Subclass 457 Integrity Review

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APRIL 2014

Visa subclass 457 Submission to the independent integrity review

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Restaurant & Catering Australia

Restaurant & Catering Australia (R&CA) is the national association representing the interests of 35,000

restaurants, cafes and catering businesses across Australia. R&CA delivers tangible outcomes to small

businesses within the hospitality industry by influencing the policy decisions and regulations that impact

the sectors operating environment.

R&CA is committed to ensuring the industry is recognised as one of excellence, professionalism,

profitability and sustainability. This includes advocating the broader social and economic contribution of

the sector to industry and government stakeholders, as well as highlighting the value of the restaurant

experience to the public.

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Contents

Executive Summary ____________________________________________________________________________________ 4

Recommendations _____________________________________________________________________________________ 5

Current Landscape _____________________________________________________________________________________ 6

EMPLOYMENT IN THE SECTOR ......................................................................................................................... 6

LABOUR SHORTAGES AND EMPLOYMENT GROWTH IN THE SECTOR ........................................ 7

Terms of Reference 1 ________________________________________________________________________________ 10

LEVELS OF NON-COMPLIANCE AND INDUSTRY DATA..................................................................... 10

Terms of Reference 2 and 3 _________________________________________________________________________ 12

ENGLISH LANGUAGE TESTING ...................................................................................................................... 12

TEMPORARY SKILLED MIGRATION INCOME THRESHOLD (TSMIT) ............................................. 13

ADMINISTRATION OF THE INDUSTRY TRAINING FUND ................................................................. 14

REPATRIATION COSTS ........................................................................................................................................ 14

IMMIGRATION OUTREACH OFFICERS ........................................................................................................ 15

Terms of Reference 4 ________________________________________________________________________________ 16

FAIR WORK OMBUDSMAN ............................................................................................................................... 16

COOPERATION BETWEEN THE DEPARTMENT & THE ATO .............................................................. 16

Addendum: Restaurant & Catering Industry Labour Agreement ____________________________________ 17

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Executive Summary

Restaurants, cafes and hospitality providers are an important part of Australias $128 billion visitor

economy. There are over 35,000 caf, restaurant and catering businesses in Australia, contributing to

666,300 jobs, and delivering $19.1 billion in earnings to the economy.

As the Asian Century unfolds, and Australia moves towards a more service-based economy, the

prevalence of employment in the tourism and hospitality sector will grow. Deloitte highlights that

tourism will be one of the major growth drivers from now to 2033, with this sector to grow more than

10% faster than global gross domestic product.

Yet the industry currently suffers from a significant shortage of skilled and unskilled labour, constricting

growth and productivity. There is currently a shortfall of 35,800 workers in the sector, with this gap

expected to increase to 56,600 jobs by 2017. In addition, employment growth in cafes, restaurants and

takeaway food services is projected to grow by more than 42,700 jobs or 8.1% to November 2017. This

rate of growth is expected to be higher than any other sector in the Australian economy. The inability to

meet future growth projections with an appropriate level of skilled workers will impact the productivity

and growth of Australias largest export services sector, as well as the national economy as a whole.

While attempts are being made to increase local workforce participation through the Vocational

Education and Training (VET) system, and programs to engage the underemployed, these programs alone

will not be sufficient to fill chronic vacancies that have long plagued the sector.

The 457 visa program is therefore a critical mechanism in addressing labour shortages in the tourism

and hospitality sector. Australia requires a robust and efficient visa system to address the need for skilled

labour and improve business productivity, while protecting the interests of overseas workers entering

the country.

English language requirements, abuse of repatriation costs, and the TSMIT continue to be the biggest

issues facing operators engaged in the 457 visa program. Questions have also arisen over the

administration and management of the Industry Training Fund in collecting employer contributions.

Addressing these issues will significantly improve the administrative burden and cost to businesses in

using the program. R&CA is also pursuing a Restaurant & Catering Industry Labour Agreement to

streamline access to skilled overseas workers, which has reached a critical point for the sector.

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Recommendations

TERMS OF REFERENCE 1

Develop a robust research base to determine the level of industry non-compliance.

TERMS OF REFERENCE 2 & 3

Review English language proficiency requirements under the 457 program, and lower

requirements for Cooks and Chefs to IELTS Level 4.

Remove the TSMIT requirement for hospitality workers under the 457 program and replace

it with the relevant industrial Award.

Designate the management and operation of the Industry Training Fund to an appropriate

government agency to ensure compliance, and clarify RTO obligations in processing

employer contributions.

Provide greater power to the Department of Immigration and Border Protections Sponsor

Monitoring Area to investigate abuse of repatriation costs by overseas workers, providing

greater certainty to operators.

R&CA supports the continuation of the Departments outreach officer program.

TERMS OF REFERENCE 4

The Fair Work Ombudsman remains the most appropriate agency to manage and investigate

issues of non-compliance, and should continue to have carriage of these issues.

Improve reporting activities between the Department of Immigration and Border

Protection and the Australian Tax Office in relation to 457 visa applicants.

ADDENDUM

Support the progression of the Restaurant & Catering Industry Labour Agreement in

streamlining business access to workers under the 457 visa program.

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Current Landscape

EMPLOYMENT IN THE SECTOR

The food and beverage services sector is the single largest employer across all tourism-related sectors

of the visitor economy. While the Tourism Satellite Account indicates the visitor economy directly and

indirectly employs over a million people, a closer examination of employment data reveals the sectors

contribution to the economy as a whole is much larger, with the food and beverage service sector

responsible for 666,300 jobs across Australia (See Table 1).

EMPLOYMENT BY INDUSTRIES (000s)

Nov

2012

Nov

2013

YoY

Change

YoY

Change

Tourism Characteristic Industries 1,736.0 1,736.2 -19.8% -1.1%

Accommodation 106.3 105.7 -0.6% -0.6%

Food & Beverage Services 678.5 666.3 -12.2% -1.8%

Road Transport 244.9 234.1 -10.9% -4.4 %

Rail Transport 43.2 47.1 3.9% 9.2%

Air and space transport 53.6 51.7 -1.9% -3.5%

Water Transport 8.4 12.8 4.4% 52.7%

Other Transport 7.1 11.6 4.5% 63.1%

Sport and recreation activities 108.3 101.5 -6.7% -6.2%

Creative and performing arts activities 40.4 38.6 -1.9% -4.6%

Heritage activities 26.0 31.1 5.1% 19.6%

Gambling activities 31.3 29.6 -1.7% -5.5%

Administrative services 190.9 190.3 -0.6% -0.3%

Property operators and real estate services 147.8 152.2 4.3% 2.9%

Rental and hiring services 49.3 43.8 -5.5% -11.2%

Tourism Connected Industries 2,023.1 2,066.6 43.5% 2.2%

Food retailing 375.7 394.3 18.6% 5.0%

Fuel retailing 35.9 36.5 0.7% 1.8%

Motor Vehicle and parts retailing 28.9 28.0 -0.8% -2.8%

Other store-based retailing 665.4 678.9 13.6% 2.0%

Non-store and commission-based retailing 19.3 24.4 5.2% 26.8%

Primary and secondary educations 533.4 528.3 -5.0% -0.9%

Tertiary education 239.2 229.1 -10.1% -4.2%

Adult, community and other education 125.5 146.9 21.4% 17.0%

All Tourism Related Industries 3,759.1 3,782.8 23.7% 0.6%

All Australian Industries 11,548.9 11,635.2 86.3% 0.7%

Table 1: Employment by tourism-related industry sectors

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LABOUR SHORTAGES AND EMPLOYMENT GROWTH IN THE SECTOR

Deloittes Positioning for Prosperity? Catching the next wave report highlights that tourism will be one of

the major growth drivers from now to 2033, with this sector to gr