Engineering and consulting industry bodies have welcomed news that the Coalition will permanently abolish the $2000 cap on tax deductions for self-education expenses.

Consult Australia CEO Megan Motto said that the move is a critical step towards restoring business confidence in government and is a ‘bullet dodged’ for professionals, firms and government alike.

“The business community was united in opposition to this proposed cap, recognising the acute impact it would have had across industries and sectors,” said Ms Motto.

“The proposed cap put all at risk, particularly regionally-based workers, and those parents returning to work who have even greater education needs.”

The concern was that the cap would have led to a dumbing down of the Australian workforce with a consequential negative impact on productivity.

Self-education expense deductions are used by many Australians to increase their professional expertise and to keep up-to-date with new developments, technologies and innovations.  Any step that made it more difficult for people to invest in their skills and expertise would have been a step backward for Australia, Engineers Australia argued.

“In making this decision the government has clearly listened to the voice of the community and responded decisively,” said Stephen Durkin, CEO of Engineers Australia.

“The $2,000 tax cap proposal was poor policy that would have devastated professional education in this country and undermined our ability to build a smart and competitive workforce. The government has shown that it is serious about investing in the skills and capacity needed to build a resilient and educated workforce that can effectively compete on the world stage.”

The initial proposal to cap the deduction for work related education expenses was announced in April by the former federal Treasurer Wayne Swan, with the cap originally scheduled for introduction on 1 July 2014.

This led to a campaign by Scrap the Cap, an alliance of over 70 organisations covering a broad range of industry and professional organisations, to scupper its introduction.

In August, the former government announced in its mid-year economic review that the introduction of the cap would be postponed for 12 months. Since then the alliance has continued to lobby both the former and current governments, which has led to the successful reversal of the policy.