Temporary Skilled Migration Income Threshold (TSMIT) Analysis

Temporary Skilled Migration Income Threshold (TSMIT) Analysis

On the 27 April 2023 Hon Clare O'Neil MP (Minister for Home Affairs) announced the Australian Government will increase the Temporary Skilled Migration Income Threshold (TSMIT) from $53,900 to $70,000 on the 1 July 2023.

What is TSMIT

Temporary Skilled Migration Income Threshold (TSMIT) is the minimum salary payable to a sponsored employee in the following visa streams.

• Temporary Skill Shortage (subclass 482)
• Employer Nomination Scheme (subclass 186)
• Skilled Employer Sponsored Regional (Provisional) (subclass 494)

This will also affect Permanent Residence (Skilled Regional) (subclass 191) visa applicants who must evidence the minimum TSMIT threshold for at least three (3) income years.

TSMIT was first introduced in 2009, with the aim to protect lower paid Australian jobs, and to ensure that employer sponsored visa holders have reasonable means of support while in Australia.

The government has announced that the increased TSMIT from 1 July to the new threshold of $70,000 is part of a larger migration strategy in response to the independent Review of the Migration System led by Dr Martin Parkinson, which found “Australia’s migration system is broken”.

TSMIT Indexation

From its introduction in September 2009, TSMIT was indexed annually based on the Average Weekly Earnings (AWE) report to keep pace with the cost of living.

However, from July 2013, TSMIT ceased to be indexed and has remained at $53,900. 

 source: https://www.homeaffairs.gov.au/reports-and-pubs/files/tsmit_review_report.pdf
 

The Honourable, Clare O'Neil MP (Minister for Home Affairs) as part of her announcement indicated that $70,000 would be the threshold had TSMIT not been frozen since 2013. However, if TSMIT had continued to be indexed to wages the new threshold should be $73,600.

The Australian Council of Trade Unions (ACTU) in their report “Skilling the Nation: Addressing Australia’s skills and migration needs now and into the future”, recommended an increase of the TSMIT to approximately $90,916.80 to be indexed annually by wage price index (WPI).

The Australian Chamber of Commerce and Industry (ACCI) in their report “Planning Australia’s 2023-24 Migration Program” recommended a modest increase of the TSMIT to $60,000.

Clare O'Neil MP, in line with the Grattan Institute’s recommendation, has described the new TSMIT of $70,000 as the “Goldilocks threshold – it’s just about right”. The minister also stated in her address that the government has not yet decided on indexing at this stage.

What the new TSMIT threshold means for lodged applications

The Government have not advised if this change will apply to undecided cases lodged before 1 July.

We are continuing to monitor announcements by the Government and within the industry and will provide further information once it becomes available.

What the new TSMIT threshold means for applications lodged from 1 July 2023  

From the 1 July Temporary Skill Shortage (subclass 482), Employer Nomination Scheme (subclass 186) visa applicants and Skilled Employer Sponsored Regional (Provisional) (subclass 494) must have a nominated salary of $70,000 per annum plus superannuation.

Commentary and Criticism of the Increased TSMIT threshold

A major criticism of the new TSMIT threshold is that it does not reflect the Australian Market Salary Rate for regional Australia and within key industries such as hospitality and aged care. Two sectors where major skills shortages have been identified. Some particular occupations which will fall foul of the new TSMIT include chefs, cooks, aged carers.

As an example, according to the latest Fair Work Ombudsman pay guide, as a full-time aged care worker you can expect to earn between $861.40 weekly ($44,792.80 annually) and $1,043.60 weekly ($54,267.20 annually).

We may see the use of more industry specific labour agreements to accommodate these occupations. The company specific labour agreement could give concessions to bypass the TSMIT.

It is also significant to note that according to Home Affairs March 2023 “Temporary resident (skilled) report” the average wage of a TSS visa holder is $103,600. This highlights low wages within certain business sectors is a broader national issue in Australia, rather than a specific issue affecting only the migrant workforce.