Changes to the 457 visa will shrink talent pool

Monday 4 September 2017

A new study on the unparalleled US-Australia economic relationship, entitled “Indispensable Economic Partners”, brought forward some valuable policy recommendations.

While the study’s primary aim was to demonstrate how much the US-Australia economic relationship continues to contribute to the remarkable economic success of this nation, through business leader surveys and interviews it also revealed a deep concern among investors that recent changes in Australian migration regulations will have a negative impact on efforts to attract and retain business talent in Australia, especially by multinational corporations that have created hundreds of thousands of jobs here.

In reviewing these results, AmCham has discovered a disparity between how Australia and America treat highly skilled corporate talent. The US has the L-1 visa, which allows the employees of multinational corporations like Westfield, IBM, ExxonMobil, or BHP to transfer executive, managerial and specialised knowledge workers between their overseas and US-based branches.

The eligibility criteria for L-1 visas focus on how the specific skills or knowledge the transferring employee has gained while working abroad within the organisation will benefit the organisation in the US. The US government implicitly recognises that running a global MNC gives companies many valid reasons for moving their top talent around the globe. And because it is so expensive to do so, there is no underlying assumption that their main reason might be to undercut the local labour market.

The US also has special bilateral treaty trader (the E-1) and investor (E-2) visas that are often used to move top entrepreneurs and talent to America. Another example is the E-3 — a remarkable category exclusively for Australians. To qualify, the requirements are a legitimate job offer to an applicant with an academic qualification equal to US college degree level — or equivalent on-the-job experience.

Over 25,000 Australians have received E-3 visas since 2005, many going to Silicon Valley or New York to make innovative contributions in technology, engineering, finance and other high-skilled professions.

These are all meant to be non-immigrant visas. But for those who find a home in America, these temporary visas can lead to lawful permanent resident status — the so-called green card. It is natural that a certain number of these temporary visitors decide to stay on, for both professional and personal reasons. And the system has mechanisms to facilitate this.

Contrast this to the new rules in Australia, where there is no L-1 or E-3 equivalent for foreign talent. All these would-be temporary entrants are lumped together in one visa subclass — currently known as the 457.

This category includes not only top multinational managers, executives and investors whose talents Australia should be seeking, but also hospitality industry workers and others filling very precise short-term needs. Under recent changes, all remain subject to labour market testing, and many companies report long delays while trying to justify why their transferring employee is uniquely qualified to fill a senior executive role.

The notion of protecting domestic employment is understandable in any country. However, in the case of these firms that have created so many highly paid Aussie jobs, isn’t the greater good served by allowing them to run their global businesses without this hurdle?

The ironic consequence of this regulation is to slow job creation, not to stimulate it. And there is also the reciprocity argument: in this relationship, one side clearly is treating the other’s citizens far better. The backlash is already evident.

One of the big changes in immigration regulations here this year is that the 457 replacement visa will no longer provide a straightforward path to permanent residency, nor to citizenship. Very deliberately, many years have been added to the wait times for both outcomes, to stop rorts reported in the tabloid press, usually involving hospitality jobs.

None of these reports involved global talent that came to Australia to work in MNCs and decided over time to stay on. But that talent is now being told, in effect, to wait years longer to become permanent residents.

This seems counter-productive in a country with a long history of competing globally for the world’s best migrants. These high tax payers will increasingly leave Australia when their current visas expire, or, given the new landscape with far more limited future options, not bother to come here at all.

The solution is simple: create the Australian equivalent of the L-1 and the E-3 visas, with appropriate safeguards to address legitimate concerns. Cap the number annually as the US does with the E-3, for example. And create a high market cap threshold so that fly-by-night companies cannot be created merely to rort the system.

If there is no change to the current system, perhaps we will wonder in 20 years why top talent has ceased to flow into Australia from countries like the US. Look at the top ranks of corporate Australia: business leaders like Mike Kane, Scott Charlton, Gail Kelly, Jayne Hrdlicka, Brian Hartzer, and Alan Joyce all came from abroad to lead iconic Aussie companies, and they have enriched the Aussie corporate gene pool. Their successful corporate leadership has undoubtedly saved or added thousands of jobs to the Australian labour market.

With recent changes, will this diversity soon cease to be an Australian strength? The business community is clearly expressing its concern now. The question is, is anyone prepared to act on it?

Niels Marquardt is CEO of the American Chamber of Commerce in Australia, and former US Consul-General in Sydney.

This opinion piece was originally published in The Australian on Monday, 4 September 2017 and is available via the following link.