The big four will be hit by the abolition of the 457 visa. – The Australian Financial Review

The big four will be hit by the abolition of the 457 visa.

The big four accounting and advisory firms may have to refocus their efforts on training local staff as the abolition of the 457 visa system curtails their ability to import staff from their overseas operations, especially for specialised consulting roles.

The firms also couldbe hit with an extra $1 million a year in costs as part of the government's proposed new levy on employers that use visa workers, as revealed in last week's budget.

PwC, KPMG, EY and Deloitte have about 1400professionals who are 457 visa holders in their ranks, representing about 5per centof the 25,800 staff at thefirms.

The now-abolished 457 visa wasparticularly useful for these global firms asit allowed them to sponsor professionals from overseas offices to work for up to four years, and featured a possible migration pathway as an incentive to come to Australia.

It has been replaced with a much tighter two-year and four-year temporary skill shortage visa as part of a government "crackdown" on the 457 visa in other industries, said Chris F Wright, a senior lecturer specialising in immigration and labour markets at the University of Sydney Business School.

While accountants remain on the four-year visa stream, management consultants have been relegated to the two-year stream which removes any path to permanent residency.

Dr Wright said the firms still have other migration pathways open, such as the 186 permanent migration visa, but they also mayhave put more effort into developing specialised skills in their local operations.

"They might have to think more creatively about developing the skills of their local staff," he said.

"It seems to me that these policy changes have been designed to address problems in two industries hospitality and construction but the blunt instrument the government has wielded has affected industries that are doing the right thing.

"The 457 visa when it was first introduced in 1996 was designed explicitly to serve the needs of organisations like the big four consultancies, their use of the visa was in line with its intended purpose of sourcing specialised skills."

PwC is the biggest user of the visas, with 550 of their approximate 7500 headcount on a 457 visa, or around 7 per cent of total staff.

"For PwC, the changes as they stand now, will make attracting and keeping global talent more challenging," said Carter Bovard, a partner and immigration practice leader at PwC.

"Most of the difficulties we expect to encounter are in the domain of management consulting, with the visa validity period reduced, and restrictions on the firm sponsoring this category for permanent residency."

On top of the new restrictions, PwC and its rivals would all face the government's proposed foreign worker levy of $1800 a visa per year from March 2018.

The levy, which goes towards a new Commonwealth fund to train local workers, replaces the current system where a sponsoring company had to pay 2 per cent of its payroll to a training fund unless it already paid 1 per cent of payroll towards internal training.

Despite the big four already investing heavily in training, the new system would, for example, force PwC to pay an additional $990,000 a year based on its current intake of 550 visa workers. That would be in addition to the costs from the government's doubling of the four-year visa application fees, which have shot up from $1060 to $2400. The two-year visa cost is $1150.

Rival KPMG has about 300 workers on 457 visas, or around 5 per cent of its 6600-odd headcount,and about 140 Australians working in overseas offices of the firms.

"We do have concerns that the government's changes to the 457 program have not sufficiently taken into account the needs of multinational enterprises who need to move staff around," said Michael Wall, a partner and KPMG's head of immigration services.

"It must be remembered that it is more expensive to hire people on 457s than recruit locally so employers only do this when there are skills gaps they cannot fill domestically."

The proposed new training levy also wouldset KPMG back $540,000 a year based on 300 workers.

At EY, there are around 300 professionals on the 457 visa, or around 5per cent of its 6415 staff, "across a couple of dozen professional occupations", said Wayne Parcell, a partner in people advisory services at the firm.

"EY sponsors EY professionals to work in Australia where there are skills that cannot be readily sourced from the Australian labour market.Many EY Australia employees are sponsored to work outside Australia throughout the firm's global operations as part of our global talent strategy," Mr Parcell said.

Finally, Deloittehas about 250 staff on 457 visas, or around 4 per cent of its total staff of 6000.

"Deloitte's priority is to focus on analysing impacts of the changes and working with our people who are feeling uncertain or unsettled about how their work arrangements will be affected,"said Alec Bashinsky, a partner and the firm's head of people and performance.

The change has had a variable impact on other professional service firms who import staff for projects.

A spokeswoman for technology consultants Accenture said the changes would not "materially impact our business".

Strategy firm McKinsey said they had made use of the 457 visa but did not detail how the changes would impact their operations.

"McKinsey Australia has used 457 work visas for highly specialised roles to access skills and experience which in some cases aren't available in Australia at short notice. This includes situations where clients' needs require people with in-depth understanding of overseas markets," said Tiffany Withers, McKinsey Australia's director of professional development.

Strategy firms Bain and the Boston Consulting Group declined to comment.

edmundtadros@afr.com.au

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The big four will be hit by the abolition of the 457 visa. - The Australian Financial Review