Visas aren't fixing our skills crisis

As the federal budget looms, every man and his dog wants the government to spend more on something or other, while Finance Minister Penny Wong and Treasurer Wayne Swan wail about sluggish revenue and the need to slash spending.

One of the more curious demands has been for the government to spend more to swell our intake of skilled workers. A group of CEOs reportedly told The Australian that more should be done to get skills into the country from abroad.

Woodside chairman Don Voelte echoed the call yesterday, telling reports at the Australian Petroleum Production & Exploration Association's (APPEA) conference that the LNG sector faced potential "cost and schedule blowouts" due to labour constraints.

These are curious demands. While the skills shortage in the resource states grows more urgent by the day, the Department of Immigration has hung out its 'All welcome!' sign and, ostensibly, is waiting for more companies to apply.

Visas granted under the 457 category (technically known as 'Temporary Business (Long Stay) – Standard Business Sponsorship') have been down over in the past two years, though are beginning to show signs of resurgence. While 110,000 457 visas were handed out in 2007/08, the figure two years later was 68,000. A spokesman for Immigration Minister Chris Bowen says this is now spiking up again, with a 41 per cent increase in applications year-on-year seen during January.

The Department of Immigration and Citizenship (DIAC) says there is a misconception that 457 visas are in some way being held back, or delayed. In fact, says Bowen's office, the median time for processing 457 visas applications is now 21 days, compared to 40 days when the Rudd government came to power in 2007.

Moreover, DIAC stresses that the number of 457 visas able to be issued is uncapped and entirely "demand driven … when the unemployment rate goes down, demand for subclass 457 workers goes up".

So what's the real beef with 457 visas? Actually, there are two.

Firstly, willing, suitably skilled workers are difficult to find. Overseas recruitment firms are expected to produce, on-demand, workers with no major health problems who can prove they have the required skills – that is, they are not unskilled labour being sneaked into the country.

But even harder, workers must have "International English Language Testing System (IELTS) test score of at least 5 in each of the four test components of speaking, reading, writing and listening". To put that in context, during the darkest days of Australia's tertiary education mis-selling rort (see: Our migration shame is over, November 12, 2010) a number of Australian universities would allow students to enrol with IELTS 5.5 in only one of those four components. Today's 457 diesel mechanics speak better English overall than many overseas university students in 2005.

The English requirement has made Ireland one of the popular recruiting grounds, particularly because of the GFC-decimated state of its own economy. The Tasmanian government, which seems to be facing skills shortages in just about every area, ran a major recruitment roadshow in late 2010 to turn the Apple Isle just a bit more Emerald.

The Tassie government was seeking "medical and allied health, engineering, hospitality, urban and regional planning, agricultural science and metal fabrication and trades such as automotive mechanics, plumbing and electrical". So pretty much everything then.

The second beef with 457 visas, is that they tightly shut out workers brought to Australia only to undercut local wages. Voelte and others are complaining loudly of union negotiation on offshore resource projects that are pushing the top pay packets above $400,000 – in one reported case for welders working only 28 weeks per year.

So where unions have negotiated 'take it or leave it' deals for riggers, employers cannot prove a lack of local skills to enable cheaper labour to come into the country as a replacement. And, one supposes, any welder who earned $400k last year is probably happy to sit tight on a deck chair and wait a year or two before returning to help plug the skills gap.

The design of the 457 visa program is, therefore, not what resource companies want. Yes, it is uncapped, and processing times are far from onerous. But until Australia's domestic workforce, at some breathtaking rates of pay, is exhausted, 457 visas don't help very much.

To this extent, another of Voelte's calls yesterday shows exactly where government money can be spent – more training of local workers to make it harder for unions to use "industrial action to take fantastic wages to outrageous wages ". Let's hope Swan and Wong find a few spare dollars for that.