Budget 2017: TSS visa levy to finance AU$1.5b 'Skilling Australians Fund'

The Australian government has announced that it will provide AU$1.5 billion over four years to establish the permanent "Skilling Australians Fund", which will focus on training workers in new skills.

Australia's states will match this funding, with the program to support around 300,000 more apprentices, trainees, and "higher-level skilled Australians" over four years, the government said in its 2017-18 Budget.

"Eligibility criteria for the fund will be defined by the Commonwealth, with states' access to the fund conditional on their agreement to meeting conditions including a requirement to focus on priority occupations, funding contributions matching Commonwealth funding, achieving outcomes, and providing up-to-date data on performance and spending," the Budget said.

"This measure includes AU$261.2 million in 2017-18, which is in addition to the revenue generated from the training fund contribution levy to be applied under the temporary and permanent employer sponsored migration programs. From 2018-19, funding for this measure will be determined by the training fund contribution levy."

The Skilling Australians Fund's ongoing financing will be via a levy the government has announced it will level at any employers that wish to bring in foreign workers under the Temporary Skill Shortage (TSS) visa.

"Employers who nominate workers for the new Temporary Skill Shortage visa, and certain permanent skilled visas, will pay a levy that will go into a new Skilling Australians Fund," the government said in the Budget.

"This fund will ensure an ongoing source of revenue to support Australian skills development and the take-up of apprenticeships and traineeships. The new fund will replace the existing training benchmarks, which have not been successful in generating training opportunities to allow Australians to fill skill gaps."

The new levy will apply from March 2018, with the government estimating an increase to tax receipts of AU$1.2 billion as a result.

"Skilled migration has always played a significant role in driving our economic growth. But it must be on our terms and we must skill more Australians to secure jobs," Treasurer Scott Morrison said in his Budget speech on Tuesday night.

"Until now, employers have had to contribute 1 or 2 percent of their payroll to training if they employ foreign workers. These requirements have proven difficult to police.

"Accordingly, we are replacing these requirements with an annual foreign worker levy of AU$1,200 or AU$1,800 per worker per year on temporary work visas and a AU$3,000 or AU$5,000 one-off levy for those on a permanent skilled visa.

"Over the next four years, AU$1.2 billion will be raised from this levy that will contribute directly to a new Commonwealth-State Skilling Australians Fund. States and territories will only be able to draw on this fund when they deliver on their commitments to train new apprentices."

Under the new foreign workers visa rules, businesses making less than AU$10 million per year are required to make a payment of AU$1,200 per visa per year for each TSS employee and a one-off payment of AU$3,000 for each employee being sponsored for a permanent Employer Nomination Scheme (subclass 186) visa or a permanent Regional Sponsored Migration Scheme (subclass 187) visa. Businesses making more than AU$10 million per year will face an upfront payment of AU$1,800 and a one-off payment of AU$5,000, respectively.

Visa application charges will also be increased from the current AU$1,060 per 457 visa to AU$1,150 per TSS visa for the short-term stream and AU$2,400 per TSS visa for the medium-term stream.

Prime Minister Malcolm Turnbull had last month announced that Australia would be abolishing the 457 temporary foreign workers visa to be replaced by the TSS visa, which he said was specifically designed to recruit the "best and brightest" overseas talent, ensuring that remains in the best interests of Australia.

"Australian workers must have priority for Australian jobs," Turnbull said in April, adding that the new visa is about ensuring that "Australian jobs" are filled by "Australians".

"We will no longer allow 457 visas to be passports to jobs that could and should go to Australians," the prime minister said.

The TSS will better target genuine skills shortages, according to Turnbull, including throughout regional areas, and will be subject to more stringent requirements such as previous work experience, better English language proficiency, and labour market testing.

Under the new TSS visa, 200 job categories have been reduced, impacting several technology-related employment opportunities, including electronic engineering technicians, IT support and test engineers, IT support technicians, web developers, telecommunications technicians, and telecommunications cable jointers, despite Minister for Industry, Innovation and Science Arthur Sinodinos saying he did not want to see consequences of the visa reform trickle into Australia's tech sector.

Federal Opposition leader Bill Shorten last week added that the government should introduce a new visa reserved for "world-leaders" in Science, Medicine, Academia, Research, and Technology (SMART), allowing universities, research institutes, medical, scientific, and advanced technology industries, companies, and public research agencies to "bring the best and brightest" into Australia from overseas.

Labor said it would also introduce a Science, High Tech, and Research visa allowing Australian workers in the tech industry to collaborate with overseas counterparts.

The government had previously kicked consultation for what was referred to as the Entrepreneur Visa, an initiative announced as part of the government's AU$1.1 billion National Innovation and Science Agenda to allow those from overseas to live and work among Australia's tech industry back in 2016.