A leading startup CEO says abolishing 457 visas could drive companies to set up in Europe or the US

The Australian tech and startup community has mostly reacted negatively to Prime Minister Malcolm Turnbull’s announcement today that the temporary skilled worker visa would be scrapped.

Turnbull said his government was “putting jobs first” and “Australians first” by abolishing the 457 visa. Software developers are among the biggest users of 457 visas.

“We’ll no longer allow 457 visas to be passports to jobs that could and should go to Australians,” the prime minister said, adding that the visa would be replaced by a new one “specifically designed to recruit the best and the brightest in the national interest”.

Expert360 chief executive Bridget Loudon said that while the immediate impact was uncertain, an unfillable skills shortage may force startups to flee Australia.

“Startups and other businesses may feel forced to consider moving their headquarters to the US or Europe,” she said.

“The talent gap in Australia is a major concern for businesses and this move simply creates more uncertainty for skilled workers who might have considered bringing their talent to Australia.”

Loudon said that while “top global talent” was incubating in Australian schools, there were gaps in the tech sector that needed filling now.

“457 visas have played a big part in helping us grow so significantly over the past four years and it would be a shame if other high-growth businesses would not be able to achieve that same level of success because of these changes.”

Marcus Dervin, owner of tech consultancy WebVine, said his business struggles to find staff with appropriate tech skills, regardless of the recruitment agency used.

“Do you know how hard it is to find specialised IT people in this country! They don’t exist!” he said on social media. “We have successfully sponsored fabulous people to live and work in Australia making a great contribution to society.”

The abolishing of 457 visas would “negatively affect the economy”, according to Dervin.

Malcolm Turnbull. Photo: Getty Images / File.

“The only alternative will now be to setup teams overseas and try to harness their skills from there which means no money in tax and unhappy clients. This makes no sense!”

Luke Anear, founder and chief of SafetyCulture, said that while the “best and cheapest” scenario is to have an Australian workforce that’s suitably trained to provide tech labour, this currently doesn’t exist.

“It comes back to supply and demand. We need a significant amount of skilled workers in order to support the — not only tech — but all industries going through technology’s disruption. The 457 program was a way for us to fill the gap between lack of skilled workers in Australia and finding experienced workers from overseas,” he said.

“We need to be able to continue to meet the demand and also provide the labour force to meet Australia’s current opportunity.”

Gruden chief executive Tim Parker said that his company had been “heavily dependent” on 457s and its abolition could come “at the expense of the local economy” as tech firms offshore their software development.

“Given that many countries have been teaching coding in kindergarten for a decade or more, Australia is well behind in the tech talent stakes,” he said. “Therefore we will continue to require imported talent in the short term, and hope the new arrangements recognise this need.”

Parker expressed relief that existing 457 visas would be honoured, to give companies some breathing space to scramble for the future.

The chief executive of the industry body representing the Australian fintech community, Danielle Szetho, urged the government to “act quickly” in revealing the details of the replacement visa.

“Australia currently faces a huge short-term shortage of domestic labour trained in areas critical to fintech and other startup sectors. The EY FinTech Australia Census data showed access to qualified talent was the industry’s third highest internal impediment to growth, with huge demand for skills like software engineering, data science, design and user experience.”

(Update: the government has published details of the replacement scheme here.)

Anna Rooke, chief executive of startup accelerator QUT Creative Enterprise Australia, said the government’s announcement is “at odds with the notion of building an innovation-driven economy”.

“The uncertainty and lack of clarity on the process for 457 visas and the new temporary visas that have been flagged is placing companies in a difficult situation on the implications and timing for changes,” she said.

Speaking against the tide, chief executive of Melbourne marketing tech startup PoweredLocal, Michael Jankie, told Business Insider that he’s “quietly optimistic” about Turnbull’s move.

“The truth is the 457 visas are broken. I’m a strong supporter of bringing brains into the country [but] the 457s have not been operating with modern companies in mind.”

However, Jankie did worry about some of the “the language” in the prime minister’s announcement video.

“A lack of clarity on the new [replacement] visa and specific mentions around work experience are worrisome,” he said.

“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.”

Online recruitment platform Weploy is a startup that actually specialises in matching temporary staff to employers, and hires 457 visa workers itself. Co-founder Nick La said that the termination was “a great initiative”.

“From experience, typically 457 visa holders take the current lower-skill and labour-based temporary work purely because it’s all that they’re being accepted or considered for, which narrows job availability for Australians,” he said.

“By providing a temporary visa focused more on specialised skill sets, Australia will be able to attract international talent, ultimately bringing our global level of excellence higher and up-skilling where required.”

La said that it was imperative the government communicated “a strong case” behind the abolition and provide information on how all affected parties would benefit.

“The changes also need to be well-communicated to the public because people don’t like change and negative assumptions can be made really quickly,” he said.

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