The government’s new Training Levy Bill, expected to take effect from March 2018, will abolish the current Training Benchmark system.
The new Migration (Skilling Australians Fund) Charges Bill 2017 will require employers to make a Training Levy payment for each Temporary Skill Shortage visa (TSS), which will replace Subclass 457 Temporary Work program from March 2018, and the permanent Employer Nomination Scheme Subclass 186 visa, and Subclass 187 Regional Skilled Migration Scheme permanent residency visa.
The funds will be allocated to the ‘Skilling Australians Fund‘, a training fund administered by the Department of Education and Training (DET), to support skills development of Australians. Payments will be allocated to State and Territory governments for apprenticeship programs and is expected to generate $1.2 billion over forward estimates.
Training Levy quantum
The Training Levy sum will differ for small and large businesses. Businesses with a turnover of $10 million or less will pay $1200 per year for temporary visas and $3000 per year for permanent visas. Businesses with a turnover above $10 million will pay $1800 per year for temporary visas and $5000 per year for permanent visas.
| Business Size | Temporary Visa Levy | Permanent Visa Levy |
| Turnover < $10 million | $1,200 per year | $3,000 per year |
| Turnover < $10 million | $1,800 per year | $5,000 per year |
Training Levy Payments to be made upfront
Significantly for many businesses, the while both Temporary and Permanent Levy payments will need to be made at the time of the visa application, the Temporary Levy payment must be made for the full period of the visa (i.e., up to 4 years, or $4,800 / $7,200 depending on business size). There will be some refunds available, for example if a Nomination application is refused, however further clarification is being sought on what will occur if an employee on a temporary or permanent visa ceases after a short period of service.
Levy payments will be capped at $5,500 for each permanent visa and $8,000 for temporary visas. This cap provides some certainty for businesses about future costs under the Training Levy system as the Levy will increase by CPI each financial year.
Significant additional training expenditure
Roam Migration Law consider that the change will be a significant increase to training costs for many businesses. Businesses will need to reconsider training budgets for future years in light of the substantial costs associated with employer sponsorship.
Many businesses will be frustrated by the additional costs and the fact that their own internal training, including apprenticeships and traineeships, cannot be counted towards these costs. Representations have been made to the Department on the potentially damaging effects of the Training Levy and the potential to decrease training expenditure on locals once businesses are obliged to pay the Training Levy direct to the Skilling Australians Fund rather than conduct their own internal training. At present government remains focused on delivering the Fund in the proposed format despite the concerns that have been raised.
Transitional arrangements
Information released by DIBP last week shows that from March 2018 businesses will effectively be released from the current Training Benchmark obligations though they will need to demonstrate compliance in past years. Businesses will not need to demonstrate compliance for ‘part years’ meaning that if they can demonstrate compliance in the 2016-2017 Financial Year, they will not need to demonstrate compliance between July 2017 and March 2018 – though they remain obliged to meet the Benchmark.
Concerns about impact of Training Levy system
Despite a number of concerns about the Training Levy being raised with the Department and government the implementation looks likely to proceed. We encourage sponsors who are dissatisfied with the proposed arrangements to contact their industry bodies, local member of Parliament or State Senators to express their concerns.
Roam Migration Law can assist businesses to make representations to government about the impact of the new training system on their organisation. For support and assistance contact Roam Migration Law on +61 3 9044 9265.
