Prime Minister Malcolm Turnbull took Australia by surprise yesterday (Tuesday 18 April 2017) by announcing the scrapping of the subclass 457 visa program. His announcement follows lengthy reviews and in-depth analysis of the program over recent years, and has been labelled as a government strategy to put ‘Australians first’. The changes to the immigration program focus on Australian companies filling jobs with local talent before looking overseas to fill those roles.

The current subclass 457 visa program will be replaced with a new program for temporary skilled migrants: the Temporary Skill Shortage (TSS) visa. The Government says the TSS visa will be specifically designed to recruit “the best and brightest”, with more stringent eligibility thresholds, such as in the areas of English language, skill, work experience and labour market testing. It will also include significant changes to the way these visa holders can transition to permanent residence.

The Government is also proposing to implement a training fund program which was one of the recommendations made by the independent review into the integrity of the subclass 457 program in 2014.

The implementation of these reforms commenced today (Wednesday 19 April 2017) and will be completed by March 2018.

Undoubtedly, these fundamental changes to Australia’s immigration framework will create significant uncertainty for businesses in the short-term. There are immediate ramifications on businesses which access top talent or use the program to fill skills shortages with foreign nationals. These changes will affect both subclass 457 visa applications currently under consideration with the Department of Immigration and Border Protection and future applications for existing subclass 457 visa holders.

The immigration reforms still provide Australian companies with a genuine need to employ foreign labour a pathway to do so under the new TSS visa program. However, the immediate impact of some of the changes necessitates an urgent review of a business’ ability to access the skilled migration programme, and how they manage skills shortages in the future.

Read more on the changes here.

Our tax@hand app features more details on the changes to the subclass 457 visa program.