The Skilling Australians Fund (SAF) levy, also known as a training tax, requires businesses sponsoring skilled overseas workers on TSS visas to pay up to $1,200 per worker each year. The idea is to use this money to help train Australians, but is the system really working as intended, or should it be rethought to better align with modern business needs?
Where Does the SAF Levy Money Actually Go?
There’s little clarity about how the SAF funds are being used. While it’s known that the money is put towards training, many businesses wonder if it’s being spent in the areas where it’s most needed to fill critical skill gaps.
While most employers understand the importance of investing in workforce training, the SAF levy can feel like a “double hit.” Businesses are required to pay into this fund while also covering the costs of their own training programs.
To make matters worse, the levy is an upfront payment, with very few options for refunds if a sponsored worker leaves their job. As the government tries to make it easier for employees to move between jobs, this upfront cost only adds to the financial risks of hiring international workers. Small and medium-sized businesses, in particular, are hit hardest because the upfront payment can put a strain on their finances.
There had been a proposal to make the SAF levy more flexible by allowing businesses to pay in installments, but this idea wasn’t included in the “Migration, Pathway to Nation Building” report. While the report suggested other reforms, the SAF levy’s payment requirements stayed the same. Businesses need to plan for these costs in 2025 and beyond.
Reform Should Go Further
The conversation around the SAF levy shouldn’t just focus on payment options. For Australia to stay competitive globally, it’s not enough to just bring in skilled workers—we also need to build a strong local talent pool. In sectors like healthcare, where there are growing skill shortages, Australia must do more than just attract overseas workers; it also needs to invest in homegrown training.
At a minimum, businesses that are already putting money into local training programs should get some recognition, such as tax credits or partial refunds on the SAF levy, to avoid paying twice. This could turn the levy from just a financial burden into a tool that encourages companies to invest in both local and international talent.
Ultimately, the SAF levy should be part of a bigger discussion on workforce development. Whether it’s through more flexible payment options or support for in-house training programs, there is a chance to turn the levy into a more effective tool for building Australia’s future workforce.