457 Visa Abolition: Implications for Australian IT Companies

457 sponsorship is dear to ProQuest Consulting. I was sponsored when I joined the company, and I became an Australian citizen exactly two years ago. A life-changing experience.

In fairness, IT Services companies like ours are not the most impacted by the changes. Still, here is how the ‘abolishment of the 457 visa program’ will impact us:

  • Skilled Occupations List (SOL) is renamed the Medium and Long-Term Strategic Skills List (MLTSSL).
  • 216 job titles were removed from the list, which means for the IT industry that Support Engineers and Test Engineers can no longer apply for the visa.
  • Visa is still granted for 4 years and can be renewed onshore, but provides a Permanent Residence pathway only after 3 years (instead of 1 currently)

Further changes will affect the visa application from 1 July 2017:

  • English language salary exemption threshold (over $96.4k) will be removed.
  • Penal clearance certificates mandatory.

Final visa modifications to be completed by March 2018:

  • 457 visa will be officially replaced by a Temporary Skill Shortage (TSS) visa.
  • Visa lodgement fees increased from $1,035 to $2,400.
  • Labour Market Testing is mandatory (employers first need to ensure that there is no suitably qualified and experienced Australian citizen or permanent resident or ‘eligible temporary visa holder’ readily available to fill that position).
  • At least two years experience in the nominated skilled occupation (from March 2018).
  • IELTS (English language) score of 5, with a minimum of 4.5 in each test component.

Another major change is the pathway to citizenship: applicants will need to have been a permanent resident for four years instead of one currently.

An uninvolved reader might think that these changes only tinker at the edges of the existing scheme, and perhaps give it more integrity going forward. We differ with that opinion. The 457 visa framework has worked really well for us, but now things may change for the worse:

  1. Things drag. If we can’t hire efficiently, we can’t grow. We sponsor overseas talents because there is a shortage of IT professionals in Australia. Every time we decide to make a 457 hire, we judiciously determine if we can hire that person locally, plan their onboarding way in advance, line up projects that take the lengthy application process time in account, and consider the cost to organise the candidate’s move. Sometimes we decide we can’t make it happen because it just doesn’t work. If government policy changes for the worse, there’s a chance the numbers may never work.
  2. Hitting us for more money. The marginal cost of making an application is $1,035. At 240% of that number, companies are unfairly imposed to bear an even bigger financial risk. If we had the option, obviously we would choose simplicity and hire locally: face-to-face interviews, get employees started within 4 weeks, local market experience, local references, no visa application fees, no risk of having to pay for their flights back home if we terminate their probation period, etc. It’s a no-brainer. Essentially we are financially penalised for hiring overseas when we don’t have any other choice.

Sadly, these new changes may harm the growth of Australian tech companies considering no efficient strategies have been proposed to fix the real problem, which is about solving the skills shortage that Australia is currently facing.

Although there may be challenges ahead, we will continue to promote diversity within our company and provide opportunities to both Australians and candidates from around the world. It’s worth noting that we pay equally and provide equal opportunity for career progression to those we employ.

Feel free to comment below and let me know your thoughts if you have been or will be personally affected by the new changes.

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