Review of the 457 Visa is Now Complete

 
 

The ‘Independent Review into Integrity in the Subclass 457 Programme’ was completed in September 2014.

Here is the government’s response:

Senator Michaelia Cash

Wednesday, 18 March 2015

The Government will act on recommendations of a recent independent review of the 457 visa programme to strengthen integrity, ensure that Australian workers have priority and support employers with genuine skill shortages.

The Assistant Minister for Immigration and Border Protection, Senator the Hon Michaelia Cash, commissioned the review in 2014. The panel was tasked with examining compliance within the 457 programme by sponsors of overseas workers to ensure that the scheme was being used as intended – to address skill shortages which cannot be met from the Australian labour market.

The review panel consulted extensively across Australia – meeting with over 140 stakeholders and receiving 189 written submissions, including from businesses, unions, industry bodies and academics.

Key recommendations of the review include an increased focus on targeting employers who seek to misuse the programme, greater transparency around the department’s sanctions processes and proactive sharing of information between key government agencies.

“The Government will introduce a new penalty making it unlawful for sponsors to receive payment in return for sponsoring a worker for a 457 visa,” Minister Cash said.

“The Department of Immigration and Border Protection will work collaboratively with the Australian Taxation Office to cross check records to ensure that workers on 457 visas are receiving their nominated salary and are not undercutting Australian workers. Further, we will proactively prosecute and name and shame offenders exploiting overseas workers and misusing the programme.”

The Government will ensure businesses that utilise the 457 programme appropriately will incur less regulation and cost, without compromising on the necessary safeguards that underpin the scheme.

“We will reduce the regulatory burden for those businesses with a proven track record by streamlining sponsorship requirements,” Minister Cash said.

“An important recommendation which is subject to further consultation is the proposal to replace the current training benchmark provisions introduced by Labor which are complex, costly, and susceptible to misuse.”

“Our intention is to better direct training funds derived from 457 sponsors to ensure that Australians are trained in those occupations where we are currently experiencing skills shortages and relying on skilled migrants.”

The Government will also appoint a Ministerial Advisory Council on Skilled Migration (MACSM) with new terms of reference. The Council will be tasked with reviewing the list of occupations available for sponsorship under the 457 programme to ensure it is responsive to the genuine skill needs of employers, the labour market and the economy.

Minister Cash said contrary to allegations made by the former Labor Government, the review did not find there was widespread rorting of the programme.

“It did make some sensible suggestions, however, for strengthening existing provisions to ensure Australian workers have priority, while supporting employers with genuine skill shortages to access the skills they need,” Minister Cash said.

“The Abbott Government is firmly committed to ensuring that the subclass 457 programme acts as a supplement to, and not a substitute for Australian workers.”

“Through the adopted recommendations, the Government has struck the right balance between strengthening necessary integrity measures whilst removing unnecessary red-tape.”

Implementation of the review’s recommendations has begun and will be further rolled out throughout 2015. Minister Cash extended her thanks to the review panel, led by Mr John Azarias.

Here are some of the key recommendations of the review :

Recommendation 2 (Core solutions – page 49)

  1. Acknowledging that, as the OECD has pointed out, employer-conducted labour market testing is not “fully reliable”, and in the Australian context has proven ineffective, that the current legislative requirement for labour market testing be abolished.

[Comment by the writer : Labour market testing is contained in the Migration Act itself and abolishing Labour market testing requires amendments to the Act to be passed by Parliament. Depending on what attitude the Greens have to the Abbott government in the future, this reform may be put in the too hard basket for the interim. At the moment Labour market testing is the law and must be complied with.]

Recommendation 3 (Core solutions – page 49)

3.1 That the Consolidated Sponsored Occupations List be retained as a list of occupations which are at Skill Level 3 and above, and that the Consolidated Sponsored Occupations List should be able to be amended by two means: first, the addition of skilled occupations which can be shown to exist in the community but which may not be on the ANZSCO list; and, second, the refinement of the Consolidated Sponsored Occupations List in cases where there may be integrity or appropriateness concerns. Any occupations not on the list, which are usually referred to as semi-skilled, may be addressed as part of the Labour Agreement regime.

Recommendation 4

  1. That the market rate framework continue to operate as a core component of the 457 programme, but that the earnings threshold above which there is an exemption from the need to demonstrate the market rate should be aligned with the income level above which the top marginal tax rate is paid (currently at $180 000)[2].

[Writer’s note : Prior to 18 April 2015 was $250,000, but in a Legislative Instrument dated 15 April 2015 with effect from  18 April 2015 this was reduced to $180,000 (now disallowed)]

Recommendation 5

5.1 While there is an argument for abolishing the Temporary Skilled Migration Income Threshold, that it nevertheless be retained to allow for streamlining within the wider programme, and that concessions to the Temporary Skilled Migration Income Threshold be afforded under Labour Agreements, Enterprise Migration Agreements and Designated Area Migration Agreements, as appropriate.

5.2 That the current Temporary Skilled Migration Income Threshold be retained at $53 900 p.a. but that it not undergo any further increases until it is reviewed within two years.

5.3 That the two roles currently performed by the Temporary Skilled Migration Income Threshold (that is, acting as a determination of the eligibility of occupations for access to the scheme and as an income floor) be more clearly articulated in the 457 programme, and that consideration be given to accepting the eligibility threshold as up to 10 per cent lower than the Temporary Skilled Migration Income Threshold.

5.4 That the government give further consideration to a regional concession to the Temporary Skilled Migration Income Threshold, but only in limited circumstances where evidence clearly supports such concession.

5.5 That in circumstances where the base rate of pay is below the Temporary Skilled Migration Income Threshold, the current flexible approach adopted by the department, taking into account guaranteed annual earnings to arrive at a rate that meets the minimum requirement of Temporary Skilled Migration Income Threshold be continued and made more visible to users of the programme and their professional advisors.

Here is the government’s response to this issue as set out on Immigration’s website (downloaded 8 May 2015):

Review of the Temporary Skilled Migration Income Threshold

While noting the importance the Temporary Skilled Migration Income Threshold (TSMIT) has for ensuring 457 visa holders are able to support themselves, the review noted concerns raised by some stakeholders that the TSMIT creates a barrier for businesses with genuine skill needs.

The TSMIT should not be confused with the ‘market rate’ requirement, which requires that 457 visa holders be paid at the equivalent wage to an Australian worker in the same occupation and locality.

As the review was unable to fully examine this issue specifically, the government will establish a review of the TSMIT to examine its impact, particularly in regional Australia. While this review is undertaken, the TSMIT will remain at its current level ($53,900).

In the review of TSMIT, consideration will be given to a range of issues including, but not limited to, whether the TSMIT is set at an appropriate level and if the TSMIT should apply to the entire programme or set at a variable level based on factors such as locality. The review will also examine the role of TSMIT in ensuring integrity and priority for Australians in the workforce and appropriate indicators to link any increases to the TSMIT.

[Emphasis added]

Recommendation 6

6.1 That the current training benchmarks be replaced by an annual training fund contribution based on each 457 visa holder sponsored, with the contributions scaled according to size of business.

Here is the government’s response to this issue as set out on Immigration’s website (downloaded 8 May 2015):

Subject to further consultation, the government proposes to replace the current complex ‘training benchmarks’ provisions.

Current indications are that payments will have to made to a government controlled fund which will decide how the money will be distributed. Concerns are raised that this will be perceived as a tax.

Recommendation 7 (English language requirement – page 63)

7.1 That the English language requirement be amended to an average score. For example, in relation to International English Language Testing System, the 457 applicant should have an average of 5 across the four competencies (or the equivalent for an alternative English language testing provider).

7.2 That greater flexibility be provided for industries or businesses to seek concessions to the English language requirement for certain occupations on a case by case basis, or under a Labour Agreement, Enterprise Migration Agreement or Designated Area Migration Agreement, as appropriate.

7.3 That consideration be given to alternative English language test providers.

7.4 That consideration be given to expanding the list of nationalities that are exempt from the need to demonstrate they meet the English language requirement.

7.5 That instead of the current exemption which requires five years continuous study, five years cumulative study be accepted.

Writer: By way of Legislative Instrument on 16 April 2015 coming into effect on 18 April 2015 the English requirement is now that an applicant achieves an average score of 5 allowing a minimum of 4.5 on any IELTS component. Other tests are permitted.

Here is what paragraph 457.223(4) (eb) states:

(eb)      if:

(i)      the applicant is not an exempt applicant; and

(ii)      subclause (6) does not apply to the applicant; and

(iii)     at least 1 of subparagraphs (ea)(i) and (ii) does not apply;

the applicant:

(iv) has undertaken a language test specified by the Minister in a legislative instrument for this subparagraph; and

(v) achieved within the period specified by the Minister in the instrument, in a single attempt at the test, the score specified by the Minister in the instrument;

Paragraph 122 of the PAM states:

The scores must have been achieved in a single attempt at the test and the test must have been completed within 3 years of the visa application date (that is, either 3 years before or after the visa application date).

Here is what the Legislative Instrument states:

  1. SPECIFY the period of three years from the date of the visa application, for the purposes of paragraph 457.223(4)(eb).
  2. SPECIFY the period of three years from the date of nomination, for the purposes of subparagraph 2.72(10)(g)(iv).

The interpretation point is – does this lesser ‘average’ test apply to applications already lodged. The writer’s opinion is that it does, the presumption against a ‘retrospective’ application of a provision applying to a detriment rather than an advantage.  So it will still be possible to lodge a subclass 457 application without having achieved the English score prior to lodging, with the applicant hoping to undertake further tests to achieve the required average score.

The Legislative Instrument is part of the accompanying material.

Recommendation 10 (Sponsorship – page 70)

10.1 That Standard Business Sponsors should be approved for five years and start-up business sponsors for 18 months.

10.2 That as part of the government’s deregulation agenda, the department should develop a simplified process for sponsor renewal.

10.3 That the department consider combining as many sponsorship classes as possible.

[This has been accepted by Immigration, the duration of the sponsorship is done by policy not regulation. One assumes that the Accredited Statusemployers will still be part of the policy whereby the approval lasts 6 years.]

Recommendation 15 (Pathways to permanent residence – page 82)

15.1 That 457 visa holders be required to work for at least two years in Australia before transitioning to the Employer Nomination Scheme or Regional Sponsored Migration Scheme, and that consideration be given to the amount of time required with a nominating employer being at least one year.

15.2 That consideration be given to reviewing the age restriction on those 457 visa holders transitioning to the Employer Nomination Scheme or Regional Sponsored Migration Scheme.

15.3 That consideration be given to facilitating access for partners of primary sponsored 457 visa holders to secure permanent residence under the Temporary Residence Transition stream.

Government’s– response

Tuesday, 14 October 2014

Joint media release with Prime Minister Tony Abbott, Minister for Industry Ian McFarlane and Minister for Immigration and Border Protection Scott Morrison.

The Government will reform the 457 visa programme for skilled migrants, while maintaining strong safeguards against abuse.

The 457 programme must be a means of filling genuine skills gaps in the local labour market while not placing unnecessary administrative burdens on business.

An effectively managed skilled migration programme ensures foreign workers supplement rather than substitute Australian workers. A business that is forced to close because it is unable to access the labour that it requires employs no-one.  That is a lose–lose situation for both employers and employees.

Following an independent review of the 457 programme, the Government will:

  • streamline the processing of sponsorship, nomination and visa applications to reward low risk applicants and refocus compliance and monitoring activities on high risk applicants;
  • increase the sponsorship approval period from 12 to 18 months for start-up businesses, to give start-ups more time to make their businesses sustainable;
  • provide greater flexibility in relation to English language testing and skill requirements for 457 applicants, to ensure that the standards required are appropriate for the industries and occupations being sought; and
  • retain the Temporary Skilled Migration Income Threshold at $53 900, ahead of a review within the next two years.

Safeguards will remain in place to ensure that the 457 visa programme is not rorted. It will continue to be a requirement that a foreign worker receives at least the same market rates and conditions that are paid to an Australian doing the same job in the same workplace.

However this is not the final response as the media release stated:

The Government will soon make further announcements on the recommendations of reviews into… the 457…. Programme…

Barbara DavidsonReview of the 457 Visa is now Complete