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Independent review of the 457 programme

On 18 April 2017, the Hon Malcolm Turnbull MP, Prime Minister of Australia and the Hon Peter Dutton MP, Minister for Immigration and Border Protection jointly announced that the Temporary Work (Skilled) visa (subclass 457 visa) will be abolished and replaced with the completely new Temporary Skill Shortage (TSS) visa which will support businesses in addressing genuine skill shortages.

Further information on these reforms is available at Abolition and replacement of the 457 visa – Government reforms to employer sponsored skilled migration visas.

​In 2014 the Assistant ​Minister for Immigration and Border Protection, Senator the Hon Michaelia Cash, announced an independent review of the temporary work (skilled) visa (Subclass 457) programme. ​The final report of the panel is titled Robust New Foundations - A Streamlined, Transparent and Responsive System for the 457 Programme (1.4MB PDF).

On 18 March 2015, the government responded to the recommendations of the panel, and a copy of the recommendations and information on the Government response is available on our website.

Implementation of the recommendations of the Independent Review of Integrity in the Subclass 457 programme

Implementation of the reforms will simplify the 457 programme and reduce red tape while strengthening integrity, preventing abuse and protecting Australian workers.

The majority of the reforms to the 457 programme will be progressed before the end of the 2015-16 programme year.

Strengthening the integrity of the 457 programme

The government will act on the recommendations of the review to ensure Australian workers have priority, while supporting employer with genuine skill shortages to access the skills they need.

Key measures

The key measures are described below.

Sponsor monitoring

The review found that a key requirement for ensuring the integrity of the 457 programme is a monitoring regime that focuses on those areas of the programme that pose the highest risks.

We will therefore continue to refine its monitoring regime through tighter and more sophisticated targeting of sponsors. Our recent creation of the Investigations Division will allow a stronger focus and approach to border crime, whether that crime is related to attempts to circumvent physical border controls or to rort our visa system.

Cooperation between government agencies

The review identified opportunities for us to work more closely with other government agencies, such as the Australian Taxation Office  and the Fair Work Ombudsman.

Greater information sharing and data matching between government agencies will make it easier to detect non-compliance in the 457 programme, and allow for a more targeted and effective approach to sponsor monitoring.

In particular we will collaborate with the Australian Taxation Office to ensure that 457 visa holders are working in their approved roles, and are not being underpaid.

Information for 457 visa holders and sponsors

The review found that overseas workers are more likely to come forward with any concerns about their treatment when they are fully informed of their rights in Australia.

To help ensure 457 visa holders are fully informed of their rights, we will also consider ways to make information on 457 visa holders rights and obligations more readily available to both visa holders and sponsors, particularly through its online presence. Sponsors will also be specifically targeted through additional educational activities.

Disclosing information on sanctions activity

The review found that we could do more to deter employers from improper practices by increasing transparency and accountability. We will therefore be proactive in  releasing information on employers sanctioned and prosecuted for exploiting overseas workers. The publication of prosecutions will deter employers from breaching their sponsorship obligations.

Payments for a migration outcome

The review found that some 457 visa holders had paid money to sponsors in return for being able to remain in Australia, and that this practice has undermined the integrity of the 457 programme. The government will therefore introduce a new penalty making it unlawful for sponsors to receive payment in return for sponsoring a 457 worker.

Training contribution by sponsors

The review identified opportunities to introduce a less complex training contribution scheme that could provide the desired training outcomes while being easer to monitor.

Subject to further consultation, the government proposes to replace the current complex 'training benchmarks' provisions.

The current provisions require employers sponsoring a 457 worker to ensure that at least one per cent of their business' payroll is spent on the training of Australians, or two per cent is contributed to an industry training fund. This current system is complex, costly, and open to misuse. The government is exploring options for implementation of this recommendation.

The government will work with key stakeholders to implement a more transparent and effective system that directly links the ability to employ a 457 visa holder with increased training opportunities for Australians.

Improving the flexibility of the 457 programme

In examining the integrity of the 457 programme, the review also identified opportunities to enhance other aspects of the programme. 

Key measures

The key measures are described below.

Ministerial Advisory Council on Skilled Migration

The report recommended that a tripartite Ministerial Advisory Council on Skilled Migration (MACSM) be established to advise the government on skilled migration issues.

The government supports this recommendation and will re-establish the MACSM with members drawn from peak bodies, industry and unions and revised terms of reference.

To support the MACSM, a dedicated labour market analysis resource comprising officers from relevant Australian Government agencies will also be established. This group will provide advice on the composition of the Consolidated Sponsored Occupation List, including identifying any occupations that may be in oversupply in the labour market.

The MACSM will also advise on opportunities for skilled migration to enhance productivity, support economic growth, and better align the 457 programme with domestic training and education policies.

Market salary rates

The review found that there was no substantial evidence to support the July 2013 increase to the threshold above which the market salary rate is not assessed, and argued that any 457 visa holder earning in excess of Australian Dollar (AUD) $180,000 is adequately equipped to negotiate their own terms and conditions of employment without the need for further government involvement.

We will therefore amend the threshold from AUD $250,000 to its pre-July 2013 level of AUD $180,000.  Market rates will continue to be assessed below this threshold.

Review of the Temporary Skilled Migration Income Threshold

While noting the importance the Temporary Skilled Migration Income Threshold (TSMIT) has for ensuring 457 visa holders are able to support themselves, the review noted concerns raised by some stakeholders that the TSMIT creates a barrier for businesses with genuine skill needs.

The TSMIT should not be confused with the 'market rate' requirement, which requires that 457 visa holders be paid at the equivalent wage to an Australian worker in the same occupation and locality.

As the review was unable to fully examine this issue specifically, the government will establish a review of the TSMIT to examine its impact, particularly in regional Australia. While this review is undertaken, the TSMIT will remain at its current level (AUD $53,900).

In the review of TSMIT, consideration was given to a range of issues including whether the TSMIT is set at an appropriate level and if the TSMIT should apply to the entire programme or set at a variable level based on factors such as locality. The review also examined the role of TSMIT in ensuring integrity and priority for Australians in the workforce and appropriate indicators to link any increases to the TSMIT. Further information is available at: Review of the Temporary Skilled Migration Income Threshold (TSMIT).

English language requirements

The review found that while a minimum level of English is necessary and that this requirement should be maintained.

To add flexibility and ensure programme integrity is maintained, the English language requirements will be amended to allow applicants to provide an overall score with minimum scores for each test components (reading, writing, speaking and listening). 

Instead of requiring a minimum test score of 5 in each of the English test's four components (reading, writing, speaking and listening), applicants will have to achieve an average test score of 5 across the components (with no less than 4.5 in any of the components).

This change does not represent a consequential lowering of the current English language requirement.

Sponsorship

The review noted concerns on the part of stakeholders with the July 2013 introduction of a 12 month limitation on the sponsorship approval period for start-up businesses, arguing that this is an insufficient period of time for the business to become viable.

We will extend the sponsorship approval period for start-up businesses to 18 months. This will provide them with sufficient time to establish their businesses on a sustainable footing, increasing the attractiveness of Australia as a destination for foreign investment.

The sponsorship approval period for other businesses will also be extended from three to five years to simplify processes for sponsorship renewal.

Streamlined processing model

The review proposed a streamlined model for processing sponsorship, nomination and visa applications based on certain risk factors. This would allow for a more targeted and transparent approach to managing risk and compliance by focusing on those applications posing a higher risk, and rewarding low-risk sponsors with a history of compliance. We will investigate options to provide a streamlined processing system for low-risk sponsors which will reduce red-tape for business and create efficiencies in processing.

Conduct of the independent review

The review was undertaken by an independent panel chosen for their experience in industry, government and migration. The panel members were:

  • John Azarias (panel lead)
  • Jenny Lambert
  • Professor Peter McDonald
  • Katie Malyon.

The independent review examined:

  • the level of non-compliance in the 457 programme
  • the current framework to better understand whether the existing requirements balance the needs of business with the need to ensure integrity in the programme
  • the viability of a deregulation strategy of the current programme
  • the appropriateness of the current compliance and sanctions.

The independent panel conducted extensive consultations, meeting with over 140 stakeholders and receiving 189 written submissions from industry groups, unions, academics, 457 sponsors, peak bodies and State, Territory and Commonwealth governments.

Terms of reference for the Independent Review into Integrity in the Subclass 457 Programme asked that the panel to examine the integrity of the 457 programme in the context of a series of reforms made to the programme over recent years, including the introduction of the Migration Legislation Amendment (Worker Protection Act) 2008, the Migration Amendment (Temporary Sponsored Visas) Act 2013, and changes to the Migration Regulations 1994.

Interested stakeholders were invited to submit submissions addressing the terms of reference.

Received submissions are available on our website.​