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OPINION: Why start-ups appear unlikely to use the GTS – we ponder on the GTS pilot three quarters of the way in

By February 22, 2019 February 28th, 2019 No Comments

On 1 July 2018, the ‘Global Talent Scheme’ (GTS) pilot was rolled out for an expected 12 months, comprising of two streams:

  1. Established businesses stream for businesses that are either publicly listed or with an annual turnover of at least $4 million in each of the past 2 years; and
  2. Start-up stream for certain start-ups operating in a technology or STEM field.

To access the GTS pilot, an interested business would need to first negotiate an agreement with the Australian government. Once approved, in theory the business could then sponsor a foreign national for a TSS visa under that agreement, and avoid some of the hindrances to attracting top talent to Australia.

GTS Visa Approvals

After a number of delays (largely attributed to political changes) it appears that unfortunately, the program has had minimal traction. A Freedom of Information (FOI) request made by Hannan Tew indicates that as at 31 January 2019, a total of:

  • 8 applications (primary and secondary applicants – i.e. family members) were lodged and granted under the Established Business stream; and
  • 0 applications were lodged and granted under the Start-up stream.

The FOI Document (FA190100704) reveals the number of visa applications made/granted under the GTS pilot, as opposed to the number of agreements negotiated under the GTS pilot. However, Media announcements indicate that at least 4 companies (Cochlear, Salesforce, Rio Tinto and SafetyCulture) have had agreements approved under the established business stream, and 1 company under the start-up stream (Q-CTRL).

OK, so what is the benefit of the GTS?

The existing TSS visa program permits any eligible business to bring in foreign workers. However, it is restricted in that the worker must be nominated in an occupation listed on either the:

  • Medium to Long Term Strategic Skills List (MLTSSL) – which allows for visas for up to 4 years, can be continually renewed and has pathways to Australian permanent residency; or
  • Short Term Skilled Occupation List (STSOL) – which allows for visas for up to 2 years, can be renewed only once onshore, and does not have pathways to employer-sponsored permanent residency.

Both lists are available in a legislative instrument here.

The primary benefit of the GTS pilot is that it allows the business to treat any position as though it correlates to an occupation listed on the MLTSSL.  For example, a “Sales and Marketing Manager” (listed on the STSOL) could be eligible for a 4 year visa and have pathways to permanent residency which would not have otherwise existed. A summary of the broader benefits are detailed in an article that we published when the GTS pilot was first in play here. This well written article also discusses the benefits of the GTS primarily focusing on (and we agree):

  • employment of talent in emerging sectors (where certain positions cannot be cleanly categorised into the existing list occupations); and
  • the ability to fill hybrid roles (also not clearly on list occupations).

So, why aren’t start-ups jumping on board?

Let’s talk about hybrid roles and emerging sector talent.

Practically, most emerging sector positions are highly technical and skilled roles that can still be “loosely” be matched to an occupation on the MLTSSL. While obviously the “fitting a square peg into a round hole” option is less than desirable, the Department appears to accept this. It’s a common practice that already occurs due to the limitations of the ANZSCO occupations and the practical reality is that most savvy companies and immigration lawyers continue to take this approach (successfully).

Alternatively, the GTS pilot provides the option of undertaking the additional bureaucratic process of negotiating an agreement with the Department for a specific role before then lodging a TSS visa. However, as the data seems to indicate, this longer process has understandably not yet been utilised.

The point seems to be, why would any business want to take on an additional bureaucratic process without any real significant benefit?

Apart from an expedited visa processing time (which might actually be countered by the additional GTS agreement preparation time) it appears that the GTS pilot needs to implement further benefits to the start-up stream to attract any actual use. Most importantly, the GTS pilot doesn’t remove what we’ve seen as the biggest impediment to start-ups (and any business) bringing in foreign workers – the high cost of the visa (including the compulsory Skilling Australia Fund levy).

How about we remove the requirement for payment of the Skilling Australia Fund (SAF) levy for companies under the start-up stream (and/or subsidise the lodgement fee)?

One of the biggest issues since the 457 visa was replaced by the TSS visa was the significant increase in cost, both in terms of the government lodgement fees and due to the introduction of the Skilling Australia Fund (SAF) levy.

The SAF levy is payable for each TSS visa lodged by a business, the purpose of which is to raise funds to train Australians, and is payable upfront at a cost of:

  • $1,200 per year of visa for businesses with a turnover of less than $10 million; or
  • $1,800 per year of visa for business with a turnover of $10 million or more.

Assuming a 4-year visa, this represents an additional cost of $4,800 for small businesses or $7,200 for other businesses. Not including professional fees, a business is looking at the following expenditure in fees to the government alone:

Visa Applicant (Single)Visa Applicant (+ Partner)
Nomination GLF$330$330
Visa GLF (Visa Applicant)$2,445$2,445
Visa GLF (Partner)$2,445
Visa GLF (Child)$625
SAF levy$1,200 x 4$1,200 x 4
Total$7,575$10,645

The SAF levy is there to apparently pay for training of Australians. But in order to access the GTS pilot:

  • The business – must demonstrate that access to the GTS pilot will support job opportunities and skills transfer for Australians; and
  • The applicant – must demonstrate that they have “capacity to pass on skills/develop Australians”.

So, do start-ups really need to be hit twice with the training requirement? The mandatory payment of the SAF levy in addition to the very high government lodgement fees, can be crippling for a bootstrapping start-up where every dollar counts. The savings from excluding start-ups from paying the SAF fee would represent a huge benefit and provide that little bit extra to really push through on what matters most – the idea. As the start-up stream only allows access to five positions per year, there is already a built in mechanism to prevent larger start-ups from abusing the SAF levy exclusion. The economic cost of a handful of waived levy fees per start-up will also be outweighed by the significant economic stimulation that the new talent brings in (even say, just from the expenditure they will now contribute to the Australian economy).

It’s by providing tangible cost saving benefits like this that start-ups are more likely to be incentivised to pursue the GTS pilot (and really have the capacity to bring talent to Australia).

Conclusion

At present, the GTS pilot is supposed to be piloted until June 2019.  Whether this pilot is extended beyond this date, or refined further, we hope that the government implements further benefits to start-ups to improve access to global talent.

Don’t let this article be all gloom and doom though. If you think your business can utilise a visa through the GTS pilot, contact us to determine if it might suit you. We’ve also found that practically, many start-ups end up being eligible to sponsor workers on the existing TSS visa, or alternative visa pathways depending on individual circumstances.

Please feel free to contact us by email at [email protected] or phone +61 3 9016 0484 if you have further comments or queries or would like some guidance.

Note: In the FOI request previously referenced, a total of 8 visas (primary and secondary) had been granted under the Entrepreneur Stream of the 188 visa – a pathway designed to attract entrepreneurs to Australia and rolled out nearly two and half years ago.

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