Following the Interim Report the Committee received further evidence which expanded on the issues related to Labour Market Testing (LMT) and the Skilling Australia Fund (SAF) and the extent to which they are impacting on businesses as they seek to sponsor skilled migrants.
Labour market testing
In its Interim Report the Committee highlighted the complexities of LMT processes for businesses, particularly the balance between the need to recruit skilled overseas workers and prioritising Australian jobs.
Much of the evidence received after the Interim Report supported and added to this view. Ajuria Lawyers considered that the current LMT process may create unnecessary work and potentially confusion for businesses.
The Accommodation Association of Australia explained that LMT is seen to be an onerous and time-consuming administrative requirement which is faced by businesses who wish to sponsor a prospective migrant worker.
The Australian Chamber of Commerce and Industry (ACCI) contend that there are already multiple existing barriers faced by employers when using the ‘highly regulated and expensive’ skilled migration program which they consider presents a ‘very strong incentive for employers to employ Australian workers as a first priority’.
ACCI expressed that LMT ‘significantly adds to the red tape burden’. Additionally, ACCI noted the likelihood that ‘numerous attempts to recruit Australian workers were made before reaching out to a migrant’.
Consult Australia considered the current LMT process creates a burden for its membership, results in unnecessary red tape and does not improve desired outcomes.
The Association of Mining and Exploration Companies noted that the administrative processes of LMT create an additional burden on top of other requirements that need to be met. Fragomen agreed, describing LMT as an unnecessary administrative burden imposed on businesses, particularly on how positions are advertised.
Fragomen further noted that in their experience with LMT, the ‘highly prescriptive rules’ informing how positions should be advertised do not ‘reflect the realities of how companies now recruit’. Fragomen explained that some employers use different advertisement protocols with specific platforms; for others, there may be circumstances in which advertising roles, particularly senior ones, are a commercially sensitive topic.
For appointments to positions such as Chief Executive Officer, Chairman, and senior operational management roles, it is usually the case that the departure of the incumbent is not publicised until their replacement is announced, because of the harmful effects this may have on the company’s stability…
The Accommodation Association of Australia conducted a survey within its own membership and found that 40 per cent of respondents viewed the LMT administrative process as a major barrier to sponsoring skilled migrants.
The Restaurant and Catering Industry Association considered that LMT acted as a hand brake on economic growth and business recovery through Australia’s post-pandemic recovery period.
EY provided evidence from its Selected Commentary – EY Survey of Business March 2021 to illustrate the impact of LMT on businesses. One respondent stated:
The current advertising requirements are not protecting the local labour market, especially as the roles we look to fill by foreign talent are due to the lack of available specialised skills. Advertising simply becomes a tick box exercise, as we know we need to recruit internationally due to the skills shortage in Australia.
Another respondent to the survey mentioned LMT as being too onerous and ineffective for occupations in high demand:
We would hire locals if they were available. The LMT process is time consuming and inhibitive if we wish to issue an offer to a candidate, but essentially have to wait 28 days before we can do that. By then the horse has bolted.
EY’s survey respondents also regarded LMT as an ‘unnecessary administrative, time consuming and costly process that has no relevance to the decision to fill a position with a local or global talent’.
EY also provided these comments on the requirement to advertise on JobActive with one respondent to the survey stating:
The current labour market testing requirements, in particular the JobActive advertisements are not designed practically for employers to properly prioritise Australian applicants. In particular, the JobActive website does not review the applications and applicants applying do not meet the minimum experience or qualifications to do the job. It would be helpful if the candidates applied via this channel are first vetted before the applications are sent through.
Another respondent to the EY survey stated that JobActive is:
‘…not a suitable job board and we rarely receive any suitable candidates for highly skilled roles such as nurses or doctors’.
EY’s survey found the majority of business respondents viewed current LMT requirements including JobActive advertisements as being an ineffective means of ensuring that employers are prioritising jobs for Australians and local job creation.
ACCI argued that JobActive does little to represent the differences in skillsets and experience of those who are long-term unemployed and skilled migrants nominated by an employer to fill a skills gap within their business. ACCI stated:
Public perception that the unemployed on JobActive could fill vacancies that are ultimately having to be filled by skilled migrants is a flawed one.
Australian International Skilled Recruitment Services further stated that local unemployed, experienced and semi-skilled workers would not be able to make a transition to another sector without undergoing re-training and experience which could take approximately three to four years and ‘…this is why skilled migration fills the gap where there are shortages’.
In contrast, the Construction, Forestry, Maritime, Mining and Energy Union (CFMEU) regard LMT as an important mechanism to gauge if there are sufficient Australian workers with the appropriate skills willing to perform the work required. According to the CFMEU:
[Labour Market Testing] is the only mechanism to keep employers who are seeking foreign labour accountable before recruiting overseas. Without the requirement seeking Australian workers by advertising, employers can simply recruit foreign workers without any checks or balances.
EY recommended a range of adjustments to LMT:
advertising on JobActive be an option and not be prescribed for all occupations
labour market testing after application lodgement be accepted
the four-week period of advertising and acceptance of applications for the role be reduced to two weeks, and
the requirement to advertise the salary be removed in line with standard business practice.
Mapien recommended some improvements to current LMT processes based on Recommendation 1 of the Interim Report.
Removing the requirement for accredited sponsors to advertise occupations classified at Skill Level 1 and 2 completely, or provide greater flexibility around the time frame within which this must have been completed.
Amending the exemption to LMT available in cases where the sponsor already has a 457/487 visa holder performing the role – currently an exemption is available where the individual has been employed in the position on a full-time basis for at least two years. Reducing this to six or 12 months would no longer force businesses into effectively running a ‘false advertising’ campaign which may occur in circumstances where the position is one which requires extensive proprietary knowledge.
Removing the expectation for a position to have been advertised prior to lodgement of a permanent residence application under the Temporary Residence Stream of the employer nomination scheme.
Mrs Whiting, Chief Executive Officer and Director of Regional Development Australia Riverina, also raised with the Committee the issue of regional employers being required to conduct labour market testing despite a migrant having filled the role for 12 months and continuing to fill the role:
Regional employers who have been employing a migrant in a position for which they are qualified for a period of 12 months should not be required to undertake labour market testing. If a regional employer can find a person that fits their business and has tested them out in a position for a period of 12 months, and they want to keep them on staff, it is counterproductive to force them to undertake labour market testing to see if there is a complete stranger who is an Australian citizen or permanent resident who can fill the position.
In contrast, although some submitters agreed with the premise of the Interim Report’s first recommendation, Australian International Skilled Recruitment Services highlighted that if the recommendation is implemented it could lead to a perception that Australians are not being afforded the opportunity to apply for roles.
As many different businesses advertise vacancies on a regular basis, in the public domain, requiring them to advertise in adherence with strict LMT measures results in additional bureaucracy. The evidence the Committee received suggests that LMT is not efficient or effective.
The highly prescriptive approach taken to the timing of LMT is, in the Committee’s view, out of touch with the way modern businesses operate. The expense and complexity of accessing skilled migrant workers alone leads businesses to exhaust all their options for employing local workers before they even commence the process of seeking overseas workers, as has come up time after time in the evidence presented to this inquiry.
Requiring businesses to demonstrate via prescribed criteria that they have sought local workers before seeking to sponsor a migrant makes little sense, in light of the extensive efforts businesses often undertake to avoid the expense and complication of employing skilled migrants.
The requirements set by Home Affairs for advertising means that existing advertising protocols are not appropriate in serving Australia’s skilled migration program (for example having two advertisements on one or more platforms with national reach for no less than 28 days). Positions also have to be re-advertised if the advertisement has not previously met the criteria specified by Home Affairs. The requirement to readvertise a position when an individual has been employed in the position on a full-time basis for less than two years or prior to lodgement of a permanent residence application also makes little sense.
The fact that, in order to qualify for skilled visas, individuals must possess skills that appear on a skilled migration list, which in turn means that these specific skills are subject to an established labour shortage, further demonstrates that the prescriptive approach and limited timeframes for LMT place an additional layer of red tape on businesses seeking to sponsor migrants.
In the Interim Report, the Committee recommended the Department of Home Affairs should streamline labour market testing to:
be less prescriptive about what constitutes labour market testing
only require Medium and Large businesses to conduct labour market testing;
require labour market testing for businesses headquartered outside Australia or businesses owned by someone who is not an Australian citizen;
remove the requirement for employers to advertise any occupations which are on the PMSOL or critical skills lists; and
remove the requirement for employers to advertise for all occupations classified as Skill Level 1 and 2 on the jobactive website.
On balance, the Committee believes that LMT plays some role in maintaining public confidence in the skilled migration program, and reassures the public that steps are taken to ensure that Australian workers receive a chance at filling jobs before overseas migrants are sought.
As such, the Committee is of the view that LMT in some form should be maintained. However, it is important that LMT continues to be reformed to take better account of current business recruitment timelines and practices. The Committee considers that, further to the recommendation made in the Interim Report, an extension of time for LMT to have taken place will assist employers and reduce some of the administrative burden.
The Committee recommends that the Government temporarily extend the timeframe for employers to undertake Labour Market Testing prior to nomination from 4 months to 6 months during the pandemic recovery.
The Committee recommends that the Government exempt businesses from Labour Market Testing when a 457 or 482 visa holder has been employed in the position on a full-time basis for twelve months or more and prior to their lodgement of a subsequent visa application or a permanent residence application.
Skilling Australia Fund
In its Interim Report the Committee received evidence that, amongst other things, the Skilling Australia Fund (SAF) levy was a significant cost, had to be paid too early in the nomination process and was difficult to obtain a refund from if particular circumstances changed. More evidence was received in regard to the SAF and its impact which is described below.
Industry associations, such as the Restaurant and Catering Industry Association (RCIA), argued that it is unreasonable for businesses to incur the heavy financial burden of the training levy, particularly smaller businesses that operate on low margins. The RCIA considers that the SAF is a strong disincentive for businesses to invest in other training as they are already paying the SAF levy.
Cairns Chamber of Commerce echoed a similar viewpoint, in that the SAF levy presents a financial burden to smaller businesses, especially where a nomination application is denied and there are no refund provisions in place.
In contrast the CFMEU noted that the role of the SAF levy is to train local workers in Australia. CFMEU stated that contributions to the levy are one way of ‘levelling up’ between companies who are reliant on overseas workers, and other companies who ‘do the right thing’ investing time and money on training Australian workers. However, CFMEU acknowledged the importance of making further amendments to increase the transparency over where the SAF is spent.
The Accommodation Association of Australia recommended that over the medium term, the Government should endeavour to halve the cost of the SAF levy across all visa products to increase the intake of qualified, skilled and experienced cohorts to address recognised skills needs. Further, extending the ability for employers to access refunds where nomination applications, in all cases, are unsuccessful should be considered.
Cairns Chamber of Commerce added that the SAF should be refundable in the event of ‘adverse decisions’, or be made a ‘time-of-decision’ criterion.
SAF Levy and Universities
Universities Australia noted that:
Payment into the SAF Levy, which largely funds apprenticeships and traineeships, does not contribute to funding the development of local capacity in the highly specialised skills and expertise for which universities recruit.
According to Universities Australia universities should be exempt from the levy:
The global nature of university endeavour is such that while universities always seek to recruit locally, it is also necessary to complement the research and higher education workforce with skills and expertise from other countries.
Ms Catriona Jackson noted that as universities educate a large number of domestic students there seemed to be little sense in the fact that universities were required to pay into the Skilling Australia Fund but weren’t able to draw from the fund.
SAF Levy and Healthcare
Ramsay Health Care Australia stated that, as an employer who invests in training programs for their current and future workforce in partnership with the tertiary sector, the SAF levy imposes unnecessary financial burden particularly as employers already financially commit to other modes of training outside of the levy.
Ramsay Health Care Australia stated the following in regard to the SAF:
The revenue raised by the SAF is being managed by the Department of Education, Skills and Employment, and there is no evidence to indicate funds are being spent to address the health care sector’s skills shortage issues.
Fragomen noted that in the current COVID-19 climate, healthcare is considered a fast-growing sector in Australia’s labour market where state and territory health departments are increasingly utilising employer-sponsored visas to address acute skills shortages.
Fragomen explained that for public hospitals, ‘the effects of the SAF levy can be prohibitive’ as overseas doctors in training require many TSS nominations to facilitate changes in occupation or specialisation. The result is that each additional nomination requires another payment of the SAF levy.
Goulburn Valley Health explained the increased costs incurred by the introduction of the SAF levy with the introduction of the 482 visa:
There’s a huge burden on the health service with respect to advertising and substantiating the fact that there are no Australian-trained local doctors available on market, so we have to go to international. As a result, there's obviously a big cost to the organisation to employ overseas doctors with the visa cost. It can potentially cost the organisation $7,500 now for a four-year 482 visa. Previously that cost was $330 for the same visa, so obviously there's a large cost burden to the health service.
Time of Collection of SAF Levy
The concerns about the timing of the collection of the SAF levy at the time of nomination were echoed in the additional evidence. Additionally, concerns were raised about the SAF being non-refundable and there being only one exemption, which is that ministers of religion and religious assistants nominated under the Labour Agreement streams of the TSS or ENS visas are exempt.
Employers, including Commonwealth entities, are required to make the SAF levy payment at the same time a nomination application is lodged.
Ms Angela Chan argued that the ‘collection of the SAF at the time of nomination’ can be described as a ‘money grab’ by the government where proceeds from the SAF go into consolidated revenue.
Ms Chan also explained that:
It is inappropriate for the government to collect and retain monies from employers of the SAF unless and until both nomination and visa applications have been approved as it is possible that many different scenarios may arise between the nomination and visa applications being finalised which may result in the refusal of either the nomination and/or visa application.
Fragomen contended that:
…the complexities of the current LMT advertising or ‘alternative evidence’ requirements, mean that sponsors can easily make mistakes which have major implications, including the loss of a substantial Skilling Australians Fund levy payment.
Mrs Samantha Norman explained that under the current environment with closed borders and longer processing times, $7000 needs to be paid up-front for a long-term occupation with a four year stay when:
…we’re not even sure when the visa will come through or when the person can join. If that is collected at the time of employment or time of entry, that would be great – or done away with completely.
Refunds of the SAF Levy
Refunds of the SAF levy are only available in the following scenarios:
The sponsorship and visa applications are approved, but the overseas skilled worker (visa holder) does not arrive/commence employment with the employer.
The employer's sponsorship and nomination application for the overseas skilled worker is approved, but the associated visa application is refused on health or character grounds.
A TSS visa holder leaves the sponsoring employer within the first 12 months of employment where the visa period was for more than 12 months. Refunds will only be available in this scenario for unused full years of the SAF levy.
Note: This does not apply to ENS or RSMS holders who leave their employer within the first 12 months of employment.
The nomination fee is refunded (for example where a concurrent sponsor application is refused).
Fragomen noted that the limited refund provisions do not cater for new nominations of TSS visa holders looking to extend employment with their current sponsor which result in the SAF levy being paid twice for the same employee.
Ms Angela Chan’s submission raised two specific examples of situations where employers should be entitled to a refund for the SAF levy. For instance, where workers do not commence or continue to work:
An employer had a 4 year nomination approved for their worker, however, requested to withdraw their support for the visa applicant before the visa was finalised as the visa applicant had severe personal problems. The employers were not entitled to a refund as the nomination had been approved. Had the employer allowed the visa application to proceed, they would have been entitled to a partial refund, however, this would have tested the integrity of the migration process, as the employer had lost confidence in their visa applicant and circumstances arose where they could not continue with the application. The visa applicant was entitled to a refund of their visa application charges as they were applying for a long term temporary visa which is not contested here
A worker was granted their two year SC482 visa and worked for their employer for 2 weeks but had to travel, immediately prior to the lockdown resulting in them not being able to return to Australia. The employer received a “partial” refund of the SAF as the worker had worked for two weeks for the employer. The visa applicant was entitled to a refund of their visa fees as they were unable to return to Australia because of the border restrictions.
Fragomen underscored that consideration should be given to the following exemptions to the SAF levy:
… where a new nomination is only required to enable the TSS visa holder to continue employment with their sponsoring employer in circumstances where there has been a:
Transfer of employment and sponsorship to a different entity as part of a corporate restructure, merger or acquisition.
Home Affairs noted that a legislated Independent Review of the Migration Amendment (Skilling Australia Fund) Act 2018 is scheduled for 2021 but that the review had yet to commence and also that Labour Market Testing settings will be considered as part of the process.
The Committee notes evidence that businesses are frustrated about having to pay the SAF levy to enable them to source the skilled labour for their business’ effective operation. At the same time, these businesses cannot see any tangible increases in the availability of skilled local workers. As a result, regardless of the presence of the SAF levy, the shortage of locally trained skilled workers remains; and having paid the levy businesses still have to fund the training of their own staff without deriving benefit from the levy.
The SAF levy imposes significant financial costs on businesses. These costs are in addition to the lack of payment exemptions and limited refund provisions associated with the levy.
Much of the evidence received put the view that it is not appropriate for Governments to retain an employer’s investment into the SAF levy prior to the approval and subsequent finalisation of a nomination application. It is important for a nomination application to become finalised, as there are multiple circumstances that may arise during the processes which could result in the refusal or termination of an application. The majority of the evidence suggested that employers should not be required to invest into the SAF levy until the visa application is, or at least ready to be, granted by Home Affairs.
The Committee agrees that the way the SAF is collected, refunded and applied needs to be changed. In the Interim Report, the Committee made recommendations that the SAF be collected at the point of commencement, rather than application, and that greater transparency regarding its use be implemented. The Committee also recommended that consideration should be given to waiving the levy if the business demonstrates the same amount or more money being invested in training in the previous 12 months. The Committee reaffirms these recommendations, as they would in part alleviate many of the concerns raised during the inquiry.
However, further reform is needed. At minimum, the SAF should be collected only once per applicant, whether this applies to minor errors made in the application process or for subsequent visa applications by the same sponsor for the same employee.
Further, the Committee was convinced by the arguments made by Universities Australia that, as educational institutions, it makes little sense for universities to pay the SAF. Given their main role in Australian society is the provision of education and the development of skills, making universities pay the SAF levy appears to be an unfair impost on this sector.
The Committee recommends that employers should be exempt from paying the Skilling Australia Fund levy twice for the same applicant, or for a subsequent visa, where the employer has already paid the Skilling Australia Fund levy for that employee.
The Committee recommends that universities should be exempt from the Skilling Australia Fund levy.
The Committee recommends that the Government guarantee a refund of the Skilling Australia Fund levy where the visa application is unsuccessful and where there is no evidence of fraud on the part of the sponsor or applicant.