Four ways Australia’s new migration strategy could affect your business or startup

Employers can expect to pay higher wages when recruiting talent from overseas, and new rules will crack down on “non-genuine” students and their dodgy education providers, under a long-awaited reset of Australia’s temporary migration regime.

Home Affairs Minister Clare O’Neil will today hand down the government’s new, 100-page immigration strategy, following a major review that found the system is “broken” and in need of significant reform.

The new strategy follows a post-lockdown boom in net migration to 510,000 people over the last financial year, which was initially viewed as a reflection of COVID-era demand.

Backdropped by a severe housing shortage, the federal government is now attempting to moderate migrant intake over the long term and predicts new policies will see net migration of 250,000 people in 2025.

“We do need to have our migration levels brought to a sustainable level,” Prime Minister Anthony Albanese said Sunday.

The strategy is “all about getting migration working for the country, including by the right settings to ease workforce shortages that are holding our country back without putting undue stress on other parts of our economy,” Minister O’Neil said.

The strategy will also speed up a “slow, complex” visa application process for highly skilled workers, which may discourage international talent from working at Australian companies and startups, O’Neil added.

The Albanese government’s temporary migration reset is split into three broad reforms: changes to the student and graduate visa eligibility, tweaks to the skilled migrant worker pathway, and the creation of a new specialist skills temporary visa category.

Student and graduate visa reforms

In an opinion piece published by the Australian Financial Review, O’Neil said it is “far too easy to use side doors and back doors of the migration system” against its intended purpose.

Specifically, the migration plan raises concerns that dodgy education providers are allowing “non-genuine” students the ability to live and work in Australia.

Additionally, some visa holders look to extend their stay by pursuing lower levels of education than their initial course, allowing them to keep their working rights without greatly expanding their long-term career prospects.

Some of these workers, who might not have strong English language skills or a solid understanding of employment law, could be “vulnerable to worker exploitation and get trapped in our system, never able to set down roots, rendered permanently temporary,” O’Neil said.

To counter the misuse of the student and graduate visa pathway and the potential exploitation of those individuals by dodgy education providers and unscrupulous employers, the government will:

• Upgrade the English language requirements for students and temporary graduate visa holders,
• Establish a “genuine student test”,
• Bar temporary graduate visa holders from switching back to a student visa while in Australia,
• Undertake a new risk assessment of education providers, and accelerate student visa application times for students looking to study at high-ranking providers.

For employers

The plan comes as a warning to the small number of employers taking advantage of student and graduate visa holders as a source of low-skilled labour.

Should the plan have its intended outcome, unscrupulous employers will find it harder to access migrant workers more vulnerable to exploitation than their domestic counterparts.

Employers are still free to employ student and graduate visa holders under the strategy, although fortnightly limits on working hours, re-established on July 1, will remain. 

More broadly, businesses that cater to Australia’s diverse and vibrant international student community may need to prepare for the migration drop-off.

Changes to the temporary skilled migrant system

Central to the strategy is a significant overhaul of the temporary skilled migrant income threshold (TSMIT).

The TSMIT is the baseline wage an employer must pay a temporary skilled migrant to fill a position.

It is designed to protect migrant workers from being paid less than their domestic counterparts.

The TSMIT was recently lifted to $70,000, after being stuck at $53,900 for a decade.

The new migration strategy will add indexation to the TSMIT, meaning it will fluctuate from year to year.

For employers

Some industry representatives say the TSMIT is too high, with domestic skills shortages in sectors like hairdressing making it hard to find overseas talent or local workers.

Those medium-term fears will not be waylaid by the decision to index TSMIT, potentially subjecting it to further growth over time.

Specialist Skills Visa

The strategy calls for the creation of a new specialist skills visa pathway, catering to jobs that pay above $135,000 and require niche experience and expertise.

In her op-ed, O’Neil reflected on the experience of Smart50 award winner Goterra, which struggled to recruit a specialist from overseas under the existing visa regime.

Applications will be streamlined under this visa format, in an attempt to connect local businesses with sought-after professionals in fields like science, cybersecurity, and renewable technology.

This stream is expected to welcome about 3,000 people a year into Australia, with O’Neil claiming their tax contributions alone will pump $3.4 billion into the economy over the next decade.

Critically, the government wants a seven-day processing time for visas under this scheme.

The addition of this visa type is intended to make Australia a more attractive destination to top overseas talent, who may currently choose to live and work in nations like the US, UK, or Canada.

In a boost for newer companies, Capital Brief reports startups with venture capital funding will be eligible to sponsor workers under this scheme.

For employers

This reform has been warmly welcomed by the Tech Council of Australia, whose members stand to benefit from streamlined and simplified visa processes for highly-skilled employees.

Those workers will provide a boost to their domestic colleagues, and the nation’s capabilities in general, said TCA CEO Kate Pounder.

“The tech experts that come to Australia thanks to these reforms will help train and upskill existing workers, which will not only benefit their careers, but the economy as a whole,” she said.