“The 457 visa system is a short-term temporary visa for skills shortages. If it’s being used for any other purpose by anyone, then it’s being used wrongly and we should stamp that out.” — Julia Gillard, The Age, March 18

If the prime minister really thinks the only purpose of the 457 visa is to fill temporary skills shortages then she should ask senior officials for a briefing about the evolution of Australia’s migration program over the past 15 years.

That may have been the original intention of the 457 visa. Conceived when Paul Keating was prime minister but introduced after John Howard took office in 1996, it was supposed to give the domestic training system enough breathing space to catch up with the demand for qualified employees. The idea was that skills gaps would be plugged with temporary foreign workers while locals were trained to fill the positions in the longer term.

Things have worked out differently. The 457 visa has expanded into something much more significant — an essential component”of a fundamentally changed approach to selecting skilled migrants.

When Senator Chris Evans was immigration minister under Kevin Rudd, he described the change as a shift from a “supply-driven” to a “demand-driven” system. Rather than qualified migrants putting up their hands to come to Australia and then seeking appropriate employment after they arrive, business recruits directly from overseas. Rather than public servants in Canberra attempting to predict which skills the economy will require next year, business hires the foreign workers it needs, as and when it needs them.

Initially, this relatively new class of workers arrives on temporary visas, but in the ideal scenario things work out well on both sides. The temporary worker becomes a valued member of staff, enjoys the job and the lifestyle, and decides to build a future in Australia. After two or three years, the employer sponsors a transition to permanent residency.

In many cases, this is indeed what happens. Almost 40% of 457 visa holders have gone on to become permanent residents. Or, to look at the statistics in another way, about half of the skilled migrants granted permanent residency last financial year were already living here on a temporary basis, mostly as migrant workers on 457 visas or as international students who had graduated from Australian universities and colleges. (In fact the two categories overlap, since an increasing number of international students move to 457 visas after graduation.)

The number of permanent migrants sponsored annually by employers has grown from around 10,000 in 2003-04 to more than 45,000 today. It’s no accident that about 80% of these migrants are already living and working in Australia; the figure reflects a calculated shift towards demand-driven skilled migration via a two-step process — first temporary and then permanent residence.

There are many arguments in favour of this two-step process, which is also referred to as “try before you buy” or “suck it and see” migration. It provides a much more flexible and immediate response to the changing needs of employers (including state and territory governments, who are big users of 457 visa holders in their hospitals). Foreign workers are recruited directly into jobs that match their skills and experience, avoiding the situation in which they come to Australia independently, fail to find work in their profession, and end up in a lower-skilled job.

Two-step migration also acts as an additional test of the quality of migrants’ skills. If the performance of 457 visa holders fails to match their qualifications and experience then their presence in the workplace — and in Australia — really is likely to be temporary. Finally, the two-step system gives migrants an opportunity to check out life and work in Australia before they confront the monumental decision of whether to move permanently to a new country.

Those are the largely positive features of the temporary migration two-step. But there are unresolved problems as well.

*Read the rest of this article at Inside Story