Purpose of the Bill

The purpose of the Migration Amendment (Strengthening Sponsorship and Nomination Processes) Bill 2024 (the Bill) is to amend the Migration Act 1958 (the Act) to provide for certain settings for skilled visas. The Bill consists of one schedule, which:

• sets income threshold requirements for prescribed temporary visas
• provides for indexation of specified income thresholds
• amends the time period for validity of labour market testing
• provides for publication of a register of approved work sponsors of nominated skilled temporary workers.

Background

Current temporary skilled work visas

The current visa for temporary skilled workers is the Temporary Skill Shortage visa (subclass 482). This visa replaced the Temporary Work (Skilled) visa (subclass 457) in 2018. It is intended to help meet skills shortages in the Australian labour market while ensuring protection of local jobs, wages and conditions. It allows employers to sponsor overseas workers where no suitable Australian workers are available.

There are 3 main streams for the visa: Short-term, Medium-term and Labour Agreement. Visa holders can stay in Australia up to 2–4 years (up to 5 years for Hong Kong passport holders), as long as they continue to work for their employer. There is no cap on the number of visas which can be granted in any year.

The sections below outline some of the settings of the visa relevant to the provisions of the Bill.

Skilled occupation lists

For the Short and Medium-term streams, the applicant must be sponsored to work in an occupation on the relevant Skilled Occupation List. The list specifies occupations for eligibility for a range of skilled visas, both permanent and temporary, and is aimed at identifying occupations where there are skills gaps in the Australian labour market which would be appropriate to fill using skilled migration.

The current Skilled Occupation List is composed of 3 main lists: the Short-term Skilled Occupation List, the Medium and Long-term Strategic Skills List, and the Regional Occupation List. Applicable lists and occupations for different visas are set by legislative instruments; see the current instrument for the Temporary Skill Shortage visa.

Sponsorship

Visa applicants must be nominated by an approved sponsor (employer). In order to sponsor an applicant, an employer must be approved as a standard business sponsor, which requires paying a fee (currently $420), demonstrating they are running a legally established and operating business, and having ‘a strong record of, or a demonstrated commitment to, employing local labour’. Additional costs apply when nominating a visa applicant. To maintain their status, employers must continue to meet sponsorship obligations. Certain kinds of approved standard business sponsors can also apply for accredited sponsor status, which provides priority processing of nominations and visa applications.

Salary requirements and income thresholds

Employers of Temporary Skill Shortage visa holders must ensure that the terms and conditions of employment are no less favourable than those they provide to Australian citizens or permanent residents performing equivalent work in their workplace. This includes minimum wages, hours of work and leave entitlements.

Employers must pay the employee at least the annual market salary rate and, if the worker is to be paid less than $250,000 per year, above the Temporary Skilled Migration Income Threshold (TSMIT).

The level of the TSMIT is set by legislative instrument as provided for in the Migration Regulations 1994 (regulation 2.72) and changes are made by amending the instrument. The TSMIT is currently $73,150 as recently amended in line with the annual average weekly ordinary times earnings figure for November 2023 of 4.5% (see the Explanatory Statement to the amending instrument). This amount is applicable from 1 July 2024 – existing visa holders and nominations are not affected.

Prior to 30 June 2023, the TSMIT had been set at $53,900, a level that had remained unchanged since 2013. The government had committed to raising the TSMIT as an outcome of the 2022 Jobs and Skills Summit (p. 4). Following the release of the Review of the Migration System Final Report (the Migration Review), the government announced in April 2023 an increase to $70,000 from 1 July 2023. The Migration Review had advised that the threshold was too low and should be raised and indexed (pp. 78–79).

Labour market testing

In most cases, employers must undertake labour market testing to demonstrate they cannot find an Australian resident to do the work. Labour market testing generally requires advertising the position for at least 4 weeks within the 4-month period immediately prior to lodging the nomination application (part of the visa application process). It must also include evidence regarding any Australian citizens or permanent residents made redundant or retrenched from positions in that period. Current requirements for labour market testing are set out in a legislative instrument (most recently amended in December 2023 including to remove the requirement to advertise on the government employment service Workforce Australia website).

Labour agreements

Currently, employers may seek to use labour agreements if they cannot meet their skills needs through Australian workers or existing skilled visa programs. Labour agreements are negotiated between employers (or a state, territory or regional authority) and the Department of Home Affairs (representing the Australian Government). There is a range of types of labour agreements, covering designated regions, industries (largely in the agricultural sector), specific large projects or specific companies. The agreements function as a contract, setting out terms that employers must comply with in addition to sponsorship obligations similar to the standard business sponsorship obligations (see above).

Labour agreements use existing visas, including the Temporary Skill Shortage visa (and permanent skilled visas), but may provide concessions in relation to the standard requirements or occupations for those visas. The annual market salary rate still applies, so that a worker under a labour agreement should not be paid less than an equivalent Australian worker, even if the labour agreement allows them to be paid below the TSMIT.

The Migration Strategy

The government released its Migration Strategy: Getting migration working for the nation (the Migration Strategy) in December 2023, following consideration of the Migration Review.

The Bill is intended to implement some of the initiatives concerning temporary skilled visas outlined in the Migration Strategy. Not all of the initiatives require amending the Migration Act, and other initiatives may still be in design, where it is not yet clear whether further legislation will be required.

A new Skills in Demand visa

One of the ‘8 key actions’ (p. 13) of the Migration Strategy is:

Targeting temporary skilled migration to address skills needs and promote worker mobility

A new Skills in Demand visa with 3 targeted pathways, and visa settings that encourage migrant worker mobility in the labour market

The Skills in Demand visa would replace the Temporary Skill Shortage visa. The Skills in Demand visa pathways or streams would comprise:

• A Specialist Skills pathway ‘to drive innovation and job creation’: targeted at highly-skilled migrants who would earn over $135,000 per year, open to any occupation excluding trades workers, machinery operators and drivers, and labourers (p. 49)
• A Core Skills pathway ‘to meet targeted workforce needs’: targeted at migrants in occupations in shortage, to be listed on a new Core Skills Occupation List, who would be paid at or above the TSMIT (and at or above the relevant average market salary rate) (pp. 50–51)
• An Essential Skills pathway: ‘a more regulated pathway for lower paid workers with essential skills’ to be developed with a focus on ‘the care and support economy’ (p. 51).

The design of the Essential Skills pathway appears to be a longer-term element of the policy implementation, with the Migration Strategy stating:

The Government will further evaluate how to develop an Essential Skills Pathway – a more regulated pathway for lower paid workers with essential skills – in consultation with state and territory governments, unions, businesses and migrant workers. (p. 51)

The design would take into account the Aged Care Industry Labour Agreement and the inclusion of aged care workers through the Pacific Australia Labour Mobility (PALM) scheme (pp. 51–52). Arrangements under the Essential Skills pathway would be ‘sector specific, capped, embedded with stronger regulation and minimum standards’ (p. 52).

The development of the Essential Skills pathway could be linked with the role of labour agreements. The Migration Strategy indicates that the government is examining the place of labour agreements:

… acknowledging that there will always be a role in the system for labour agreements, the Government will evaluate existing labour agreements for below-TSMIT migration and will rewrite guidelines for future labour agreements to provide stronger worker protections. The Government will further consider how best to enshrine these guidelines in legislation. (p. 52)

The Migration Strategy also committed to legislating indexing of income thresholds and to ‘streamline labour market testing’ by increasing the period it remains valid from 4 months to 6 months. The Bill will implement these 2 initiatives. The Migration Strategy further states:

As Jobs and Skills Australia’s role further matures, the Government will consider moving away from employer conducted labour market testing towards mechanisms for robust and genuine independent verification of labour market need. (p. 53)

Other commitments on temporary skilled migration which do not require amending the Migration Act include revising the approach to identifying skills needs (p. 52), establishing new service standards for visa processing times (21 days for the visa generally, and 7 days for the Specialist Skills pathway, p. 53), and including start-up businesses with venture capital funding to the categories of accredited sponsors (p. 53). Further measures intended to open temporary skilled worker settings to greater mobility between employers and pathways to permanent residence are set out in a table on page 48. A number of these measures have been, or will likely be, implemented through changes to the Migration Regulations.

A new skilled occupation list

The commitment regarding identifying skills needs is further detailed in the section on the key action ‘Planning migration to get the right skills in the right places’ (p.78). A new Core Skills Occupation List (CSOL) will be created to replace the current Skilled Occupation List (p. 81). This will apply to the Core Skills visa stream. Jobs and Skills Australia is designing the new CSOL and ran a consultation process in May 2024. Like the current Skilled Occupation List, the CSOL will be based on Australian and New Zealand Standard Classification of Occupations (ANZSCO) occupations. The CSOL will not apply to the Specialist Skills pathway, which will be open to any occupation except trades workers, machinery operators and drivers, and labourers, as long as they will earn at least $135,000 per year.

Addressing worker exploitation

The commitment to establish a public register of approved sponsors of temporary skilled migrants is listed in the Migration Strategy in the key action on ‘Tackling worker exploitation and the misuse of the visa system’ (pp. 76–77).

The government has implemented a number of other initiatives in this key action area through legislation, including the Migration Amendment (Strengthening Employer Compliance) Act 2024. That Act amended the Migration Act including to introduce:

• criminal offences and deterrence measures for employers who coerce temporary migrant workers into working in breach of their visa conditions
• measures designed to remove some of the disincentives for temporary migrant workers to report exploitation.

Most recently, the government has announced a pilot program for a Workplace Justice visa, a model designed in conjunction with stakeholder groups including a partnership of organisations led by the Human Rights Law Centre and the Migrant Justice Institute. Refer also to the Explanatory Statement to the instrument creating the visa and the Explanatory Statement to the instrument implementing new protections from visa cancellation for certain temporary migrant workers in the case of workplace exploitation.

Committee consideration

Senate Legal and Constitutional Affairs Legislation Committee

The Bill has been referred to the Senate Legal and Constitutional Affairs Legislation Committee for inquiry and report by 2 September 2024. Details of the inquiry are at the inquiry homepage.

Senate Standing Committee for the Scrutiny of Bills

At the time of publication of this Bills Digest, the Senate Standing Committee for the Scrutiny of Bills had yet to report on the Bill.

Policy position of non-government parties/independents

There has not yet been substantive comment from the opposition or other non-government parties or independents on the Bill.

Media following the release of the Migration Strategy in December 2023 quoted opposition leader Peter Dutton criticising the exclusion of trades occupations from the Specialist Skills pathway. Another report noted that opposition immigration spokesperson Dan Tehan had raised concerns for regional Australia, where he argued the new visa ‘would sever the link between temporary workers and the regional businesses that sponsor them, creating a shortage’.

Position of major interest groups

Stakeholders have provided comments on the Bill in submissions to the Legal and Constitutional Affairs Legislation Committee inquiry. In addition, because the initiatives were flagged in the Migration Strategy, there has been more general commentary on the proposed Skills in Demand visa.

The Migration Review outlined previous stakeholder views, for example on skills lists (p. 75), the effectiveness of labour market testing (p. 76), and the level and indexation of the TSMIT (pp. 78–79).

The Migration Strategy has a table of stakeholder views which summarises some key concerns and intended government actions to address them, including complexity in occupation lists, labour market testing, and other aspects of skilled migration (p. 97).

The stakeholder views of the Bill’s initiatives are varied, with commentary both in support of and in opposition to particular measures, as outlined below.

Register of approved work sponsors

Employer and business advocates were generally (but not exclusively) opposed to the introduction of a register of approved work sponsors. Deloitte described the measure as ‘excessive’ and raised concerns of commercial sensitivity (submission 2, p. 3). The Law Council of Australia noted ‘serious issues’ with the proposed register, including that:

• it could have privacy implications and deter employers, particularly small businesses and sole traders, from sponsoring workers
• it could be open to abuse from marketing entities, disgruntled former employees or scammers
• it could be burdensome to maintain, both for employers and for the department to keep up-to-date
• it might not be effective in its intent of assisting workers to find a new reliable sponsor (submission 19, pp. 5–9).

The Law Council did not support the measure, but recommended that, if it is retained, that inclusion on the register be voluntary and the measure in proposed paragraph 140GE(2)(f), concerning the publication of the kinds of occupations covered by nominations, be removed due to privacy concerns (p. 9).

The Migration Institute of Australia raised similar concerns and was ‘strongly opposed’ to the proposed register (submission 14, pp. 1–3).

Stakeholders who supported the proposed register included the Australian Council of Trade Unions (ACTU, submission 11), the Restaurant and Catering Industry Association (submission 12), the Immigration Advice and Rights Centre (submission 8), and the Australian Chamber of Commerce and Industry (ACCI, submission 18).

Income thresholds and indexation

Some stakeholders raised concerns that higher income thresholds would disadvantage employers or exclude certain occupations and industries from access to the proposed visas (including Clubs Australia (submission 4), the Restaurant and Catering Industry Association (submission 12), and Early Learning and Care Council of Australia (submission 9)).

The Law Council of Australia was concerned that setting the income thresholds in the Migration Act would be ‘unduly rigid’ and would be better included in a legislative instrument. It also contended that using the Average Weekly Ordinary Time Earnings (AWOTE) as a basis for indexation was a high amount (submission 19, p.11). The ACCI recommended the formula for indexation should use ‘whichever is lower out of AWOTE or CPI [consumer price index]’. It also recommended an exemption from the Core Skills Income Threshold for occupations in skills shortage where the local wage levels are currently below the TSMIT (submission 18, p. 4).

Labour market testing

There is wide division on the issue of labour market testing generally. Unions contend that the current system is ‘not fit for purpose’ and do not support the proposed amendments to extend the validity period (for example ACTU, submission 11, pp. 5–6). The ACCI recommended that occupations in skills shortage should be exempt from labour market testing (submission 18, p. 2). Stakeholders in favour of the amendments include the Law Council of Australia (submission 19; see pages 10–11 for its additional recommendations) and the Migration Institute of Australia (submission 14, p. 3).

Visa pathways and skills lists

The main issue raised by stakeholders in the media is the exclusion of certain occupations from the high-income threshold Specialist Skills pathway, meaning trades workers would need to apply through the Core Skills pathway. Stakeholders expressed concern that the Core Skills pathway would have a lower processing priority than the Specialist Skills pathway, potentially disadvantaging trades applicants and their prospective employers.

Master Builders Australia (submission 5, p. 3) stated it was:

… disappointed that tradespeople were expressly carved out of the Specialist Skills pathway, and fundamentally disagrees with the concept of differentiating highly paid trade workers from their white-collar counterparts.

Some media characterised the exclusion of trades from the Specialist Skills pathway as a concession to unions. Reporting noted support for the Skills in Demand visa pathway from unions and business, including the Business Council of Australia.

Stakeholders were seeking more information and certainty on aspects of the Bill, in particular the proposed Essential Skills pathway and the skills lists (for example Law Council of Australia, submission 19, p. 12; Deloitte, submission 2).

Academics Stephen Clibborn and Chris F Wright at the University of Sydney, who made a submission to the Migration Review, welcomed the announcement of the Skills in Demand visa. Writing ahead of the introduction of the Bill, they stated:

Migrant workers should have mobility to switch employers, a pathway to permanent residency, and better protection of their workplace rights, and skill shortages should be verified independently so that migration addresses genuine labour market needs.

The Grattan Institute, which has issued a range of reports on skilled migration policy, does not yet appear to have directly commented on the Bill, but has published its submission to the consultation on the draft Core Skills Occupations List. It has previously argued for raising the TSMIT, indexing of income thresholds, improved worker mobility and abolishing skills lists and labour market testing.

Financial implications

The Government assesses the Bill as having a low financial impact. The Explanatory Memorandum to the Bill notes that the Government has allocated $30.1 million over 4 years from 2023–24 to reform temporary skilled visas, including replacing the Temporary Skill Shortage visa with a new Skills in Demand visa (p. 3).[1]

Statement of Compatibility with Human Rights

As required under Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 (Cth), the Government has assessed the Bill’s compatibility with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of that Act. The Government considers that the Bill is compatible ‘because, to the extent that it may limit human rights, those limitations are compatible with the nature of the right and for the purpose of promoting general welfare in a democratic society and are reasonable, necessary and proportionate’.[2]

Parliamentary Joint Committee on Human Rights

The Parliamentary Joint Committee on Human Rights had no comment on the Bill (Scrutiny report 6 of 2024, p. 2).

Key issues and provisions

Income thresholds for new visas

As noted above, the level of the TSMIT is currently set by legislative instrument as provided for in the Migration Regulations 1994. The Bill will provide for the levels of the income thresholds, and indexation of the amounts, to be set in the Migration Act.

Section 140GB currently provides for the power to approve nominations for approved work sponsors for visa applications. The minister must approve the nomination if the prescribed criteria are met.

Item 2 inserts proposed paragraphs 140GB(2)(c), (d) and (e) which provide for additional criteria that, for the relevant prescribed nominations and occupations for particular visas, the minister must be satisfied that the relevant income thresholds are met. These 3 proposed paragraphs will legislate income thresholds requirements for the different streams of the proposed Skills in Demand visa. The Explanatory Memorandum states that proposed paragraph 140GB(2)(c) will provide for the Specialist Skills pathway, proposed paragraph 140GB(2)(d) will provide for the Core Skills pathway, and proposed paragraph 140GB(2)(e) will provide for nominations for occupations ‘that would be available to workers with skills that are essential to Australia’s workforce’ (p. 8). This third provision would allow for an Essential Skills pathway or similar visa as proposed in the Migration Strategy (see the background section above).

Item 3 inserts proposed subsections 140GB(2A) and (2B) to determine the income thresholds for the proposed visa streams. Proposed paragraph 140GB(2A)(a) sets the income threshold for the prescribed visa (to be the Specialist Skills pathway) at $135,000. Proposed paragraph 140GB(2A)(b) sets the income threshold for the prescribed visa (to be the Core Skills pathway) at $73,150.

The Explanatory Memorandum states that these income thresholds will be termed the Specialist Skills Income Threshold and the Core Skills Income Threshold respectively (p. 2). The Migration Strategy states that the Specialist Skills Income Threshold of $135,000 ‘closely corresponds with the 90th percentile earnings for all workers’ (p. 50). The Core Skills Income Threshold of $73,150 corresponds to the level of the current TSMIT (see above).

Proposed paragraph 140GB(2A)(c) provides that an income threshold for the prescribed visa may be set out in regulations or may be specified by the minister in writing, as per proposed subsection 140GB(2B). This would provide for an Essential Skills pathway visa, or other kind of prescribed visa, with income thresholds that may be determined without further amendments to the Migration Act.

Proposed subsection 140GB(6) (inserted by item 4) provides that a specification by the minister under proposed subsection 140GB(2B) is not a legislative instrument. The Explanatory Memorandum describes this provision as ‘administrative in character, and the referred provision is merely declaratory of the law and is not prescribing a substantive exemption from the operation of the Legislation Act 2003’ (p. 9).

Item 4 also inserts proposed subsection 140GB(5) which provides that different kinds of visas may be prescribed for the purposes of proposed subparagraphs 140GB(2)(c)(i), (d)(i) and (e)(i), and that different kinds of occupations may be prescribed for the purposes of proposed subparagraphs 140GB(2)(c)(iii), (d)(iii) and (e)(iii). The Explanatory Memorandum notes the intention to create Specialist Skills and Core Skills visa pathways in the Migration Regulations for the relevant purposes (p. 7).

The Explanatory Memorandum does not provide further details on the Essential Skills pathway proposed in the Migration Strategy, referring only to workers or applicants ‘with essential skills’ (for example p. 3). As noted in the background section above, the design of the Essential Skills pathway is still under consideration.

The Explanatory Memorandum does not provide further details on the prescribing of different kinds of occupations, however, see the background section above on the government’s current initiatives to develop a new Core Skills Occupation List for the Core Skills visa stream.

Item 8 provides that the proposed amendments of sections 140GB and 140GBA apply for nominations made on or after the date of commencement. That is, the new arrangements for nominations and the amended timeframes related to labour market testing (discussed below) are not retrospective.

Labour Market Testing

Items 5 and 6 of the Bill amend the length of time labour market testing for a position remains valid, from 4 months to 6 months. This applies to advertising for a position for the purposes of labour market testing (subsection 140GBA(4)) and required evidence regarding redundancies or retrenchments of Australian citizens or permanent residents (subparagraph 140GBA(3)(b)(ii)).

Indexation

As noted above, the TSMIT is currently set by legislative instrument. Item 7 of the Bill will insert proposed section 140GD to provide for automatic indexation of the income thresholds set by proposed paragraphs 140GB(2A)(a) and (b) (in relation to the proposed Specialist Skills and Core Skills visa streams). Amounts set under proposed paragraph 140GB(2A)(c) or proposed subsection 140GB(2B) (in relation to a potential future Essential Skills pathway or other visas) are not subject to indexation. 

Proposed section 140GD provides that indexation is to occur on 1 July each year and is to be worked out according to an indexation factor set out in proposed subsection 140GD(3), with reference to the full-time adult average weekly ordinary time earnings for the relevant quarter. Definitions of terms used in the proposed section are set out in proposed subsection 140GD(6).

Register of approved work sponsors

Item 7 also inserts proposed section140GE which provides that the department may publish certain details of approved work sponsors (employers) on its website. The information is to be prescribed in regulations (proposed subsection 140GE(1)) and may include (without being restricted to) the kind of work sponsor, their business name, their Australian Business Number and related postcode, and the number of individuals nominated under the sponsorship approval process and the occupations of the nominated workers (proposed subsection 140GE(2)). See the background section above for details of the current sponsoring arrangements – the Bill does not change this process.

Proposed subsection140GE(3) provides that the regulations must not prescribe information that is a personal identifier. Proposed subsection 140GE(4) provides that the regulations may prescribe circumstances in which information must not be published. The Explanatory Memorandum states that these provisions will operate to ensure compliance with the Privacy Act 1988 (p. 12).

The Explanatory Memorandum states that the intent of the proposed section is to ‘encourage transparency, monitoring and oversight’ and help temporary workers who want to change employers to find a new sponsor and ensure that they are legitimate (see also the Migration Strategy, p. 76). It also states that the department will conduct consultation and communication on the proposed register ahead of implementation, notably in relation to the publication of employer details (p. 12).