The Coalition budget offers millions to the Fair Work Ombudsman, makes a big splash in the VET sector, and provides a boost for small businesses.

Pre-election budgets are always tricky – no one is sure if they will be enacted or not. That being said, the budget presented on Tuesday by Treasurer Josh Frydenberg offers an idea of the political battleground ahead and, importantly for HR, it hinted at where the government’s workplace priorities lie.

So while the headlines went to the tax cuts and forecasted ‘significant’ surplus for 2019/2020 (the budget predicts Australia will climb from a $4.2 billion deficit to $7.1 billion in surplus), the Coalition is also promising a raft of spending that should interest the people department.

Regulators given more money

A big winner for the night were regulatory bodies.

The budget aims to raise $3.6 billion in revenue from multinationals through a $1 billion investment in the Tax Avoidance Taskforce, extending it until 2023. Also in the budget is a measure (actually announced in February) to use $57.5 million over 5 years to provide small businesses with what’s been described as “access to a fast, low cost, independent review mechanism where they are in dispute with the Australian Taxation Office”.

The Fair Work Ombudsman (FWO) will receive an extra $9.2 million over four years to help stop sham contracting and other forms of non-compliance with workplace laws.

As non-compliance has been a steady source of public concern, this seems appropriate. And it’s not just smaller organisations, larger ones like the ABC have been at fault. It admitted to a systemic issue that meant up to 2,500 of their workers were being underpaid over six years.

The FWO will also receive a further $19.8 million to establish a ‘national labour hire registration scheme’ – which was suggested by the recent migrant worker taskforce review. It would force labour hire organisations in the worst offending sectors to register with the government.

Over half of that money ($10.8 million) will go towards increasing the FWO’s capacity to educate key employers and employees about their rights and responsibilities, and investigate underpayments and other issues within the sector.

Also facing more scrutiny will be the big banks. If people were upset enough about payroll compliance to float the idea of criminalising wage theft, you could only describe the anger at the country’s financial institutions as white hot.

So it’s not surprising that the government, which initially wavered on the need for a commission, is now giving the regulators of financial institutions a big boost. The Australian Securities and Investments Commission will receive $400 million to strengthen court action against criminal actions, and the Australian Prudential Regulation Authority will receive $152 million to help better moderate issues within governance and remuneration.

(For our article for what the Commission said about the regulation of a key HR responsibility, culture, read our article).

Skills and jobs investments

Both major parties talk about Australia’s skills shortages, and we know what the Coalition is proposing to address it. It’s a $525 million bump to apprenticeships and the Vocational Education and Training (VET) sector.

The biggest item is the $156.3 million set aside for 80,000 apprenticeships. Employers will see an increase in their incentive for hiring apprentices, and apprentices themselves will receive a $2000 incentive for going into priority areas.

“This will make it more likely that more workers will be given a go, many of whom may not have otherwise been able to find work,” says McDonald Murholme managing director Alan McDonald. “This will boost employment in this area and is both beneficial to the employer, who gets to train and skill new workers, and apprentices, who can get their start in the industry.”

As outlined in this government fact sheet, there are a few other ideas, including:

• A National Careers Institute will be established and headed by a National Careers Ambassador. The idea is to “transform careers advice” and promote “consistent national guidance on quality careers advice”.
• $44 million to streamline incentives for employers in the VET space
• $10 million to develop “innovative” partnerships between schools, employers and the VET sector
• $41.7 million for a ‘Skills Organisations’ pilot in the digital technologies and human services care sectors. These will trial new, industry-led methods of qualification development and assessment, and develop standards for industry to accredit Registered Training Organisations.”
• A four year $50.6 million project targeting youth unemployment in regional areas, consisting of 10 training hubs that will “support industry pathways in areas of local skills shortages that complement the completion of secondary education”.
• The establishment of a National Skills Commission to oversee the nation’s $2.8 billion investment in VET. It will work with the “states and territories to develop a nationally consistent approach”.

VET is getting the lion’s share but there was some less costly items for other initiatives, such as a $3.4 million package to support more women in STEM.

Business boosts

There are a variety of measures in the budget aimed at helping businesses. The reaction to them has already been mixed, with the Australian Financial Review’s Chanticleer column calling the measures, “a Band-Aid solution for the two most pressing challenges facing the Australian economy: dismal productivity growth and the banks’ growing reluctance to lend to small businesses.”

Beyond the already announced securitisation fund, the tax rate for companies with a turnover of less than $50 million will be cut to 25 per cent by 2021-22 (earlier than before). And those some companies can benefit from the $60 million boost to the Export Market Development Grants scheme (it had its funding frozen in 2014). The scheme allows organisations to be reimbursed for export promotion expenses worth in grants to SMEs looking to promote their products overseas.

The budget also promises to extend the number of businesses who will have access to instant asset write-offs to those that have a turnover of up to $50 million (it was previously $10 million).

Stagnant wages

The Coalition’s most compelling answer to the continued slow real wage growth for most Australian workers were the tax cuts it flagged for low and middle-income tax earners. Labor will pass that legislation, and has already announced it will propose further cuts to those earning less than $40,000 should it win the election.

But tax cuts aren’t going to increase wages in any kind of direct way – they’ll take home more pay, not earn more. Indeed, if the people arguing that the wage growth predicted by this budget is overly optimistic, then the tax cuts may do very little at all to offset slow wage growth.

Labor’s plans to change workplace laws are arguably the second prong of their attempt to deal with low wages. As outlined in HRM’s trends article Labor, amongst other things, wants to reverse the reduction in penalty rates and is contemplating changing industry bargaining laws. So it will be interesting to see what answers the Coalition has in mind as we get closer to the election. Will they focus on economic stewardship and portray Labor’s policies as too risky during a global downturn? Or will they offer changes of their own?