2017-2018 Federal Budget Expert Analysis - Employment and remuneration

Key points

  • Medicare levy to increase by 0.5% from 1 July 2019

  • Subclass 457 visas to be abolished

  • $1.5 billion Skilling Australians Fund created for up to 300,000 extra apprenticeships

  • Estimated increase in wage growth from approximately 2% to over 3% in the next four years

  • $263 million to assist parents of young children to re-enter the work force

 
The Medicare levy is to increase by 0.5% from 2% to 2.5% from 1 July 2019. This increase is to ensure the NDIS is fully funded and is to apply in line with funding requirements. The current rules around levying of the Medicare levy remain unchanged.

In an effort to increase the employment rate, Subclass 457 visas will be abolished and replaced with a new Temporary Skill Shortage visa with tighter conditions and stricter safeguards. The intent of this change is to ensure that foreign workers are only brought into Australia to meet genuine skill shortages. Requirements are also being strengthened for English language attainment, work experience, visa renewals, eligibility for permanent residency and criminal history checks.

As part of the effort to increase skills for Australian workers, $1.5 billion over the next four years has been announced for the Skilling Australians Fund. This fund has been established to support the skilling and training of apprentices and trainees for occupations in high demand, occupations with a reliance on skilled migration pathways, industries and sectors of future growth, trade apprenticeships, and apprenticeships and traineeships in regional and rural areas.

The budget documents indicate an estimate for improvement in wage growth from approximately 2% p.a. (current rate) to over 3% p.a. in the next four years. The Treasurer, the Honourable Scott Morrison indicated that this estimated growth will be the result of economic improvements in areas such as:
 
  • growth in the services sector
  • an increase in household consumption
  • an increase in performance of the Australian economy
  • a decrease in the tax rate for companies with a turnover of less than $50 million from 2018-2019
  • the $75 billion plus investment in infrastructure projects
  • the Government’s foreign trade agenda and
  • securing export trade deals with China, Japan and South Korea.
The Treasurer further indicated that these amounts were in line with economic estimates provided to the Government.

For new parents, $263 million will be added to the ParentsNext program which provides parents of young children tailored support to assist their return to work. Participants in the ParentsNext program will receive personalised assistance, including advice on relevant education and qualifications and training to improve numeracy & financial literacy.