Australia's Finance Minister Cormann welcomes scrapping of '457' visas

Key Points
  • Australia's Cormann comments to CNBC ahead of May 9 budget
  • Says efforts to bring in skilled immigrants needs better 'matchup'
Australia is an open trading economy: Finance minister

Australia's move to scrap the 457 visa program that allowed skilled migrants to work in the country for up to four years was the right move for the trade-dependent economy, Finance Minister Mathias Cormann said in an interview with CNBC at the weekend in which he discussed economic challenge ahead of the next federal budget.

Questioned on whether scrapping the visa program would send out the wrong message to trade partners, Cormann said "we are an open trading economy" that needs skilled workers but that the 457 visa did not match people where the country had skill gaps and new rules "will improve" that process.

"There has to be a matchup," Cormann said.

He also suggested the May 9 budget presentation will address some aspects of soaring home prices in parts of Australia, but said that the fundamental issue was one of supply and demand and not nationwide, requiring more of a "scalpel" approach than a "sledgehammer."

Australia finance minister on the future of the country's labor market

"It is true that in some markets in Australia, Sydney and Melbourne," that prices have soared, he said. But he noted that the even in those cases there are policy responsibilities split between local, state and federal government and prudential regulators over issues such as mortgage loans.

He said the government's focus will be on setting tax and regulatory policies to allow the country to sustain an OECD (Organisation for Economic Co-operation and Development) record of 26 straight years of economic growth as the economy continues a transition from a natural resources infrastructure building boom to a rebalancing.

Wealthy Chinese fleeing their country China for countries such as Australia are inflating housing in the Sydney area, pictured here, where prices in some suburbs have surged as much as 27 percent in the past year.
Kevin Winter | Getty Images

Australia's next election is not required until May 2019, and Cormann avoided trumpeting any potential new policies in the upcoming budget.

But he did say the economy would be aided by exports that benefit from a weaker exchange rate and low borrowing costs with the Reserve Bank of Australia's cash rate at a record low 1.5 percent.

Correction: Details of Australia's 2017-18 federal budget will be released on May 9.

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