Labour considers tax on those who hire offshore to fill skilled positions

Labour is considering a plan to put a levy on employers whom it says would rather import skilled labour rather than upskill their own workers.

But leader Andrew Little denies it's a tax on immigrants.

Instead he calls the policy, which stems from his party's Future of Work Commission and was unveilved at its annual conference this weekend, a case of asking "industries to invest in training for their future workforces and future skills needs".

"We're just not producing enough people with the skills that we need," Mr Little told The Nation.

"There are some employers who do a great job - they take on apprentices - but there are others who don't. They get the benefit of a skilled workforce - they just take them from fully qualified people.

"If we want to make sure we've got the skills for the future… for those employers who don't take on apprentices, don't invest in training, you can contribute a levy and that'll help to defray the cost of those who are doing the training and other broader costs as well," he says.

"If you did no training, no education and people had to go overseas to get it, sure. The only way you're going to fill skills shortages… is to bring them in from overseas. "

On the other hand, he thinks there are still too many people being granted work visas to do jobs Kiwis should be taking, the Labour leader says.

"We have, according to our unemployment statistics, roughly 15,000 people who do labouring work who are unemployed. Last year we issued 6500 visas for people to do labouring work. That doesn't make sense. You manage immigration policy to deal with that issue.

"The number of work visas going to people on semi-skilled jobs and occupations that could be filled by people here, even with a little bit of training, that doesn't make sense."

Business New Zealand chief Kirk Hope warned such a tax might mean smaller businesses would suffer.

Many employers could not get local staff in the first place, he said in a statement.

Mr Hope said small businesses also might not have the capacity to deliver training.

RAW DATA: Lisa Owen interviews Labour leader Andrew Little on The Nation

Lisa Owen: The Labour Party’s in Auckland this weekend for a crucial annual conference. A year out from the next election, the party is still labouring in the polls. Even with its partner, the Greens, it couldn’t form a government. But it’s aiming to turn things around with a list of new policies and proposals, including a package focused on the future of work. Leader Andrew Little joins me now. Good morning.

Andrew Little: Good Morning.

One of the things under consideration is a skills shortage levy. Now, tell me, how would that work? What is it?

We’ve all suffered in New Zealand in a lot of industries where we are just not producing enough people with the skills that we need. The construction industry is a classic example. There are some employers who do a great job; they take on apprentices. But there are others who don’t. They get the benefit of a skilled workforce; they just take them from fully qualified people. So what we’re saying is if we want to make sure we’ve got the skills for the future, whether it’s in the trades, whether it’s in other skilled areas, for those employers who don’t take on apprentices, don’t invest in training, you can contribute a levy, and that will help to defray the cost of those who are doing the training and other broader costs as well.

So who do you think would actually end up being levied? Who will pay?

Where there are industries that say, ‘Right, we want to get our volume of trainees and apprentices up, and we know there’s going to be this demand for a skilled workforce in our industry in the future, so we want to start making steps now,’ so they will say, ‘Okay, we’re all in this.’ Some of you are capable of providing the training. Others of you aren’t. Those of you who aren’t, your contribution can be levied while we get the people into the industries and getting the training.

So individual businesses or umbrella organisations?

I expect it would be individual businesses, but you’d want to deal with industry bodies and industry organisations to get the thing set up. As you see, for example, with research levies in some of the agricultural industries, the individual businesses will pay towards getting, in this case, skills training.

And how much? How much will they pay?

I can’t quantify it, but if you accept that we have had a constant and consistent problem of simply not getting enough of the skilled labour into a range of industries, then we want to make sure that the resources are there to allow that to happen. In the end, it benefits every business in the industry because they’ve then got the pool of skilled labour that they’re drawing from. All businesses, or at least those who are typically doing the training, aren’t taking the risk for the benefit of others. So you end up sharing the cost and sharing the risk.

You mentioned the construction industry there, but what kind of jobs are you talking about? Give me some other examples.

Oh, there’ll be others as well. It could be in the IT industry. It could be in a whole swag of different industries. It’s not kind of your classic trades. So many industries now… I guess one of the outcomes from the—

So the jobs may be on the skills shortage list? Is that what you’re talking about? IT jobs… Bringing in the people from overseas. The ones that we’re having to bring people from overseas for.

I think one of the conclusions from the Future of Work Commission project is that there’s a whole heap of new skills going to be added either to existing jobs or to jobs that don’t even exist at the moment. The level of skill required to compete in the workforce of the future is going to be a step different to what it is now, so we need to really step up the level of investment and involvement in education and training. Some of that the state can do. Some of that the industries are going to have to be doing as well.

But you are talking about jobs that people are currently bringing in workers from overseas for.

Sure. I mean, I think we’ve made the point already — that if you look at the work visas being issued, the number of work visas going to people on semi-skilled jobs and occupations that could be filled by people here even with a little bit of preliminary training, that doesn’t make sense. That’s a question about how we’re managing immigration to meek workforce needs.

So tour guides and chefs?

Yeah. I don’t see the training and the skills issue that we’re talking about in our Future of Work Commission report as necessarily being related to that. I mean, if it all works, of course, and you’re managing your immigration properly, then you will see fewer work visas being issued to people in the semi-skilled roles.

Well, the thing is it’s called a skills shortage levy, but it could equally be called an immigration tax in some ways, because you’re talking about businesses who are short of workers so they bring them in from overseas. It’s an immigration tax, isn’t it?

No. This is about making sure that we’re doing… For people who are already living here, either because they’ve come here or they’ve been born here and grown up here, is that they’re being given the opportunity to get the skills needed to fill the jobs that are here. We will always be dependent on a level of immigration, so there’s no question about that. It’s not about—

But if you’re having to resort to immigration, then there’s not enough people trained here. And by your policy, you will be levied for that.

Well, the issue with immigration we’re seeing at the moment is that we’re seeing work visas issued for positions and for roles that are semi-skilled, many of which could be filled by people already living in New Zealand. So you take the classic example of labourers. So we have, according to our unemployment statistics, roughly 15,000 people who do labouring work who are unemployed. Last year we issued 6500 work visas for people to do labouring work. That doesn’t make sense. You manage your immigration policy to deal with that issue. The issue that the skills levy proposal that we’re considering is about saying the level of skill required to do a whole heap of jobs in the future is going to be different. We need to be making that investment in skills in the future workforce now.

Those two issues are inextricably linked, though, because if you’re bringing in workers because you’ve got a skills shortage, it is, in essence, a levy on immigration and on skills.

If you did no training, there was no training, no education and people had to go overseas to get it, sure, you’d say, ‘Yeah, okay, well, the only way you’re going to fill skills shortages and the high level of skills shortages, yeah, you’re going to have to bring them in from overseas.’ I don’t see—

Is this part of a deterrent, though, Mr Little? Is it part of creating a deterrent for bringing in those workers, a way to cap immigration without actually saying you’re capping it?

Well, it’s about creating opportunities here for people who are here, working with business and industry to make sure that they’re doing their bit. I mean, within a single industry, as I said before, you’ve got some businesses who are committing to training, investing in apprenticeships, getting the skills formation going for their particular industries. But they do it, and others in the same industry don’t do it, and there are some employers who are saying, ‘We’re meeting all the costs, we’re taking all the risks, and we are providing that kind of channel of future skills to the rest of the industry. How about as a matter of fairness, we share the cost, share the risk?’ And the skills levy proposal is a way of doing that. It’s not a counter—

So you’re saying you’re not using it as a deterrent?

It’s not a counter to immigration. We’re always going to depend on a level of immigration to meet skills shortages we have in New Zealand.

Okay. So if it’s not a deterrent to bringing in immigrant workers, then it’s revenue gathering , isn’t it? And what are you going to do with that money?

Well, it’s revenue gathering for industries to invest in training for their future of workforces and their future skills needs.

But how are you going to distribute that money? Are you going to ring-fence it and send it to particular training organisations? Are you going to set up a chef school, if that’s where the shortage is? How is the money going to be spent?

We’ll work with existing organisations and existing bodies. So you’ve got industry advocacy organisations, but you’ve also got industry training organisations who are already set up to work with industry to determine the future skills needs. What they don’t have, necessarily, apart from what state funding they get, is the ability to ensure that the kind of costs and the risks are shared equally between businesses in a specific industry. So the kind of infrastructure is there to make this work, and for those who make the decisions about the allocation of the resources from the levies raised. You don’t need somebody sitting in a minister’s office to make those decisions. The industry can make that.

I’m just wondering how much it’s going to cost taxpayers, though, because you’re going to have to levy a lot of government departments, because they are bringing in workers. The Department of Corrections is bringing in corrections officers from overseas. Hospital workers is another place where we have big shortages on the skills list; we bring people in from overseas. You’re going to be levying government departments, and that’s levying the taxpayer.

Well, the government already invests in the training for Corrections officers, for example, and nurses and doctors and other health professionals. The private sector invests in the training for a lot of the aged care workers, for example, because it’s largely a privatised industry. And you’ll work with the ITO that looks after those workers and for that industry to make sure that the levy raised is going to allow us to meet the investment of the future workforce for those needs.

But have you worked out how much it’s going to cost?

No, we haven’t got down to figures. The Future of Work Commission report that we’ve got, this is the conclusion of two years’ work of going out, consulting, looking at 20 years, looking at what we expect will happen with the workforce, what the demands and the challenges will be and coming up with a set of ideas to start to meet those challenges. So a high-level, highly detailed kind of policy level and prescriptive work hasn’t been done. This is about a set of ideas to help us meet those challenges of the future.

Okay, let’s move on to Mt Roskill. You lost the party vote last time in that electorate. The support arguably is for Goff personally, so how worried are you?

What I’m very pleased about is the campaign that we’re running there. We’ve got a fantastic candidate with Michael Wood. We’ve got a great campaign team there. I’ve been out there a couple of times with Michael and with his team, and we are doing everything we need to do to win every vote, to earn every vote, to get Michael returned.

Well, the thing is Phil Goff won by an 8000 majority, but in the party vote, National beat you by about 2000 votes.

That’s right. This is a by-election – slightly different. You only get one vote.

Yeah, it is.

But that’s the reason why we take nothing for granted, and we have a good campaign team working very hard. Michael is working very hard every day. We’re out there earning every vote we get. As I say, we take nothing for granted. This is a hard graft for us, but I’m confident with the campaign we’ve got there, the candidate we’ve got, the sort of feedback we’re getting, that we are in with a good chance.

Well, the thing is Mt Roskill is a very ethnically diverse suburb. Are you worried that, say, policies like the one you’ve just been talking about this morning might be interpreted as an immigration tax and you might be alienating those voters?

In all the discussions I’ve had about an industry levy for training for future workforce needs, I’ve never heard it linked to immigration before. I think, with all due respect, that’s frankly a bit of a stretch. The campaign in Roskill is about housing, it’s about transport and traffic congestion, and it’s about crime. Mt Roskill people and small businesses there are very concerned about the number of robberies and burglaries and assaults that many of those small businesses are witnessing or experiencing. They want a safer community. That’s what Michael Wood and Labour are standing for. That’s what we’re advocating for in the campaign.

Shortly on the show we’re going to have the Equal Employment Opportunities Commissioner, Jackie Blue, and she wants every political party to pledge to a 50-50 cabinet of men and women. Would you commit to that?

I’m not going to commit to that right now, because I don’t know what the number’s going to look like for us after the election next year, but what I can say is we are totally committed to pay equity. It was the project that we started several Labour governments ago. We’re committed to it, and I think I agree with her when she says, actually, the state sector ought to be leading the way. The state sector ought to be the exemplar on this. What I can commit—

But in terms of your own cabinet— I mean, Jan Logie is also on, and she says it’s Green’s policy, half and half, so how’s that going to work if you guys are all in cabinet together? Are you committing to half and half as well?

Like any government-formation process, you negotiate these things, and we can— you know, we can make commitments. We are totally committed to pay equity, and starting with the state sector, totally committed to—

What about totally committed to representation in your cabinet?

…to ensuring that we see more women in senior roles in the state sector – actually, and outside it too. You know, I look at the work that the New Zealand Institute of Directors is doing in terms of promoting women into board positions, into board roles. They do fantastic stuff. You know, the state sector has got something to learn from them about what we can do to get more women into senior roles.

All right. Before we go — we’re running out of time — the other thing that Jackie Blue says is we need to look at making private companies report their gender pay gaps, entrench it in law and fine them if they don’t do it. Would you support that?

Certainly support reporting it and make it as part of the annual reporting process. Whether you—

As a legal requirement?

Yeah, put it in the Companies Act. Make it one of the things that has to be reported on. Working out a penalty regime or a fine regime for not meeting whatever targets that will have to change over time anyway, I’m not sure that’s going to be particularly helpful. I think the giving people information or requiring companies to report and disclose that information, totally acceptable and is necessary. Once you get the transparency, you’re going to get the impetus to actually make the change.

All right. Thanks for joining us this morning.