On Friday, the Australian Population Research Institute (APRI) released a damning report chronicling the widespread rorting of Australia’s visa system, which has seen huge numbers of foreign workers flood Australia’s labour market, in the process crowding-out employment opportunities for resident Australians.
The most damning assessment was given to the IT sector, which has employed large numbers of (mostly Indian) workers on low wages despite there being little evidence of labour shortages:
[There are] high and increasing numbers of IT professionals being granted 457 visas. They constitute by far the largest occupation group within the 457 program. Most are Indian nationals who are sponsored by Indian IT service companies. They have been successful in winning a major chunk of Australia’s IT consulting work on the basis of these 457 visa holders. They have succeeded in part because they are paying these professionals much lower salaries than the market rate for IT professionals in Australia…
The 17,185 IT professionals visaed in 2015-16 (Table 1) indicate the scale of the problem. By contrast, just over 5,000 residents are currently completing undergraduate course in IT each year.
…some 76 per cent of the 7,542 457 visas issued in the three IT occupations listed were to Indian nationals. The great majority of these were sponsored by Indian IT service companies as intra-company transferees…
Once in Australia their staff are being paid at much lower rates than experienced resident IT professionals and in some cases even new local graduates.
Even more disturbing is the relatively high proportion of these Indian IT professionals (28 per cent) whose 457 visas were approved at the extremely low base salary of $53,900 or less. This is despite the fact that only eight per cent of the 457 visas granted to Indians in the two ICT occupations in 2014-15 were aged less than 25.
The median starting salary for local ICT graduates under the age of 25 is around $54,000. Coincidentally, the 457 minimum salary ‘floor’ is set at $53,900…
As the data in Appendix I show, between 2012-13 when Labor was in office and 2013-14 under the Coalition the proportion of Indian 457 IT professionals approved at the very low base salaries increased dramatically, from eight per cent to 27 per cent…
Clearly, the legislated requirement to pay the 457 market salary rate is not being implemented in the case of the Indian IT service companies…
Despite this damning evidence of abuse of Australia’s visa system, The SMH ran an article over the weekend lamenting how Sydney is too boring and expensive to attract high tech jobs, which contained the below request for taxpayers to subsidise the employment of foreign workers across Sydney’s IT industry [my emphasis]:
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The Start-up AUS Crossroads 2016 report card on progress in Australia’s transformation to a competitive high-tech economy says “Australia has a high cost of living that is currently acting as a disincentive for overseas talent to accept offers of employment with Australian start-ups”. It recommends making public schooling freely available for the children of 457 visa holders and reintroducing the Living Away From Home Allowance to help defray some of the living costs of foreign workers.
You cannot make this stuff up. Under this hare-brained scheme, Australia would incur the double-blow of allowing its IT workers’ wages and employment conditions to be further eroded, with the associated loss in quality of life and dis-incentivisation of local talent, all the while taxpayers pick-up part of the tab for the foreign worker’s living costs.
Given the widespread evidence of rorting, Australia’s visa system needs to be reined-in big time, not provided with taxpayer subsidies so that it can be expanded even further.
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.
