Employment department questions 457 visa rort

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ScreenHunter_2989 Jun. 26 08.16

By Leith van Onselen

The federal Department of Employment has questioned the efficacy of Australia’s 457 temporary worker visa system, arguing that it has created a continued reliance on foreign workers rather than developing required skills onshore. From The Australian:

The Employment Department has told the government’s 457 visa review that the agreements have “contributed to ongoing reliance’’ on imported labour. It wants them reviewed “to ensure there is an ongoing skill or workforce shortage that cannot be met from domestic employment and training strategies’’.

“This is important where … agreements are used by businesses in states with above-average unemployment rates and/or large numbers of retrenchments of Australian workers in industries or occupations with transferable skill sets to the industries and occupations covered by templates’’…

The Department of Employment has also recommended that English-language skills should not be watered down, noting that they are currently “not that high”, which is a blow to the Business Council of Australia, who has lobbied for lower language proficiency standards.

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Moreover, in a separate submission, the Department has recommended the government begin testing the skills of would-be migrants, arguing that many 457 visa holders do not have their proficiency independently tested, with many then going on to become permanent residents.

It’s good to see the Department of Employment taking a stand on this issue. After all, its own labour shortages report, released in February, claimed that “skill shortages continued to abate” and employers in 2013 “generally filled their vacancies with ease and had large fields of applicants from whom to choose”. Further, unemployment is still hovering near 10-year highs, labour force participation is falling (suggesting hidden employment), and there is substantial under-employment, suggesting significant excess capacity in the labour market.

And with the mining investment boom continuing to unwind, along with the closure of the local car industry by 2017, labour surpluses are only likely to increase from today’s already high levels.

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In light of the above facts, one has to seriously question whether the 457 visa program is being abused by employers, as well as the efficacy of further liberalising the program, as planned by the Abbott Government.

As suggested by the Department of Employment, the 457 visa system should not systematically make it easier for employers to import labour from offshore rather than training local workers, as this will only lead to a large pool of unemployed, and deprive our youth of employment opportunities. It also particularly cynical in light of the Budget’s tighter requirements on under-30s accessing to Newstart.

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About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.