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Senate Enquiry into 457 visas: What does it mean for Australian business?

Senate Enquiry into 457 visas: What does it mean for Australian business?

Temporary skilled migration into Australia is the hot topic of the moment.

Are you part of a business that utilises the 457 scheme? Would you like to ensure that your business is not affected by proposed changes to the scheme and that your access to skilled workers is not restricted?

Or would your firm like to suggest ways in which the regulatory burden of the 457 process could be alleviated?

Perhaps you own a business that is negatively affected by rorting or overuse of the program by your competitors.

If would you like to make a submission to the Senate Enquiry or have your views heard by Government, Dearin & Associates can help to bring your views to the decision makers in the most effective way. Contact us today to find out how we can assist you.

On 23 February, the Minister for Immigration and Citizenship, The Hon. Brendan O’Connor MP announced proposed changes to the Subclass 457 Temporary Worker (Skilled) visa program in response to the changing needs of the Australian economy and domestic employment market.

On 14 March, Prime Minister Julia Gillard gave a speech to the ACTU Community Summit On Creating Secure Jobs And A Better Society, during which she claimed that temporary overseas work was growing much faster than employment was growing and that there was clear evidence that in some growing sectors, importing workers on 457 visas was a substitute for spreading important economic opportunity to Australian working people.

On 20 March, less than a month after Mr O’Connor’s initial announcement, the Senate launched an enquiry into 457 visas and other skilled migration programs.

So what’s it all about?

The Temporary Business (Long Stay) (Subclass 457) is one of many of visa categories which are part of the national migration program. It is a temporary visa that allows skilled workers to be sponsored by a business in Australia to fill a vacancy that cannot be filled locally.

However, as Peter Mares points out in a recent article, things have worked out differently. The 457 visa has expanded into something much more significant – an essential component of a fundamentally changed approach to selecting skilled migrants. Many Australian businesses rely on the skills of 457 visa holders to keep their enterprises running.

The 457 visa has a number of major restrictions. It is confined to highly skilled workers and minimum salary requirements apply so that foreign workers cannot be used to undercut Australian workers.  Their stay is restricted to four years, after which time they may apply for permanent residency and eventually, citizenship.

Most 457 visa holders are professionals or technicians and trade workers, taking up jobs in sectors like construction, health care and other services around the country.

Research has shown that the 457 visa has been effective in enabling businesses to access skilled workers quickly at times of economic growth. A significant number of 457s have subsequently applied to enter Australia as immigrants so that in 2010-11 40.3% of migrants to Australia were already in Australia under another visa (student, visitor, working holiday maker or 457).

The scheme has been especially effective in recruiting skilled workers to regional and remote areas where there has been great difficulty in recruiting Australians, especially in medical services, engineering and specialised skilled trades.

Although the temporary skilled migration program has been growing steadily in recent years it has generated little public interest until earlier this year.

What changes are proposed to the 457 scheme?

Minister O'Connor indicated that the changes would include:

  • An obligation on employers to demonstrate that they are not nominating positions where a genuine shortage does not exist – this may indicate a strengthening of the current requirement to show that the position is genuine.
  • Stricter English language requirements for certain positions in line with the English language thresholds for permanent employer sponsored visas such as the Subclass 186 Employer Nomination Scheme Visa.
  • Improved enforceability of existing training requirements for employers that use the program and further strengthening of the current sponsorship obligations to ensure that the working conditions of 457 workers are in line with Australian standards.
  • Increase in the market salary exemption from $180 000 to $250 000 - currently, employers are not required to demonstrate that they are paying ‘market rate’ for positions offering $180,000 per annum or more,
  • On-hire arrangements of 457 visa workers to be restricted.
  • Strengthening of compliance and enforcement powers to deter employers who have routinely abused the system.
  • Stakeholder consultation to ensure market rate provisions more effectively protect local employment.

In the media release announcing the changes, the Minister said that while the 457 scheme played a vital role in ensuring that Australian businesses were able to source the skilled workers they needed where they were unable to find suitably skilled labour in the domestic employment market, it had become clear that the growth in the scheme was out of step with current skills shortages. He went on to say that the government had evidence that some employers were using 457 visas to discriminate against locals.

The proposed changes are expected to come into effect on 1 July 2013 with further details to be released before this date.

What is the purpose of the Senate Enquiry?

The purpose of the Senate Enquiry is to seek a range of views on the 457  (and similar) visa schemes and the proposed changes to them. The Enquiry’s Terms of Reference are broad and include an examination of:

  • The effectiveness of 457 visas in filling areas of identified skill shortages and the extent to which they may result in a decline in Australia's national training effort, with particular reference to apprenticeships;
  • The accessibility of 457 visas and the criteria against which applications are assessed, including whether stringent labour market testing can or should be applied to the application process;
  • The process of granting 457 visas and the monitoring of these processes;
  • The adequacy of the tests that apply to the granting of 457 visas and their impact on local employment opportunities;
  • The economic benefits of the 457 and related schemes and the economic and social impact of such agreements;
  • Whether better long-term forecasting of workforce needs, and the associated skills training required, would reduce the extent of the current reliance on such visas;
  • The impact of the recent changes announced by the Government on the above points;

The complete Terms of Reference are available here:

http://aph.gov.au/Parliamentary_Business/Committees/Senate_Committees?url=legcon_ctte/457_visas/info.htm

and submissions should be received by 26 April 2013. The reporting date is 3 June 2013.

What does this mean for Australian business?

The proposed reforms announced by Mr O’Connor and subsequent enquiry have prompted a wide-ranging debate about whether changes to the 457 visa are warranted and what their impact on Australian business is likely to be.

The Australian Manufacturing Workers’ Union (AMWU) is campaigning against the 457 scheme, which it describes as a disgraceful abuse of overseas workers and a means for employers to drive down wages and conditions in Australia.

The Australian Council of Trade Unions (ACTU) says that workers on 457 visas have been underpaid, abused and subjected to sub-standard conditions of work. The union claims that most cases of abuse have tended to involve trades level 457 visa holders with little or no English language skills who often lacked the technical skills they were supposed to have to be eligible for a 457 visa.

At the same time, the ACTU says that the 457 visa program has undermined the Australian labour market by enabling employers who are unable to attract local labour as a result of offering poor wages and conditions, or who are unwilling to train workers in areas of skills needs, to sponsor workers from overseas.

Others argue that the scheme is not tough enough in spite of significant amendments to the program in 2009. In a paper published in November 2012 by the Centre for Population and Urban Research at Monash University, the authors noted that while labour market testing may be expensive and hard to enforce, there is a need to better protect domestic workers from foreign competition.

Business groups and private enterprise on the other hand, have argued for the merits of the existing 457 visa scheme.

Mr Innes Wilcox, CEO of the Australian Industry Group has queried the Prime Minister’s assertion that temporary overseas work is growing much faster than employment is growing or that there is clear evidence that in some growing sectors, importing workers on 457 visas is a substitute for spreading important economic opportunity to Australian working people.

Mr Wilcox points out that much has been made of the purported growth of 457 visa holders in a slowing economy and argues that in this economic climate the number of applications from employers should have fallen, not risen. He says that in fact that is exactly what has happened, citing a recent Department of Immigration and Citizenship report which states that the number of subclass 457 primary visa applications continued to decline in January 2013, having declined for five consecutive 
months.

Business Council of Australia Chief Executive Ms Jennifer Westacott has said that the proposed changes to 457 visa arrangements are a classic regulatory overreach that risks damaging the competitiveness and viability of important projects and businesses.

“Less than a month after the Department of Immigration reported that the 457 visa program was responding well to economic needs and demand was declining in recent months the minister has claimed the program was being abused by some employers at the expense of local jobs,” Ms Westacott said.

Mr Ian Murray, Executive Director of the Export Council of Australia says “research clearly shows that Australia’s International competitiveness has declined in recent years. The high dollar, high labour costs and high interest rates have all contributed to this. In the manufacturing and IT sectors Australia as an exporter competes at the premium end where high level skills are an absolute necessity.”

Evidence clearly shows that without the support of the 457 Visa program the IT export sector, a shining light in Australia’s recent export performance, would simply not have occurred. Mr. Murray said  “The reasons behind making these changes now, when the export sector, is struggling, is difficult to comprehend. Australia is going to fall behind internationally as a result and the opportunity to capture the innovation that comes with the development of these industries will never be realised.”

Holding Redlich partner Maria Jockel has described its recent politicisation of the 457 scheme and the move to further tighten visa requirements as a worrying concern for individuals and employers who rely on the 457 visa.

ANU demographer, Peter McDonald, has questioned  whether tightening of the rules is really necessary, estimating that only about 2 or 3 per cent of employers are ‘rorting’ the system.

The Department of Immigration and Citizenship has said that the reforms will not adversely affect the vast majority of employers who are using the program appropriately.  Nonetheless, it is clear that employers will be expected to meet higher benchmarks in order to sponsor foreign workers in future.

Getting involved in the Parliamentary process

Are you part of a business that utilises the 457 scheme? Would you like to ensure that your business is not affected by proposed changes to the scheme and that your access to skilled workers is not restricted?

Or would your firm like to suggest ways in which the regulatory burden of the 457 process could be alleviated?

Perhaps you own a business that is negatively affected by rorting or overuse of the program by your competitors.

If would you like to make a submission to the Senate Enquiry or have your views heard by Government, Dearin & Associates can help to bring your views to the decision makers in the most effective way. Contact us today to find out how we can assist you.

 

Sources

 

  1. Chowdhury, Rita and Healey, Samantha. “Proposed changes – Subclass 457 visa – temporary work (skilled) program”. Lexology. 5 March 2013. (http://www.lexology.com/library/detail.aspx?g=6596348c-c35b-490a-98a4-3052196f369c).
  2. Clancy, Ray. “Data backs up growth in 457 visa programme”. AustraliaForum.com. 12 March 2013. (http://www.australiaforum.com/information/immigration/data-backs-up-growth-in-457-visa-programme.html).
  3. Clancy, Ray. “Poll backs changes to Australia 457 visa programme”. AustraliaForum.com. 22 March 2013. (http://www.australiaforum.com/information/jobs/poll-backs-changes-to-australia-457-visa-programme.html).
  4. Gillard, Julia MP, Prime Minister. “Address To The ACTU Community Summit On Creating Secure Jobs And A Better Society”. Prime Minister of Australia Press Office. Thursday,  14 March 2013. (http://www.pm.gov.au/press-office/address-actu-community-summit-creating-secure-jobs-and-better-society).
  5. Hugo, Graham. “Explainer: 457 Visas in Australia”. The Conversation. 14 March 2013, 9.56am AEST. (http://theconversation.com/explainer-457-visas-in-australia-12622).
  6. Mares, Peter. “Temporary migration is a permanent thing”. Inside Story: Current affairs and culture from Australia and beyond. 26 March 2013. (http://inside.org.au/temporary-migration-is-a-permanent-thing/).
  7. O’Connor, Brendan MP, Minister for Immigration and Citizenship. “Reforms to the temporary work (skilled) (subclass 457) program”. Brendan O’Connor, MP, Minister ofr Immigration and Citizenship. 23 February 2013. (http://www.minister.immi.gov.au/media/bo/2013/bo193683.htm),
  8. Phillips, Janet. “Temporary skilled migration and the 457 visa”. FlagPost: Information and Research from Australia’s Commonwealth Parliamentary Library. 13 March 2013. (http://parliamentflagpost.blogspot.com.au/2013/03/temporary-skilled-migration-and-457-visa.html).
  9. Phillips, Melissa. “How low can they go?”. On Line Opinion: Australia’s e-journal of social and political debate. 14 March 2013. (http://www.onlineopinion.com.au/view.asp?article=14795).
  10. Quine, Stephanie. “Lawyer slams tightening of 457 visa program”. Lawyers Weekly. 14 March 2013. (http://www.lawyersweekly.com.au/news/lawyer-slams-tightening-of-457-visa-program).
  11. Thompson, Scott. “Red Tape Not the Answer on Skills”. Business Council of Australia. 23 February 2013. (http://www.bca.com.au/Content/102096.aspx).
  12. Wilcox, Innes. “The debate over 457 visas has reached the bottom of the barrel”. Manufacturers’ Monthly. 15 March, 2013. (http://www.manmonthly.com.au/features/the-debate-over-457-visas-has-reached-the-bottom-o).
  13. Williams, Dan and Arends, Megan. “'Fair go' for local workers - changes to the Subclass 457 temporary work visa program”. Lexology.  25 February 2013. (http://www.lexology.com/library/detail.aspx?g=5c1e0638-66e1-4fb2-906f-eecf71bd74dc).
  14. “Stop visa 457 exploitation”. AMWU Campaigns. Accessed 26 March 2013. (http://www.amwu.org.au/campaigns/4/457-VISA-EXPLOITATION/).
  15. “Temporary overseas workers”. Australian Council of Trade Unions. Accessed 26 March 2013. (http://www.actu.org.au/Issues/OverseasWorkers/default.aspx).

 

 

About Cynthia Dearin

Cynthia Dearin is an international business expert, business author and keynote speaker on the topic of leadership. She owns Dearin & Associates, an international business consulting firm specialising in fast-growing emerging markets, which provides companies with the commercial intelligence and strategies, cultural skills and trusted contacts that they need to succeed in new countries.

1 Comment

  1. The latest on the the 457 saga:

    Michael Easson, an immigration advisor to the Australian government has backed a landmark finding that only a “small proportion” of employers are abusing the skilled worker program .

    Mr Easson, the chairman of the ministerial advisory council on skilled migration said that claims by government ministers that there is widespread abuse of the Temporary Work (Skilled) Visa (Subclass 457), better known as the ‘457 visa’ are false.

    He told journalists that there had been ‘unhealthy rhetoric’ on the subject. This appears to be a reference to the immigration minister Brendan O’Connor who announced in February that the government would crack down on abuse of the system or ‘rorting’.

    Mr O’Connor has said that about 10% of 457 visas are ‘rorted’. There are currently some 105,000 people in Australia with 457 visas so this would mean that over 10,000 457 visas were obtained by ‘rorting’.

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