Upcoming Changes to Skilled Migration and What it Means for You

Recent media reports are signalling that significant changes to skilled migration are on foot. For example, the Australian Financial Review reported that businesses will be able to bring in foreign skilled workers on potentially as little as $120,000 in a fast-tracked visa processing.

The changes are a response to the Review of the Migration System Final Report (the so-called Parkinson Review), published on 21 March 2023.

One of the proposed changes is to introduce a three-tiered system in relation to the Subclass 482 Temporary Skills Shortage (TSS) visa.

Whilst the Government’s efforts over the last few months in reducing processing back logs have been commendable, it is a well-known fact that the current TSS system is cumbersome and adds unnecessary costs on employers, particularly where these visas are supposed to allow employers to alleviate local skills shortages.

For example, the so-called “labour market testing” requirement forces an employer to undertake arbitrary advertising for 28 days through three nation-wide platforms before it is deemed that the employer is unable to find an Australian to fill a vacant position. This is despite the employer’s already knowing that it cannot fill the position locally, or the employer’s already having advertised, albeit not in a compliant format.

The Three-Tiered Approach

The proposed new Three-Tiered Approach to TSS visas will see “light-touch” processing on TSS visas for highly-skilled visa applicants (Tier 1). Presumably, how highly-skilled they are will not depend on a designation in any occupation list, but based on their proposed salary, i.e. whether they will be paid more than $120,000 per annum.

It is likely that Tier 1 applications will remove the requirement for labour market testing all together.

The next tier of visa applicants (Tier 2) will be those who are paid at or above $70,000.

One of the changes that has already come into effect from 1 July 2023 is the raising of the Temporary Skilled Migration Income Threshold (TSMIT) from $53,900 to $70,000. The TSMIT is the minimum salary payable to any TSS visa applicant (with some exceptions). The previous TSMIT figure had come under criticism for being too low, either in terms of “pricing” migrants in a way that could potentially undercut the Australian workforce, or otherwise in terms of making those migrants susceptible to employer exploitation.

Whilst the new threshold of $70,000 appears reasonable enough, there remains concern that certain industries, such as hospitality and retail, will be locked out of using the TSS system. This is despite broad recognition of a skills shortage crisis in hospitality.

It is likely that Tier 2 applicants will no longer be subject to labour market testing either. Instead, the Immigration Department will refer to labour market shortages data compiled by Jobs and Skills Australia. A “data driven” occupation list may then replace the current skilled occupation list.

Applicants who will earn less than $70,000 will potentially form a cohort in the lowest tier (Tier 3) which will be subject to a greater scrutiny or compliance focus.

Currently, there are in place Industry Specific Labour Agreements which allow applicants to access the TSS system on lower salaries. However, anecdotal evidence, for example, in relation to the Aged Care Labour Agreement, suggests that requests for these Labour Agreements are often met with significant red tape, such as the need for extensive union consultation. There are also Designed Area Migration Agreements with a salary concession, but again, obtaining approval for these are a daunting task for most employers.

Other Changes

Home Affairs Minister Clare O’Neil has also announced that by the end of 2023, new legislation will be announced to allow persons holding TSS visas on the Short-Term Skilled Occupation List (STSOL) to access permanent residency under the Subclass 186 visa. Currently, TSS visa holders working in STSOL occupations have no ready pathway to permanent visas.

Further, TSS visa holders will be able to transition to permanent residency after two years, instead of three years.

The “devil is in the detail” and we await the release of the legislation with bated breath.

Changes will also be made to allow TSS visa holders 6 months to change employers. Currently, this period is 60 days.  From an employer’s perspective, whilst this change may reduce the risk to the visa holder of employer exploitation, it may have the unintended effect of disincentivising employers from using the TSS system at all. This is because after incurring the significant cost of bringing an overseas worker into Australia, the employer may find that those workers are readily poached by competitors.

Implications

• The move towards a simplified, quicker system with less red tape and arbitrary requirements is certainly welcome, but there may be unintended consequences for certain industries. Whilst assessment of lower-paid TSS visa holders (below TSMIT) may require greater rigour, the system must also be responsive to labour market needs across all industries where those needs are identified. Already, the Grattan Institute has suggested that 35% of existing TSS users may be “priced out” of the system. The hospitality and retail industries may well become casualties.
• Employers may need to consider the implications of the increased TSMIT in relation to their current TSS workforce. The new TSMIT will apply when those workers are nominated for their next visa (either a renewal of the TSS visa or their permanent visa). Employers may consider whether salaries ought to be reviewed towards $70,000 over the life of the current visa in readiness for the next nomination.
• There would appear to be a further shift away from independent (points-tested) skilled migration. The Department has long preferred employer-sponsored visas, being demand-driven, over skilled migration without a ready employer. Already, allocations to the various States to nominate skilled workers have dropped to pre-pandemic levels.

If you require assistance in relation to TSS visas, please contact Lester Ong or Melissa Phan.