Migration & Recruitment Blog
457 Visas should not be a political football – A letter to Mr Malcolm Turnbull (PM) & Honourable Mr Bill Shorten Dec 15, 2016
A couple of weeks ago, I was at the annual Migration Institute of Australian (MIA), registered migration agents conference in Brisbane, and one of the keynote speakers was the Shadow Minister for Immigration, Shayne Neumann. He continued with a tirade against the 457 visa program and proposed cuts. With all due respect to Mr. Neumann, the implication of his proposals are extremely dangerous for the Australian economy. It seems more of a political regurgitation of party lines. I hadn’t seen Mr. Shorten’s most recent blast of the 457 visa’s at the time, but post conference I played back, and clearly both are reciting the labour party political agenda for the next Federal Election. Several days later, the Minister for Immigration & Border Control, Mr. Dutton announced he intends to cut the 457s. I hope we don’t see an anti-immigration, and more specifically anti-skills (aka anti-457) theme along the lines of ‘Trumpism’ and 'pro-Brexit' lines from both sides of politics. This should not be an unrelenting theme all the way up to the next Australian Election.
Like you, Mr. Shorten, Mr. Neumann latched onto the Australian unemployment and underemployment rates, the taking of Australians’ jobs by temporary migrants, abuse of the 457 workers, drop in apprentice rates and lack of training. Mr. Shorten, you tried to compare the number of Australians out of work, and correlate this with the number of temporary visa holders in Australian with work rights (457, students, working holiday makers being the majority). There was no consideration for the suitability or non-suitability of available local talents for current skills shortages, Regional eccentricities (especially hospitality and agriculture industries), comparative mobility (or lack thereof) of Australian workforce to move to where work is, lack of apprentices/traineeship, and very often utter shunning of some who work the system and some who simply do not want to work (Yes, I did say that!). Why is it that there is many thousands of unemployed in North Queensland, yet farmers/agricultural industries and small businesses etc, can't get casual workers? However, Mr. Turnbull & Mr. Shorten, here I wish to focus only on the impact of the 457 program in Australia and why it needs to be managed correctly now, rather than any knee-jerk reaction. Let's focus on what's good for Australia and the Australian people, not on political agendas.
Abuse of 457 System
Like every program, there is abuse, however, its minimal sensationalised and politicised. However, categorically it should not be tolerated, and absolutely cracked down on, and in particular the peddlers. Whenever, there is a change in the Migration Regulations or Policy, opportunists latch on to any gap and explore prospects. All the more reason for the policy setters to take the time to introduce changes rather than rush through shoring up the legislation to cease these weaknesses. At a recent Department of Immigration and Border Protection (DIBP) announcement on changes to temporary work visas, namely Temporary Work (subclass 407) and Temporary Activity (subclass 408), it was clear DIBP compliance teams had not been involved, as there were ostensible exploitation openings, which I cannot mention so as not to encourage opportunists. So any changes to the 457 program need to be carefully mapped out, rather than pushed upon implementers with declining resources.
With all the recent hype about the 457 visas, the Australian Industry Group (AIG) recently wrote a great article in an attempt to demystify the misinformation being spurted about. In 2015-16, the number of 457 visas approved represented a measly 0.38% of the Australian workforce, putting the numbers into perspective. The number of primary 457 visas granted annually has declined in every year since 2012-13, but they peaked at 68,481 (interestingly, when the previous Labour Government was in power!). In 2015-16, 45,395 primary 457 visas were granted. So Mr. Shorten, let’s not be hypocritical. The shear underlying fact is that the 457 numbers fluctuate in line with the Australian economy supplementing rather than replacing the Australian workforce, and funny enough, doing exactly what it’s intended to do! An overreaction by The Liberal party should be paused.
Source: Australian Industry Group (AIG)
The aforementioned politicians mentioned about concern over unemployed Australian mechanics, nurses, doctors, cook/chefs, and carpenters and joiners. With all due respect, all these occupations are in demand, and surprisingly, employers coming to our office have expressed their struggle in trying to find local workers. The unemployment rate within each of these occupations is minimal, so stating the Australian unemployed can fill these skilled jobs is pure nonsense. The Department of Education’s statistics included these very same occupations in its most recent Skills Shortage Lists. So it would take years to train up locals in those areas – which should happen, but that’s already a different topic to cover. Konnecting has employers constantly approaching us stating they have searched for 6 months or up to 1 year, searching for these very same skills, and only out of last resort, seek our assistance to find them “international or 457 visa workers”, or their businesses will suffer detrimentally, and/or worse, the employment of their other local Australian employees will be affected as well.
As we know, Australia has an aging population. According to the Intergenerational Report (IGR), over the next 40 years, the proportion of the population participating in the workforce is expected to decline as a result of population aging. The IGR states that by 2050, the number of Australians aged over the retirement age of 65 will double. A lower proportion of Australians working will mean lower economic growth over the projection period. Immigration is the most practical solution to the declining workforce, and the skilled program, of which the 457 is a significant element provides the most economical benefits within the immigration streams.
Apprenticeship and Traineeship Problem
The major long-term problem for Australia is the plummeting apprentice numbers. In the 12 months to 31 March 2016, compared with the previous year, there were 286,500 apprentices and trainees in training, a decrease of 10.2% from the previous year (319,100). Coupled with prior year drops of 11.8%, shows implicit problems for future Australian trades and related shortages. This is the issue both sides of Government need to address and need to action quickly together. The graph below shows the declining apprenticeship numbers.
An apprenticeship takes 3-4 years, so even if apprentice numbers doubled in the next year (obviously not going to happen!), the time lag up to full qualification will not fill the short term to intermediate term gaps. According to Mr. Stephen Cartwright, NSW Business Chamber Chief Executive, “Our apprenticeship system is in crisis. The flow of young, job ready, skilled workers is at a drip when we need it to be a flood”.
The last Labour government cut $1.1b from apprenticeship and traineeship support, including the successful “Tools for your Trade” program, causing an exodus from the traineeships, and now they want to cull the 457 numbers. Youth unemployment is at 12.6% and desperately needs addressing. Well, you cannot have it both ways. Government focus and investment into trainees and apprentices are paramount.
Financial Contribution of 457 visa holders to Australia
According to the DIPB’s own 457 reports, “The demand-driven, uncapped nature of the 457 visa programme is critical to enable businesses to find the critical skills they need and cannot find locally”, and admitting “Australia needs migrants to support economic development and to combat the impact of population aging on the workforce”. There are many reports demonstrating the financial, economic and social contribution of 457 visa holders to the Australian economy. By definition, they are employed close to 100% of the time, pay taxes through the many tax systems, and generally spend significant earnings within the Australian economy.
Only employers who can demonstrate they have spent at least 1% of their annual payroll (or a 2% ‘contribution’) on training their local Australian staff are eligible to nominate 457 visa holders. This “Training Benchmark”, which is a fantastic policy requirement, is generally continuous for the duration the employer has 457 staff, and also required for future permanent resident applications. In addition, and contrary to some of the recent rhetoric, 457 visa holders train, up-skill, and transfer their vast knowledge to Australian workers, vastly beneficial to Australian employees.
Review of 457 program and occupations
Almost annually, there seem to be reviews of the 457 visa program, the most recent one last year being the Independent Review of the Integrity in the 457 Program. While possibly overkill, this is warranted to ensure the program remains demand driven by industry and achieves its goals. However, with both parties recently citing occupations on the 457 list for culling, it doesn’t stack up. The fact that an occupation is on the 457 list does not mean it’s being utilised – it simply means it can be utilised if a local cannot be sourced for the specific position. As a simple case, imagine the skill requirements in Alice Springs, extremely regional Northern Territory. Do you think employers in this town can readily attract mechanics, carpenters, doctors, nurses or even cooks and chefs which have been singled out for overuse? In fact, if analysed properly there would be many skilled and semi-skilled occupations that should be added to the 457 Consolidated List (e.g. aged care worker, child care worker, meatworker, specialist digital and new age marketing occupations, and much more), but the political backlash constrains this discussion. The 457 program is demand driven, accessed by employers only when needed, and ignored when not required. The Australian economy is currently heading closer to full employment, with unemployment currently at 5.6%, from 6.3% in July 2015, and the OECD predicting further reductions.
Unashamedly, Konnecting recruits 457 visa workers to plug the gaps within the Australian workforce. But whenever we find suitable and qualified local Australian workers, categorically, they are always given priority, as employers prefer not to go through the costs and documentation for 457 visa sponsorship. The sheer facts are that combining the aging population, the vastness of varying requirements across the country, lack of apprentices and training the experience and skills required by the industry are simply not always readily available in Australia. While I welcome a review of the occupations used in the program and even a slight cull of some minor non-used occupation, it doesn’t seem appropriate for both sides of politics latching on and treating this as a political football without proper analysis and forecast modeling. In essence, I would advise, albeit unsolicited, against throwing the baby out with the bathwater. The 457 debate is not an immigration issue but should be a discussion on how to address the scarcity of suitable local skills to satisfy current industry needs. The focus must be on economic growth, innovation, up-skilling, cross training and ultimately, increasing the “employability” of Australians. The 457 visa program gives employers the license to hand pick the cream of international workers, akin to a scholarship, but free to Australian taxpayers. So, to the Honourable, Mr. Malcolm Turnbull, and Mr. Bill Shorten, I implore you both, before you go off on this political escapade, please look at the facts and work together on the real issues at hand. I’m available if you wish to discuss objectively.
Konnecting – Australian Skilled Migration & Recruitment
One of the most important assets a business can have is its highly-skilled workers. In practice, it’s also one of the hardest to obtain. A quality workforce guarantees success for a company. As the saying goes, ‘a business is only as good as its people’
SHORTAGE OF TRADE WORKERS IN AUSTRALIA WORRYING FOR EMPLOYERS
In a recent article, news.com highlighted the fact that apprenticeships and traineeships are being snubbed by high school graduates. For Australian industry, this is an extremely worrying trend. Despite ABS statistics showing 86.6% of trade qualified workers find employment within 4 months after graduating, compared with 68.1% of Degree holders. There is a stigma attached to trade workers in Australia, and the sacrifice in wages for the duration of the traineeship are a distinct turn-off for apprenticeships. Long term, this is a major problem for employers.
EMPLOYERS - Remember to maintain your 457 Training Benchmarks
If you have employees on a 457 visa, you may be familiar with the term "Training Benchmarks". As a 457 Standard Business Sponsor (SBS), the employer has an obligation to maintain the training benchmarks for each anniversary year of the business sponsorship. There are 2 ways to meet this obligation:
1. Expenditure by the business equivalent to 1% of the payroll of the business on training of local Australian staff; or
2. Expenditure of 2% of the payroll to an industry training fund.
Previously, while the employer made this commitment, the Dept of Immigration (DIBP), did not excessively monitor. However, now, while it's still not monitored, an employer can come unstuck when they go to re-apply for a new SBS, or when they go to nominate employees on the permanent Employer Nomination Scheme (ENS) or Regional Skilled Migration Scheme (RSMS) visas. For each of these processes, evidence is required for the employer to demonstrate they met the training obligations.
Not sure if you met the obligations?
As an employer is you believe you have not met the benchmarks there maybe still options to satisfy the requirement. For example, we have found many cases where the employer actually did meet the requirement, but the information was not presented correctly, or some training they thought was excluded, could actually be included. Or, it may also be possible to meet the benchmark cumulatively over the life of the previous SBS, if not met for each year. Certain portion of training to principals of the business may be countable. If categorically, the employer has not met the training benchmark for the previous SBS, there is still hope. Ask us how.
Training Benchmark Template:
As mentioned above, very often employers have met the training benchmark, but have not collated the information and presented correctly to the Department. Konnecting, have developed a simple template to assist in recording training. Download, the Konnecting Excel Training Template here.
Contact Konnecting for more infomation, or if yuo haev any questions.
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