There’s no demand for a genuine skilled visa program

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Last year, the Morrison Government launched its Global Talent Independent (GTI) visa program, which promised that visas for 5,000 highly-skilled specialists working “at the top of their field” and earning in excess of $149,000 annually would be fast-tracked for permanent residency each year.

Early results are disappointing, however, with tech migrants shunning the program:

Documents obtained by iTnews under freedom of information laws reveal only 735 EOIs (expressions of interest) were lodged for the ‘Global Talent Independent’ program in the three months after it was launched last November.

But the actual number of visas submitted and granted following these EOIs is far lower…

Even if all 227 of the visa granted came through the GTI channel, it represents just a fraction of the 5000 people the government wants to attract between July 2019 and June 2020…

A key drawcard of the GTI program is the offer of a “fast-tracked process to permanent residency” taking weeks, not months, according to immigration and citizenship minister David Coleman.

While demand for these genuinely high-skilled tech visas is abysmal, Australia has experienced a boom in low-paid IT workers from India.

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Recall the Australian Population Research Institute’s (APRI) 2016 report “Immigration overflow: why it matters”, which examined the widespread rorting of Australia’s skilled visa systems, especially involving Indian IT workers.

The APRI report noted how IT professionals, engineers and accountants (including auditors) were the key professions where foreign worker visas were being issued, despite these industries having significant surplus labour:

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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…

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In particular, the IT sector has experienced the deepest rorting from Indians being paid well below market wages:

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…

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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 (and perhaps other multinationals with Indian branches). The violation is obvious, given that more than one-quarter (28%) of Indian 457s in the two ICT occupations had their visas approved at no more than Australian IT graduate starting salaries…

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Indeed, the Department of Home Affairs’ data on Indian migration showed they dominated IT professions in 2017-18:

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This is more proof that the main 457/482 temporary “skilled visa” is actually a low-wage sham.

The key problem is that the Temporary Skilled Migration Income Threshold (TSMIT) has been set at an appallingly low $53,900 (non-indexed), which is $3,300 (6%) below the median income of all Australians ($57,200), which includes unskilled workers:

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This $53,900 TSMIT has incentivised Australian employers to hire cheap migrants instead of local workers, as well as abrogated the need to provide training.

The first best solution is to raise the pay floor for all skilled migrants (both temporary and permanent) to at least the 75th percentile of weekly earnings (currently $85,852 p.a.). This would close off the cheap labour route and ensure that employers only hire migrant labour to fill genuinely skilled professions.

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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.