Visa 457, DIMA & the ATO

Is the Visa 457 program undermining Australian rates & conditions?

‘New Matilda‘ is running with the Temporary Work Visa issue at the moment and the facts need to be disclosed says Sydney immigration and labour market analyst, Bob Kinnaird.

It seems the Department of Immigration and Multicultural Affairs (DIMA) has adopted one recommendation from seven suggestions for ‘Fixing the 457 visa for temporary foreign workers’, published in New Matilda (8 September).

A media report maintains DIMA is now proposing that the Australian Taxation Office be authorised to match payroll data in the tax returns of 457 employers with DIMA data on the wages that 457 visa-holders are supposed to be paid (‘Making 457-visa bosses pay up’, Australian Financial Review, 22 September 2006).

Data-matching
Known as ‘data-matching’ this process will show whether employers are actually paying 457 visa-holders the minimum wage rate originally set by DIMA, i.e. the award rate or the 457 minimum salary level (MSL), whichever is the higher. It will also mean changes to taxation legislation.

Current situation
The current 457 MSL is an annual base salary of just under $42,000 for most occupations and $57,300 in some ICT occupations. Both the award rate and the MSL are below market rates for many skilled occupations in which 457 visas are granted.

Future situation?
It is suggested DIMA is proposing the ATO be authorized to notify DIMA of 457 employers who ‘underpay’ 457 visa-holders by failing to pay them the higher of the relevant award (collective agreement) rate or the MSL.

Current failure?
It is inferred that DIMA support for data-matching by the ATO is an admission of shortcomings in its current system for monitoring employer compliance with the wages regulations in the 457 visa program. The AFR article also maintains that for 75% of the 10,000 employers of 457s in 2005-06, DIMA relies solely on a paper-based checking system.

A need to disclose actual wages
It is not clear whether the data-matching will disclose the actual dollar wages that 457 visa-holders have been paid though this information on actual wages is essential to determine if they are being paid below market rates and if the 457 visa program is therefore undermining Australian rates and conditions.

Report due late 2006
A Task Force of officials from Commonwealth and State/Territory governments is reviewing the 457 visa program and is expected to report to the Council of Australian Governments) COAG in December 2006.

The Task Force will need to address this vital issue of how to obtain and publish data on wages actually paid to 457 visa-holders by occupation and locality, and then compare actual 457 wages to relevant market rates, says Bob Kinnaird.

About Bob Kinnaird
Bob Kinnaird is with Sydney consulting firm RT Kinnaird and Associates Pty Limited. He was a Federal public servant for nearly 20 years and the first Australian Exchange Officer (from the Dept of Employment) to the Canada Employment and Immigration Commission.

Have you been involved with the Visa 457? What is your experience?