457 visa reformers should remember our shady skilled migration history

With 457 visa reform, the Coalition is retracing old and risk-laden territory. Stefan Postles/AAP

Temporary labour migration in Australia is a highly vexed issue. On the one hand those advocating a rethink of the 457 visa are accused of “turning away skilled, net-contributors to the Australian project”, while those opposed to re-regulating the 457 visa have been cast as failing to protect the jobs of Australian workers or being unconcerned about the exploitation of 457 visa holders.

The reality is somewhere in between.

Yesterday the government released the report of the 457 visa independent review panel, which is a constructive and evidence-based contribution to the ongoing debate over temporary skilled migration.

The 457 visa can benefit the Australian economy, creating local jobs and providing life opportunities for temporary migrant workers. Crucial to its success, however, is the design of the program to ensure 457 visa holders are only used in areas of genuine skill shortage, that they are protected from exploitation in the labour market and that we continue to invest in and train Australian workers, particularly the youth unemployed.

A number of positive reforms have been suggested in the report. Firstly, to improve the ability of the Immigration Department and Fair Work Ombudsman in monitoring compliance by employers with the rules of the 457 visa program.

Regulators cannot possibly monitor the workplace of every 457 visa holder – they are vastly outnumbered. However, the report recommends the Department and the FWO use a similar approach to the Australian Tax Office. Given not every tax claim can be scrutinised for fraud, a risk matrix is used, coupled with complex IT systems, to identify those most likely to be involved in tax evasion.

The report recommends a more coordinated approach between the Department and the ATO to ensure that the incomes of 457 visa holders are being accurately reported by employers and to identify visa holders who are most vulnerable to dodgy employer practices. Immigration Minister Scott Morrison has indicated he will act on this recommendation.

Another key recommendation of the report is the proposal for an annual training contribution payable by employers who rely upon 457 visa holders. This innovative idea is based upon the notion of a “social licence”, that is, the idea that, in return for being able to access temporary migrant labour, the sponsor should contribute to a national benefit.

Identifying skills shortages

A welcome development in the report is the proposal for independent labour market testing to replace employer-conducted labour market testing. This is a proposal that I made in my submission to the 457 visa independent review panel, but also articulated in my article for The Conversation last year.

It’s important there is a rigorous mechanism for determining whether an occupation is genuinely in skill shortage. If it is, then it is usually entirely appropriate that an employer rely upon a 457 visa holder to meet the skill shortage. This opens up employment opportunities for local workers because it means the employer’s business is not stymied by its inability to fill vacancies.

However, if a skill shortage is not genuine and an employer is using a 457 visa holder to achieve a compliant workforce, a deunionised workforce or simply to rort the system by paying the worker less, then there is real cause for concern that local jobs are being replaced by temporary migrant workers. The government’s repeated attempts to whitewash claims of rorting within the 457 visa program obscure the truth: temporary migrant workers are a vulnerable group and cases continue to emerge of serious exploitation and abuse.

While employer-conducted labour market testing burdens good employers with extra red tape, it is relatively easy for unscrupulous employers to evade. In contrast, my article in the Federal Law Review last year shows that independent labour market testing can work.

Some of the advice is being ignored

Yet, it seems unlikely that reforming the 457 visa program so that it works more effectively to meet skill shortages is going to be adopted by the government.

In his address to the National Press Club, Minister Scott Morrison did not identify the report’s recommendation for an independent labour market testing model as a priority, instead admitting that because of a lack of cross-bench support, the government was prepared to retain the employer conducted labour market testing model but that the Department was applying this in a diluted fashion. What this means in practice, is that there is still no rigorous way to determine whether an occupation is genuinely in shortage.

A proposal contained in the report which the government has said it will adopt, is the weakening of the English language requirement. This is currently a minimum of five across the four competencies (reading, writing, speaking and listening) which the report proposes should be reduced to an average of five.

This is concerning because the main function of the English language proficiency requirement is to ensure a 457 visa holder will not be exploited.

If temporary migrant workers have lesser language skills, this could leave them vulnerable to potential health and safety risks in the workplace. Research shows migrant workers usually have far higher injury rates because they have less training and experience, and less command of the local language. This was the case prior to the Rudd government’s reforms to improve the English language requirements.

Protecting the integrity of the program

Another concerning recommendation of the report is the proposal to freeze the Temporary Skill Migration Income Threshold (TSMIT) at its current level and to review the role of the TSMIT in two year’s time.

Like a strong English language requirement, the TSMIT has a key role in protecting the integrity of the program overall. It was introduced following the Deegan Review into the 457 visa to act as a salary floor ensuring a visa holder’s wage was sufficient to maintain a reasonable standard of living given the lack of access to welfare and tax benefits available to local workers.

This protection was seen as particularly necessary for visa holders in trades or semi-skilled work because the Deegan Review found many of these were not receiving salaries or wages equivalent to that of Australian workers performing the same work, in some cases, even where employed in the same workplaces.

A preference for deregulation

The report is a step in the right direction in that it offers ideas on how to reform the 457 visa program so that it is more balanced. It seems unlikely some of the more re-regulatory, worker-protective proposals will be adopted by the government, with the Minister indicating his preference for deregulating the program and making it easier for employers to access temporary migrant labour.

This brings with it real concerns that the scheme will begin to operate in the way it did under the Howard government, where the program was expanded and deregulated. During this time, stories abounded of serious instances of exploitation: an Indian chef unable to speak English worked 14 hours a day for 40 consecutive days without being paid. In another case, four Chinese workers who spoke little English were found to have been underpaid $93,667. In another case two workers were forced to continue working after breaking bones in their arms doing work they were unqualified to do. In many other cases 457 visa holders had “rent money” docked from their wages to pay for overcrowded and underserviced company housing.

It is vitally important the Minister does not forget the chequered history of the 457 visa program and does not merely adopt the deregulatory proposals of the report without seriously considering ideas for how to improve the integrity of the whole program.

The problem for the government is how to design a deregulatory 457 visa without Australia descending into a guest-worker ghetto. Our experience makes it apparent that rigorous, in-built safeguards are needed and it is simply not good enough for the Minister to dismiss claims of rorting out of hand.