Federal Budget 2017: New Foreign Worker Levy

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Immigration into Australia has been frequently and heavily discussed in the recent years and whilst the Department of Immigration and Border Protection (DIBP) has been steadily tightening regulations, it has not enough been able to quiet the burgeoning crowd of unhappy voices.

Within a span of a month, the DIBP has dropped a few significant bombshells

  • New occupation lists with caveats and restrictions affecting State sponsored and employer sponsored visas
  • Restrictive new regulations regarding the Temporary Work (Skilled) visa (subclass 457) and it’s imminent removal (to be replaced in March 2018 with the Temporary Skill Shortage (TSS) visa)
  • Changes to the Employer Nomination Scheme (ENS) visa (subclass 186) and Regional Sponsored Migration Scheme (RSMS) visa (subclass 187)
  • Tougher requirements for applying for citizenship
  • New foreign worker levies

On the night of along 9 May 2017 the federal budget announced that a foreign worker levy will be imposed beginning March 2018. These levies are said to contribute to the Commonwealth State Skilling Australians Fund and will raise a considerable amount of $1.2 billion within 4 years of its imposition.

The foreign worker levy will require that businesses sponsoring a foreign skilled worker will have to hand over $1,200 in every year that a temporary visa worker is in their employment and $3000 for each employee sponsored for a permanent visa. Businesses with turnovers exceeding $10 million will be charged $1,800 and $5,000 respectively.

Currently, the application charge for a 457 visa (not including Standard Business Sponsor (SBS) and nomination application charges) is $1,060 for the main applicant. Come March 2018,  a TSS visa will cost $1,150 for a 2 year visa and $2,400 for a 4 year visa. The 2 year visa has no pathway to permanent residency.

Undoubtedly, all the toughened requirements and raised charges will be a hard pill to swallow for overseas skilled workers and for employers who are genuinely struggling to fill a position. Outside the cost factor, the entire process has just become more of a bother.

Amongst employers in the industries of farming and agriculture, horse racing and IT, to name a few, as well as business owners in regional areas and small businesses owners have spoken up on how difficult it already is for them to fill positions and how these new levies will suffocate their businesses.

So who benefits from the foreign worker levy? According to news releases, States and territories will have access to Skilling Australians Fund, subject to their meeting commitments such as matching funding and providing up to date data on performance and spending. At the moment it’s a little hard to understand who is really benefiting and how.

“We are an immigration nation, but the fact remains, Australian workers must have priority for Australian jobs, so we’re abolishing the 457 visas, the visas that bring temporary foreign workers into our country”

– Malcolm Turnbull

Of course our Prime Minister’s remark is not reflective of what actually is going to happen. Yes the 457 visa will disappear in March of 2018 but it will just be re-branded. We expect some kind of slick marketing campaign will be spun out before the changes come out. Isn’t that a logical ploy from the government when something become politically unpopular? Just change the name and say it is a whole new original program?

In reality most of these so called new provisions actually existed 20 years ago when I first started working helping people overseas residents to apply for work visas to Australia. Back then strict Labor Market testing was required with multiple advertisements but the only people who benefited were the newspapers. When the government all of sudden realised Australia needed more skilled workers, all of that was abolished to speed up the visa process.

Now the job market is tight we have just gone full circle. You wait and see, in about 5 years time or less all of this red tape will be scrapped by an new incoming government. These current changes will just harm the economy and businesses and it is a shame knee jerk reactions have become the marketing tool of choice for this administration.

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IN THE NEWS..

Financial Review: Foreign worker levy shocks small business

SMH: Employers fear foreign worker tax pain

The Australian: New tax on overseas labour to fund apprentices

The Australian: Tax on foreign workers will hurt IT start-ups

ABC News: Farmers, regional businesses demand Government rethink new foreign workers’ levy

Business Insider: Startups are complaining that a new foreign worker levy unfairly punishes them for Australia’s skills shortage

 

 

 

 Karl Konrad
 Managing Director, Australian Immigration Law Services MARN 9904238 

 Meet the team!

 

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