Government denies skilled migrant levy is now a “secret” small business tax grab

Small businesses sponsoring skilled migrant workers are being subjected to a secret “tax grab” by the Albanese government, the federal opposition says, claiming a levy designed to prop up skills and training programs is instead flowing into consolidated government funds.

The government disputes that argument, saying the levy revenue continues to support skills and training initiatives.

The Skilling Australians Fund (SAF) levy, announced in 2017 by the former Coalition government, was designed to bolster apprenticeship and trainee programs operated by the states and territories through a national partnership.

The SAF operates by charging businesses, including small employers, with a levy each time they recruit a worker through the skilled migration system.

For businesses with an annual turnover below $10 million, sponsoring migrants through the current Temporary Skill Shortage visa scheme means paying $1200 in SAF levies per year.

Small businesses sponsoring migrants on a permanent basis through the Employer Nomination Scheme or Regional Sponsored Migration Scheme pay a one-off $ 3,000 contribution to the levy.

The Commonwealth contributed in excess of $617 million to the national partnership between 2017 and 2022, with matched funding from the states and territories helping to fund over 216,000 apprenticeships and trainee placements.

Employers hoping to sponsor a skilled migrant worker are still subject to the SAF levy.

However, Deputy Opposition Leader and Shadow Minister for Shadow Minister for Small and Family Business Sussan Ley claims the funds collected by the federal government through the SAF levy are no longer being shared through the national partnership, which expired in June 2022.

In a Friday statement, Ley’s office claimed those funds are instead rolling into general government coffers.

“Australian business owners will be rightly outraged to know that Anthony Albanese is using a levy they pay in good faith to prop up Labor’s budget bottom line,” Ley said.

“This money is supposed to be guaranteed to go towards skilling Australians not paying for Labor’s pet projects.”

The levy’s current administration amounts to “sneaky” conduct by the government, Ley added.

Government hits back at “sneaky” conduct claim

Levy funds are currently managed by the Department of Employment and Workplace Relations.

Speaking to SmartCompany, Minister for Skills and Training Brendan O’Connor said those funds continue to flow to training programs, even in the absence of the prior agreement.

“The SAF levy helps to ensure those businesses that benefit from skilled migration also contribute to skills development for local workers,” he said.

“Its revenue underpins the expenditure on training provided by the Commonwealth.”

Countering claims of “sneaky” conduct, O’Connor maintained “our own investment in skills and training far exceeds revenue from the SAF”.

Those statements are backdropped by progress on the new National Skills Agreement (NSA), a fresh take on skills and training program funding under consideration by Commonwealth, state, and territory authorities.

It is set to contribute to providing the states and territories with $4.1 billion in Commonwealth investment over five years from 2024.

Under principles agreed to by the National Cabinet in August last year, the NSA will give states and territories “appropriate flexibility and autonomy” to fund priority initiatives.

It will also extend opportunities to all Australians, but “particularly women, First Nations Australians, young people, mature age Australians, those experiencing long-term unemployment, people from culturally and linguistically diverse communities, people with disability, and regional and remote learners,” the principles state.

SAF under scrutiny since the start

While Ley’s commentary has drawn the SAF into the spotlight, it is not the first time the program has come under scrutiny.

In 2018, while the Coalition was still in power, the Australian Chamber of Commerce and Industry criticised the former government for what it called the sluggish turnover of funds collected by the Commonwealth to the states and territories.

The Albanese government’s 2023 review of Australia’s migration system, undertaken by the Department of Home Affairs, also honed in on the SAF.

Its final report noted criticism from sponsors over how the funds were administered and complaints from smaller employers that SAF fees were too expensive.

While acknowledging the SAF’s place in a complex and convoluted migration system, the report also recommended that SAF levies not drop any lower.

“It is arguable that the SAF could be justifiably higher,” the report found.

“However, given that the issues with Australia’s apprenticeship and trainee programs are outside the scope of this Review, the Panel does not propose any increase be made to the level of the SAF at this stage.”

Instead, the report called on the government to “consider the aims, effectiveness and transparency of the SAF.”