Insight and opinion: Nomos’ take on Australia’s skilled migration programme reforms

17 July 2017 | Article by Peter Papadopoulos, Kathryn Viegas and Victoria Stevenson | Nomos Legal

Much has been written and said about the major reforms to Australia's skilled migration programme that were suddenly announced by the Prime Minister Malcom Turnbull MP and the Minister for Immigration and Border Protection Peter Dutton MP on 18 April 2017. The reform implementation process commenced on 19 April 2017 and is expected to conclude in March 2018. For an overview of the reform agenda and an explanation of the first phase of these reforms, click here.

The second phase of these reforms came into effect on 1 July 2017. Most of these changes were foreshadowed in previous government announcements. However, a few important changes were introduced without notice and are of concern to visa applicants and their employers. For a breakdown of the key 1 July 2017 changes, click here.

As we enter the third phase of the reform implementation process, we wanted to reflect upon what's driving these reforms, share our perspectives on some of the significant changes and offer an insight into the key issues that will shape the reform agenda conversation between now and March 2018.

A storm was brewing

Immigration law and policy can shift quickly with the political winds. We had an inkling earlier this year that something was brewing. The government had been silent about concerns raised by the Productivity Commission in its April 2016 Migrant intake into Australia report that the 457 visa pathway to permanent residence under the Temporary Residence Transition stream was too easy and that this was "not a trivial concern" because the "poorer English skills" of some migrants using this pathway translated to "poorer social and economic outcomes".

Throughout 2016, as reports of foreign worker exploitation dominated the media, the government found itself pressured to respond to the opposition's plan to crackdown on the 457 visa programme and Bill Shorten MP's introduction to Parliament on 28 November 2016 of a private members' bill entitled Migration Amendment (Putting Local Workers First) Bill 2016. Meanwhile, 457 visa processing times had blown out more than ever before as the under-resourced Department of Immigration and Border Protection (DIBP) struggled to process applications in line with increasingly prescriptive and confusing policy guidelines that sought to deal with various occupations of "integrity concern".

A rushed policy announcement

The government's Putting Australian Workers First announcement on 18 April 2017 sent shockwaves throughout key Australian industry sectors that rely upon skilled migration. Insiders later revealed that the policy announcement was a hurried affair. The legal framework and detail supporting the changes was simply not there but would be "rolled out" over the coming year as the 457 visa would, eventually, be abolished in March 2018. Many were blindsided by the breadth of the proposed reforms and concerned about the pall of uncertainty they would bring to the immigration landscape.

At a DIBP Stakeholder Roundtable Meeting in Sydney on 27 April 2017, senior DIBP officials explained the policy underpinning the reforms and the implementation agenda. Stakeholders raised concerns about the adverse impacts posed by sudden and ongoing frequent changes to eligible occupational skills lists, particularly given insufficient consultation regarding the composition of such lists had occurred. Concerns were raised in relation to the utility and legal invalidity of the new 457 visa caveat system which had primarily been introduced to exclude applicants that DIBP felt were of "integrity concern". The media immediately seized on whether the new system was having an adverse impact on particular occupations such as CEOs and University Lecturers as sectors of the Australian economy, especially the ICT, hospitality and education sectors. However, the issue surrounding the entire system's legal invalidity was eventually reported in The Australian Financial Review on 7 June 2017.

The Budget strikes another blow

On 9 May 2017, the Budget revealed the government's plan to establish a Skilling Australians Fund in March 2018 which would collect over $1.2 billion over four years from employers seeking to access Australia's employer-sponsored migration programmes. The revenue raised will be spent towards achieving the goal of "skilling up" more than 300,000 Australian apprentices and trainees. This revenue will be collected by way of a levy to be paid by an employer each time they nominate a foreigner to work in their business. Small businesses with annual turnovers less than $10 million will have to pay $1,200 per year for a foreign worker seeking a temporary sponsored work visa, along with a one-off $3,000 payment for a foreign worker seeking a permanent sponsored work visa. Larger businesses with annual turnovers exceeding $10 million would pay $1,800 per year per temporary visa holder, along with a one-off payment of $5,000 for each foreign worker sponsored for permanent residence.

In return for having to pay the levy from March 2018, the government would no longer require these businesses to meet the current migration law training benchmarks. We understand that no employers would be exempt from the levy and no allowance for refund of levy payments will be made under the proposed system. Many employers, especially larger employers with extensive staff training programmes, raised concerns about the levy imposing an undue cost on their businesses and that the removal of the training benchmark requirements was little consolation.

The Budget also revealed that significantly higher visa application charges will need to be paid for the proposed Temporary Skills Shortage (TSS) visa (which will replace the current 457 visa) from March 2018.

Accessing employer sponsored skilled migration after March 2018 will involve higher costs for employers and visa applicants and we anticipate that other parts of the migration programme will come under pressure as people pursue cheaper and more certain visa options.

So what happened on 1 July 2017?

Stakeholders waited with bated breath in the hope that changes to the occupation lists due on 1 July 2017 would restore some balance to the newly introduced framework. Many were pleased to see some balance restored to the occupational lists and the revised framework's accommodation of Australia's international trade obligations.

Unlike the shock in April, most of the 1 July 2017 changes had been foreshadowed in previous government announcements. Some changes clearly showed that the government had listened and taken steps to address various stakeholder concerns. While the government introduced regulations to address initial concerns in relation to the validity of the legal framework underpinning the 457 visa caveat system, its new framework (which was further extended to the Direct Entry stream of the permanent visa programme) is arguably invalid and remains open to legal challenge. Concerns in this regard were recently reported in The Australian Financial Review on 7 July 2017.

However, some of the 1 July changes had not been foreshadowed.  Immediately, questions emerged in relation to the legal validity of the retrospective application of changes that removed the eligibility for skill and English language requirement exemptions which had applied to many permanent residence visa applicants who lodged applications before 1 July 2017 and are still awaiting a decision.  After renewed lobbying efforts and a further report in The Australian Financial Review on 11 July 2017, the government responded by way of a DIBP Newsroom Media Release on 11 July 2017 stating that it would not apply these changes retrospectively. While this development is welcome, we await a further legislative amendment to support the government's revised position. We recall a similar problem occurred in April 2009 when the removal of an English language testing exemption by way of legislative instrument adversely affected many Chefs and Head Chefs who were awaiting a decision on their 457 visa applications at that time. After further consultation with stakeholders, including the legal profession, it transpired that the then Minister for Immigration re-instated the exemption for that group of people by way of issuing a new legislative instrument in May 2009.


As many stakeholders have now had a chance to digest the 1 July 2017 changes and prepare to take their next steps, it feels as if we are in the eye of the storm. We forecast rough weather ahead as we expect the following key issues will dominate the reform agenda conversation between now and March 2018:

  • The legal validity of the regulation underpinning the revised caveat system – we look forward to decisions being made in relation to caveat-affected applications and the real prospect that an affected person will seek judicial review to challenge the validity of the law underpinning the scheme.
  • The application of the revised caveats by decision-makers at DIBP and the Administrative Appeals Tribunal – we expect some inconsistent and unlawful decision-making in the not too distant future as conflicts emerge over the precise legal definition and scope of various important terms specified by the Minister in the new legislation e.g. annual turnover, base salary, business etc.
  • Which occupations the Department of Education and Training will flag for possible removal from the MLTSSL on 1 July 2018 – Based upon last year's Skilled Occupations List Review timetable, we anticipate this announcement in October / November 2017 will prompt further lobbying activity.
  • Whether the levy system will undergo further changes before its proposed introduction in March 2018.
  • The need for further legislative and policy detail in relation to how, before the end of 2017, DIBP will start:
    • collecting Tax File Numbers for 457 visa holders (and other employer sponsored migrants), and commence data-matching with Australian Tax Office records to ensure that visa holders are not paid less than their nominated salary
    • publishing on its website details relating to sponsors sanctioned for failing to meet various statutory obligations, including their migration law sponsorship obligations.
  • The urgent need for clarification in relation to key eligibility criteria issues including:
    • if and when any remaining skill, age and English language testing exemptions will be removed and who will be denied further access to those exemptions
    • how DIBP will assess specific caveat requirements, particularly in relation to start-up businesses
    • how DIBP will assess the "genuine temporary entrant" requirement under the Short-Term stream of the proposed Temporary Skills Shortage (TSS) visa to be introduced in March 2018
    • what the proposed legislative and policy framework will look like in March 2018, especially the scope of any grandfathering and transitional provisions so that employers and visa applicants will not be adversely affected by the pending introduction of a 3 year residency requirement under the permanent residence programme.

Many remain concerned about the scope of these reforms and their manner of implementation thus far. The ever-narrowing eligibility criteria, use of retrospective legislation and uncertainty surrounding the legal validity and composition of future occupation lists continue to challenge Australian businesses that rely on attracting and retaining foreign talent as well as Australia's reputation as a country with a stable regulatory environment within which business may be readily conducted.

This article is an edited version of an opinion piece originally published on the Nomos blog. For more information about skilled migration and other immigration law issues, visit the Nomos website.

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