Politics Analysis

Business groups call for higher immigration 'facile'

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Business Council of Australia Jennifer Westacott (image via YouTube)

Since late last year, various business lobby groups are pressing for higher levels of immigration.

For example, the Australian Chamber of Commerce and Industry has suggested a skill stream of 200,000 per annum and the Business Council of Australia (BCA) for a migration program of 220,000 per annum.

Officials in the NSW Government have suggested net migration of 400,000 per annum, management consultants KPMG are pushing for net migration of 350,000 per annum and now a number of economists have been talking up the need for higher levels of immigration.

I have written previously on the facile nature of the immigration debate in Australia from the perspective of both the groups calling for "immigration to be cut wherever possible" versus the "go hell for leather" crew.

The fundamental problem is the debate focuses on alternative aggregate numbers, often confusing the permanent migration program with the concept of net migration as the Australian Financial Review does in this article, while giving no thought to how any proposed target would be delivered, what risks are involved or how the risks would be managed.

So let’s start with the basics.

The official migration program reflects the number of permanent resident visas issued in any one program year, irrespective of whether the person is living overseas or has been living for years in Australia. Over the past 15 years, significantly more than 50 per cent of the program has been delivered to temporary entrants living long-term in Australia, particularly former students.

Net migration measures long-term and permanent arrivals less departures of people who have been living long-term in Australia and intend to remain overseas for at least 12 months out of the next 16 months. This is a measure of population flows irrespective of people’s visa status or citizenship and is the way the Australian Bureau of Statistics measures the contribution of immigration to the population.

Net migration can fall sharply even when the migration program is large such as in 2014-15 when we had one of the largest permanent migration programs in Australia’s history at 190,000 but net migration fell to 180,000. A sharp fall in net migration is usually associated with a weak labour market leading to a large outflow of people such as in 1975-76; 1982-83; 1991-92 and 2008-09.

On the other hand, even when the migration program is being cut as Prime Minister Scott Morrison announced in his March 2019 population plan, net migration can be forecast to rise such as in the April 2019 "back in the black" budget when Treasurer Josh Frydenberg forecast the highest sustained level of net migration in our history at 268,000 per annum. Like his budget, that was never delivered.

Although we had negative net migration during the pandemic, the idea of "catching up" on lost population growth through higher immigration carries little logic. Policy should be based on future circumstances not on "catching up" with the past.

Before discussing the various immigration targets that have recently been proposed, it’s useful to understand the Government’s current forecasts and how it intends to deliver those: something that surprisingly few so-called "experts" do.

The 2021-22 migration program has been set at 160,000 per annum. In Treasury’s December 2021 Population Statement, this is assumed to increase to 190,000 per annum from 2023-24 and is fundamental to delivering the Government’s long-term net migration forecast of 235,000 per annum.

There is no official Government commitment to a migration program of 190,000 and there probably won’t be ahead of the Election. There has also been no indication of the composition of this larger program or how policy might be adjusted to deliver the larger program.

The current 2021-22 migration program is likely to be split evenly between the family stream and the skill stream. This is because the Government is at last clearing the very large backlog of partner applications it had deliberately (and unlawfully, in my view) allowed to build up.

If the planned 72,000 partner visas in 2021-22 are delivered, the Government will in future only need to allocate around 50,000 places for partners, around 5,000 more than the current application rate and without allowing for refusals. That would contribute to an overall family stream of around 60,000, around 20,000 less than the current family stream.

To deliver a program of 160,000 from 2022-23, the Government would thus need to find an additional 20,000 visa grants in the skill stream, or an additional 50,000 to deliver a program of 190,000. That would be an overall skill stream of around 130,000.

The current skill stream planning level of around 80,000 places in 2021-22 has four main components.

Firstly, the current demand-driven allocation for employer-sponsored migration is around 23,000. There is scope to increase demand for these visas by undoing some of the foolish changes former Minister Peter Dutton made in 2017-18 and processing these visas more efficiently.

However, it is highly unlikely even with a very strong labour market, that demand would rise much above 35,000 per annum, especially if a more robust minimum salary requirement (with regional concessions) and strong monitoring of compliance with employer obligations are re-introduced to minimise the risk of wage theft and exploitation.

Secondly, the Government has allocated around 11,000 places for the business innovation and investment program (BIIP). The passive investment portion of these visas is bad policy. They are simply a "buy a visa" scheme and should be either abolished or significantly modified to ensure a greater level of active investment as I argued in 2018. I resisted the establishment of these passive investment visas until I left the Department in 2007.

Long-term, that would reduce places for the BIIP to around 5,000 per annum once the current large backlog of around 30,000 is cleared.

Thirdly, there is the Global Talent Independent Visa with around 10,000 places. This visa is highly susceptible to cronyism and corruption and attracts few migrants in addition to those who would in any case qualify for other more robust visa categories. It should either be abolished or very significantly pared back to a few hundred visas per annum for highly exceptional candidates.

Most of the people qualifying for this visa would qualify for employer sponsorship or state nomination which are much more appropriate pathways.

Fourthly, there are the state-nominated skilled visas which have an allocation of around 25,000 places. While the labour market is strong, there would be merit in increasing the allocation of places for these visas as state governments are well placed to understand the labour market needs of their jurisdictions.

But it is unlikely state governments would be able to fill more than an additional 10,000 places per annum given the occupational targeting and employment criteria they have in place. They would fill far fewer places in a weak labour market.

Finally, there is the skilled independent category with around 7,000 places. Once again, while the labour market is strong, there is scope to increase the size of this category but there are also risks that would need to be managed.

As these migrants have no confirmed job and face a four-year wait for access to social security, diluting the criteria for this visa to increase the numbers who are eligible means a rising portion of these migrants would struggle to secure a skilled job.

Those with options may leave to another country where job prospects are stronger thus having a negative impact on net migration. Others would be forced to take whatever job they can, including at exploitative wages.

In my experience, increasing the size of this visa category to more than around 25,000 would involve substantial risks, especially if the labour market weakens once the current fiscal and monetary stimulus is removed.

In total, that gives a skill stream of around 100,000. Together with a family stream of 60,000, that gives only just enough to fill the existing program of 160,000 per annum, let alone increasing it to 190,000 as proposed by Treasury or the 220,000 proposed by the BCA.

Those advocating for much higher levels of immigration need to demonstrate how that would be delivered and how the risks in a likely weaker labour market would be managed.

Without that, the speculative immigration numbers they propose have little more validity than picking numbers for a lottery ticket.

Dr Abul Rizvi is an Independent Australia columnist and a former Deputy Secretary of the Department of Immigration. You can follow Abul on Twitter @RizviAbul.

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