The Federal Budget handed down on 11 May 2021 was largely about job creation. Our employment recovery to date has been strong with unemployment currently sitting at 5.6% (which is back to pre-COVID levels).

Employment and hours worked in March 2021 were both higher than March 2020, up by 0.6 per cent and 1.2 per cent respectively. The next month of data will be telling but it appears as though the end of JobKeeper 2.0 on 28 March 2021 has not resulted in significant job losses across the nation.

The Federal Government is targeting 5% unemployment by mid-2022 and even lower in 2023 (which will be close to full employment). From the government’s perspective, It is hoped that full employment will lead to stronger wage growth.


Measures to reduce unemployment rates

Extending the JobTrainer initiatives to encourage young people to develop skills in-demand occupations

As foreshadowed in pre-budget reports, the government is extending the JobTrainer fund, which provides access to affordable training courses for young people. The budget provides for an additional $506.3 million over two years, to be matched by contributions from the states and territories.

JobTrainer was established in partnership with state-based TAFEs in 2020 to provide affordable courses to help young people develop skills needed in the workforce.


Boosting apprenticeship commencements by expanding the 50% wage subsidy program

The wage subsidies which reimburse employers for the wages of new apprentices and trainees by up to 50% will be continued. Under the expanded program, the number of eligible places will be uncapped and the duration of the 50% wage subsidy will be increased to 12 months.

Businesses of any size will be able to claim the subsidies for new apprentices and trainees who begin their employment between 5 October 2020 and 31 March 2022, with a maximum amount of $7,000 per quarter available.


Increasing incentives up to $10,000 for hiring JobSeekers and disadvantaged people

Wage subsidies for eligible jobseekers on JobActive, Transition to Work and ParentsNext payments will also be increased to $10,000, in a budget measure designed to encourage employers to hire disadvantaged people.


Implementing childcare rebate changes from 1 July 2022 to encourage primary carers to return to work

The policy changes include removing the $10,560 subsidy cap for parents with a combined income of over $189,390 and increasing the subsidy to 95% for families with more than one child in care at the same time. However, the measures do not come into place until July 2022.

The investment will add up to 300,000 hours of work per week which would allow the equivalent of around 40,000 individuals to work an extra day per week. Importantly it lowers the disincentive to take on an additional day or two of work for many families.


In this EI webinar, our experts discussed the 2021 Federal Budget Update; the key considerations for employers and its implications on the workplace.


Labour shortages

One of the issues that the budget, and other recent announcements from the Government, has sought to address is labour shortages across various sectors.


Temporarily allowing employees on student visas to work more than 20 hours a week if they are working in the tourism or hospitality sector

Most individuals on student visas are currently only allowed to work up to a maximum of 20 hours per week.

The proposed changes mean that tourism and hospitality will be treated the same as other industries where COVID has caused a shortage of work including agriculture, health, aged care and disability sectors.

We will let you know as soon as we have information about the exact date this will take effect.


Tourism and hospitality workers allowed to apply for the 408 visa

The subclass 408 visa is a visa that allows temporary visa holders (e.g. backpackers) to apply for an extension to remain and work in Australia for an additional 12 months, so long as they are employed by an employer listed in one of the “critical sectors”.

It has now been announced that employees in the tourism and hospitality sector are now able to access the subclass 408 COVID-19 visa that was only previously available to the foreign nationals working in the agriculture, food processing, health care, aged care, disability care and child care sectors.

Temporary visa holders will be able to apply for the subclass 408 COVID-19 Visa up to 90 days before their existing visa expires.


Limited numbers of new foreign students will be allowed to enter Australia in late 2021

The Government has indicated that it hopes to see an intake of foreign students on a smaller scale later this year, hopefully in time for the seasonality increases in labour needed across hospitality and tourism.


Higher numbers of skilled migrants (but not expected until mid-2022)

Immigration will play a key role in Australia’s long term economic growth however it is expected that we will not start seeing any net increase in migration until the middle of next year.


Other budget initiatives

Mental health resources for small businesses

In a cause that is very close to our hearts at Employment Innovations, further funding of $0.9 million over four years from 2021-22 to support small business owners to take proactive, preventative and early steps to improve their mental wellbeing through the “Ahead for Business program”.


Super guarantee changes

From 1 July 2022, employers will be required to make compulsory Superannuation Guarantee contributions for employees earning less than $450 per month.

Currently, employers do not need to make Superannuation Guarantee contributions on behalf of an employee who earns less than the $450 per month income threshold, unless otherwise stipulated in a relevant Award or Agreement.

The superannuation guarantee will increase, as planned, to 10% from 1 July 2021.


Employee share schemes

The Government has announced changes to the taxation and regulation of Employee Share Scheme (ESS) interests. These changes are intended to assist Australian companies with engaging and retaining talent in order to remain competitive in the global market.

Currently, where an employee is provided with an ESS interest that meets certain eligibility requirements, the employee can defer the tax on the ESS interest until the earliest of the following points in time:

  • Cessation of employment;
  • The removal of any risk of forfeiture and restrictions on disposal; and
  • 15 years from the date the ESS are issued.


The Government is proposing to remove the cessation of employment as a taxing point.

The Government is also proposing to remove regulatory requirements relating to disclosure documents required under the Corporations Act for employers who provide ESS interests where:

  • The employer is not charging, or lending to the employees to whom the ESS is offered; or
  • Where the ESS offers are valued at less than $30,000 a year per employee.


In this EI webinar, our experts discussed the 2021 Federal Budget Update; the key considerations for employers and its implications on the workplace.


What we did not see?

We had expectations for more initiatives around female participation and equality. For example, there were rumours of super being payable on parental leave to close the gap on retirement savings but there was nothing on this.

There were no announced changes to further defer the increase of the Superannuation Guarantee rate for compulsory employer superannuation contributions. The rate is still scheduled to progressively increase to 12% by 1 July 2025.

Also, unlike JobTrainer, the JobMaker hiring credits have not been extended at this stage. JobMaker offers payments to businesses that increase their headcounts by hiring young job seekers between 7 October 2020 and 6 October 2021. Recent reports have indicated that the take up of this has been well below expectations – possibly linked to the tight criteria needed to qualify.


About Employment Innovations

Employment Innovations is one of Australia’s leading providers of employment services designed to increase productivity and ensure compliance. Its services and solutions include all the tools that every Australian small to medium sized employer needs – including workplace advice, legal services, payroll solutions, migration, human resource management and HR software.



The information provided in these blog articles is general in nature and is not intended to substitute for professional advice. If you are unsure about how this information applies to your specific situation we recommend you contact Employment Innovations for advice.


This article was originally published on 13 May 2021; updates have been made following the advice of State & Federal government authorities. Last updated 14 May 2021.