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Malcolm Turnbull

Government abolishing 457 visa to give Australian workers priority “for Australian jobs”

The 457 visa, or the temporary work visa allowing skilled workers to work for an approved business in Australia for up to four years, is to be abolished, Prime Minister Malcolm Turnbull announced today.

In a video announcement posted to Facebook, Turnbull said that while Australia is “the most successful multicultural national in the world”, Australian workers “must have priority for Australian jobs”.

“We will no longer allow 457 visas to be passports for jobs that could and should go to Australians,” he said.

While acknowledging that businesses must have access to the “skills they need to grow and invest”, Turnbull said the 457 visa will be replaced by a new temporary visa, specifically designed to recruit the “best and brightest”.

“The new visa will better target genuine skills shortages, including in regional Australia. It will include new requirements, including previous work experience, better English language proficiency, and labour market testing,” he stated.

Existing 457 visas will be honoured, but the list of qualifying occupations for the new two-stream visa will be cut by more than 200. Among the cut occupations are ICT support and test engineers and web developers.

A new short term two-year visa, which will not allow for permanent residency, will be introduced, while a new medium term visa, for “more critical skills shortages”, will run for four years.

The permanent residence pathway or eligibility period under the medium term visa will be extended from two to three years, while under the reforms employers sponsoring foreign skilled workers will also be required to provide “enhanced training outcomes” for Australians in high-need industries and occupations.

The government had introduced initial reforms to the 457 visa last year, with Minister for Immigration Peter Dutton cutting back the number of days a visa holder can stay in Australia while in between jobs from 90 to 60 days.

Dutton had also said the government would look to cut down on the number of occupations eligible for the visa.

Today’s announcement has been met with a mixed from the startup community, which has had a long-standing focus on attracting international talent and a reliance on the 457 visa; 9,111 have been granted to software developers since 2014.

Tank Stream Labs CEO Bradley Delamare, who came to Australia on a 457 visa sponsored by Ernst & Young and is now a citizen, believes the level of burden involved for sponsor companies is already high and that changes will make it even more difficult for startups to find talent to help them compete globally.

While he hopes the new temporary visa will be attractive to international talent, he believes the focus on Australian jobs for Australian workers is problematic.

“Peter Dutton said one of his key goals in abolishing the 457 as it currently stands is to stop international workers on these visas from becoming permanent residents down the line,” he said.

“There are a huge number of creative and savvy migrants who are not just working for large companies on their visas, but have eventually gone on to launch their own small businesses and startups. We want these kind of innovators to continue to make Australia their home.”

Also concerned was Anna Rooke, CEO of QUT Creative Enterprise Australia (CEA), who described the announcement as “at odds” with Australia’s goal of building an innovation-driven and flexible economy that can respond to the need of businesses.  

“The uncertainty and lack of clarity on the process for 457 visas and the new temporary visas that have been flagged is placing companies in a difficult situation on the implications and timing for changes,” she said.

“For instance, at CEA we have specialist positions that our startups, and ourselves as an accelerator, have recruited overseas for because of shortages in specific technical skills in Australia. The implication that this announcement may jeopardise those workers, and the startup community more generally, is a significant issue until greater clarity is provided.”

For Julius Wei, cofounder and Head of Investment Analysis at BMY Group, the announcement mainly reflects Australia becoming more “protectionist” in its policies, rather than inciting massive economic change, with Wei adding that the abolishing of the visa will only impact a small portion of Australia’s workforce.

“457 visas represent a very small portion of the overall workforce, and are already designed to help businesses hire skills that local employees don’t already have. Saying this policy is putting Australian jobs first is a misnomer as it actually won’t provide much more in the way of Australian jobs anyway,” he said.

Adding that there’s no need for “panic” as a new and potentially better policy will take the place of the current visa system, Wei acknowledged the issues of Turnbull’s Donald Trump-like approach to delivering the announcement via a short Facebook video message.

“But without providing details of what that new policy is, the cancellation of 457 visas leaves the impression that Australia is shutting its doors to foreign workers. For a country built upon migration this is a poor approach; we rely on overseas markets and investments and should be welcoming newcomers, not rejecting them,” said Wei.

Growing Australia’s innovation economy through international talent was a key recommendation in last year’s StartupAUS Crossroads Report, which highlighted ways to help shape Australia’s startup ecosystem global competitiveness.

In addition to establishing a program to attract international startups to move to Australia, the report also recommended the implementation of an Entrepreneur Visa, which would offer international startups an accessible and appealing path to conducting their business down under.

While key for the tech industry, the 457 visa has come under fire from unions and other worker’s groups over the years, with concerns raised around both the exploitation of foreign workers and the both research and Australians missing out on jobs.

The issue of exploitation is of particular concern in the hospitality industry, with a number of reports emerging over the last few years of workers being mistreated.

According to The Conversation, a survey of employers conducted in 2012 found those in the hospitality industry are 13 times more likely to prefer workers on a 457 visa than similar Australian workers, with over 15 percent of 457 visa workers employed in hospitality.

Only 42 percent of respondents in the hospitality industry stated “they have filled skilled job vacancies” as a result of sponsoring 457 visa holders, compared to 52 percent of employers across all industries, with 41 percent said they had “increased loyalty from 547 workers” as a result of the visa, compared to 19 percent of all employer respondents.

The rolling out of the new visa will begin immediately and is set to be completed by 2018.

Image source: Startup Daily.