The Federal Government will increase the Temporary Skilled Migration Income Threshold (TSMIT) from $53,900 to $70,000 from 1 July, which will have ramifications for venues employing cooks from overseas.

Frozen since 2013, the TSMIT has suffered from a lack of gradual indexation from previous governments over the last decade, leading the Albanese government to make the big jump in the threshold.

This is the Albanese Government’s first action in response to the independent Review of the Migration System led by Dr Martin Parkinson, which found that Australia’s migration system is broken.

The TSMIT was introduced in 2009 as a base salary threshold used by the Subclass 457 visa program, which was subsequently subsumed by the Temporary Skilled Shortage (TSS) subclass 482 visa. According to immigration law firm Gilton Valeo, the dual purpose of TSMIT is to act as an indicator that an occupation is skilled and to ensure that a visa holder has reasonable means of support while in Australia.

The increase to the TSMIT is for all occupations employed through this particular visa program, but within hospitality, venue operators have noted that while for most chef and senior cook positions the increase in the threshold is close to or on par with average salaries, for the lowest grade of cooks, the TSMIT in fact sits about $10,000 above the award. This means from 1 July, operators looking to hire overseas workers for these roles will need to bump up the salary significantly.

In highly competitive metropolitan markets where these roles are already paid above the award, the increase in the TSMIT threshold is not expected to have too big of an impact. But in regional and rural areas where the roles are paid at the award, the increase in the threshold will bring a significant jump in kitchen wage costs.

The review into the migration system did note that there may be the opportunity to use tripartite labour agreements, on an industry basis where award salaries fall below the TSMIT, but these would have to be agreed to by the industry and the unions, and are therefore are a long-term option.

While acknowledging the impact the TSMIT will have on regional venues in particular come 1 July, Australian Hotels Association (AHA) CEO Stephen Ferguson noted that the $70,000 threshold was a reasonable compromise in line with where indexation should have been – and a better outcome than what was initially on the table.

“We’re thankful that the review and the government didn’t agree with the recommendations put forth by the unions to increase the TSMIT to $90,000, which would have been a complete disaster, not only for our industry, but for others as well,” Ferguson told Australian Hotelier.

“So where they settled at $70,000, we see as something that, for the majority of venues, at least they can work with that, but understanding that at the bottom level, the grade five category, they may need to pay over the award.”

Pathways forward: Training and increasing the employee value proposition

The increase to the TSMIT will not be grandfathered in, so cooks currently employed under the TSS visa and applications submitted before 1 July will not need to meet that $70,000 threshold. However, it does mean that in the new financial year, cooks could look to move to another venue that would need to pay them $70,000 at a minimum under the TSS visa. Fiona Wong, a partner at Gilton Valeo, warns that while there are some benefits to getting applications in now, it’s only a short-term solution.

“Once you rush to get them in, you get them the visa, this person can work for you. But eventually, you’re probably going to be paying a lot more in terms of recruitment fees, in terms of labour market testing, and then doing a new application because that person might move to a new employer. It’s a very short-term plan.

“So a lot of it’s about understanding that employee mentality. Perhaps there is a relationship that you have with your employee. But I think from the employee value proposition (EVP) standpoint, it’s important to understand what they could perceive the business has to offer.”

This is something that the team at Australian Venue Co, one of the biggest hospitality groups in the country, is already thinking about. Currently it’s international workforce is in a good place, with its kitchens well-staffed. But Rachel Checinski, AVC’s Chief People Officer, can see it changing how the group approaches visa sponsorship in the future.

“It will inhibit opportunities for future sponsorships for cooks. I think it just means we’ve got to get more creative on how we use other visa types such as training and hope that they’re performing the level of that entry level cook. And by the time they finish their training visa, we can then consider them at a chef level where the difference is not as great.”

And the chief people officer agrees that enhancing and highlighting the EVP is an important tool in retaining talent under the visa, pointing out as an example that because staffing levels within the company’s kitchens are currently high, the work-life balance means more reasonable hours than kitchen staff would normally be accustomed to.

Checinski stated that the TSMIT increase was another reason for the industry to collectively appeal to young Australians to get involved in hospitality.

“It also means that as an industry we’ve got to appeal to Australian workers, and really continue to sell that hospitality is a viable career choice, just to continue to attract apprenticeships and Australian workers into these roles as well.”

AVC has recently invested in a larger training team, headed up by ex-Sand Hill Road CEO Bianca Dawson. One of the focuses of the team is new apprenticeship pathways, and marketing the company and its training opportunities to young Australians of all backgrounds.

Other expected migration changes

While publicans may have some concerns about the increase to the TSMIT from 1 July, Ferguson highlighted that the review is expected to bring two positive changes to the migration system that would benefit the industry greatly. Firstly, the removal of labour market testing, which has been a source of “tremendous frustration to employers”. And secondly – and most significantly – a pathway to permanent residency for cooks after four years. Currently this is only available to chefs, which means when it comes to cooks, Australia’s program is not as appealing as countries like New Zealand, Canada, the US and the UK. The inclusion of cooks would change staffing prospects meaningfully.

“Those are two big, big things,” stated Ferguson. “That’s significant.”

Vanessa Cavasinni

Vanessa Cavasinni is the managing editor of Australian Hotelier and Club Management, trade publications for the pub and club sectors respectively. Vanessa has been at the helm of Australian Hotelier since...

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