Is the Net Cast Too Wide? An Assessment of Whether the Regulatory Design of the 457 Visa Meets Australia's Skill Needs
| Author | Joanna Howe |
| DOI | 10.22145/flr.41.3.3 |
| Published date | 01 September 2013 |
| Date | 01 September 2013 |
| Subject Matter | Article |
WHETHER THE REGULATORY DESIGN OF THE 457 VISA
MEETS AUSTRALIA'S SKILL NEEDS
Joanna Howe
ABSTRACT
With increasing use of skilled temporary migration by employers and its significant
influence upon Australia's permanent migration intake, the 457 visa has far-reaching
implications — both for the domestic labour market and for the long-term composition
of the Australian population. The scheme was introduced in 1996 to facilitate the
temporary migration of skilled overseas workers to alleviate domestic skill shortages.
Predicated upon a premise of business demand, the scheme allows employers to
sponsor overseas workers whose occupations are on the Consolidated Sponsored
Occupation List. Verification of whether the employer's attestation of a skill shortage is
genuine is provided through employer-conducted labour market testing for certain
occupations and the market salary rates requirement. This article questions whether
these regulatory mechanisms are effective for ensuring the 457 visa program meets its
objectives.
INTRODUCTION
The 457 visa was a significant policy innovation at the time of its introduction. Prior to
this, visas for economic and family migration entitled visa holders to residency based
on an understanding that migrants were permanent contributors to Australia. The shift
to temporary labour migration visas reflects the increased movement of people around
the world for economic purposes. The World Bank estimates that moving an additional
14 million workers from low income to high income countries would increase global
income by $350 billion,1 and the Global Commission on International Migration
recommends 'carefully designed temporary migration programs as a means of
_____________________________________________________________________________________
Lecturer, University of Adelaide Law School. The author is indebted to the Journal's editor
Matthew Zagor and the anonymous referees for their invaluable feedback on earlier drafts
of this paper. The author benefitted from presenting this paper at a research workshop
with Adelaide Law School colleagues and would like to thank Gabrielle Appleby, Paul
Babie, Craig Ellis, John Keeler, Ngaire Naffine, Rosemary Owens, Alexander Reilly,
Andrew Stewart and Kellie Toole. All errors are the author's own.
1
World Bank, Global Economic Prospects 2006: Economic Implications of Remittances and
Migration (World Bank, Washington DC, 2005) 31.
444
Federal Law Review
Volume 41
____________________________________________________________________________________
addressing the economic needs of both countries of origin and destination'.2 Australia's
457 visa aims to address skill shortages in the domestic economy by allowing
employers to sponsor a foreign worker for anything up to a four year period.3
Given the sheer numbers involved and the fact that the visa has become a stepping-
stone to permanent residency, the architectural foundation of the 457 visa has far-
reaching implications for the configuration of the Australian population. Use of the 457
visa has quintupled since its inception in 1996 and is increasingly the first step towards
permanent settlement in Australia.4 In 2010–11, 41 710 permanent residency visas were
for people who last held a 457 visa, with almost nine in ten granted a permanent
employer sponsored visa.5 As such, the 457 visa impacts not only upon how
efficaciously Australia can attract temporary migrant workers to meet skill shortages
but also the composition of Australia's permanent migrant intake.
Thus the question as to whether the 457 visa is effective in meeting skill shortages is
of high national significance. Historically, this question has not been properly explored
in the Parliament because of a bipartisan political commitment to the 457 visa that has
only recently been fractured.6 Those advocating a rethink of the 457 visa are accused of
'turning away skilled, net-contributors to the Australian project' because of a
'protectionist' belief — a position scathingly critiqued in a recent editorial in The
Australian.7 In contrast, those opposed to reregulating the 457 visa scheme have been
cast as failing to protect the jobs of Australian workers or being unconcerned about the
exploitation of 457 visa holders. In the final Parliamentary sitting day at the expiration
of Labor's second term, the Government passed the Migration Amendment (Temporary
Sponsored Visas) Act 2013 (Cth). This Act introduced a number of key reforms to the 457
visa scheme including a limited form of labour market testing for certain occupations,8
a requirement that employers provide notification of redundancies in the four months
prior to the making of a sponsorship application9 and the granting of new powers to
_____________________________________________________________________________________
2
Global Commission on International Migration, Migration in an Interconnected World: New
Directions for Action (Global Commission on International Migration, Geneva, 2005) 16.
3
The 457 visa was introduced by the Howard Coalition Government on 1 August 1996,
through the insertion of a new Pt 457 in Sch 2 of the Migration Regulations (Amendment)
1996 No 76.
4
There were 25 786 subclass 457 visa grants in 1996–1997 compared with 125 070 in 2011–
2012: Janet Phillips and Harriet Spinks, Skilled migration: temporary and permanent flows to
Australia (Background Note, Parliamentary Library, December 2012) 40, Table 3;
Department of Immigration and Citizenship, Trends in migration: Australia 2010–11,
(Australian Government, February 2012) 37.
5 Department of Immigration and Citizenship, Population flows: Immigration aspects 2010–11
edition (Department of Immigration and Citizenship, 2012) 66.
6
For more on the recent debate over the subclass 457 visa, see, David Penberthy, 'The debate
over the 457 visa scheme is embarrassing', Herald Sun (Melbourne), 6 April 2013; Daniel
Hurst, 'Labor's talk against 457 visa scheme is "disgraceful" and "racist": Murdoch', The
Sydney Morning Herald (Sydney), 2 April 2013; 'Strong evidence of 457 visa rorts says PM',
The West Australian (Perth), 26 March 2013.
7
The Editor, 'Skilled migrants a success story: unions must not be allowed to undermine
productivity', The Australian (Sydney), 13.
8
Section 140GBA inserted into the Migration Act 1958 (Cth).
9
Section 140GBA(3)(b)(ii) inserted into the Migration Act 1958 (Cth).
2013
Regulating how the 457 Visa Meets Australia’s Skill Shortages
445
____________________________________________________________________________________
the Fair Work Ombudsman's workplace inspectors to monitor the treatment of 457 visa
workers and to ensure compliance with the visa's conditions.10
Recognising this fraught political context, and in light of the Migration Amendment
(Temporary Sponsored Visas) Act 2013 (Cth), this article attempts to trace and evaluate
the ability of the 457 visa to meet skill shortages. Any scheme to address 'skill
shortages' — a type of labour shortage experienced by employers — will necessarily be
based on 'employer demand'. This is because it is employers who must first identify
their need for a particular job to be done that cannot be met through the local labour
market. What is concerning about the 457 visa scheme is that it is entirely demand-
driven as it allows employers to attest their need for temporary migrant workers rather
than relying on a more independent verification of this need. As such, this article tells a
story of a 457 visa developed to meet employer needs — as distinct from a visa
designed to meet national needs that consequentially provided employers with skilled
temporary migrant workers in areas of shortage. The power to determine how many
foreign workers to employ has always been outsourced to employers. From the
beginning there was only a limited labour market testing that could be circumvented if
an employer nominated the 457 visa to undertake a 'key activity'. By the early 2000s,
even this requirement was done away with and replaced with an occupational list that
included a large number of occupations not closely tied to the existence of skill
shortages. As the visa was uncapped, employers could request unlimited numbers of
foreign workers so long as their occupations corresponded with those on the list. If
employers wished to employ semi-skilled workers they could do so via the labour or
regional agreement streams. The Migration Amendment (Temporary Sponsored Visas) Act
2013 (Cth) has reinstated a narrow form of labour market testing by requiring that
certain occupations be advertised domestically within the four month period prior to
making a 457 visa sponsorship nomination application. It is unlikely that this will have
a significant impact on improving the efficacy of the 457 visa to meet skill shortages as
the labour market testing is only of a limited nature and can be evaded by
unscrupulous employers. Moreover, the employer-demand principle still underpins
the 457 visa.
This article commences with an examination of how Australia's 457 visa has
evolved from relying upon labour market testing to a broadly conceived occupational
list from 1996 until the passage of the Migration Amendment (Temporary Sponsored Visas)
Act 2013 (Cth).11 This trajectory has occurred adjacent...
To continue reading
Request your trial