457 visa changes: Government responds to independent enquiry

The Government today released a response to the Independent Review of the 457 Visa Programme. A full list of each recommendation and the government’s response can be found here. A summary of the major changes that are likely to be implemented in the near future can be found here.

The key balancing act the government has set itself is the desire to reduce unnecessary red tape while preventing and punishing any abuses. This is in keeping with the current Government’s insistence of compliance while maintaining business efficacy.

Key measures to strengthen the integrity of the program include:

  1. Ensuring the sponsor monitoring regime is adequate and robust – this is most likely to involve risk tiering based on a number of factors, especially considering the intention to introduce streamline processing for low-risk sponsors.
  2. Better cooperation between government agencies – The Australian Tax Office (ATO) and Fair Work Ombudsman are listed as the main agencies that would provide information to the Department of Immigration and Border Protection (DIBP). This is mainly to check that employee terms and conditions as listed in applications adequately reflect the reported salaries to the ATO.
  3. Increased education of sponsor obligations and disclosing information on sanctions – Most likely, this would be a “name and shame” of employers who have been prosecuted for sponsor obligation breaches and to better highlight sponsor obligations and employee rights with information provided to both employers and visa holders.
  4. Introduce penalties for employers receiving payments from visa holders for sponsorship – A new penalty is likely to be introduced to specifically target this practice. It would be expected that this would be primarily punitive.

The government has flagged the following to assist in improving the flexibility of the program:

  1. Establishment of an advisory council – this body’s aim would be to address issues with the programme and to assist the Government in amending regulations where applicable using labour market analysis and other empirical information.
  2. Abolishing or amending the current training benchmarks and implementing training contributions – No doubt, this comes to the relief of many migration agents and employers. Instead of training benchmarks, it is likely that an annual training fund contribution will be required by sponsors, according to their business size or the number of 457 visa holders, paid directly to the Department of Industry who would direct these funds to general training areas of need.
  3. Rollback of the market salary rate and review of the Temporary Skilled Migration Income Threshold (TSMIT) – The market salary rate exemption could be rolled back from the current minimum of AUD 250,000 to the previous amount of AUD 180,000. The TSMIT will be reviewed for its effectiveness, particularly in regional areas where some sponsors struggle to meet such a requirement to fill labour shortages.
  4. English language requirements – For those visa applicants excruciating shy of meeting the Vocational English requirement for a 457 visa, the possible new requirements will be that (for an IELTS test) and overall band score of at 5.0 will be enough, however, no one individual component can be less than 4.5. It is expected that there would be equivalent leniency with the newly approved English tests, and the English scores for occupations with mandatory licensing requirement would remain unchanged.
  5. Sponsorship approval terms – Start-up businesses (trading for less than 12 months) will have their term of approval increased from 12 to 18 months while standard business sponsors (trading for 12 months or more) will have their term increased from 3 to 5 years. There has been no indication of any increase of the term for accredited business sponsors from the current 6 years.
  6. Establishing a streamlined processing model – As indicated before, it seems that the Government will be investigating streamlining visa applications for low-risk and compliant businesses outside of the current accredited business sponsorship arrangements currently in place.

We are obviously in the early stages of significant changes in the way a pillar of Australia’s visa programme operates and is enforced. No date has been set for these changes, however, the Government states that most will be implemented in the 2015-16 programme year.

Should your business have any queries on employer sponsored visas, Peak Migration is always willing to assist: + 61 3 9399 4201.