Australia: Labor: Protecting Local Workers package: Promoting local employment or unduly stifling temporary work visas?

Introduction

Immigration policies will be a key focus at the upcoming Federal election. In a press release dated 23 April 2019, the opposition Labor party released the first details of its proposed 'Protecting Local Workers package' ('PLW package'). Advocating significant alterations to the present 482 programme (referred to in the PLW as a 457-style visa), Labor proposes to advance local employment opportunities whilst minimising the risk of exploitation of foreign temporary workers. This update outlines the key elements of Labor's proposed reforms, before discussing the predicted consequences of these alterations to the 482 visa programme.

Overview of proposals

Temporary Skilled Migration Income Threshold

At the forefront of Labor's proposal is a significant increase to the Temporary Skilled Migration Income Threshold (TSMIT). The TSMIT prescribes the minimum wage that employers can pay 482 visa holders, currently fixed at $53,900. The TSMIT also serves to exclude occupations from nomination where the market rate for that occupation is under $53,900. With the TSMIT having been frozen since 2013, the PLW package proposes to immediately increase the TSMIT to $65,000 with annual indexing. To complement this change, Labor has stated that it will 'close loopholes' which it says allows employers to artificially inflate employees' salaries to meet the threshold.

Skilling Australians Fund levy

Implemented on 12 August 2018, the Skilling Australians Fund (SAF) levy imposes a 'Nomination Training Contribution Charge' on employers nominating foreign workers under temporary and permanent employer-sponsored visa schemes. Labor's PLW package proposes to index the SAF levy per year at 3% of the TSMIT for businesses with a turnover under $10 million, and at 6% for businesses with a turnover over $10 million. Businesses with a turnover of less than $10 million per year will be required to pay $1,950 per year (up from $1,200), and businesses with a turnover of more than $10 million per year will pay $3,900 per year (up from $1,800).

Reducing exploitation

Seeking to diminish the exploitation of 457 and 482 visa holders, Labor proposes the creation of a public register detailing the number of visa holders engaged by individual workplaces and employers. All employers will be required to provide employees with a copy of their relevant collective agreement, Award or labour agreement, and contact details for support services and organisations, including migrant work centres and unions.

The PLW package further proposes to expand the regulatory powers of the Fair Work Ombudsman in the inspection of workplaces, and the investigation of employer breaches of provisions of the Migration Act relating to visa work conditions. Cooperation between the Fair Work Ombudsman and the Department of Home Affairs is also expected to be strengthened, to give migrant workers a channel to expose exploitation without an immediate risk of visa cancellation.

Australian Skills Authority

Labor intends to legislate the establishment of a tripartite Australian Skills Authority ('ASA') to prevent the granting of 482 visas in occupations where there is no shortage of skilled workers in Australia. The ASA will be tasked with regularly reviewing the skills shortage lists, and forecast future skills shortages to prompt the proactive training of local workers in these jobs.

Alongside the ASA, Labor intends to introduce an 'Australian Jobs Test' which will prevent labour agreements from being entered into unless they 'support or create jobs' for local workers.

Maintaining Skills Standards

As a prerequisite to being granted a visa in occupations where it is mandatory to hold a licence, Labor proposes to strengthen the skills assessment scheme through requiring offshore assessment and testing of overseas workers to be conducted by a Trades Recognition Australia-approved Registered Training Organisation.

Predicted consequences

Labor intends to clarify the details of its PLW package over time, however, the proposed reforms ostensibly pose a number of serious adverse consequences.

Temporary Skilled Migration Income Threshold

In its press release, Labor justifies its significant escalation of the TSMIT on the basis that it will prevent overseas workers from serving as a 'cheap replacement' for local workers, and preclude the undercutting of Australian wages. However, given that the PLW package requires that all Australian employers meet the TSMIT increase immediately, small businesses will be faced with extreme challenges in adapting their structures to this sudden additional burden. Furthermore, significantly raising the TSMIT across all regions without regard to differences in geography or average socio-economic status presents substantial adverse impacts for regional areas, which generally are characterised by lower salaries and costs of living, whilst ever-increasingly relying on foreign labour. Finally, should the TSMIT not be grandfathered, businesses that have existing temporary visa holders earning a salary less than $65,000 may risk the loss of those employees.

Skilling Australia Fund levy

The recently-introduced SAF levy has been subject to a number of criticisms. The levy was primarily a budget repair measure, but also introduced on the premise that governments are better placed to train workers than business. The levy disproportionately affects businesses which have historically suffered from skills shortages and successive governments' failures to adequately fund the TAFE system. The levy also applies to state government employers in health and education, with the consequence that money provided to state government-funded entities will flow to federal governments. Furthermore, prior to the implementation of the SAF levy, employers were required to demonstrate that they invested money in training their staff. The SAF levy disincentivises companies from investing in beneficial training for employees, as costs of training coupled with the levy can be excessive. Finally, as with the TSMIT increase, the SAF levy unjustly applies to regional and metropolitan areas alike, posing potentially exorbitant burdens on small regional businesses.

The current form of the SAF levy requires employers to pay a levy of up to $7200 without any certainty as to application outcome. This has meant refusals of Nomination applications for the 482 visa, without any prospect of a refund of the $7200. The PLW Package proposes a 163% increase on the SAF levy payable per year for businesses with turnovers under $10 million, and a 217% increase for businesses with turnovers over $10 million. If the current structure of the SAF levy payment remains, employers and visa applicants may be spending up to $20,000 for SAF and visa application charges per application, without any surety of approval. Businesses will thus be confronted with substantial and unprecedented costs in employing 482 visa holders, only accentuating the present criticisms of the existing SAF levy.

Australian Skills Authority

Labor's proposal to legislate for the creation of an ASA largely mirrors the Coalition Government's present scheme by which the Department of Jobs and Small Business ('the Department') is responsible for reviewing skilled migration occupation lists. Though the government planned to review the lists every six months, reviews have been much less frequent, raising concerns that a lack of resources will similarly undermine the success of the ASA. Furthermore, there are wider issues inherent in bodies such as the Department or ASA creating sweeping lists of Australia-wide skills shortages. Shortages of skilled labour can vary to extreme degrees within and between States. Furthermore, such lists can oversimplify the fact that particular jobs – and their requisite surpluses or shortages – vary significantly with experience. Unless the ASA is sensitive to these disparities, it risks grossly miscalculating business needs across Australia.

Maintaining Skills Standards

Presently, 482 visa holders must obtain licensing where it is mandatory as a condition of holding the visa. For occupations not requiring a licence, the present skills assessment system is comprehensive, as well as time-consuming and costly. In requiring Trades Recognition Australia-approved assessments for licensed occupations for temporary work visas, Labor offers little more than an additional layer of bureaucracy to an already thorough and laborious system.

Conclusion

We consider that Labor's PLW package goes too far, and fails to recognise the important skills gaps that skilled foreign workers fill which allow businesses to hire more workers in other parts of their operations which do not suffer the shortages. There also seems to be limited recognition of Australia's International Trade Obligations under various free trade agreements and the impact of the proposals on intra-corporate transfers. Without significant refinement, Labor's PLW package risks undermining the 482 visa programme, which will serve to discourage transnational businesses from undertaking projects in Australia and local businesses from expanding operations in areas where they are likely to face skills shortages.

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