let's talk!

Home Affairs Minister Clare O'Neil has announced major reforms to Australia's migration program in response to the recently released Review of the Migration System Final Report.

While full details will not be released until later this year, the most immediate change – the first of likely many to come – will be an increase of the temporary skilled migration income threshold (TSMIT) to $70,000.

What is the TSMIT?

The TSMIT is the minimum annual earnings employers must pay to sponsored workers under the standard employer sponsored program (eg. Subclass 482, 494, 186 and 187 visas).

What will change?

From 1 July 2023, the TSMIT will increase from $53,900 to $70,000.

The TSMIT has remained at $53,900 since 2013. The higher $70,000 income threshold is approximately where the TSMIT would be if indexed to inflation and wages growth over the past decade.

Why the change?

The $70,000 figure was settled on due to analysis by the Department of Home Affairs that found a higher TSMIT – $80,000 or $90,000 – would decimate the care and education workforce, while anything lower would encourage exploitation of low-paid workers.

How will this impact employers and skilled workers?

The higher TSMIT will impact:

• Employers wanting to nominate new skilled workers and
• Current temporary skilled workers whose visas need to be renewed.

The extent to which they are impacted will largely depend on the industry.

About 21,000 workers on temporary skill shortage visas earn between $53,900 and $70,000. If their employer does not raise their salary above the new $70,000 TSMIT when their visa needs to be renewed, they would need to leave Australia. Businesses and workers most likely to be affected are those working in sectors with a much lower average nominated salary. This includes hospitality, retail, and agriculture.

For example, cooks have consistently been one of the most popular occupations nominated by employers. But according to Seek, the average wage for a cook is between $55,000 and $65,000. If employers were unwilling or unable to match the increased TSMIT from 1 July, the existing skill shortage crisis faced by many small businesses in the hospitality industry would likely get worse.

For employers and workers in sectors like finance, IT, mining, and construction where the average nominated base salary is much higher, the increased TSMIT will not have an impact.

I’m a current or potential sponsor. What should I do?

We are aware many of our clients may be impacted by an increased TSMIT from 1 July. While we are still waiting on more detailed information as to how the change will be implemented (eg. whether or not there the government will allow an extended transition period), it pays to act now in preparation for a scenario where the change will take place immediately.

This means employers and/or potential sponsors should ensure their current applications for temporary skilled workers are ready for lodgement prior to 1 July 2023 to avoid being caught by the increased TSMIT. They should also keep in mind that Labour Market Testing must be carried out for at least 28 days before lodgement.

If you are concerned about how the increased TSMIT could impact existing employees or plans for sponsoring future employees, contact us and we can help assess your individual situation.

Stay tuned: further changes to come

An increased TSMIT is only the first change in a raft of proposed reforms to the migration program. We will cover the big-ticket items in more detail in our next Newsflash, but some notable proposed changes to keep an eye out for include:

• Access to permanent residency for temporary skilled workers: By the end of 2023, all temporary skilled workers are likely to have the opportunity to apply for permanent residency.
  
  
• Three new skilled pathways: Fast-tracked pathway for highly skilled workers; mainstream temporary skilled pathway focusing on evidence-based assessment of skills; and a pathway that addresses long-term labour shortages in essential industries.
  
  
• Reformed points test for permanent skilled migrants.
  
  

• Reformed Global Talent and Business Innovation & Investment programs