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There is a big hole in Malcolm Turnbull's 457 visa plan

The federal government's rhetoric of "Australian jobs first" which accompanied its announcement to abolish the 457 visa is not matched by the policy detail.

In fact, the core problem which has dogged the 457 visa is being carried over to the government's new system – employer-conducted labour market testing. 

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457 visas: PM's Australia-first rhetoric

The decision to abolish 457 temporary work visas is presented by Malcolm Turnbull as putting the interests of Australians first.

The new system will incorporate two new visa streams for which employers can access temporary skilled workers. For this visas, the government will rely on employers to provide evidence of failed recruitment efforts in order to ensure that local workers have been given an opportunity to apply for job vacancies.

This approach has been discredited because it doesn't stop unscrupulous employer from accessing temporary migrant workers to replace local workers. Employer-conducted labour market testing is an ineffective and extremely resource-intensive measure that cannot properly identify genuine skills gaps in the Australian labour market.

The problem with relying on employers to provide evidence of where skill shortages exist in the economy is that the national interest does not always match up with what is in the interest of employers. Under the government's new scheme, all an employer will have to do is to prove they have tested the labour market by advertising locally. They will submit this documentation to the Department of Immigration who will then have the responsibility of verifying whether the employer-conducted labour market testing requirement has been met.

The Coalition government's own expert inquiry into the 457 visa in 2014 produced a report which recommended the abolition of the current approach and its replacement with a new independent labour market testing model. This report, led by John Azarius, confirmed that this testing needs to be done independently of employers, drawing on international best practice and evidence from the OECD. Given that the government is ignoring the core recommendation of the Azarias report, it is quite misleading for Prime Minister Turnbull to say that his announcement seeks to implement the Azarias report.

A far better reform than to abolish the 457 visa would have been to introduce an independent labour market testing model.

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This would require the establishment of an independent agency to ensure an occupational shortage list is regularly updated and reflects the changing skills profile of the economy. The occupational shortage list would account for regional nuances in labour supply. After all, an occupation which is in shortage in regional NSW may not be in shortage in the Sydney CBD.

Under an independent model, if an occupation is not on this list an employer would have to make the case that a shortage exists and conduct a genuine attempt at labour market testing before accessing a 457 visa worker. A good example of where this occurs fairly effectively is in Britain through the work done by its independent body, the Migration Advisory Committee.

The biggest challenge for the federal government is how to resolve the tension between the objectives of expanding employers' access to migrant workers and protecting the job prospects and conditions of Australian workers in a context in which migration is acknowledged as a key driver for economic and social renewal in Australia. This is a difficult balancing act, and disappointingly the government's announcement to abolish the 457 visa and replace it with two new visas will do little to meet this challenge.

Dr Joanna Howe is an associate professor in law at the University of Adelaide and the co-editor of the book Temporary Labour Migration in the Global Era: The Regulatory Challenges.