The Australian federal government has announced a raft of reforms under the Industry Innovation and Competitiveness Agenda. The reforms are designed to improve Australia’s economic competitiveness by lowering costs through decreased regulation, increase skills in the labour market, improve infrastructure and encourage innovation and entrepreneurship.

One of the key initiatives announced in the Agenda is the enhancement of the 457 visa programme and investor visas. These skilled migration reforms are intended to improve the skills in the local labour force and attract high quality international talent to Australia.

The government has advised that initial legislative and regulatory reforms will commence this month with implementation to continue through 2014 and into 2015.

457 & Investor Visa Reforms

The reforms to the 457 visa programme were drawn from the recently released ‘Robust New Foundations’ report. The report made 22 recommendations and some of these have been accepted by the government as part of the Agenda. Reforms include:

  • streamlining the processing of business sponsorship, nomination and visa applications based on risk factors with a focus on targeting high risk applications;
  • reforming sponsorship requirements to reduce cost and time for businesses;
  • refocusing compliance and monitoring activities on high risk applicants;
  • greater flexibility in relation to English language requirements based industry standards;
  • increasing the sponsorship period for start-ups from 12 to 18 months;
  • Retaining the Temporary Skilled Migration Income Threshold;

Impact on businesses

The proposed changes are likely to result in an overall decrease in cost and time to businesses using the 457 visa programme. The announced reduction Business Sponsorship requirements are expected to benefit employers as current requirements are technical and difficult to manage administratively. Further detail will be required in order to determine the likely impact of these changes.

The proposal to streamline applications based on risk factors will be highly appreciated by most business sectors and large companies with a history of successfully using the programme and compliance will be the biggest beneficiaries.

Employers in the hospitality and construction sector are likely to see levels of scrutiny maintained or even increase as a result of the processing reforms. Both industries were highlighted in the Robust New Foundations report as having higher levels of non-compliance and thus presenting greater integrity concerns.

Allowing for a wider range of English language scores is another positive move for employers. The current IELTS requirements stipulate that visa holders from non-English speaking countries must provide evidence of results with a minimum score of 5.0 in each of the 4 areas of reading, writing, listening and speaking. These requirements are out of step with industry requirements. While employees must be capable of understanding Occupational Safety guidelines as well as written and oral instructions there is limited need for high level writing and reading skills in many occupations. Providing flexibility to allow for an average English language result in place of a minimum, for example, would improve outcomes for many employers and employees.

The reforms for start-ups will go some way to reducing the higher burden faced by new businesses however the government should be encouraged to go further. To encourage innovation and entrepreneurship among start-up businesses the government should move to reduce additional costs involved in renewing sponsorship obligations and sponsored visas. These additional costs are imposed on businesses that can least afford higher administrative burdens.

Retaining the TSMIT at $53,900 for 2 years will mean that many employers can continue to sponsor staff where continued TSMIT indexation risked pricing them out of the market. Annual indexation of the TSMIT has seen the ‘salary floor’ increase from $47,480 in 2010 to $53,900 in 2013. Employers must continue to ensure that staff are paid at market rates – if rates in the industry have increased 457 visa holder remuneration will need to be adjusted accordingly.

Conclusion

The proposed reforms will be welcomed by employers seeking greater flexibility in global mobility and reduced administrative costs. Further detail will be required to determine the exact benefits to business. It is not clear at present whether any additional reforms will accompany those announced in the Agenda however the government should be encouraged to consider implementing further reforms to reduce the programme’s complexity.