FEDERAL BUDGET 2011: $3 billion workforce training and participation projects to combat skills shortages

A $3 billion, six-year plan to train thousands of new workers is at the centrepiece of the Government’s 2011-12 budget, with initiatives to support apprentices, increase skilled immigration and provide support for the long-term unemployed.

The plan, which the Government has labelled “Building Australia’s Future Workforce”, comes as official estimates show unemployment dropping to 4.75% this year and to 4.5% in 2012-13.

Treasurer Wayne Swan says that as the country reaches full capacity businesses will need to compete for skilled workers, and warns “such skills shortages could constrain our economic growth and mean missed opportunities for Australians”.

Experts have also warned such skills shortages will drive inflation up even further as wages increase, creating further pressure on the Reserve Bank to raise interest rates.

One of the major pillars of the program is a new $558 million National Workforce Development Fund, which will be used to create over 130,000 training places to various industries, while more than $200 million will be used to support apprenticeships through mentoring and modernisation.

Skilled migration will also increase, while incentives will be provided to employers who take on the long-term unemployed.

“Better training is essential for the workforce our economy needs, as is encouraging, rewarding, and insisting on the participation of more workers,” Swan told Parliament this evening in his budget speech.

The program is divided into three aspects – training existing workers, attracting the unemployed and increased skilled migration from other nations.

Training

The Government’s $588 million National Workforce Development Fund is the key part of its training initiative, with the goal of delivering 130,000 training places over the next four years.

The fund, according to the Government, will “respond to the most critical emerging skills needs facing the Australian economy”.

Training places will be co-ordinated with specific industries, which will work alongside the new, $25 million National Workforce and Productivity Agency.

Companies can bid for funding, with large businesses required to pay two-thirds of training costs, medium-sized businesses required to pay 50%, and small businesses only liable for one-third of the cost.

This new agency will be responsible for delivering the outcomes of the fund, which represents an expansion of Skills Australia.

The new funds will support the creation of industry-based training initiatives, while the agency will give independent advice on the skills needs of different sectors “to enhance national workforce capability”.

Secondly, more support will be provided for VET placements, and more funding is promised for those states and territories that agree to the Government’s ambitious plans.

The budget has allocated $1.75 billion over five years, starting from 2012-13, to be shared among those participating states and territories that work to make the VET system more “transparent and productive”.

The Government wants the VET system to deliver better training, offer more transparency and become more responsive.

The states and territories will be briefed over the rest of the year about what the new structure of the VET system will look like. But the Federal Government warns the principles will contain more pathways for VET students to reach higher education, more training at the Certificate III level and rewards performance, including higher completion rates.

Thirdly, more support is being pledged for apprentices, with $100 million promised for training so apprentices can fulfill their qualifications sooner than expected and $101 million is being set aside for a mentorship program.

This funding also includes money for advising prospective apprentices on what would be the best trade for them to pursue.

The Government points to data showing most apprenticeships take over three years to finish, and this number has remained mostly steady over the past decade.

Swan says this money will let apprentices “progress as they acquire the right skills”, with funding to be used to investigate other flexible training models.

The Government has also put aside tens of millions of dollars for several other initiatives, including:

• $30 million for the More Help for Mature Workers initiative, which will see skills assessments, recognition and gap training provided for workers who are 50 years and older, with relevant skills but no formal qualifications.
• $143 million for 30,000 additional commencements in the Language, Literacy and Numeracy Program.
• $80 million for training places for single and teenage parents.
• $20 million for the Workplace English Language and Literacy program, with $20 million to maintain the Australian Apprenticeships Access Program.

Participation

Swan says the Government must do more than just increase training for skilled workers – it must also court the long-term unemployed in order to fight the looming skills shortage.

“In a growing economy like ours, we cannot justify the fourth highest proportion of jobless families in the developed world,” Swan told Parliament tonight.

“A wealthy country like ours has no excuse to leave people out of work.”

Much of the money will be provided for bringing the long-term unemployed back into work, with $233 million pledged for six-month wage subsidies for employers who employ those who haven’t been working for two years.

A further $133 million is also being set aside for those who have spent two years in employment services to participate in work experience, two days a week for 11 months a year, up from six months a year at present.

The Government is also removing a disincentive to remain at home – the Dependent Spouse Tax Offset. Eligibility for this benefit will be tightened so that any person with a dependent spouse 40 or under on July 1 will no longer be able to claim the offset.

“These changes reduce disincentives to participate for people who are well placed to benefit from the employment prospects presented by a strong economy,” the Government says, pointing out that nearly 230,000 people on income support have been doing so for over two years.

Furthermore, $179 million is being set aside to change the income test for parents on the Newstart benefit. This will change the taper rate from 50 or 60 cents in the dollar to 40 cents by January 1, 2013, which will let each worker on that benefit retain more money from part-time work.

Additionally, single parents will also be supported through an assistance package totaling $103 million over four years, with more training places, community-based support and counselling included.

Other changes include:

• An increase in the Family Tax Benefit A for dependent 16-19 year-olds in full-time study.
• $2 million as part of a $50 million package for the Personal Helpers and Mentors services to help employers employ and retain workers with mental illnesses.

Immigration

Finally, the Government will increase the amount of skilled migrants in order to ease the skills shortage, with Swan saying “we also need to attract highly-skilled migrants to live and work in regional Australia”.

There will be a moderate rise in the 2011-12 migration program, rising from 180,000 to 185,000.

However, two-thirds of those migrants coming under the program will be needed to fill shortages in regional areas. Overall, 16,000 places will be allocated to the Regional Sponsored Migration Scheme, and those regional visas will be given the highest priority.

“For the first time, the Federal Government will specifically allocate permanent visas for regional areas,” Immigration Minister Chris Bowen said in a statement.

As part of this program, the Government will also fast-track permanent residency for temporary business 457 visas for those who have spent more than two years in regional Australia, and whose employers pledge to continue sponsoring them for another two years.

A new benefit called the Regional Migration Agreements will also see employers, local and state governments and unions collaborate to determine local labour requirements.

“The patchwork nature of the Australian labour market means it’s important to recognise unique local circumstances and tailor migration solutions accordingly,” Bowen said.