Current issues in the skilled temporary subclass 457 visa

People and Place, June, 2006 by Bob Kinnaird

There has been a sharp increase in the numbers of skilled migrants sponsored by employers on long-stay temporary entry visas (subclass 457). Several trade unions and the Australian Labor Party have asserted that some sponsoring employers pay below market rates to the migrants in question. This article examines this and other claims. It concludes that, on the limited evidence the government makes available, there is a basis for these concerns, especially in the ICT industry.

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The business long-stay or subclass 457 visa is Australia's main temporary visa for employer-sponsored skilled persons. (1) The 457 visa has a notional maximum stay in Australia of four years, but in practice this is extendable. This temporary employment visa program has been expanding very rapidly and is now a highly contentious political issue. The Australian Council of Trade Unions (ACTU) and Federal Australian Labor Party (ALP) Opposition now vigorously oppose the 457 visa program in its current form. Both portray the 457 program as part of the Coalition Government's broader industrial relations strategy. Critics claim this strategy, especially the controversial 2005 Workchoices legislation aims to reduce wages and working conditions, and to shift the balance of power in workplace relations more towards employers.

ACTU and ALP concerns on the 457 visa include 'that unscrupulous employers are using the employer-sponsored visa as a means to drive down wages and conditions of employment', with visas being approved at wages below market rates. In March 2006, the ACTU formally requested an investigation into the operation of these visas by the Commonwealth Ombudsman, to include 'whether the requirements for the issue of such visas are being met prior to issue and if temporary workers entering the country under such visas are having their rights abused'. (2)

The number of 457 visas granted in 2005-06 is projected to be around 40,000 (primary applicants only), a massive increase of over 40 per cent in just one year. This is about the same as the number of skilled permanent visas expected in 2005-06 in the main permanent migration program, the General Skilled Migration program (GSM). In 2006-07, for the first time in Australia's migration history, there will probably be more temporary skilled 457 visas granted than skilled permanent visas.

This is so for two reasons. In May 2006, the Federal Government announced that GSM visas for 2006-07 would be held at 2005-06 levels, while changes were made to this program following the evaluation of the GSM. Second, the number of 457 visas granted in 2006-07 is likely to be even more than the 40,000 projected for 2005-06. The 457 visa is essentially an employer-demand driven visa, and employer take-up of 457 visas is likely to grow further. There is no cap on the number of 457 visas issued each year (unlike the counterpart US temporary skilled visa--the H-1B visa--which does have an annual cap), nor is there any annual government target for 457 visas.

The Government is aggressively promoting 457 visas to employers, including by outposting Department of Immigration and Multicultural Affairs (DIMA) officials to employer and industry organisations to stimulate demand for skilled visas. In January 2006, there were some 20 such DIMA 'Industry Officers' outposted and the number has probably increased since then. (3) Other factors contributing to increased employer take-up of 457 visas include record low unemployment, genuine skills and labour shortages in some sectors such as resources, and a large and growing supply of temporary residents in Australia on other visas who are willing to take up 457s.

Against this background, this article outlines the history of the 457 visa, its main features in 2006, and examines the evidence on some of its more contentious aspects.

HISTORY OF THE 457 VISA

The 457 visa was introduced by the first Howard administration on 1 August 1996, following its election in March 1996. But the decision to introduce the 457 visa was actually first made by the Keating Labor government. In September 1995, the then Minister for Immigration and Ethnic Affairs, Senator Nick Bolkus, announced that the Australian Government had accepted the key recommendations of the Roach Report (4) on temporary skilled visas and would change the visa program accordingly. These changes were essentially the new 457 visa regime.

The Roach Report was prepared by a Committee chaired by Neville Roach, then Managing Director of Fujitsu Australia. The Committee included a representative of the ACTU as well as business interests. The new Coalition Government also accepted the Roach Report as the blueprint for the 457 visa.

The 457 visa rules involved a radical deregulation of Australia's temporary entry regime, involving 'considerable self-regulation' by employers recruiting foreign nationals. Before August 1996, the Australian Government operated temporary work visas on the basis that access by foreign nationals to the Australian labour market should not jeopardise the employment of Australian citizens and residents. This was embodied in the visa requirement that employers undertake resident 'labour market testing'. This meant that employers had to demonstrate that the jobs to be filled by foreign nationals had first been offered to Australian residents and that none suitable were available.