Perspectives

GES NewsFlash

Australia—Government response to the independent review of the 457 visa program

27 March 2015

Overview

In 2014, the Australian Government (the “Government”) announced an independent review of the temporary work (skilled) visa (Subclass 457) program. The panel conducting the review produced its final report titled Robust New Foundations - A Streamlined, Transparent and Responsive System for the 457 Program. On 18 March 2015, the Government responded to the recommendations of the panel.

The Government supports or supports-in-principle the majority of the recommendations, which are outlined below. At this stage, no time frame has been provided for the implementation of the recommendations.

Recommendations not supported

Removal of Labour Market Testing (LMT)

The Government has noted the recommendation but will not move to abolish LMT. With respect to wider labour market issues, the Australian Government has supported a recommendation wherein the new ministerial advisory council be supported by a dedicated labour market analysis resource.

Expansion of nationalities that are exempt from the English language requirement

The review found that a minimum level of English is necessary and that this requirement should be maintained.

Recommendations supported or supported-in-principle

Consolidated Sponsored Occupations List (CSOL)—Occupations

The CSOL will be retained for occupations that are at Skill Level 3 or above. Further, skilled occupations that are not listed in Australia and New Zealand Standard Classification of Occupations (ANZSCO) and are required in the community should be added to the CSOL, and where there are integrity or appropriateness concerns, the CSOL can be refined to support the ongoing integrity of the 457 program.

The recommendation that the new ministerial advisory council provides advice on occupations, which raises integrity concerns, coupled with additional advice on limitations on occupations and/or regions, has also been supported.

Market rate framework and the Temporary Skilled Migration Income Threshold (TSMIT)

The market rate framework will remain in place, with the exemption to show market rates being reduced to $180,001 from $250,000.

The TSMIT will also remain in place at $53,900 with concessions being afforded to Labour Agreements, Enterprise Migration Agreements, and Designated Area Migration Agreements. The TSMIT will not be increased until it is reviewed within two years.

The Government has also supported the recommendation that consideration be given to accepting an eligibility threshold of up to 10% lower than the TSMIT. Further regional concessions have also been supported in limited circumstances where evidence clearly supports such a concession.

Arrangements enabling sponsors to nominate a base rate of pay below the TSMIT, provided that the guaranteed annual earnings meet or are above the TSMIT, will continue to be accepted, and will be made more visible to users of the program.

Training benchmarks

The Australian Government has supported a recommendation where the current training benchmarks will be replaced by an annual training fund contribution based on each 457 holder a business sponsor. These contributions will be scaled according to the size of the business. Further consultation to determine the specific requirements will be held.

The funds raised through the annual training contribution will be invested in four main areas; training and support initiates, programs encouraging employers to take on apprentices/trainees from target groups, mentoring programs and training scholarships, and training and support initiatives for sectors of critical national importance.

English language requirements

The recommendation to allow a visa applicant to provide English test results, such as International English Language Testing System IELTS, with an ‘average’ score of 5 rather than a score of 5 across all parts of a test has been supported.

Greater flexibility for English requirements under Labour Agreements, Enterprise Migration Agreements, and Designated Area Migration Agreements as well as on a case-by-case basis has also been supported.

Furthermore, that consideration be given to allow five years of cumulative study in the English language, rather than five years of continuous study has been supported.

Genuine position requirements

The Government has supported the need for targeted training for decision makers in relation to the assessment of the genuine position requirement. It has also supported-in-principle that decision makers should invite the sponsor to provide further information prior to a nomination being refused on the genuineness criteria.

Standard Business Sponsorship (SBS)

The recommendation that an SBS be approved for five years for an established business and 18 months for start-up businesses has been supported. It has also been supported that the renewal process be as simplified as possible.

When more detail is available, the Government will investigate the alignment of overseas business and Labour Agreement sponsorship periods with the general SBS approval period. 

Sponsor obligations and requirements

There are several supported recommendations and these include:

  • The time frame for notifiable events be increased to 28 days after the event.
  • The enforcement of the attestation relating to nondiscriminatory employment practices.
  • It be unlawful for a sponsor to be paid by a visa applicant for a migration outcome and that this be enforceable.
  • That sponsors be required to provide their 457 visa holders with both a summary of visa holders rights prepared by the Department of Immigration & Border Protection (DIBP) and the Fair Work Ombudsman’s Fair Work Information Statement, as part of the employment contract.
  • Greater priority be given to monitoring and more allocation of resources to programs aimed at helping sponsors understand and comply with their obligations.
  • Greater collaboration between the DIBP and the Australian Tax Office. It has also been supported to place an obligation on a 457 visa holder to provide their tax file number to the DIBP.
  • The Fair Work Ombudsman’s role in monitoring and compliance should continue and that the DIBP should provide information in real time that is compatible with that of the Fair Work Ombudsman.
  • The DIBP should monitor decisions of the Fair Work Commission to determine if sponsors have breached obligations or provided false or misleading information. 
  • The recommendation that dedicated resources be available to the DIBP to enable the investigation and prosecution of civil penalty applications and court orders has been supported in principle. It has also been supported that the DIBP disclose greater information on its sanction activity.
  • When lodging new nomination applications, sponsors must certify that there has been no change in the information provided to the DIBP in relation to whether the business or an associated entity has been subject to adverse information.
  • The DIBP investigate the feasibility of system improvements that enable greater linkages with information held by other government agencies.

Labour Agreement

The recommendation that Labour Agreement negotiation times be significantly improved, where the standard 457 program arrangements are not suitable, has been supported.

Consideration of the development of additional template agreements to address temporary local labour shortages to enable the Labour Agreement pathway to be more open and accessible for additional industry sectors.

Streamlining of the application process

The following recommendations have been supported:

  • As part of a deregulatory measure, consideration be given to creating streamlined processing within the 457 program
  • Further consultation will be undertaken to maintain program integrity, taking into consideration that streamlining should be built around risk factors, including business size, occupation, salary, and sponsor behavior

If the recommended nomination and visa streamlining is implemented, the DIBP should investigate a redefined accredited sponsor system. Current accredited sponsors should retain priority processing until their sponsorship ceases. No further sponsors should be granted accredited status until a new system is implemented.

The Government will also look to combine as many sponsorship classes as possible.

Permanent residence

The following recommendations have been supported:

  • 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. The period of time with the nominating employer is recommended to be one year.
  • Consideration be given to reviewing the age restriction on 457 visa holders applying for a permanent visa under the Employer Nomination Scheme or Regional Sponsored Migration Scheme.
  • Consideration be given to allowing partners of primary sponsored 457 visa holders to apply for permanent residence under the Temporary Residence Transition stream.

Other

A review of the current lodgment fee structure has been supported, especially for secondary visa applicants and visa renewal applications.

Deloitte's View

Deloitte has recently highlighted the impact on the nation’s productivity of the combined cost of administering and complying with unnecessary public and private sector bureaucracy. Deloitte therefore welcomes the Government’s support or support in principle of the majority of the recommendations, in particular, those which look to streamline and simplify the standard 457 and agreement processes.

We regret the decision to retain LMT in its current format. However, we support the allocation of a dedicated labour market analysis resource to the new ministerial advisory council, which may in turn lead to further streamlining in this important area for the business community.

Deloitte is concerned that the new annual training fund which will be based on the number of 457 visa holders a business sponsors may create additional cost to businesses which already have a substantial training plan in place for their Australian employees. We note that further consultation will be undertaken and Deloitte will take an active part in these consultations.

Deloitte notes that there is a recommendation to streamline the sponsorship approval types for employers, but we support the retention of some form of accredited sponsorship.

Contacts

If you have any questions concerning the issues in this GES NewsFlash, please contact a GES professional at our Deloitte offices as follows:

Mark Wright
+61 2 9322 7454
mawright@deloitte.com.au

Beth Fitzpatrick
+ 61 7 3308 7186
bfitzpatrick@deloitte.com.au

Sasha Grimm
+ 61 8 9365 7388
sgrimm@deloitte.com.au

Fiona Webb
+ 61 3 9671 6334
fwebb@deloitte.com.au

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