Australia: PM announces abolition of 457 visa, introduces 458 visa instead

Last Updated: 27 April 2017
Article by Jackson Taylor

The Prime Minister captured national headlines following a surprise Facebook livestream on the 19th of April, in which he that his government would be abolishing the 457 Temporary Work visa. The 457 visa has been subject to significant criticism and public concern in recent years as local economic conditions have slowed and numerous cases of misuse of the visa have been uncovered. The Prime Minister stated that public confidence in the program had failed and the proposed changes will ensure that Australians are offered the first opportunity for all jobs.

The full detail of the changes remain to be announced however the below information is based on the publicly available statements of the Department of Immigration and limited regulations released to date.

Abolition of the 457 visa - creation of the 458?

The 457 visa may soon be abolished but the proposed changes will result in what could be described as a '458' temporary work visa. The newly minted Temporary Skill Shortage (TSS) visa, will commence in March 2018 but the proposed changes will result in a real difference in how the program operates and interacts with Australia's broader migration program.

The Temporary Skill Shortage visa will include two 'streams': the Short Term Stream and the Medium to Long Term Stream.

The Short Term Stream will draw from a Short Term Skilled Occupation List (STSOL) includes approximately 450 occupations the government considers to be of limited long term benefit to Australia.

The Medium to Long Term Stream will draw from a Medium and Long Term Skill Shortage List (MTSSL) with approximately 170 occupations available for the TSS program.

Both streams will include common requirements:

  • 2 years' work experience - the applicant must be able to demonstrate 2 years' full time work experience in the occupation
  • Labour Market Testing - the employer must advertise the position locally prior to engaging an overseas national
  • Minimum Salary Floor and Market Rates - to be considered eligible the position must pay above a minimum salary floor and must pay the appropriate market rate for the role.
  • Penal clearances - applicants will be required to provide police clearances
  • Non-discriminatory recruitment practices - employers must demonstrate they do not discriminate in their recruitment practices
  • Training requirements - business will be required to make a contribution to training Australians

Additional criteria for the Short Term Stream include:

  • Limited renewals - can be applied for onshore or offshore but can only be renewed onshore once
  • English requirements - IELTS score of 5.0 overall, 4.5 in each component - same as current 457 visa.
  • Genuine Temporary Entrant - applicant must demonstrate that they only intend to enter Australia temporarily

Additional criteria for the Medium to Long Term Stream include:

  • Onshore renewal - can be applied for onshore or offshore
  • English requirements - IELTS 5.0 in each component

Access to Permanent Residency

In recent years, the 457 visa has become one of the primary pathways to Permanent Residency in Australia through employer sponsorship. This onshore pathway was deliberately adopted by government after analysis showed that temporary migrants with employment in Australia who applied onshore had better economic outcomes than those who obtained permanent residency directly from outside but lacked Australian employment experience. The government's proposed approach will remove the pathway for many 457 visa holders because their occupations will not longer qualify them for permanent residency.

The government has stated that the division of occupations between the MTSSL and STSOL will better align with Australia's long term strategic skill shortages and ensure Australian workers are prioritised. Occupations which feature on the STSOL will not be for permanent residency. This means Short Term Stream TSS visas will be limited to an initial 2 year visa with the potential of a second onshore 2 year visa and will not have a pathway to permanent residency. The change is intended is to optimise the skilled migration system by enabling only workers in occupations deemed to be of longer term strategic importance to Australia to access permanent residency.

Removing the pathway to PR for Short Term TSS visa holders has a number of potentially significant implications for employers, 457 and future TSS visa holders, as well as the broader economy. As has been noted in the media, a number of economically and otherwise significant occupations have been classified under the STSOL, such as CEOs, Managing Directors, CIOs, University Lecturers, Laboratory Managers, Mathematicians, Economists and a number of other highly skilled roles. This means that employers will not be able to recruit outstanding overseas candidates from these occupations to their organisations permanently and may face challenges in attracting and retaining candidates for these positions. This limitation has the potential to undermine local innovation and development and prevent employers from competing successfully in a global environment. Many employers will need to seriously consider whether the changes risk impacting long term strategic resourcing needs.

In addition, many current 457 visa holders will be negatively impacted by the change and may no longer have a pathway to permanent residency available to them. In some cases, 457 visa holders will be required to pack up established households and return to their home country as no visa options will be available. To date the government has not made concessions for 457 visa holders in these circumstances.

Failure to address worker exploitation concerns

Numerous enquiries into the 457 visa program and other temporary visas have suggested methods to limit and prevent worker exploitation. Very few of these measures have been adopted in the changes.

The positive changes include data matching between employers and the Australian Taxation Office to ensure workers are paid correctly and making the information of sponsors who breach their obligations available publicly.

Other changes are more likely to reinforce the potential for worker exploitation. Although the final reform is not clear, it appears the government will require TSS visa holders to complete 3 years' work experience with a single sponsor before obtaining permanent residency. If this is the case it risks reinforcing the power of unscrupulous employers over visa holders and worsening the risk of abuse.

Conclusion

While Australia will continue to operate a temporary work visa system from March 2018, the consequences of removing the pathway to permanent residency for as much as 50% of the temporary visa holder cohort poses significant risks to employers who require access to skilled overseas employees where their occupation is not considered of 'significant long term strategic importance' to the country. Employers should consider how these changes may affect long term resource management.

In addition, the announced reforms fail to consider the impact on current visa holders, only provide limited improvements to prevent rorting of the visa system, and in some instances risk worsening worker exploitation.

It is hoped that the government will listen to concerns from the business sector about the potential negative impact of these changes on the economy and Australia's global competitiveness.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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