The Weekend Australian had a full blown whinge over the Turnbull Government’s announced changes to Australia’s temporary ‘skilled’ visa system, claiming that it will damage the economy.
The politically driven battle cry “Aussie jobs before foreigners” is a decisive change in the zeitgeist — innovation, economic growth, corporate and university excellence, seizing our global opportunities, being the best and the brightest: these have succumbed to baser priorities.
What price so-called clever politics? The march of populism is eroding our quality as a nation. How many more opportunities will we miss? In an age heavy with snake oil, this week the snake oil was overflowing. When the IT sector, the university sector and the hospitality industry — very different beasts — push the alarm button you might just think something is badly amiss…
The concept, providing temporary overseas workers where shortages exist, better integrates our economy and society into overseas markets, the key to rising living standards. Are there abuses? Sure, that’s human nature and there will always be some cheap and lazy employers…
Migration Council Australia’s chief executive Carla Wilshire says: “The 457 program has become fundamental for Australia’s economic needs and in acting as a feeder for permanent migration”…
At present about 50,000 of our annual skilled migration intake come from onshore 457 visa-holders. The scheme has evolved to become a vital migration pathway. This is obviously good, having new migrants coming from people already here with jobs. Yet the government has broken this nexus, largely delinking the entry to full migration…
The truth is that many Australians don’t want to be cooks in the Pilbara or specialist aged-care workers dealing with the infirm.
The 457 visa scheme exists because we have skills shortages. There are jobs that businesses need to fill because they can’t find Australians to do them. These skills shortages have not magically gone away. Indeed, the information technology sector, medical profession, restaurateurs, start-up entrepreneurs and universities have said jobs will sit vacant or they will have to lower standards to fill them. And it sends the wrong signal to our trading partners.
This decision was never about policy, it was about politics. So much for the sober, rational and thoughtful policy decisions that we were promised…
Atlassian boss Mike Cannon-Brookes says Australia is running the risk of a tech brain drain, praising the government’s 457 visa revamp but warning that the bombast around it was having severe consequences.
“This rhetoric around Australia being an inclusive country is dangerously trending in the wrong direction,” Mr Cannon-Brookes said yesterday.
“The tech industry is really trying to be big on inclusiveness and diversity, and those are the exactly right things for us to be doing as an industry, but governments are trending away from that.
While this week Malcolm Turnbull announced the 457 visa would be abolished and replaced by another form of temporary visa to give Australians the first chance of getting a job, businesses in Griffith told The Weekend Australian of their difficulty in finding local workers and the potential impacts on their businesses of failing to gain access to skilled foreign workers…
Collier & Miller plans to expand its 6500sq m machinery floor by more than half to accommodate surging work in a strong agricultural industry. It is being forced to turn to well-paid, skilled migrant workers to fill the gaps.
“If I wanted an injection of 15 staff right now, from in Australia, I would not be able to get them,” Mr Miller said. “We’ve advertised on seek.com.au, in the local papers and everywhere we could think but never got the numbers we needed.”
Enter the 457 visa workers, all from The Philippines, who have arrived ready-made with fabrication and welding skills and a love for the country town they now call home. There are more than 100 foreign workers on 457 visas in the town.
From the whining coming from the above articles, you’d think that the Turnbull Government had totally abolished immigration altogether, rather than making minor adjustments to the temporary ‘skilled’ visa system, which was clearly being overused if not outright abused.
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The arguments about filling skills shortages are particularly laughable, given the Department of Employment has for several years shown that skills shortages are near ‘historical lows’. In a similar vein, almost 90% of 457 visas issued have gone to the cities rather than the regions, where skills shortages are supposedly the most acute (graphic from The Australian):
The recent Senate Report, entitled A National Disgrace: The Exploitation of Temporary Work Visa Holders, identified massive flaws in the Consolidated Sponsored Occupations List, which it saw as ad hoc and ineffective. The Senate Committee also claimed the 457 visa system was”not sufficiently responsive either to higher levels of unemployment, or to labour market changes in specific skilled occupations”.
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Heck, The Australian itself published the results of an FOI request in November, which revealed that government officials had refused to cull the Skilled Occupation List because they didn’t want Australians to think 457 visas were being used to manage any short-term shortage of workers, despite this being precisely their initial purpose:
The Australian has previously revealed the Department of Health wanted 41 medical occupations, including GPs and surgeons, removed from the 2016-2017 list because local graduates might struggle to find training places or jobs so long as the immigration pathway remains open. Those recommendations were largely ignored or overruled, by an interdepartmental committee and then the responsible Department of Education and Training, in the annual review, with the government offering no explanations.
Briefing notes for Vocational Education and Skills Minister Scott Ryan, obtained under Freedom of Information laws, emphasise that since its establishment in 2010 “the list has remained relatively stable with only a few occupations being added or removed in any given year”.
“Major changes to the list from year to year would signal that it is being used to manage short-term labour market fluctuations,” the briefs state.
Whereas Joanna Howe, Senior Lecturer in Law at University of Adelaide, also identified major flaws in the 457 visa process:
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The mechanism for identifying who can apply for these [457] visas is the Consolidated Sponsored Occupations List. This is a list that has no requirement that the occupation be in demand in the Australian labour market. It includes more than 600 occupations, most of which are not in shortage. So long as an employer nominates an overseas worker to perform a job on this list, then the occupation is deemed to be in need.
Nursing, teaching, engineering and law are all on this list, and are also occupations where Australian graduates are struggling to enter the labour market.
This means the 457 visa can be used by employers who wish to access foreign labour for an ulterior motive.
However, perhaps the most damning evidence against 457 visas has come from the Australian Population Research Institute’s (APRI) recent report entitled “Immigration overflow: why it matters”, which examined the widespread rorting of Australia’s 457 visa system, especially by Indian IT firms:
One of the findings from this report was “the high and increasing numbers of IT professionals being granted 457 visas”, which “constitute by far the largest occupation group within the 457 program”:
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The APRI showed that Indian IT service companies have been successful in winning a major chunk of Australia’s IT consulting work on the basis of these 457 visa holders, partly because they are paying them much lower salaries than the market rate for IT professionals in Australia:
As Table 2 shows, 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…
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The report also showed how the biggest sources of skilled permanent migrants – engineers, accountants and IT professionals – are also the areas with the biggest surplus of workers, thus debunking the Migration Council’s claim that the “457 program has become fundamental for Australia’s economic needs and in acting as a feeder for permanent migration” [vital for the Migration Council maybe, but certainly not to the economy at large]:
The Department of Employment’slatest report on IT Professionals also revealed that 457 visas have grown much faster than the growth in IT jobs, despite a large pool of applicants available per advertised job and large numbers of IT graduates being unable to gain full-time employment:
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A key feature of the IT labour market is the large number of candidates competing for available vacancies. There were, on average, around 29 applicants per surveyed vacancy and most employers were able to choose between multiple suitable applicants (an average of 3.1 per surveyed vacancy)…
Notably, a number of employers recruiting for graduate or junior level vacancies had applicants who they considered to be overqualified for the advertised position….
While 457 visa grant numbers for IT professionals are variable over time, grants have been generally trending upwards since 2005-06 (when the data series began).
The number of IT professional 457 visa holders is increasing at a faster rate than the number of employed IT professionals. In 2009-10, the number of 457 visa holders equated to 3.0 per cent of employed IT professionals, but by 2014-15 it had risen to 4.3 per cent…
A range of data suggests that there is some spare capacity in the graduate labour market at present. Notably, graduate outcomes for students studying in the field of Computer Science (which includes the vast majority of students studying in the Information Technology field of education) have been declining for four consecutive years…
In 2015, 67 per cent of computer science graduates were in full-time employment four months after graduation, below the average of 69 per cent for all graduates. Graduate outcomes are now 17 percentage points below the level recorded in 2008 (84 per cent).
How The Australian can bemoan the Turnbull Government’s modest changes to the 457 visa system, without even acknowledging the widespread rorting going on, shows just how much ideology trumps evidence within the masthead.
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.
