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Australia abolishes 457 visas – what is the impact on its startup and tech community?


Prime Minister Malcolm Turnbull announced (on Facebook) that the government will be abolishing 457 visas going forward. (Current visa holders will not be impacted)

Turnbull’s reasoning behind this announcement was that he wants to put “Australian jobs first.” Indeed, in a list of 650 occupation classifications that could apply for a 457 visa, only 200 now remain under the new system.

The visas will instead be placed with two temporary visas. Details on these are still coming out but the first looks like a two-year visa that won’t offer residency at the end of it (unlike the current 457). The second will be a four-year visa requiring a criminal check, higher level English language skills and proof of previous work.

More than 95,000 workers have come into Australia on 457 visas in Australia since Sept 2016, according to the Department of Immigration. Since 2014, more than 9000 of those visas have been granted to software and application programmers, the largest occupation where 457 visas are being granted

This could have potential ramifications for the tech industry and the skill sets that are imported into Australia, so we’ve reached out to some tech companies to get their opinions on what this means.

Issy Livian, co-founder of ASX-listed audio social media platform HearMeOut

Issy Livian
Issy Livian

“To be honest, no one is surprised by politicians announcing major policies on social media anymore. Donald Trump has already done this with polices on Twitter, and Malcolm Turnbull has only further cemented social media as a legitimate media channel for authentic and legitimate news across the globe. Added to this, many people no longer look at newspapers and television for their breaking news, but instead turn to social media channels such as Twitter, Facebook and LinkedIn which are more immediate and offer analysis at their fingertips.

“For some international companies this announcement may not have as big an impact as we expect. While yes, many overseas businesses in Australia do like to bring in workers from their existing overseas staff, many others prefer to hire and train up employees in Australia for a more local office focus.

“Until there is more clarification on what these 457 visas will be replaced with, it is too early to say whether this announcement will have a negative impact on international businesses working in Australia.”

Athan Lekkas, CEO and Chairman of ASX-listed software and IOT solutions company Xped

Athan Lekkas
Athan Lekkas

“Tech companies and companies in general should be hiring the best and the brightest. In Australia, we usually have the best and brightest, which is why 457 visas make up less than 1% of Australia’s 12 million strong workforce.

“We’re hiring for our base in Adelaide and our first port of call is Australia. Hiring from overseas puts up so many problems that you’ll only take on if it’s absolutely necessary.

“We’ve also got a base in the US and it’s interesting to note that the Trump administration was making a similar move on the same day.

“Creating false barriers to access the best and the brightest lowers the bad and expectations rather than striving for excellence. Rather than protect the jobs of today, both Australia and the US should be growing the industries of tomorrow.”

Michael Jankie, CEO of small business end-to-end Wi-Fi provider PoweredLocal

Michael Jankie
Michael Jankie

“I’m quietly optimistic about this announcement, it feels like using politics to actually get something fixed. The truth is the 457 Visas are broken. I’m a strong supporter of bringing brains into the country and the 457’s have not been operating with modern companies in mind.

“However, some of the language with Turnbull’s announcement does worry me. A lack of clarity on the new Visa and specific mentions around work experience are worrisome. The truth is some of today’s brightest minds from around the world do not have high level of work experience, because what they tend to be working on is new, experimental, disruptive.

“So experience should not be tested on a number of years in a job, but on the knowledge able to be brought onto our shores.”

Julius Wei, co-founder of Australian wealth management firm BMY Group

“This announcement is less about the effect and impact that abolishing 457 visas may have, and more about how Australia is becoming more protectionist in its policies.

“457 visas represent a very small portion of the overall workforce, are are already designed to help businesses hire skills that local employees don’t already have. Saying this policy is putting Australian jobs first is a misnomer as it actually won’t provide much more in the way of Australian jobs anyway.

“Adding to this the fact that this announcement has been made in a vague social media announcement, rather than through official channels, means that the lack of details will significantly impact businesses in terms of uncertainty. This type of messaging and stream of information is reflective of Donald Trump’s approach of announcing policies on Twitter.

“That said, there is no reason for us to panic at the moment. This change is more about replacing the current visa stream with what is mean to be a ‘better’ policy. But without providing details of what that new policy is, the cancellation of 457 visas leaves the impression that Australia is shutting its doors to foreign workers. For a country built upon migration this is a poor approach; we rely on overseas markets and investments and should be welcoming newcomers, not rejecting them.”

Yanir Yakutiel, CEO and Founder of Australian small business lender Sail Business Loans

Yanir Yakutiel
Yanir Yakutiel

“This could, potentially, be a big blow to our business. We’ve generated strong growth since launching our online lending service in Australia in November last year and just this month had begun the formal process of seeking approval to sponsor overseas workers to help take our business to the next level – a big investment for a new business like ours.

“In fact, we had recently extended an offer on the condition of the applicant receiving sponsorship and we planned to hire 3-4 others with skills and experience across technology, finance marketing and product development.

“Now, that growth may be in jeopardy. While it is important to create opportunities for Australians, the talent gap is very real, especially within the technology sector. It is critical that we make it easier, not more difficult, to attract and retain top talent and leverage their skills to compete in a global market. Breeding uncertainty with these changes and cutting off pathways to permeant residency or citizenship is counterintuitive to that process.

“We have seen a significant skills gap in the roles we need most and these changes will cause more confusion and de-incentivize foreign workers who might have considered bringing their skills and experience to Australia.

“Talent is critical to growth, especially in the early stages of a business. In just a few months, we have created around a dozen jobs and supported small businesses all over Australia and now, our growth may be stifled by isolationists policies that are counter to the Government’s promise to support SMBs and Australia’s technology sector.”

David Ballerini, co-founder of Australian-based restaurant discovery and cash loyalty app Liven

David Ballerini
David Ballerini

“An immediate effect of the changes and uncertainty could be an increase in development costs, with early stage startups worst hit. Occupations to be dropped from the replacement programs include ICT support and test engineers, technicians and web developers – roles that are critical to the tech sector.

“When we began our business we were bootstrapping. Finding affordable talent was a major challenge. In the end, it was our ability to attract a foreign developer through the 457 visa program that allowed us to build our minimum viable product (MVP) and then successfully raise seed funding.

“We have had employees on 457 visas, do have them on 457s, and were hoping to continue to have future employees on 457s. The ones we have hired that have been on them held various positions in primarily technology and product development. A shortage of relevant skills/experience from the local market was the main reason to rely on 457s.

“While we haven’t hired anyone under an occupation that has been ‘removed’ from the list so far, those removed positions will become more relevant in the near future for us, so it is disappointing to see them removed from the list. Testing, for example, is a big part of our product development cycle and is being removed from the list of approved occupations.

“A big question for us now is: how will we hire from the local market and find relevant test experience in the future in this area specifically? Most of the local talent is vastly under experienced simply due to the lack of a fully developed startup ecosystem in Australia. We met a couple of young guns during some of our meetups, but as soon as they turned 21/22, they were snatched away by some of the big overseas tech companies.

“We held off hiring test engineers until now because 1) We hadn’t grown to a size until recently that required extensive testing and 2) We were unable to find people locally that had the relevant experience. Because of our recent Series A funding, we are now looking to hire more experienced developers. In particular, test engineers, which will be more critical to our business as we look to expand overseas.

“The government needs to do more to offset the impact of these changes on the local startup scene. If they are going to restrict our hiring ability, then they should consider providing robust training, or subsidise startups for spending money and time in training local hires. This may involve startups engaging contractors/professional trainers to skill up the local workforce, which would increase the operational costs.

“If the government’s long-term goal is to cultivate the local workforce, then they should do more by encouraging the hiring of inexperienced developers that are trained by their employers. Lack of such support would drive Australian startups to either outsource more (given there are no other real alternatives) or completely relocate to other more ‘startup-friendly’ countries, which is exactly what the Turnbull government does not want.

“Startups who find themselves in this position in the future may have one less tool at their disposal to help them survive in the harsh international business climate. While there is merit to saving jobs for Australian-born developers, the fact of the matter is that the community is small and technical specialists are few and far between. When it comes to tackling the hardest challenges to complete highly specialised work, there may simply not be developers in Australia with the relevant experience. Under the 457 visa program, Australia as a country was able to attract (and retain) developers of an extremely high quality who may now be unable to gain permanent residency through that channel.

“The end result is slowed growth in an Australian startup scene which is really still in its adolescence, thanks to a reduction in international talent flowing to Australia. While a focus on training Australians to fill our own labour market needs is important, skilled migrants are often best positioned to be educating the next generation of Australian workers – such as when working together with junior developers within the same companies, for example. While we wait for more details on the new program to be released, we will remain hopeful that the changes made do not restrict the options available to startups.”