Statement 1: Budget Overview (Continued)
Building Australia's future workforce
The strong medium‑term outlook for the economy will create further demand for skilled labour and test the economy's capacity. At the same time, some regions and industries will face challenges and some groups in the community are experiencing low rates of participation and higher unemployment.
To respond to these challenges, the Government will deliver a new Building Australia's Future Workforce package, to help industries get the skilled workers they need, and to ensure participation in work and the benefits that this brings.
The Building Australia's Future Workforce package will:
- invest $3 billion in new skills initiatives over six years — targeting our skills investments to better meet the skills needs of industry; and
- boost participation — improving incentives to participate in the workforce and the services available to support disadvantaged Australians find jobs.
Investing in skills
The Government is helping to meet demand for skilled labour, by better targeting our skills effort to deliver quality training focussed on addressing the differing skills needs of industry across Australia. The Government is also continuing its efforts to reform the skills system to help deliver the workforce that Australia will need in the future.
The $3 billion package of skills measures builds on the 2010‑11 Budget's Skills for Sustainable Growth strategy, and the 2009‑10 higher education reforms.
The investment in skills:
- places industry at the heart of our training effort;
- modernises and streamlines arrangements for Australian Apprenticeships;
- pursues reform of the vocational education and training (VET) system to meet longer term needs; and
- builds better skills for workforce participation.
Placing industry at the heart of training effort
The Government will establish a new $558 million National Workforce Development Fund to respond to the most critical emerging skills needs facing Australian industry, including at a national, regional and enterprise level. The National Workforce Development Fund will incorporate the $200 million Critical Skills Investment Fund.
The National Workforce Development Fund is expected to deliver an estimated 130,000 high quality training places directly tailored to industry skills needs.
The training places will require co‑investment from industry, recognising the shared responsibility for training between the Government and industry.
The fund will be supported by the establishment of a new National Workforce and Productivity Agency from 1 July 2012 through an expansion of the current functions of Skills Australia at a cost of $25 million over four years. The National Workforce and Productivity Agency will work closely with industry to identify critical skill needs and build a more skilled and capable workforce.
Modernising and streamlining arrangements for Australian Apprenticeships
The Government provides incentives and assistance for over 400,000 Australian Apprenticeships each year, but variable training quality, a lack of support and arrangements where completions are based on time contribute to low completion rates and lost training effort.
The Government's Building Australia's Future Workforce package contains a number of important measures to reform and strengthen the Australian Apprenticeship system, with a focus on providing better support to apprentices and enabling accelerated completions provided quality is met. Measures include:
- investing $100 million in competency based progression and better recognition of apprentice skills through trial apprenticeship models which allow for faster progression without compromising skill quality, and the development of competency rather than duration based model award clauses, so apprentices can be recognised for their skills and get higher wages sooner; and
- investing $101 million to improve apprenticeship completions by funding more than 300 apprenticeship mentors per year to support up to 40,000 eligible apprentices overall, and 144 advisors per year to assist school leavers considering an apprenticeship.
These measures build on the increased tax‑free bonuses available for eligible apprentices which provide up to a total of $5,500 as they reach key milestones in their training, and the new National Trade Cadetships to build modern pathways from school to an apprenticeship.
Reforming Vocational Education and Training to meet longer term needs
The Government is reforming Commonwealth‑State funding arrangements for VET, as agreed by the Council of Australian Governments in February 2011, to deliver the strong and productive training system required to meet the changing labour needs of the economy. In particular, the Government will set new reform standards for its $7 billion investment in the National Skills and Workforce Development Agreement over the next five years.
The Commonwealth will also provide up to $1.75 billion over five years from 2012‑13 to states and territories under a new National Partnership depending on the levels of ambition in reform. Funding will be available to those states and territories that are prepared to partner with the Commonwealth on more ambitious reforms for VET. This includes the delivery of a more productive and responsive system that is supported by improved outcomes such as higher level qualifications, increased completions and transparency, better recognition of skills, and catering to disadvantaged learners and regions. The National Partnership will be negotiated over the coming months.
Building better skills for workforce participation
For many Australians, stronger language, literacy, and numeracy skills will improve their opportunities in the workforce, and improve their broader capacity to participate in society. This is why the Government is:
- investing $143.1 million over four years to offer an additional 30,000 places in the Language, Literacy and Numeracy Program for job seekers with poor skills;
- committing $20 million to offer an additional 13,190 places in the Workplace English Language and Literacy program, which will provide additional support to businesses looking to improve their workers' skills; and
- providing additional funding of $19.7 million to maintain the number of places in the Australian Apprenticeship Access Program which supports prospective apprentices to obtain the basic skills they will need in their chosen trade.
Boosting regional support for skills and training
In addition to the skills measures in the Building Australia's Future Workforce package, the Government is also boosting education infrastructure by investing $500 million over five years through the Regional Priorities round of the Education Investment Fund. This investment will support capital projects at regional higher education and VET institutions.
In addition, the Government has allocated $109.9 million over four years to increase and better target funding to regional universities through a change in the formula for allocating Regional Loading for universities with regional campuses.
This regional investment builds on the Government's commitment to skills formation pursued through its Education Revolution agenda and the significant reforms to funding of, and access to, university in the 2009‑10 Budget.
Boosting participation
The Building Australia's Future Workforce package strengthens incentives and invests in additional services to support participation and encourage work.
Broad‑based participation reforms include bringing forward the Low Income Tax Offset (LITO) to provide more immediate returns to work and phasing out the Dependent Spouse Tax Offset (DSTO) for taxpayers born on or after 1 July 1971.
The improvements to LITO will provide more immediate returns to work. By giving people more money in their regular pay packets, this measure will reward participation for low‑ and middle‑income earners as well as help households manage the day‑to‑day costs they face.
The Government will phase out the DSTO for taxpayers with a dependent spouse who was born on or after 1 July 1971. Dependent spouses who are carers, invalid or permanently disabled and selected other groups will not be affected. These changes reflect changing community attitudes to work and will strengthen the incentives for dependent spouses in couples without children to seek paid employment.
These reforms build on the Government's previous participation measures, which included a doubling of the LITO and an increase in the child care rebate to 50 per cent.
The participation measures in this Budget also support participation for disadvantaged groups including:
- young people;
- single parents;
- people with disability;
- the very long‑term unemployed; and
- people in disadvantaged locations.
In recognition that certain areas experience concentrated disadvantage, a number of the measures focus on new opportunities and case coordination through service delivery reforms.
These measures balance greater responsibility through increased participation requirements with additional services and support such as training, childcare and employment services, and greater rewards for workers and employers.
The participation requirements for the different groups take account of the different circumstances of individuals and what can reasonably be expected of them.
These measures will build on the changes to employment services delivered though Job Services Australia, also announced in this Budget.
Young people
Approximately 10 per cent of Australians aged 15 to 24 (around 320,000) are unemployed or not in the labour force and not studying. To encourage all young people into jobs, education or training, the Government will extend 'Earn or Learn' requirements to those aged 21.
This is part of broader changes to Youth Allowance (other). The age of eligibility is being increased so that the Newstart Allowance will not be available until age 22 (up from 21). This will mean that the age of independence is aligned for Youth Allowance (student) and Youth Allowance (other), and the age which Family Tax Benefit (FTB) is available, which creates better incentives for youth to undertake training or study, rather than moving on to unemployment benefits. At the same time, the Government will introduce a more generous income free area and working credit for Youth Allowance (other). The Government will also provide $67.6 million through Job Services Australia to fund foundation skills activities for early school leavers.
The Government will further direct $50.7 million into a new Indigenous Youth Career Pathways Program that will provide supported School Based Traineeships to assist Indigenous students in targeted schools to transition from school into further education and/or work.
The Government will also increase FTB Part A assistance for 16 to 19 year olds in full‑time secondary study to encourage increased school completion rates which is vital for future workforce participation.
Single parents
Australia has the fourth highest proportion of children under the age of 15 living in jobless families in the OECD. There were 640,000 families with a dependent child aged under 15 on income support in December 2010. Single parent families also make up around 70 per cent of jobless families.
A reformed income test will increase the rewards from part‑time work for single parents. The Government will reduce the taper rate for single parents on Newstart Allowance to 40 cents in the dollar at a cost of $179 million over four years. This will allow single parents to keep up to $3,900 extra of their income from part‑time work every year.
In addition, the Government will deliver a package of assistance for single parent families to help them transition into work, including:
- $80.0 million for additional training places, which will also assist teenage parents;
- $3.7 million for career advice; and
- $19.1 million for the Communities for Children program.
From 1 January 2013, the Government will also gradually align Parenting Payment eligibility rules for families whose youngest child is aged over 12. The changes will only affect parents who were payment recipients before 1 July 2006 and have a youngest child born since 1 January 2000.
People with disability
The number of DSP recipients is growing and the participation rates of people with disability are substantially lower than the general population.
The Government has already announced that it will introduce more accurate and efficient assessments for Disability Support Pension (DSP) and employment services. DSP applicants will need to provide evidence that they have tested their future work capacity. DSP applicants with a terminal illness or profound disability will not be impacted by this measure.
The Budget brings forward the start date of this measure to 3 September 2011.
The Government will also update the definitions of incapacity used for DSP assessments, with the new definitions to apply from 1 January 2012. This will update definitions that haven't been updated since 1993.
The Government will also introduce additional measures designed to further encourage DSP recipients into the workforce. Measures include:
- the introduction of appropriate participation requirements for DSP recipients under 35 years of age with an assessed work capacity of more than eight hours;
- relaxing the number of hours recipients can work before their payment is suspended; and
- providing additional wage subsidies.
Very long‑term unemployed
Nearly 230,000 income support recipients registered with employment services are estimated to have been receiving support for two or more years, notwithstanding the strong labour market conditions over this period.
The Government will provide $232.6 million to increase the support available to get the very long‑term unemployed into work. This includes $94.6 million for the introduction of targeted wage subsidies to encourage employers to hire those who have not worked for over two years.
Addressing geographic disadvantage
Across Australia there are large differences in unemployment and participation rates.
The Government will target disadvantaged locations with:
- $47.3 million to introduce compulsory interviews and participation plans for teenage parents, as a first step towards a broader national effort to build their skills to get ready for work, and to get their children ready for school;
- $71.1 million to introduce participation requirements for jobless families in ten locations with preschool age children to improve school and employment readiness; and
- $117.5 million over five years to extend income management arrangements to five additional trial sites to help recipients of income support better manage their affairs.
To improve services for regions that need extra help, the Government will provide:
- $19.1 million over two years to develop 34 Regional Education Skills and Jobs Plans aimed at improving access to and participation in education, training and employment; and
- $45.2 million to extend the priority employment areas and local employment coordinators measure until 30 June 2013 and enhance it through a new flexible funding pool.
Skilled migration for the regions
The Government will make a modest increase to the permanent migration program of 16,300 places, aimed at attracting skilled migrants to live and work in regional Australia. As the level of net overseas migration has significantly fallen from a peak of 315,700 to 185,800, this increase will not place pressure on Australia's population.
To ensure new migrants are settling in regions of Australia where their skills are in demand, the Government is specifying 16,000 places to the Regional Skilled Migration Scheme and providing priority processing for regional visa categories.
The Government is also introducing Enterprise Migration Agreements to address the short term labour needs of major resource projects in the construction phase. This will be complemented by Regional Migration Agreements, where the Government will work with regional communities to develop tailored solutions to address their labour shortages.
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