Australia’s 457 skilled worker visa program is set to be abolished following moves on the part of the Turnbull government to dump the program in favour of a new and more restrictive foreign worker program involving tougher requirements.

In his latest announcement, Prime Minister Malcolm Turnbull says the current 457 skilled worker visa program will be abolished and replaced by a new Temporary Skill Shortage Visa.

Visas granted under the new scheme will comprise two streams: a Short Term stream under which visas will be issued for two years and a Medium Term stream in which visas will be issued for four years and will be issued only in the case of more critical skill shortages.

As well as mandatory criminal checks (both streams), the new scheme will involve tighter English language requirements for the Medium Term stream.

Other requirements of both streams will include mandatory labour market testing with limited exemptions; a new non-discriminatory workforce test; mandatory criminal history checks; a market salary rate assessment and a new two-year work experience requirement.

The new visas will be underpinned by more focused occupation lists which respond to genuine skill needs and regional variations across Australia.

Employers using the new scheme will also be subject to a strengthened training obligation to provide enhanced training for Australians in high-need industries.

The moves come amid ongoing concerns about flouting of 457 visa rules and exploitation of foreign workers.

Whilst the program was supposed to be used to fill critical skill shortages, a number have wound up working in places such as convenience stores and fast food restaurants.

A number of 457 visa workers are believed to have been caught up in the 7 Eleven worker underpayment scandal.

In a statement, Turnbull said the contribution of foreign workers in Australia should not be underestimated, but that new rules would restore integrity to the foreign worker visa system.

“There is no doubt foreign workers have played a significant role in the remarkable economic growth of the nation,” Turnbull said.

“This will continue but not at the expense of Australians finding work. Unlike Labor, the Turnbull government will always put Australian workers first.”

Employer groups cautiously welcomed the changes, which unions dismissed as tinkering around the edges.

The Australian Chamber of Commerce and Industry said that restructuring the program would the provide the opportunity to place it on a more sustainable footing.

Master Builders Australia chief executive officer Denita Wawn said her organisation welcomed the changes and looked forward to working with the government to ensure that the new program was sufficiently flexible to the needs of the building sector.

Implementation of the new visa scheme will begin immediately with full implementation to be complete by 2018.

Existing 457 visa holders will be unaffected by this change.