Will Your Local Candidates Listen to Your Need for Skilled Workers? Australian Federal Election 2019

Now that the federal election has been called, it is important to ensure that the automotive sector is ready to engage and where necessary challenge political parties and local candidates about their policies. This is important to ensure that any decisions of an incoming government do not impact on dealerships. The Government for its part, during 2017 and 2018 introduced a number of changes to the former 457 and current 482 subclass visa regime that have made it more difficult for dealerships to source international talent to meet their skill needs. In particular, these changes included more restrictive requirements for labour market testing. Previously all job vacancies needed to be advertised within 12 months of the employer nomination being submitted; A 12 month period recognizes the time spent:

• determining whether there are any suitable locals available;
• engaging the services of a recruitment agent to source international talent;
• shortlisting the talent for interviews;
• interviewing the talent;
• making a decision on which talent to recruit;
• finalizing negotiations for the contract of employment; and
• have the international talent successfully undertake the Australian trade skill assessment (historically these have been held every 6-8 weeks).

The recently introduced legislation reduced the period prior to submitting the employer nomination to four months. This timeline is not feasible given the tasks set out above and will require the employer to re-advertise because additional time is required to complete all of these activities prior to lodging the employer nomination. One could question why this is necessary since, as the Australian Government already acknowledges that there are serious skills shortages for the motor trades and has not challenged the MTAA research that indicates that Australia needs another 16,500 motor mechanics immediately. The imposition of a Government training levy of $7,200 to go to the Skilling Australians Fund for each international skilled worker recruited by businesses with a turnover of more than $10 million.

• this is a great idea for industries that do not train and hence did not meet the previous training requirement (ie: 1 per cent of payroll was spent on training);
• this also reduces poaching in those industries;
• for the automotive sector, however, it is not appropriate as most dealerships spend considerably more than 1 per cent of their payroll on training, but due to skills shortages they are required to also pay the training levy so that they can recruit international talent;
• the Australian Government should be providing an option to enable businesses that spend at least 1 per cent of their payroll on training to use this in lieu of paying the training levy;

The imposition of the training levy of $5,000 for visa holders seeking permanent residency:

• there is no valid reason why a business should be charged $5,000 for helping to solve the skills shortage because it wants its international talent to become permanent residents (it seems to be nothing more than a ‘cash grab’ by the Government from businesses seeking to retain highly skilled talent);
• the business has already paid considerable sums to the Government through the training levy, employer nomination and visa fees to recruit the international talent;
• The reality is that the $5,000 charge will become a disincentive for employers to support their international talent seeking permanent residency and will only perpetuate the skills shortage.

The Opposition has been supportive of most of these changes to the 482 visa introduced by the Government. The Opposition has also pledged to crack down on ‘the abuse’ of 457/482 visas and proposes to make further changes. Bill Shorten is concerned that many companies fill positions without advertising them to local workers first (how this occurs is a mystery considering the requirements for labour market testing). An April 2019 Senate report which was chaired by the Opposition ¹ gives a hint at some of the other issues that the Opposition will focus on should they win Government. The Senate Report has a lot of commentary about certain occupations, the genuineness of skills shortages, the training levy, the Skilling Australians Fund and the restrictive advertising requirements, but failed to take account of the concerns of employers. The Senate Report made 21 recommendations, but three that stand out are recommendations relating to:

• the genuineness of many occupations that appear on the various skills shortages lists (ie: with the intent to remove some);
• increasing the minimum salary that can be paid to an overseas skilled worker from $53,900 to at least $62,000; and
• introducing even more stringent labour market testing. ²

These three recommendations in particular, will certainly make it more difficult and costly to bring in international skilled talent. The minimum salary recommendation is particularly horrific considering that average salaries for local motor mechanics are $50,000 per year (in major cities, and $45,000 in regional areas) and is designed to make international talent too expensive for dealerships and other businesses that rely on skilled international talent at the intermediate skill level. This will also have a particular impact in regional Australia where wages are not as high as in the capital cities.

On 23 April 2019, the Opposition Leader announced that a Labor Government if elected would increase the minimum annual salary to be paid to an overseas skilled worker to $65,000: while this may be appropriate for professionals, it does not recognize the labour market for tradies, particularly motor mechanics:

• Research indicates that while the minimum award rate may be $45,300, the average salary paid to a mechanic is $50,000: the proposed minimum salary proposed for overseas skilled workers is 30 per cent higher than the average salary for motor mechanics.

We know that what is said in Opposition does not always reflect what is done when in Government. The challenge, of course, are the risks should the Opposition following through with such high profile commitments if elected.

Conclusion

Any changes to 482 visas, of course, will require whichever party that forms Government to have legislation prepared and passed by both Houses of Parliament. Depending upon the legislative agenda of the Government, it is likely that changes could take some time before they become law. Any international talent that is recruited and where there is an employer nomination submitted prior to any changes taking effect, will of course normally be ‘grandfathered’ or insulated from any retrospective changes. These issues and their impact can be taken up by your dealership with your local political candidates during the election campaign. Now is the time for action! Go and talk to your local candidates about your concerns!

Author Tony Mitchener

[1] Recommendation 2 of the Senate Legal and Constitutional Affairs Committee, April 2019, p 25.

[2] Ibid, p 73.