Chapter 3

Key issues

Priorities of the Skilling Australians Fund

As outlined in Chapter 2, one of the major priority areas for the SAF is apprenticeships and traineeships in occupations in demand. Many submitters welcomed this focus, emphasising the importance of a strong vocational education and training (VET) sector and expressing broad support for the overall principles of the Skilling Australians Fund (SAF).
For example, TAFE Directors Australia (TDA) stated that it supported the priority set by the Commonwealth government for the SAF to grow apprenticeships, traineeships and to expand pre-apprenticeship training and higher-level apprenticeships.1
Mr Ben Bardon, Executive Officer for the National Australian Apprenticeships Association also expressed support for the priorities of the SAF:
…we do want to applaud the ambition of the fund to stimulate apprenticeships in Australia, because they've been in precipitous decline, as you're undoubtedly aware. A lot of that is due to changes in the existing worker traineeships, but other traineeships and apprenticeships have declined markedly over recent years, so the ambition to increase those is welcomed.2
The National Apprentice Employment Network (NAEN) praised the ambitions of the fund and indicated its support for the direction to prioritise apprenticeships and traineeships in the VET sector.3 Ms Lauren Tiltman, National Executive Officer of NAEN emphasised:
As highlighted in our submission, we have strong support for the commitment and focus of government on the particular apprentice and traineeship focus with the vocational and education and training sector. As an apprenticeship provides an employment opportunity from day one of the training, we believe it helps address a range of government priorities in relation to youth unemployment, skills needs and a range of other areas…4
Master Builders Australia (MBA) advocated for the passage of the two bills, in particular noting that it welcomed the SAF because it ensured all stakeholders (including industry, employers and governments) have equal 'buy-in' in terms of their 'commitment to delivering meaningful training today for the jobs and skills of tomorrow'.5 It also listed the focus on apprenticeships and the linking of the use of overseas skilled labour with a contribution to local education needs as positive elements of the SAF initiative.6 Deputy Chief Executive Officer Mr Shaun Schmitke summarised MBA's position as follows:
In short, Master Builders Australia believes that this fund is a very positive development for the building and construction sector, particularly given the nature of our sector and its future skills needs.7
The Department of Education and Training (DET) provided the committee with additional detail on the rationale behind the priorities for the SAF:
The focus on apprenticeships and traineeships, the flagships of the Australian Vocational Education and Training (VET) sector, reflects their crucial role in fulfilling the needs of industries which rely on a skilled workforce to drive innovation and growth. The numbers of apprentices and trainees have been in decline since 2012, following a series of cuts to employer incentives. There are national and regional skills shortages in a range of professions which have an apprenticeship or traineeship pathway. These shortages are burdensome for business. The Fund will boost the number of Australians who choose and succeed in this pathway, supporting more Australians to get the skills they need for jobs in demand and industries of potential growth.8
DET also advised that during 2015–16, Australian employers sponsored approximately 70 000 foreign workers. While acknowledging that there is not just one education or training pathway to many jobs, DET emphasised that around 70 per cent of the jobs filled by these sponsored migrants were in an occupation with a possible training pathway through VET, and that around 50 per cent of the jobs were filled in an occupation with an apprenticeship or traineeship pathway.9
Whilst most submitters offered broad support for the introduction of the SAF, there were several areas where issues were raised, including:
the operation of the SAF;
the fluctuating revenue base of the SAF;
some industry concerns; and
the proposed changes to labour market testing.
This chapter will examine each of these issues in turn.

Operation of the Skilling Australians Fund

Some submitters commented on the project-based approach of the SAF and the role to be played by state and territory governments.
In regard to the operation of the SAF (i.e. project-based agreement that will allow for numerous individual projects with matched funding from the proponent state or territory), TDA noted:
While details of the proposed agreement are still being negotiated, TDA is concerned that the model may result in a piecemeal approach to reforms needed in the sector. The increased accountability and administrative work envisaged in such projects, while primarily between levels of government, will also flow through to TAFEs and other providers that will likely be the delivery arm for the initiatives. TDA encourages the Commonwealth to strike an agreement with states and territories that minimises red tape and promotes initiatives of larger scale as leverage for more systematic reform.10
NAEN also stated that it held concerns about the project-based approach to the SAF:
In principle we support targeted programs that allow for variations in regions and industries, however, to limit this fund to small projects would create a significant administrative burden. Alternately, to allow only larger project proposals due to administrative efficiencies would disadvantage those in thin markets, regional and remote employers and potential apprentices, and small, emerging and innovative industries.11
To combat this, NAEN recommended that the SAF allow for direct partnership agreements with national or state organisations which have the capacity to deliver against the outcomes in the fund, at a reduced administrative cost.12
In relation to the involvement of state and territory governments, Mr Craig Robertson, Chief Executive Officer of TDA emphasised the importance of 'additionality' in the funding for SAF projects:
…what can happen is a state government, in trying to meet its obligations, shifts some pre-existing funding from one bucket to another, so there's really not additionality. And so what we need to be careful about is that this that this funding generates additionality into the system, not substitution. So there is a risk that states and territories will simply substitute one bucket of money in order to meet this commitment.13
The committee asked for further clarification on the concerns about the lack of state funding:
CHAIR: So clearly TAFE is a state and territory responsibility. Correct? Constitutionally, it's their responsibility. So what you're saying is that, while the federal government is coming to the party with this funding under this program [the SAF], your concern, based on historical evidence of state and territory behaviour, is that they may now say, 'Yes, we'll support it,' but they're going to do a little shell trick with money after the fact and underfund it.
Mr Robertson: That is one of the dangers that always occurs in these Commonwealth–state arrangements.
CHAIR: But you're not specifically referring to any danger from the Commonwealth government?
Mr Robertson: Certainly not, no.14
In response to this concern, Dr Subho Banerjee, Deputy Secretary of DET provided details on the discussions the department had conducted with the state and territory governments around the operation of the SAF:
They've [the discussions] been very extensive. That would be the first characterisation. We've been talking with the states. The minister convened a ministerial meeting—from my recollection, it was in July [2017], postbudget—and, since then, there has been a very extensive officials process. The officials process has been very constructive. There is a real shared commitment to the objects of the fund—that this can contribute real funding to a real need, particularly some sharp needs in the apprenticeship and traineeship space that we've talked about before. With that, I think the states have engaged with goodwill. As is always the case with these things, there are a number of detailed matters that need to be worked through to figure out exactly how this will work in practice and how it will be administered, but, on the overall intent level, I think there's support and enthusiasm.15
When asked for clarification on whether anything in the negotiations would give cause for concern about the viability of funding from state and territory governments, Dr Banerjee responded:
No. There's been real interest in these areas being a significant priority both for the Commonwealth and for the states.16

Committee view

The committee notes the comments made by some submitters regarding the arrangements for matching funding from state and territories. The committee is of the view that the Commonwealth, state and territory governments have been engaged in productive discussions around the operation of the Skilling Australians Fund and it encourages state and territory governments to commit to fully funding the initiative.

Fluctuating revenue base of the Skilling Australians Fund

While many submitters commended the principles underpinning the SAF, a few raised concerns regarding the future sustainability of the initiative.
The Law Council of Australia (Law Council) stated that it welcomed the funding of training opportunities for Australian citizens and permanent residents, and considered that the SAF levy was an appropriate replacement to the 'training benchmarks' for the collection of revenue for the SAF. However, it expressed concern that should the number of skilled migrants decrease, so too would SAF funding. To counter this, it suggested that the levy should not provide the only source of revenue for the SAF.17
The Victorian TAFE Association commented on the funding nexus between the SAF and the nomination training contribution charge (i.e. SAF levy), noting that while it supported the creation of the SAF, it did not support the linkage to revenues obtained through skilled migration charges.18 It stated that as international migration is affected by a number of variables (e.g. changes in policy in other countries, Australian labour market conditions and cultural circumstances), to link the SAF to migration charges would 'link its future health and sustainability to a potentially volatile and unstable funding source'.19
The submission further outlined:
The Victorian TAFE Association welcomes any policy that facilitates the increased training and education of Australians. However, if the need for this policy initiative is established, then its future sustainability and funding should not hinge upon the ability to raise revenues through new migration charges. Further, linking the Skilling Australians Fund to migration charges would limit funding provided to that raised through the migration charges.20
The Victorian TAFE Association also observed that the nexus between the SAF and the SAF levy meant that the SAF would become 'increasingly unsustainable':
The Skilling Australians Fund has been putatively designed to meet identified skills shortages by enabling the training of apprentices, trainees, and pre-and higher apprentices in (among other things) occupations with a reliance on skilled migration… If the activities supported by the Skilling Australians Fund are effective, then the need for skilled migrants, should, over time, reduce. As a consequence, the revenues raised through the nominations charges will also fall and the funding source upon which the Skilling Australians Fund is dependent will become increasingly unsustainable.21
The Victorian TAFE Association therefore recommended that the nexus between the two policies be decoupled, arguing that the SAF 'should not be dependent upon or tied to the government's ability to raise revenue through this specific funding source.'22
NAEN put forward similar views, acknowledging that while in principle it supported the new revenue stream for the SAF, it held concerns about the longevity and sustainability of the approach:
The position of NAEN is that the government should guarantee a minimum contribution to this fund in the absence of funding provided through these bills. The VET [vocational education and training] sector should never be in a position where the best it can do to ensure sustainable funding for apprentices, going forward, is to encourage increased skilled migrant employment. That would counter the primary purpose of this fund.23
The Australian Council of Trade Unions (ACTU) expressed support for the concept of an employer-paid levy, but stated that the funding mechanisms for the SAF as outlined in the bill were inadequate. It argued that tying the funding to a 'cyclical and insecure' source would lead to instability:
457 visa requests tend to follow business cycles, which peak and trough throughout the financial year. This means that the funding for the initiatives funded through this new source [the SAF] will be equally fluctuating. This will put these initiatives at the mercy of the business cycle and ensure that the public servants administering them will be unable to undertaken long-term planning.24
The Australian Chamber of Commerce and Industry (ACCI) observed that the 'direct nexus' between the SAF and its funding mechanism means that there was no guarantee that the SAF would receive the amount of monies projected to be raised.25
The Business Council of Australia (BCA) expressed concern that the SAF represented a significant alteration of the Commonwealth-state funding arrangements for VET. It noted that although the SAF levy was expected to generate revenue of $1.2 billion over the forward estimates, it was unclear whether there would be sufficient demand in the identified visa categories to generate this level of revenue.26
Related to these concerns, the Electrical Trades Union (ETU) stated that the bills could create a situation where the government will require a minimum number of visas are issued, regardless of demand or genuine need, in order to generate revenue for the SAF.27
In response to committee questioning on the methodology used to ascertain the funding capacity of the SAF, Mr David Wilden, Acting Deputy Secretary of the Policy Group of the Department of Home Affairs explained:
…what we did in putting together the bill was to look at the current, as in the old, system and how that was working. What was clear there was there was no revenue base upon which the Commonwealth could draw down; it was all out in industry, with very variable performance. When we looked at, if you like, the total number, we looked at it from several different ways. The first was to look at what would be a fair impost on businesses to pay under the different circumstances, be they a 457 or coming in on the permanent streams, and we basically used that as a basis for modelling what would be similar or not too far out of the existing commitments they were making, but turning that into a cash contribution that came in as revenue to the government, which went into building the Skilling Australians Fund. That was the basis for the numbers [SAF's projected funding stream] coming out how they were.28
In response to questions about the fluctuating revenue base of the SAF, Dr Banerjee, Deputy Secretary of DET outlined how the department would administer the SAF should the expected revenue not eventuate:
The estimates that are in the budget, and, as required, updated in MYEFO [Mid-Year Economic and Fiscal Outlook], represent the funding envelope of the program [SAF]. Our responsibility is to administer that funding envelope. For a published year our job is to administer responsibly up to that number.29
Dr Banerjee further explained:
There are a number of examples of these sorts of hypothecated funding sources in the Commonwealth government that are reasonably standard mechanisms. They are used for a range of different things. There are lots of private sector analogues where there is some uncertainty about revenue, often because of sales figures. There are various techniques in the private sector and the public sector to administer against some degree of uncertainty. That's just a standard form of public administration to work with, in this case the states as the partners under the national partnership, to commit money in a responsible way that is within that envelope. That's quite a standard thing to do…
These are things [techniques to administer within a degree of uncertainty] to be determined as the detailed administration of the fund is worked through. But, if I can use an example without going to the specific numbers, it would be quite a standard practice, for a particular number that is given as the envelope for spending, to come to an agreement—in this case with the states—to a certain proportion of that number depending on the degree of funding certainty—a pretty high proportion of that number; let's say of the order of 80 per cent or perhaps 90 per cent, depending on the degree of uncertainty that there is—and then to make adjustments at the margin as is required if there are any changes in the revenue source. That would be quite a standard thing to do in other hypothecated examples for revenue. It would certainly be quite a standard thing to do in private sector analogues where there's uncertainty in revenue due to sales.30
The Department of Home Affairs also advised that the two employer sponsored permanent visa classes, the Employer Nomination Scheme and the Regional Sponsored Migration Scheme visas, would provide a more stable source of revenue for the SAF.31

Committee view

The committee acknowledges the concerns raised by submitters regarding the fluctuating revenue base for the SAF. However, the committee emphasises that the bills do provide for a guaranteed, ongoing source of funding for the SAF, and that employer sponsored permanent visa classes provide a much more stable level of funding that will mitigate the natural fluctuations in temporary visa application numbers. In addition, based on evidence from the Department of Education and Training and the Department of Home Affairs, the committee is satisfied that should the projected revenue not be achieved, the SAF will be able to be administered in such a way that does not impact on its sustainability or effectiveness.

Impact on industry

Numerous submitters raised issues relating to the impact on industry arising from the bills. There was particular emphasis on the consequences for small businesses, the cost of the training contribution charge, the provision of refunds, and eligibility to access SAF funds.

Consequences for small businesses

The Office of the Australian Small Business and Family Enterprise Ombudsman (ASBFEO) advised that while it acknowledged the policy approach underpinning the creation of the SAF, it argued that some aspects of the bills may constitute disproportionate burdens for small businesses:
Many small businesses will rely on foreign temporary skilled workers to fill positions that cannot be filled today by Australian workers. We are concerned about the additional costs to small business seeking foreign skilled workers, particularly in regional and rural areas where attracting skilled trades persons and workers can be challenging. The costs of obtaining skilled workers include not only the training contribution charge, but also the requirements for advertising a position (labour market testing) which are quite ominous and impose a disproportionate burden on small businesses. There is an additional compliance burden of establishing internal processes to ensure that sponsorship obligations are not breached.32
ASBFEO also argued that the training contribution charge (i.e. SAF levy) may prove too costly for small businesses to absorb:
The training contribution charge for the new visas is high. This is even more pronounced as employers must pay the total costs, depending on whether it is a short or medium term visa application. This can represent a significant impost on cash flow for a small business. The cost is an out-of-pocket expense with no guarantee that the application will be successful.33
Mrs Anne Scott, Principal Advisor with ASBFEO emphasised that ASBFEO were not disagreeing with the principle of the SAF levy, but were advocating for the cost to be proportional to what small businesses could afford:
We were just concerned that, with the cost of the overall process – not just the levy, but the cost on businesses to apply, do labour market testing and ensure compliance – there is a disproportionate burden on very, very small businesses that needs to be considered in the implementation.34
The Northern Territory Government informed the committee that overseas workers formed an essential component of the local workforce, particularly in the hospitality, health and childcare industries. It also stated that 95 per cent of all businesses in the Northern Territory are categorised as small businesses. Because of these factors, the submission argued that the bills would likely impact on the 'thin market' environment in the Northern Territory more significantly than in larger jurisdictions, and that the SAF levy requirements may have adverse impacts on small business operations as a result of the additional costs and administrative burden to comply with the process.35

Committee view

The committee recognises the significant contribution small businesses make to the Australian economy and acknowledges that the SAF levy will have a financial impact on the subset of small businesses which choose to utilise overseas workers. However, the committee notes that the design of the levy framework appropriately differentiates between businesses based on their annual turnover, and on balance the committee considers the costs proportionate to the benefits that the SAF will deliver.

Cost of training contribution charge

Some submitters expressed concerns that the cost of the training contribution charge (i.e. SAF levy) set out in the bills was too high.
The Queensland Tourism Industry Council argued that the levy charges were excessive and beyond the affordability for industry. It contended that as a result there would be slower business growth.36
Ramsay Health Care Australia stated that the levy would significantly increase the cost burden to employers who rely on overseas workers to fill critical skills shortages. It argued that based on the number of overseas workers who are sponsored to work for the company each year, the proposed fee structure would create a multi-million dollar cost impost to the business.37
ACCI described the quantum of the proposed levies as 'unreasonable and excessive' and argued that the real cost of the SAF levy would be borne by those businesses that were able to previously demonstrate they were already spending money on training.38 It provided an example of this in relation to current training benchmark b (i.e. expenditure of a least 1 per cent of payroll on training employees):
As an example, a small business employing 20 people on average weekly earnings would have a payroll of around $1.6 million. The direct employment of one apprentice would more than satisfy the 1 per cent requirement. Under the new system, the business would have to pay a training levy of $4800 for a worker eligible for a four year visa, regardless of whether they kept on their apprentice.39
ACCI recommended that the proposed training levies should be halved, so that the cost would be $600 per year for small businesses and $900 for large businesses for each sponsored temporary migrant, and $1500 for small and $2500 for large businesses sponsoring under the employer nomination scheme.40
ACCI also recommended that the nomination training contribution charge limit in the charges bill be set at $3600 for a temporary visa and $2500 for a permanent visa and proposed that there should be no 10 per cent differential between the proposed levies and charge limit, noting that the charges bill already provides for indexation of the limit.41
Cross Cultural Communications and Management, a consultancy firm, also echoed ACCI's training expenditure point, contending that the bills would unfairly disadvantage those businesses that already spend at least 1 per cent of their payroll on training.42
Similarly, the Law Council commented:
The proposed new system prejudices businesses that are already meeting the training benchmark – especially companies making considerable efforts to train Australian citizens or permanent residents through apprenticeships, courses for staff, etc. Businesses that choose to meet the current 1% of payroll training benchmark should not be 'double hit' with a significant additional expense (the levy) which does not offer the business any additional value and does not recognise the contribution the business has already made through its training program. Furthermore, the levy may act as disincentive for many businesses to continue apprenticeships and structured external training for staff.43
BCA reported that feedback from its members indicated that it may be difficult for businesses to meet their levy requirements without some impact on the amount of funding already internally allocated for learning and development.44
The Federation of Ethnic Communities' Councils of Australia indicated it was concerned the cost of the levy on employers would result in greater levels of wage theft and other forms of exploitation should employers choose to 'pass on' the associated cost of hiring overseas workers.45
Conversely, other submitters took the position that the proposed costs of the training contribution charge were too low. The Australian Manufacturing Workers' Union (AMWU) outlined that while it supported the imposition of a levy on those who sponsor temporary overseas workers, it must result in a net addition to the stock of apprenticeships and cadetships for Australians. For example, the AMWU submission suggested the inclusion of additional requirements in the bills, such as:
Require employers that sponsor a temporary worker to be required to pay a nomination fee which is either the fee expressed in the draft bill, or the training fee associated with the qualification associated with the trade or vocation of the temporary worker in the state of territory in which the temporary worker is based, whichever is greater.46
ETU contended that the nomination contribution charges set out in the bill (i.e. $8000 and $5200 for temporary and permanent visas respectively) fall far below the actual cost of training an Australian worker. As an example it cited the cost of training an apprentice electrician in Queensland (approximately $17 000) compared to the nomination contribution charge ($5200) for a permanent visa holder. ETU summed up its argument as follows:
Faced with making commercial decisions about employment, business will be incentivised to pursue visa workers over Australian workers in every single occupation eligible for temporary and permanent visas.47
Similarly, ACTU submitted that while it fully supported the introduction of a levy for 457 visas, it felt that the amount must be increased such that the cost of an overseas worker is commensurate with the cost of hiring and training a local worker. It claimed that any lesser amount would provide an incentive for employers to use temporary overseas workers instead of training and employing local workers.48

Committee view

The committee is of the opinion that the quantum of the SAF levy is adequate and proportional, and that it is important to create a direct link between skilled migration and the training of Australians.

Provision of refunds

The Minister's second reading speech for the amendment bills states that it is intended that refunds of the SAF levy will be available in certain circumstances, such as where an employer's sponsorship application is refused.49
Several submitters expressed a desire for clarification on the matter of SAF levy refunds. For example, the ASBFEO submitted:
If a migrant has to return to their homeland for whatever reason (e.g. health, death in family), it is not clear if and how the contribution charge will be refunded in whole or part.50
ACCI suggested that training levies paid by sponsoring employers be refunded if the application is unsuccessful, as well as refunded on a pro rata basis if the visa holder resigns within the term of a temporary skill migration visa.51
The Queensland Tourism Industry Council advocated that used-friendly systems should be put in place to ensure that businesses are swiftly reimbursed, should applications be unsuccessful or if the visa holder returns home during the visa term.52
Similarly, the Northern Territory Government supported the provision for refunds of the nomination fee based on non-approved applications, or overseas workers not arriving or leaving the place of employment within a certain time period. It recommended that the refund process not be onerous or lengthy, in order to minimise the adverse impacts on the financial and operational viability of small businesses. It suggested that an alternative to providing refunds would be to implement a staged payment system, rather than one up-front payment.53
Ramsay Health Care Australia submitted that it would be appropriate that pro rata refunds of levies paid towards a new nomination be available for the unused portion of a proposed employment period in particular circumstances, including:
if sponsorship, nomination and/or visa application is refused or withdrawn;
if the employment relationship ceases during the proposed period of sponsorship;
if the employee never commences employment; or
if the employee is granted an alternative visa.54
The Law Council made several observations in regard to the provision of refunds of the SAF levy. It noted that the SAF levy was comparable to the Immigration Skills Charge in operation in the United Kingdom (UK), a charge paid by employers for every overseas worker hired. Under the UK system, refunds of the charge are permitted for additional reasons beyond those proposed for Australia outlined in the amendment bill, including:
if the applicant is successful, but does not come to work for the sponsor;
if the applicant gets less time on their visa than originally sponsored for;
if the applicant changes to another sponsor; and
if the application leaves their job before the end date on their certificate of sponsorship.55
The Law Council recommended that consideration be given to whether the additional reasons for refunding the charge in the UK should also be incorporated into the proposed Australian system.56
The Law Council was concerned that the amendment bill did not provide sufficient clarity to ensure that:
it is clear when the fee is payable and that in the event a sponsorship and/or nomination is not approved the nominator will be entitled to a full refund if the fee is required to be paid before either of these events occur;
a sponsor that has paid a training contribution charge upfront for the full visa period is entitled to a refund for the balance of any unused portion of the visa period granted; and
a sponsor that is taking over the sponsorship of a visa holder is only liable for the balance of any unused portion of the visa period granted.57
In regard to this point, the Law Council noted that clarification on the respective liabilities of sponsors would ensure that government is not able to 'double dip' by charging both the first and any subsequent sponsor a training contribution charge based on the full visa validity.58

Committee view

The committee notes the various circumstances where submitters are seeking greater clarity about the application of the refund of the SAF levy. The committee agrees that further clarification on the circumstances where the SAF levy is refundable would benefit stakeholders during the introduction and implementation of the SAF.

Recommendation 1

The committee recommends that the Minister provide clarity on the various circumstances raised in evidence that may warrant a refund of the Skilling Australians Fund levy.

Eligibility to access the Skilling Australians Fund

Some submitters commented on matters relating to the actual disbursement of SAF funds. BCA argued that as the SAF will be administered by DET, it was unclear to what extent industry would be consulted about what qualifications should be priority areas for funding. BCA advocated that as the SAF revenue would be primarily provided by employers, industry must play a key decision-making role in the SAF.59
Universities Australia (UA) expressed concern that universities would be required to contribute to the SAF, but generally ineligible to draw from it, owing to the SAF's focus on apprenticeships and traineeships which universities rarely utilise. It argued that this would cost the sector more than $9.5 million.60
Ms Catriona Jackson, UA Deputy Chief Executive Officer, noted that while the peak body commended the government for recognising the importance of preparing Australians for active participation in society and economy, it was concerned that the SAF would have a negative impact on the university sector:
The vast majority of our members—Australian universities—won't have access to the fund, which seems a strange contradiction given that we already educate and train Australians and we're being asked to contribute to a fund which is for training Australians which we won't be able to draw down on.61
Innovative Research Universities put forward a similar argument, noting:
The question is why raising funds for vocational education and training should target all employers using visas, rather than target those recruiting people with vocational qualifications with a direct tie to the extent of such recruitment. All, or close to all, university recruitment of international staff is for people with higher education qualifications.62
Ramsay Health Care Australia observed that the utilisation of the SAF to increase apprenticeship and trainee places would not assist in resolving shortages in the nursing workforce, where positions require a higher level of qualification.63
The Australian Private Hospitals Association echoed this point, noting that the SAF's focus on VET would not assist in fixing the major skills shortages in the health sector, as the occupations in demand required degree level qualifications as a minimum. It also advised that occupations based on VET qualifications (e.g. enrolled nursing and medical technicians) were rarely filled through migration pathways.64

Committee view

While the committee acknowledges the concerns put forward by submitters on this matter, it considers that it is reasonable for employers seeking to access overseas skilled workers to contribute to the broader skills development of Australians.

Changes to labour market testing

A number of submitters commented on the proposed changes to labour market testing (LMT).
The Australian Private Hospitals Association noted that it regarded the increased requirements for LMT as 'unreasonable' when government agencies have already established which specific occupations are in high demand. For example, it pointed out that DET revises a list of skilled occupations in demand bi-annually.65
Related to this point, Catholic Health Australia suggested that where occupations are known to be in high demand (e.g. perioperative registered nurses and midwives), these could be detailed on a list and exempted from providing evidence of LMT. It noted that such a list could be reviewed at the same time as the biannual review of the skilled occupations list produced by DET.66
ACCI argued that LMT was not effective and emphasised that it did not support an expansion of LMT powers or reach:
Increasing the powers and requirements for LMT is based on the premise that LMT is effective in protecting local jobs. But LMT is ineffective in achieving this aim. It adds significantly to the regulatory burden for employers without ensuring locals are recruited ahead of foreign workers. This is because no regulation can be designed to stipulate which advertising and recruitment approach best fits each situation, and no regulation can force employers to recruit one worker over another.67
Ms Jenny Lambert, Director of Employment, Education and Training, and Tourism for ACCI provided further detail on this position:
The vast majority of employers that turn to temporary skilled migration to fill their gaps know the labour market well, know what's available to them, have been attempting to do things for years, know their region, know the skills they need and know the problems that they have. Labour market testing is merely a time-consuming, regulatory dance, if you like, between the department and them over trying to demonstrate that they've done it.68
ACTU advised it had some concerns with the legislative language used, in particular that the proposed mechanism places the requirements for satisfying the LMT condition at the discretion of the minister:
The extent to which, if at all, such a system will establish a rigorous LMT process will of course depend on the content of any legislative instrument's that the Minister chooses to issue, or indeed whether the Minister elects to issue such instruments at all.69
The Law Council expressed support for the proposed change to LMT requirements. It observed that the types of evidence required to accompany a nomination (e.g. the way a job advertisement is written, the method of advertisement, the period the advertisement occurs in, and the period the advertisement must run for) are similar to those required to comparable jurisdictions, including New Zealand, the UK and Canada.70

Committee view

While the committee notes the concerns put forward by submitters, it considers that the proposed changes to the LMT framework are reasonable and will work to ensure a uniform approach to LMT from employers seeking to access overseas workers.

Concluding committee view

The committee notes that stakeholders have recognised the importance of growing and supporting a robust vocational education and training sector in Australia. The committee is of the opinion that the priority areas of the Skilling Australians Fund will assist more Australians in gaining the required skills to secure employment and succeed in a valuable career.
The committee considers it wholly appropriate that employers seeking access to overseas skilled workers should be required to contribute to the broader skills development of Australians. The measures contained in the bills form a critical element of the employer sponsored skilled migration reforms and clearly demonstrate the Commonwealth government's commitment to vocational education and training. The Skilling Australians Fund will support targeted investment in critical skill needs in key regions and industries across the Australian economy.
The committee notes that all stakeholders emphasised the importance of skilling Australians and many expressed broad support for the principles underpinning the Skilling Australians Fund. While the committee acknowledges the concerns raised by submitters, on balance it considers the bills necessary to ensure that all Australians have access to adequate and high quality skills and training opportunities.

Recommendation 2

Subject to Recommendation 1, the committee recommends that the Senate pass the bill.
Senator Lucy Gichuhi

  • 1
    TAFE Directors Australia, Submission 1, p. 2.
  • 2
    Mr Ben Bardon, Executive Officer, National Australian Apprenticeships Association, Proof Committee Hansard, 30 January 2018, p. 10.
  • 3
    National Apprentice Employment Network, Submission 9, p. 2.
  • 4
    Ms Lauren Tiltman, National Executive Officer, National Apprentice Employment Network, Proof Committee Hansard, 30 January 2018, p. 11.
  • 5
    Master Builders of Australia, Tabled Document, pp. 1–2 (tabled 30 January 2018).
  • 6
    Master Builders of Australia, Tabled Document, pp. 1–2 (tabled 30 January 2018).
  • 7
    Mr Shaun Schmitke, Deputy Chief Executive Officer, Master Builders Australia, Proof Committee Hansard, 30 January 2018, p. 40.
  • 8
    Department of Education and Training, Submission 14, p. 2.
  • 9
    Department of Education and Training, Submission 14, p. 3.
  • 10
    TAFE Directors Australia, Submission 1, pp. 1–2.
  • 11
    National Apprentice Employment Network, Submission 9, p. 2.
  • 12
    National Apprentice Employment Network, Submission 9, p. 2.
  • 13
    Mr Craig Robertson, Chief Executive Officer, TAFE Directors Australia, Proof Committee Hansard, 30 January 2018, p. 24.
  • 14
    Mr Craig Robertson, Chief Executive Officer, TAFE Directors Australia, Proof Committee Hansard, 30 January 2018, p. 24.
  • 15
    Dr Subho Banerjee, Deputy Secretary, Department of Education and Training, Proof Committee Hansard, 30 January 2018, p. 64.
  • 16
    Dr Subho Banerjee, Deputy Secretary, Department of Education and Training, Proof Committee Hansard, 30 January 2018, p. 64.
  • 17
    Law Council of Australia, Submission 16, p. 7.
  • 18
    Victorian TAFE Association, Submission 4, p. 3.
  • 19
    Victorian TAFE Association, Submission 4, p. 3.
  • 20
    Victorian TAFE Association, Submission 4, p. 3.
  • 21
    Victorian TAFE Association, Submission 4, pp. 3–4.
  • 22
    Victorian TAFE Association, Submission 4, p. 3.
  • 23
    National Apprentice Employment Network, Submission 9, p. 2.
  • 24
    Australian Council of Trade Unions, Submission 12, p. 12.
  • 25
    Australian Chamber of Commerce and Industry, Submission 13, p. 7.
  • 26
    Business Council of Australia, Submission 6, p. 2.
  • 27
    Electrical Trades Union, Submission 3, p. 5.
  • 28
    Mr David Wilden, Deputy Secretary, Policy Group, Department of Home Affairs, Proof Committee Hansard, 30 January 2018, pp. 55–56.
  • 29
    Dr Subho Banerjee, Deputy Secretary, Department of Education and Training, Proof Committee Hansard, 30 January 2018, p. 58.
  • 30
    Dr Subho Banerjee, Deputy Secretary, Department of Education and Training, Proof Committee Hansard, 30 January 2018, p. 59.
  • 31
    Mr Michael Willard, Assistant Secretary, Economic Policy, Department of Home Affairs, Proof Committee Hansard, 30 January 2018, p. 56.
  • 32
    Australian Small Business and Family Enterprise Ombudsman, Submission 18, p. 1.
  • 33
    Australian Small Business and Family Enterprise Ombudsman, Submission 18, p. 2.
  • 34
    Mrs Anne Scott, Principal Advisor, Australian Small Business and Family Enterprise Ombudsman, Proof Committee Hansard, 30 January 2018, p. 27.
  • 35
    Northern Territory Government, Submission 17, pp. 1–2.
  • 36
    Queensland Tourism Industry Council, Submission 5, p. 2.
  • 37
    Ramsay Health Care Australia, Submission 19, p. 4.
  • 38
    Australian Chamber of Commerce and Industry, Submission 13, p. 6.
  • 39
    Australian Chamber of Commerce and Industry, Submission 13, p. 6.
  • 40
    Australian Chamber of Commerce and Industry, Submission 13, p. 8.
  • 41
    Australian Chamber of Commerce and Industry, Submission 13, p. 8.
  • 42
    Cross Cultural Communications and Management, Submission 11, p. 5.
  • 43
    Law Council of Australia, Submission 16, p. 7.
  • 44
    Business Council of Australia, Submission 6, p. 2.
  • 45
    Federation of Ethnic Communities' of Australia, Submission 2, p. 3.
  • 46
    Australian Manufacturing Workers' Union, Submission 10, p. 4.
  • 47
    Electrical Trade Union, Submission 3, p. 5.
  • 48
    Australian Council of Trade Unions, Submission 12, p. 13.
  • 49
    The Hon Peter Dutton MP, Minister for Immigration and Border Protection, House of Representatives Hansard, 18 October 2017, p. 11033.
  • 50
    Australian Small Business and Family Enterprise Ombudsman, Submission 18, p. 2.
  • 51
    Australian Chamber of Commerce and Industry, Submission 13, p. 7.
  • 52
    Queensland Tourism Industry Council, Submission 5, p. 2.
  • 53
    Northern Territory Government, Submission 17, p. 2.
  • 54
    Ramsay Health Care Australia, Submission 19, p. 6.
  • 55
    Law Council of Australia, Submission 16, pp. 5–6.
  • 56
    Law Council of Australia, Submission 16, p. 6.
  • 57
    Law Council of Australia, Submission 16, p. 6.
  • 58
    Law Council of Australia, Submission 16, p. 7.
  • 59
    Business Council of Australia, Submission 6, p. 2.
  • 60
    Universities Australia, Submission 8, p. 1.
  • 61
    Ms Catriona Jackson, Deputy Chief Executive Officer, Universities Australia, Proof Committee Hansard, 30 January 2018, p. 51.
  • 62
    Innovative Universities Australia, Submission 7, p. 1.
  • 63
    Ramsay Health Care Australia, Submission 19, p. 5.
  • 64
    Australian Private Hospitals Association, Submission 20, p. 3.
  • 65
    Australian Private Hospitals Association, Submission 20, p. 4.
  • 66
    Catholic Health Australia, Submission 21, p. 2.
  • 67
    Australian Chamber of Commerce and Industry, Submission 13, p. 8.
  • 68
    Ms Jenny Lambert, Director of Employment, Education and Training, and Tourism, Australian Chamber of Commerce and Industry, Proof Committee Hansard, 30 January 2018, p. 9.
  • 69
    Australian Council of Trade Unions, Submission 12, pp. 9–10.
  • 70
    Law Council of Australia, Submission 16, p. 8.

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