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Federal Budget: foreign worker tax introduced

Businesses that employ foreign workers will be subject to a new levy that will be used bankroll a fund for training Australian job seekers, the Government announced in the Federal Budget.

From March 2018, businesses will be subject to a levy of $1200 per foreign worker or $1800 if they’re on a temporary skilled visa. In addition, there will be a $3,000 one-off levy for foreign workers on certain permanent skilled visas. This one-off levy rises to  $5000 if a business’s turnover exceeds $10 million.

With the introduction of the new levy, the government is seeking to raise between $1.2 billion and $1.5 billion, over a four-year period, for its new Commonwealth-State Skilling Australians Fund.  It expects the Fund, when matched with State and Territory funding, will support up to 300,000 apprentices, trainees, pre-apprentices and higher level skilled Australians.

In a statement addressing the new levy, Treasurer Scott Morrison said the goal was “ensuring at Australians come first for Australian jobs” and that businesses become “less reliant on foreign workers in the future”

Dynamic Business received comment on the new levy from several businesses, including tech start-ups, with the operator of one describing it as a “real Homer Simpson ‘dohhhh’ moment”.

Jeff McAlister, CEO of ticket platform TryBooking: “We have long claimed that we could not hire enough local workers to grow our business. Also, we were unable to meet the training requirements for 457 sponsorship. It is good to hear that this will be replaced with a $1,200 levy per foreign worker per year. This will help us grow our local workforce and global business aspirations.”

Michael Jankie, chief executive of ‘social WiFi’ start-up PoweredLocal: “Foreign worker levies seem like pure politicking, but it makes the visa issue seem like it will go the right direction, allowing Australian companies to attract great people to our shores. We’ll just have to pay a fee (fine) to do it.”

Luke Taylor, managing director of digital marketing firm Mpire: “Creating a fine which appears to support apprenticeships will do nothing in terms of helping grow the kinds of skills that we need to develop technology talent in Australia. For us this fine is a wasted cost, we are still a young company and are frugal about wherever we spend our money and this is essentially charging us for being unable to access local talent. Like many startups, our fast growth trajectory means we just can’t afford to wait to train and hiring from overseas remains essential to our growth.”

Tony Wu, Head of Growth at on-demand recruitment platform Weploy: “This policy will make it harder for the businesses who desperately need skilled staff to hire. It sends a message that Australia does not value the skills of foreign workers. Weploy will pay the levy either way because we need to be able to hire skilled foreign workers (alongside local Weployees) so we can provide the best talent available to our clients. It’s just an unnecessary tax that will not be beneficial to many businesses including our own.”

Ewen Malcolm, Founder of property management company MiSale:” The foreign worker levy will be a real Homer Simpson “dohhhh” moment that future generations will look back on with dismay and a lot of question marks. It’s a rather devastating blow for tech startups and Australia at large. The reality of it is, we don’t have access to the qualified engineers we need, we are forced to source overseas as it is. There is not enough funding for local companies, and now the government wants to force us to pay more money, or dip into a smaller pool of people with inferior skill-sets. It’s not ideal for the agile environment we need to create here in Australia.”

Mark Tanner, co-founder of online document start-up Qwilr: “For a quick growth tech company on the hunt for talent to help us expand, the new levy will do nothing to ease the supply and demand challenges we face. The top 1% of candidates in technology can offer expertise and results that are 10 times better than anyone else — and the reality is that most of these candidates are from outside of our shores. Putting up barriers to attain overseas talent will be detrimental to the success of Australia in the global tech race long term.”

Yanir Yakutiel, CEO and founder of Sail Business Loans: “The government says implementing an annual foreign worker levy will generate $1.2 billion to support local skills development. While it sounds good in theory, governments seem to forget that businesses change their behaviour based on legislative changes. Businesses will be discouraged from hiring skilled foreign workers, resulting in revenue likely falling short of expectations. A levy would effectively be passed onto foreign workers’ salaries, decentivising them from coming to Australia in the first place and making it more difficult for Australian startups and businesses to attract top talent.

“We recently had to pull two offers to potential employees when the 457 visa changes were announced as it wasn’t clear how it would impact our business moving forward. This can be a significant setup for a growing startup like us.

“As a small technology-focused business, we rely on very specific skills for growth. Unfortunately, these skills are in short supply in Australia. Surely, skilled migrants are the last people we want to deter from immigrating to Australia. On the contrary, we need to make Australia as attractive as possible, as we are competing globally for the brightest minds. The multiplier effect of imported skills is enormous. The best way to skill Australians is to expose them to global expertise. Shielding the local labour market from foreign skills is a protectionist policy that is going to have the exact opposite result that what it is intended to achieve.”

Howard Digby, Chairman of audio-based social network HearMeOut: “The tightening of foreign worker visa policy to increase jobs for Australians may work for some areas (e.g. for trade and technical) but has the reverse effect for others (such as higher executives). Bad handling of this policy will end up being counter-productive for Australian jobs. New policies must allow for key people in strategic positions to be hired from overseas if it is deemed by the board of a company to be in the best interests of that company. Having blanket restrictions for industries or job titles could restrict that. The right person in a strategic role may mean the difference between great or poor performance of a company. This has the most impact on the growth of Australian Jobs by far. Successful and growing businesses create jobs, not governments.”

Julius Wei, Co-Founder and Head of Investment Analysis at BMY Group: “One of the biggest losers in tthis budget are foreigners. Especially those skilled people working in Australia with the new levy on businesses hiring foreign employees on a work visa. Adding to the turmoil caused by Mr. Turnbull and immigration department’s earlier announcement of closing 457 visas all of a sudden. This budget again shows the message that Australia doesn’t welcome talent. We are talking about people who can bring skills and talents to the country, the people who contribute to the nation’s culture and economy, people who pay their taxes and spend money on consumption – hence “making a net profit” for the treasury’s point of view.

“Looking at the history of Australia, from the early development since 19th century, to the European migrants fleeing from WWII, and the recent wave of Asian migrants and investment, none of them do any harm to Australia. On the contrary, people, good people with skills and talents are the best addition to any country. At a time when extreme right-wing thoughts are driving anti-foreigner campaigns in many European and American economies, the only thing Australia should do is to open its arms and provide a shelter to these skilled people like it did in the past. This will in turn be paid back by the contributions made by these people and make them proud of Australia, as they eventually will become Australians like most of Australian’s ancestors did.”

See also: Liven co-founder suggests training subsidy to offset start-up impacts of the 457 visa reformStart-ups weigh in on the 457 visa abolishment

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James Harkness

James Harkness

James Harnkess previous editor at Dynamic Business

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