Budget Special: VAC increases from 1 July 2017; new levies to be introduced; increase residency requirements for pension

The Federal Budget always brings with it some surprises. The major change to Australian visas were already announced in the weeks leading up to the budget, including the new temporary parent visa, and the abolition of the Subclass 457 – Temporary Work (Skilled) visa, which will be replaced with the Temporary Skill Shortage (TSS) visa in March 2018.

The major change that came with the Budget handed down last night was visa application charge (VAC) increases from 1 July 2017 and new levies that will commence from 1 July 2017. The Department of Immigration and Border Protection (DIBP) have already released a fact sheet that includes all new VACs from 1 July 2017.

VACs have been subject to major hikes in recent years. This will hopefully be curtailed by indexing VACs annually in line with the forecast Consumer Price Index.

However, over the next few months, there will also be levies for certain visas and visa programmes. For the new temporary parent visa, there will be a AUD 5000 levy applied for any primary applicant for 3-year parent visa and AUD 10 000 for the 5-year parent visa. This had already been reported.

As part of the reforms to the temporary work visa programme, the new TSS visa will require a hefty levy known as the Skilling Australians Fund Levy. This levy will be determined by how big the sponsoring business is, how long the visa will be for their nominated worker, and how many applicants will be included in the application.

There will also be a one-off levy applied for any permanent employer sponsored visa application, which will be AUD 3000 for any small business and AUD 5000 for any medium to large business commencing from March 2018. It is suspected that these levies will finally replace the “interim” training benchmarks, the bane of many HR employees.

It is not yet known where in the application process this will apply and who will be liable for these costs.

The other major change is the increase to the requirements for eligibility to the aged pension or disability support pension. While these benefits are controlled by other government departments, they will affect migrants reaching retirement age. This is probably a strategy to offset the substantial costs to taxpayers of parent migration estimated to be between AUD 335 000 and AUD 410 000 per adult.

It has been reported that claimants will require 15 years of continuous Australian residence (up from 10 years), unless they have either:

  • 10 years of continuous Australian residence, of which five years of this residence was during their working life; or
  • 10 years of continuous Australian residence without having received an activity tested income support payment for a cumulative period of five years.

Existing exemptions for disability support pension applicants who acquire their disability in Australia will continue to apply.