Turnbull’s 457 Visa Abolition Creates Uncertainty for Australian Industries

In recent hours, Malcolm Turnbull announced the shock abolition of the long-standing 457 visa for foreign workers. To be replaced with two new, temporary visas, Turnbull and his government claim the change is set to put Australians and Australian jobs first. But how will this affect the industries which rely heavily on migrant workers?

The 457 visa was introduced by the Howard government in the 1990’s to meet skills shortages within the Australian workforce; thus allowing businesses to employ foreign workers for up to four years. The visa, until now, has allowed workers to bring with them eligible family members (including same-sex partners), and has allowed workers and businesses to apply for an extension while in Australia. 457 visa holders often go on to apply for permanent residency, and have traditionally been able to make these applications from within the country, while still holding a current visa.

Workers living in Australia under the current 457 visa program number at least 94,000 and are employed across a number of fields and industries. The largest beneficiaries of these migrant worker visas are the accommodation & food services, information technology and construction industries, as well as scientific and healthcare sectors.

The visa program is no stranger to controversy. A 2014 audit conducted by the Fair Work Ombudsman found as many as 40% of 457 visa holders were either no longer employed by their sponsor, or were being paid below the minimum wage. Since the Japanese free trade agreement began in 2015, businesses employing Japanese nationals were no longer required to prove a shortage of Australian workers.

The Australian government has announced that as a result of the abolition of the 457 visa, it will be introducing two new visa options in its place. The sudden announcement has, understandably, caused a certain amount of panic among both employers and workers who have pending 457 visa applications. While slim on detail, the announcement from Malcolm Turnbull, and subsequent press releases from Immigration Minister Peter Dutton, have revealed the new visa conditions will be stricter; applicants will be eligible for a 2-year or 4-year working stay, with the possibility of one extension. Those wishing to apply for an alternative visa or permanent residency will be required to do so from outside the country.

The few details so far announced include:

• A new 2-year visa will include 200 less skills categories than the current 457 visa;
• A higher level of English language skills will be required;
• Criminal history checks and a minimum 2 years of work experience will be compulsory;
• The new 4-year visa option will be even further restricted and the cost of the visa application will more than double.

It is unclear whether the same entitlements—such as bringing eligible family members and partners—will remain as a part of the new programs, nor which industries will have their eligibility restricted.

“All we’ve got at the moment is an announcement which is short on detail, we’ve seen no drafted bill or legislation upon which we can comment other than a few motherhood statements made by the prime minister that he wants Australian jobs first, that uphold Australian values – whatever that means,” Michael Walker, visa services manager at TSS Immigration

As the food services industry relies so heavily on 457 workers in roles such as chefs, restaurant managers and wait staff, this incoming change is sure to ruffle feathers. Sydney chef and restaurant owner, Erez Gordon, worries the increased cost and restrictions of the new visas will impact his business. He, like many other businesses, reports hiring Australian workers as his priority that is often just not possible.

“Given the choice, I would probably be much happier employing Australians. The simple truth is, when we run a job ad, almost for any role, we rarely get Australians applying.” Gordon tells the ABC

Skills shortages and a lack of enthusiasm for certain roles from Australian workers are among the major hurdles faced by employers wishing to hire local workers. The government reports a training package is set to be announced at a later date. However, as Ed Husic, Labor’s acting employment spokesman told the ABC, over $2.5 billion has been cut out of skills and training funding, and 130,000 fewer apprenticeships have been undertaken under the current administration.

Innes Willox, chief executive of the Australian Industry Group told AM details of the new fees should be announced soon:

“What we believe will occur is that there’ll be an increased fee and a more streamlined fee for skilled migrants that will be paid for by their employers when they come into Australia.That money needs to be used wisely to train Australians, particularly young Australians in jobs that are in need and the jobs of the future.”

Currently, around 5,690 (or 14.2% of the total 457 program workers) are employed in the accommodation and food services industry. While youth unemployment is high in most major cities, small businesses in particular insist they simply cannot find Australian workers to fill many of their positions. Erez Gordon worries the new fees will have to be passed on to his customers, but even more worryingly, foreign workers will be discouraged by the new scheme and its restrictions. He is not alone, as many businesses begin to react similarly to the news.

Over one quarter of the total contingent of 457 workers are Indian, while many from the United Kingdom are also currently sponsored under the program. With trade talks between Australia and India constantly undergoing negotiations, it is unclear exactly how this new legislation will affect relations with the important trading partner. It does seem, however, that the Turnbull government is trying to restrict permanent residency applications, to boot.

“Competent English will be mandatory, no exceptions, and the pathway to permanent residency will begin at three years, not two years.” Malcolm Turnbull

Just how these new restrictions will affect the food services industry, as well as others—such as mining, construction and health services—is yet to be seen. More details are set to be announced over coming weeks.