Dr Bob Birrell from Australian Population Research Institute (APRI) has released a new research report, entitled “The Coalition’s 457 Visa Reset: Tougher Than You Think”, which examines the Turnbull Government’s changes to the 457 temporary “skilled” visa program.
Below is the Executive Summary:
Over the resources boom years 2003 to 2012, successive Australian governments opened up Australia’s immigration policy in order to achieve two ends:
- To give employers open-ended rights to recruit the skilled migrants they needed on a temporary basis via the 457 visa program
- To maximise the opportunity for employers to keep these temporaries for the long term by sponsoring them for a permanent entry employer sponsored visa (ENS).
The result is that these two visa subclasses are now the main source of skilled migrants. In 2015-16 there were 45,395 temporary 457 visas issued to principal applicants and 48,250 permanent ENS visas granted to principal applicants and dependents.
Few commentators realise that the reset will reverse these priorities.
The reset certainly came as a shock. The Coalition stated that from March 2018 it would abolish the 457 visa and replace it with a new Temporary Skills Shortage (TSS) visa. The Prime Minister, Malcolm Turnbull, said that: ‘Australian workers must have priority for Australian jobs, so we are abolishing the 457 visa… we will no longer allow 457 visas to be passports to jobs that could and should go to Australians’.
The head of the Department of Immigration and Border Protection (DIBP), Mike Pezzullo, asserted that the 457 visa had become a ‘bloated out and a proxy pathway to permanent residence’. The purpose of the reset, he said, was to make the 457 visa regime address ‘Short term need’.
Notwithstanding such bold statements, subsequent media analysis has concluded that the reset is largely cosmetic. The media focus has been on just one aspect of the reset. This concerned whether or not employers would maintain their rights to sponsor migrants for a 457 visa or a Temporary Skilled Shortage (TSS) visa when the 457 visa was abolished in March 2018.
It soon became evident that, on this issue, all that had changed was that the government had split the eligible occupations into two streams: one allowing employers to enter employment contracts with temporary foreign workers for an initial two years (with the option for a further two years); and the other which permitted four year employment contracts. The two year stream comprised 250 occupations and four year stream 185 occupations.
Furthermore, it was quickly revealed that few significant occupations had been removed from those eligible for sponsorship. Though the total number of occupations had been reduced from 651 to 435, those deleted such as goat farmers and kennel hands were insignificant. Those sponsored in the deleted occupations made up just ten per cent of the annual number of 457 visas granted in recent years (p. 2).
The analysis in this paper (pp. 4-7) shows that the Coalition has not put any mechanism in place to remove any of the 435 eligible occupations where there is evidence of a surplus of domestic aspirants.
The reset looked like, and was labelled as, window dressing; not much more than a publicity stunt.
A reassessment – the reset is an immigration policy game changer
It is a game changer because it will have two consequences:
- It will significantly reduce the number of migrants eligible to apply for a TSS visa and toughen the requirements for employers who want to sponsor those that are eligible; and
- It will reduce the number of ENS visas granted either to TSS visa holders or other foreign workers because only a small fraction of the occupations previously eligible for such sponsorship will continue to be eligible. Employers will also face much tougher sponsorship hurdles.
Reducing the supply of eligible applicants and tightening requirements for sponsors
From March 2018, applicants for TSS visas must have two years of relevant experience in their nominated occupation. This is a game changer, because over half the 457 visas currently being granted are to onshore applicants. The majority of these are former overseas students or Working Holiday Makers (pp. 12-13).
Most of these will struggle to find the required experience, even though they may hold graduate credentials, especially in accounting. This is because such jobs are scarce and employers prefer domestic applicants to foreigners on temporary visas (p. 12).
In addition, the reset will sharply reduce the number of onshore applicants (mainly overseas students) who have been able to bypass the 457 route to permanent residence by being sponsored directly by employers. This is the case for around half of those sponsored in the Regional Sponsored Migration Scheme, which is responsible for about 12,000 of the annual total Employer Sponsored visas being issued. This group will be largely excluded from this pathway in future, because, from March 2018, all applicants will have to have three years’ experience in the relevant occupation (pp.8-9).
For their part, potential sponsors will be prompted to think twice about whether pursuing a 457 or TSS visa sponsorship is a good idea. They will have to pay addition visa costs and training levies and they will have to provide evidence that they have labour market tested. They will also be subject to more surveillance in regard to their wage payments to visa holders. Employers who do not pay the nominated salary to 457 or TSS visa holders will be publicly exposed through interrogation of Tax Office records (p. 11).
Abridging the pathway from a temporary work visa to an ENS visa
From March 2018, those holding a TSS visa in the two year stream of occupations will no longer be eligible to be sponsored for an ENS visa. This will cut the number of ENS visas to about a third of their recent level – given the current pattern of ENS sponsorship by occupation (p. 7-8).
The reset has also placed a number of new hurdles and costs in the path of the relatively few employers who have occupations they want to fill that are still eligible for an ENS sponsorship. The most important are that eligible employers will have to establish that there is a genuine need for the person sponsored to do the work (p. 10). The persons being sponsored will, from 1 July 2017, be required to meet much higher English language standards than in the past (p. 8). He or she will also have to have been employed by the sponsor for three years rather than two as in the past. In addition, as with TSS visa holders, there is the new threat of public exposure if the nominated salary level is not being paid (p. 12).
Political Implications
The reset puts an axe to the two pillars of past immigration policy of encouraging employers to recruit as many skilled temporary foreign workers as they want and then facilitating their transition to permanent residence via ENS sponsorship.
Though much more remains to be done (pp. 14-16), the reset has gone some way to redressing the balance between employer interests and those of domestic workers.
It is the first serious sign that either major political party is prepared to tackle the immigration issue. All the Coalition’s reset initiatives point one way, they add additional constraints and costs to employers considering employing foreign workers on a temporary or long term basis.
Make no mistake about the significance of the reset. When fully in place from March 2018, the flagship ENS program will fall to less than a third its recent size of 48,250. The number of TSS visas will also fall sharply relative to the current number of 457 visas being granted. Those who think that immigration levels are set in concrete will have to reassess this belief.
The reset leaves Labor exposed. It has been inert on immigration policy.
True, the significance of the reset has not yet cut through to the public. Expect further Coalition reform designed to rectify this situation.
Those who think that Australia is immune from policy discord on immigration are wrong. The immigration issue is now in play.
While the Coalition’s 457 visa reforms are undoubtedly a step in the right direction, I do not consider them to be an “immigration policy game changer”.
First, while the criteria has been tweaked for the better, employers are still free to hire temporary foreign workers at the pathetically low salary of $53,900 (non-indexed), which is 35% below the average full-time salary of $82,789. With the salary floor set so low, employers will remain incentivised to employ cheap foreign workers over locals.
If the Coalition was serious about restricting temporary ‘skilled’ workers, it would have set the pay floor to at least equivalent to the average full-time salary (which comprises both skilled and unskilled workers). The fact that is has not increased the floor suggests it is not serious in curbing visa abuse.
Second, and more importantly, the Coalition has left Australia’s permanent migrant intake at the ridiculously high level of 200,000 (two-thirds “skilled”), which is 2.5 times the level that existed at the turn of the century and even higher than at the peak of the mining boom:
While temporary ‘skilled’ workers may find it more difficult to gain permanent residency, the overall permanent migrant intake has not changed (just the composition), thus ensuring the population pressures afflicting the nation will remain.
