Julia Gillard wants Australians to go back to work, using the budget to tackle a worsening skills shortage through training and apprenticeships, delivering more migrant workers to labour-hungry areas while cracking down on the unemployed to get them learning or earning.

Treasurer Wayne Swan’s address to parliament tonight talked of delivering a “Labor budget”. But it was as much a labour budget, as the government recognises crippling skills shortages as the economy ramps up from its GFC slump and the need to widen the taxpaying base amid slipping revenues.

And while Swan is taking a stick to the long-term unemployed there are also juicy carrots for workers and employers to increase participation. The government pledged pre-budget to create 500,000 new jobs and cut the unemployment rate from its current 4.9% level to just 4.5%.

Swan said the government’s Building Australia’s Future Workforce program was about getting “more people into work, and to train them for more rewarding jobs. So that national prosperity reaches more lives, in more corners, of our patchwork economy.”

Swan says the government will deliver a “new approach to training”. Initiatives include:

  • A $558 million National Workforce Development Fund, creating 130,000 new training places over four years.
  • “Reforming” apprenticeships to encourage completion, with $101 million for a national mentoring program to help 40,000 apprentices finish training and $100 million in flexible training models to accelerate them.
  • Topping up the $7 billion funding commitment to states and territories over five years by offering a further $1.75 billion as a sweetener for more “ambitious” vocational education and training reform.
  • A $263 million investment in programs to improve reading, writing and numeracy among job-seekers.

Minister for Skills and Jobs Chris Evans says the package puts industry at the centre of efforts to reduce skills shortages. Industry will bid into the Workforce Development Fund to secure matched funding to train current or prospective staff, with small business to receive more assistance.

Construction — the third largest economic sector — and aged care — with demands growing due to an ageing population — will be priority areas, Evans says.

A new National Workforce and Productivity Agency — to cost $25 million, replacing Skills Australia — will administer the fund and work with industry to identify areas of need from July 2012.

As expected, the Treasurer also announced a lift in skilled migration places for regional areas. A further 16,000 migrants will be shipped in, with new Enterprise Migration Agreements for large resource projects (with businesses expected to contribute to train workers).

And in “providing opportunity”, Swan said the government was also “demanding responsibility”. It will target the young, older workers, the disabled and the long-term unemployed to participate in the workforce.

Many of the “carrot and stick” tax and welfare initiatives were flagged before the budget: extending tax breaks for low and middle income earners; phasing out spousal support for those aged over 40; toughening the income test on Newstart payments for single parent families; extending the “earn or learn” provisions of the Youth Allowance payment; forcing the long-term unemployed to perform more work experience; developing participation plans for those unemployed with a disability.

Significantly, Family Tax Benefit A will be boosted by some $772 million over five years for teenagers who remain in secondary school. The initiative will boost payments by up to $4208 a year for 16 to 19-year-olds.

The “very long-term unemployed” will be targeted with $133 million in support programs to co-ordinate training, Work for the Dole and other activity requirements. There are also wage subsidies for employers to take on workers who have been on income support for more than two years.

And the government will identify 10 disadvantaged regions to provide new “services, opportunities and responsibilities” to boost job readiness. Income management will be expanded in five of these areas to tackle dysfunctional domestic situations.