is required, businesses properly test the labour market before nominating an overseas worker for a prescribed visa and provide appropriate evidence of that LMT.
The charges bill is a complementary measure to the amendment bill, and its purpose is to introduce the nomination training contribution charge (SAF levy) payable under new section 140ZM of the Migration Act 1958.
The SAF levy will be payable by persons seeking to nominate a worker for a visa prescribed in the Migration Regulations 1994. From March 2018, it is intended that visas that are to be prescribed are the:
Temporary Skill Shortage visa;
Employer Nomination Scheme (Subclass 186) visa; and
Regional Sponsored Migration Scheme (Subclass 187) visa.
The charges bill aims to implement the following:
set a charge limit for the nomination training contribution charge;
make arrangements for the annual indexation of the charge limit; and
provide that the amount of the nomination training contribution charge is to be prescribed in the regulations and that the regulations may prescribe different charges for different kinds of visas or persons.
The charge limit for the financial year beginning 1 July 2017 is $8000 for a nomination relating to a temporary visa, and $5500 for a nomination relating to a permanent visa.
The explanatory memorandum for the charges bill notes:
The charge limits…are approximately ten per cent above the highest nomination training contribution charge proposed to be prescribed in the Migration Regulations, being $7200 and $5000 for temporary and permanent visas respectively.
In his second reading speech, the Minister noted that the charge limit provides flexibility for the government to make increases to the SAF levy in the future, while providing certainty for business as to the limited scope for potential increases.
Replacing existing training benchmark requirements
The SAF levy will replace the current training benchmark requirements:
The nomination training contribute charge replaces current requirements that employers sponsoring a worker for a 457 visa [the Temporary Work (Skilled) visa, which is to be replaced in March 2018 with the Temporary Skill Shortage visa] or nominating a worker under the Direct Entry stream of the Subclass 186 visa have recently spent:
the equivalent of at least two per cent of their business' payroll in contributions to an industry training fund (training benchmark A); or
the equivalent of at least one per cent of the business' payroll on the training of employees (training benchmark B).
The SAF levy model aims to simplify compliance and monitoring by removing the need for employers to keep records demonstrating expenditure to meet the current training benchmark requirements.
The Minister's second reading speech for the amendment bill described the current system as 'overly complex' and made clear that replacing the existing training benchmark requirements would reduce the regulatory burden on employers and lead to improved training outcomes for Australians.
Skilling Australians Fund
The government announced the Skilling Australians Fund (SAF) in the 2017-18 Budget to underpin a new national partnership with the states in regard to training Australians. The creation of the SAF aligns with recommendations by the 2014 Azarias Review of the Integrity of the Subclass 457 Program, as well as the 2016 inquiry by the Senate Education and Employment References Committee into the exploitation of temporary workers in Australia.
The SAF replaces the National Partnership Agreement on Skills Reform (NPASR), which included a mix of payments for facilitation, structural reforms and training outcomes. The SAF will not include up-front payments; rather, states will be paid for the achievement of milestones that are linked to increasing the number of apprenticeships and traineeships.
As the SAF levy will not be charged until March 2018, the government will provide an additional $261.2 million in 2017-18 to the SAF. From 2018-19 onwards, the SAF will be funded only by revenue raised from the SAF levy.
The Department of Education and Training (DET), which will be administering the SAF, advised that the priority areas for the fund included:
apprentices and trainees in occupations in demand;
occupations with a reliance in skilled migration pathways;
industries and sectors of future growth;
rural and regional areas;
people from targeted cohorts;
industries and communities experiencing structural adjustment; and
workforce priorities such as the implantation of the National Disability Insurance Scheme and Family Violence reforms.
DET's submission noted:
The [Skilling Australians] Fund will support skills development across Australia, providing a positive impact on employment outcomes and the businesses that gain these skilled workers. Improvements in human capital will influence Australia's economic success, future productivity and growth. With matched funding from the states, the Fund will support up to 300,000 more apprentices, trainees, pre-apprentices, pre-trainees and higher-apprentices. It will deliver a range of training across all skill levels and across a broad range of occupation.
The Minister's second reading speech on the amendment bill stated that the SAF 'represents a significant government commitment to ensure Australians can gain the skills to fill Australian jobs and succeed in a valuable career.'