Major Projects Skills Guarantee (MPSG)
The Victorian Government has made commitments to grow jobs and promote vocational training. Part of this commitment is the Major Projects Skills Guarantee (MPSG).
The MPSG provides new employment opportunities and more vocational training for young Victorians. It applies to all works valued at $20 million or more.
For at least 10% of the total estimated labour hours, projects must use Victorian:
- engineering cadets
More than 90 projects will be applying the MPSG. This will create more than 3,500 jobs for young Victorians, with many more expected over the next few years.
The 10% figure is a starting point. The key goal of the MPSG is to create more apprentices, trainees and cadets, as well as reduce the cost to employers. We will review the target after 12 months.
We will also review the $20 million threshold after 12 months.
The MPSG applies to government-funded:
- civil engineering
- other capital projects
The requirement to meet the 10% labour hours applies to contract works as a whole. It extends to all the works as part of the contracts for those projects.
Where a project has a large maintenance package as part of the contract, the labour hour requirement also applies to the maintenance package.
How is the $20 million calculated?
A program or project might be over $20 million, but only involve 1 or 2 contracts valued above the threshold. When the MPSG applies to contracts rather than programs or projects, the 10% rule applies only to contracts over $20 million.
The MPSG doesn't apply to contracts under $20 million, even though they might be part of a larger project or program.
For a single large contract over $20 million, with the works broken down into individual contract packages under $20 million where the smaller packages are part of the initial large contract, the MPSG will apply to those packages by being applied to the initial contract as a whole.
If the principal contractor doesn't own the smaller packages, the MPSG wouldn't apply if these are under the threshold.
How is the 10% calculated?
Contractors can count contributions from either:
- directly employed apprentices, trainees or cadets, or
- those hired through group training companies
Contributions can be counted from existing and new apprentices, trainees or cadets. Time spent by apprentices, trainees or cadets at trade school or other off-site vocational training also counts.
Contractors also need to make sure their subcontractors work towards the 10% rule.
Compliance will be based on what contractors propose in the Compliance Plans. Contractors need to report during the project, and give final compliance reports.
The 10% rule forms part of the contract, so not achieving it means a breach. That record carries over to the next tender.
We will review compliance outcomes after 12 months, including linking payments to the 10% rule.
The employee rule
The MPSG looks to create more jobs and training. These opportunities need to extend to people who have found it harder to get a start, or get access to a trade career.
Contractors are encouraged to use employees from under-represented groups, but it’s not mandatory.
Contractors can use apprentices, trainees or cadets in any combination. But the mix needs to reflect what’s happening in that sector.
For sectors with many apprentices, contractors shouldn’t only rely on trainees and cadets to meet the MPSG target. In industries with many trainees, contractors should include some trainees in MPSG plans.
For tenders, contracts and contractors
If the MPSG applies to your project, specific clauses will be included in the tender and contract documents. Contractors need to complete a Compliance Plan as part of this process.
The MPSG might mean an increase in some costs. Projects may use more labour from apprentices, trainees and cadets. While the cost of hiring these employees is lower than qualified staff, they need more training and supervision. These costs can be managed by using apprentices from Group Training Companies.
There may be some extra administration for contractors. But contractors already prepare and report related information for the Local Jobs First - Victorian Industry Participation Policy (VIPP). The MPSG is an extension of the Local Jobs First - VIPP and will be managed in the same way.
Reviewed 30 October 2018