Demographer Professor Peter McDonald put the basic equation very clearly on the 7.30 program back on 14 March. Each year the Australian labour force grows by 1%, that’s about 120,000. In addition we have about 140,000 more baby boomers retiring than we have young people coming on. So we have an annual shortfall each year of about 260,000 workers. McDonald says the 457 visa program for skilled workers supplies about 40,000 of these. Chris Uhlmann gave this overview of how the numbers were trending:
The visas were introduced by the Howard Government and about 30,000 a year were issued until they took off with the mining boom. 39,500 were awarded in 2003-’04 and 110,570 in the Howard Government’s last year. They fell under Labor to a low of 67,980 in 2009-’10 in the wake of the financial crisis, but by 2011-’12 they’d surged again to 125,070.
So the common experience of recent years seems to be above McDonald’s 40,000, but nowhere near the 260,000 workers we require. We’ll come back to the numbers.
The origins of the Temporary Business (Subclass 457) Visa stem from a report by Kevin Roach commissioned by the Keating Government in 1995. Andrew Jakubowicz tells us that the Howard Government implemented the scheme in 1996. The intention was
to see the system as part of a major investment in training of Australians, and as a short gap cover until the training system was expanded.
Under Howard the training side of the deal atrophied while the visa side expanded. In a discussion paper generated by the Department of Immigration and Citizenship in December last year identifies two fundamental tenets of the scheme:
a. enable businesses to sponsor a skilled overseas worker if they cannot find an appropriately skilled Australian citizen or permanent resident to fill a skilled position; and
b. ensure that the working conditions of sponsored visa holders are no less favourable than those provided to Australians, and that overseas workers are not exploited.
The visa covers an individual worker who is sponsored by a specific business to do a specified job for a specified period of time. Workers coming this way can and commonly do transfer to permanent residency, but if the job goes so do they, within 28 days, unless they transfer to a new sponsoring firm.
The Rudd Government undertook a review of the program in 2008-09 and effective from 14 September 2009 introduced a range of sponsorship obligations to ensure the working conditions of sponsored visa holders met Australian standards and that they were not exploited. The rights pertaining to the visa are listed here.
On 2 July 2012 a Ministerial Advisory Council on Skilled Migration (MACSM) chaired by Michael Easson AM met for the first time to monitor and provide advice on the program as well as the Enterprise Migration Agreements (introduced in May 2011) and Regional Migration Agreements (from 2011-12). Aforesaid Professor McDonald is a member. Four of the nine are union representatives.
0n 24 November 2012 the name of the 457 visa scheme was changed to Temporary Work (Skilled) (Subclass 457) visa. Originally it had been the Temporary Business (Long Stay) visa. Importantly “long stay” has disappeared leaving “temporary” highlighted, and “business” has become “skilled”. There were some minimal changes meant to tighten the scheme, but it stayed much the same.
You should know that in March this year Senator Nick Xenophon initiated a senate inquiry, pointing to, for example problems with flight attendants:
“Anyone knows that when you advertise for flight attendants, hundreds of people turn up for a handful of jobs, but the role is listed on the Consolidated Sponsored Occupations List, which means an airline could potentially apply for 457s for flight attendants.”
“We need to look at why occupations like that are listed in the first place, when it’s clearly not because there’s a lack of Australian applicants,” Nick said.
It’s an inquiry of the Senate Standing Committees on Legal and Constitutional Affairs looking into the Framework and operation of subclass 457 visas, Enterprise Migration Agreements and Regional Migration Agreements. I believe it’s chaired by Doug Cameron and will report in June.
The 457 scheme has been seen as ahead of other countries in terms of skilled migration programs.
The Conversation has a series of articles on 457 visas. Graeme Hugo has a useful explainer. In addition to the individual enterprise agreements and regional agreements with states, territories or municipal authorites, Shanthi Robertson explains that many temporary migrants work here on working holiday visas and temporary graduate visas, sometimes for considerable periods of time. Australia is one of the more open countries in terms of labour market access, and, it seems, needs to be in order to meet seasonal, regional and expanding work force needs.
Problems, issues and rorts
The Jakubowicz article tells us:
While the majority of 457s appear bonafide arrangements, … some rorting of the system also appears in significant sectors.
He then puts the current debate in the context of immigration policy and experience.
Kim Carr in his exit interview indicated that the initial impetus for Minister Bowen to act came from the case of two employers in Adelaide:
“The circumstances were such whereby an employer said they had not actually made any real effort to look at the local job market.”
Carr said this forced Chris Bowen’s hand.
“Chris Bowen had examples with two employers in Adelaide who said: ‘We haven’t tried to actually seek out locals’. He asked his department what do I do, and they said there was no power to act.”
The December 2012 discussion paper identifies 12 measures to tighten the regulations, most of them directed at preventing misuses of the program. It is clear that the regulatory provisions are so loose you can drive a fleet of trucks through them. The paper is not statistical in its approach and I can’t find where it says, as has been reported, that problems or rorts are rare. It commonly uses this phrase in assessing the impact of the measures identified:
This measure would have no impact on genuine users of the program. (Emphasis added)
Obviously the measures target non-genuine users of the program. It mentions inter alia firms who say that advertising in Australia does not fit their business model, or would increase costs, and firms that seek sponsorship for a skilled job and then appoint a worker to do more menial jobs.
I can’t find a link, but one day on the radio I heard Senator Cameron put the case for doing something more eloquently in 30 seconds than Gillard or O’Connor had ever done. The bit I remember was about a group of workers in Perth who weren’t paid for months. In a discussion with Lyndal Curtis and Senator Scott Ryan (towards the end) he makes clear that he is mainly concerned about visa-holders’ welfare:
Well Australian jobs should come first but if there are workers here who are here on 457 visas, they should be looked after, they should get decent conditions. That’s what I fought for all my life. I fought for Chinese workers, Filipino workers, Korean workers who were being ripped off. If you’re on a 457 visa, the chances of you being injured or killed on the job are far more than an Australian worker, so they should be helped and protected.
One engineering company went out and bought two houses and employed 28 workers. Part of their contract of employment was $167.50 a week rent. They were living in two houses these 28 guys and all paying that money.
One lever that companies use on 457 workers is that if you work every Saturday for nothing, for a year, I’ll get you permanent residency. I’ve meet 40 or 50 people that have been exploited that same way.
The most compelling evidence I've seen is from Tim Colebatch, who tells us the foreign worker program is being rorted just as the student visas were. For example:
Until mid-2011, few firms used 457 visas to import cooks; in 2010-11, just 45 visas a month were issued for skilled kitchen staff. Yet by January this year, 1690 cooks had been granted 457 visas, 240 a month. Cooks have suddenly become the biggest users of section 457 visas.
That happened while consumer spending in hotels and restaurants fell.
Chefs on visas have suddenly shot up 150%. While retailers are cutting back on staff employed, they imported 300 foreign workers a month as shop assistants. Hairdressers imported to Victoria have trebled. Nepal has emerged as a significant supplier of skilled migrants!
And while Australian workers get more pay over time, the pay for 457 visa holders is falling quite markedly in specific categories, such as technician or manager.
Colebatch is saying that while overall the 457 visa system works well the rorts must be fixed.
I agree with him. In a sense the numbers don’t matter. Any abuses of the system should be prevented if possible and subject to remedy if they do occur. However I’m concerned that employers, stressed in the two-speed economy, may be learning quite fast that the tiger has no teeth. When this happens the rules may as well not exist. The danger is that a new exploitative norm may be emerging in Australian business practice.
The Government wants to install Fair Work Australia as the agency to police the scheme. The Coalition last year said it would keep Fair Work Australia, but it may be working under a very different act and be less well resourced. Ben Eltham suggests that industrial relations could be a real point of difference between Labor and the LNP. A Coalition policy is in the making which Michelle Grattan says will address issues of “flexibility, productivity and union militancy”. Eric Abetz confirmed this on the 7.30 report. Warning lights are flashing!
Business wants a free hand. Under the LNP there is every chance they will get it, or something close.
Given the problems identified and the potential for them to become more commonplace, a case can be made that the Government is justified in using publicity to let miscreant businesses know that the authorities are on the case. This should be done, however, in a way that emphasises our pride in being an open society where people from elsewhere can experience our lifestyle and contribute to our endeavours. We don’t need talk instilling fear of strangers and other ideological rhetoric which Mark identified.
We should expand our humanity rather than shrink our souls.
Not enough has been said or written about this aspect. Measure 2 of the discussion paper seeks to strengthen arrangements. It seeks to
Strengthen the enforceability of the existing training benchmarks to ensure that sponsors are genuinely contributing to ongoing training of Australians.
Matters are not helped, however, when LNP state governments are cutting TAFE.
Greg Hugo’s article gives us this graph:
This actually gives a clearer idea of the trend than the graph that Tad Tietze used:
Tad’s post tells us that O’Connor sees the numbers spinning out of controll from 105,000 to 350,000 in three years time. O’Connor and Gillard have been saying that the year on year increase was 20%. If you apply that exponentially it only gets you to 181,000 in three years. I think you’ll find, however, that O’Connor’s claim was that the rate of increase was increasing year on year. Indeed, the first graph seems to confirm that he’s right.
While the mathematics he used may be technically correct O’Connor needs to give us an explanation as to why the trend will accelerate. All he did was make himself look ridiculous. I think no-one knows what comes next with graphs like that.
People are then disinclined to believe him when he said that the incidence of problem visas was 10,000. McDonald earlier estimated problems at 2 to 3,000. I read somewhere that the immigration only monitors 4% of visas.
I suspect the truth is somewhere between 2,000 and 10,000. Whatever the truth, the scheme needs to be cleaned up, so that it meets the legitimate needs of Australian industry while protecting inherently vulnerable workers, without decreasing the opportunities and working conditions of Australian residents. Greg Hugo sums it up this way:
The 457 visa has served the Australian economy well – both major parties agree on this. As with other visas, such as tourist and student visas, there have been attempts to misuse it.
Training Australians to meet skill shortages in the medium- and long-term must be a priority in Australia, but there are contexts where 457s are the most appropriate way to deal with short term shortages.
The answer is not to abolish the program but to ensure it works in the way it was intended – to meet a genuine need and benefit all Australians.