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Peter Dutton's migration policies contribute to weakening economy

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Kristina Keneally is concerned that Peter Dutton's migration policies are damaging Australia's growth (Image by Dan Jensen)

A revision of Peter Dutton's strict visa policies needs to happen in order for our economy to prosper, writes Abul Rizvi.

ON 5 DECEMBER 2019, the Senate established a Select Committee on Temporary Migration to ‘inquire into... the impact temporary migration has on the Australian economy, wages and jobs, social cohesion and workplace rights and conditions’.

In the Sydney Morning Herald on 29 January 2019, Shadow Minister for Home Affairs, Kristina Keneally, is reported to be concerned that ‘Australia's reliance on temporary visas has created millions of migrants with no stake in the country's future… the nation is risking a new and damaging form of social and economic exclusion’.

Temporary entrants are not a homogenous group. They consist of a vast array of visa categories with different visa conditions and different lengths of stay. Most have work rights but many do not. Some are growing rapidly while others are in decline.

Most are subject to massive turnover as hundreds of thousands of temporary entrants leave every year and an even larger number arrive — that is increasingly the nature of the modern world.

Similarly, young Aussies with modern skills are also in heavy demand around the world. Just under 100,000 Australian citizens leave Australia long-term or permanently every year and another 20,000 permanent residents leave long-term or permanently.

The world is an increasingly mobile place.

History shows that when our economy is strong, the net number of temporary entrants, as well as the net number of Aussie citizens returning home, increases. When our economy is weak, the reverse occurs.

The period of the Abbott Government is a good example. Even though immigration settings under Abbott were highly facilitative with some of the biggest migration programs ever delivered in our history, the weak economy during that time meant that net overseas migration fell sharply.

That is likely to happen again in 2019-20 as a result of both the ham-fisted policy changes made by Home Affairs Minister Peter Dutton as well as a weaker economy. On current policy settings, net overseas migration in 2019 and 2020 will be significantly below the forecasts in Treasurer Josh Frydenberg’s 2019 Budget.

If we want Australia to continue to be a modern economy that is competitive on the global stage, we need to ensure we have the right immigration policy settings in place so Australia and Australian citizens are net beneficiaries from the increasingly rapid people movement that will characterise the world in the 21st century.

That includes ensuring temporary entrants are not exploited but made to feel welcome. Our current arrangements for protecting Aussies from wage theft are hopeless. They are even worse for protecting migrants from wage theft.

A portion of temporary migrants goes on to become permanent residents. Our formal migration program could not be delivered at current levels without a substantial feeder cohort of temporary entrants. We need to ensure sensible and clear pathways to permanent residence for temporary entrants who meet Australia’s needs.

The Senate Committee will need to consider all of these complexities.

To understand some of the issues the Senate Committee will need to address, there is merit in digging into the different visa categories to see which are actually growing or declining and which represent the kinds of risks the Committee is concerned about.

As Chart 1 shows, the number of temporary entrants in Australia has increased from 1.605 million in December 2011 to 2.433 million in December 2019, an overall increase of over 0.8 million.

(Source: Data.gov.au, Department of Home Affairs)

The bulk of that increase has been driven by two categories: students which increased from 0.255 million in December 2011 to 0.480 million in December 2019 and visitors which increased from 0.367 million in December 2011 to 0.635 million in December 2019.

(Source: Data.gov.au, Department of Home Affairs)

The Senate Committee is unlikely to recommend limiting the number of international tourists (see Chart 2), especially at a time when Australia’s tourism industry has been hit by bushfires and the Wuhan coronavirus. In addition, the Government’s blunt attempts to limit visitors seeking asylum has led to a very large increase in visitor visa refusals that is costing the tourism industry over $500 million per annum (see here and here).

(Source: Data.gov.au, Department of Home Affairs)

While the Committee may consider limiting student numbers or limiting their work rights, it would be conscious that international education is Australia’s third-largest export industry. It would also need to take into account the major policy tightening that Home Affairs has introduced that will cut back the growth in offshore student visa grants from 2019-20.

The Committee is more likely to be concerned about media reports on the standard of education being delivered and the impact of that on the reputation of the industry. A particular concern is the private VET sector and second-tier Australian universities.

Flowing on from the growth in student numbers has been the strong growth in temporary graduates (a 2-4 year visa that is available to graduate students depending on the level of study undertaken). These have grown from 21,911 visa holders in December 2011 to 89,324 visa holders in December 2019.

This post-study work visa is a critical pathway for successful overseas students to develop skills needed either for a pathway to permanent residence or improved job opportunities in other countries. The Government has made further changes to these pathways that represent very poor policy. It would make sense for the Committee to examine the issues arising from these changes.

(Source: Data.gov.au, Department of Home Affairs)

While the Committee may recommend limiting or indeed abolishing this visa, it would need to be mindful of the UK experience where similar action led to a sharp decline in overseas students. The UK has subsequently reinstated a post-study work visa.

Any recommendation to limit post-study work visas would be met with fierce opposition from universities and state/territory governments.

(Source: Data.gov.au, Department of Home Affairs)

The temporary visa that has attracted the most opprobrium over the last decade is the employer-sponsored skilled temporary visa — the former sub-class 457 and now sub-class 482.

Despite the volume of media coverage, the number of skilled temporary visa holders in Australia has been in steady decline since its peak in late 2013 (see Chart 5). As a result of the changes made by Dutton in 2017-18, the application rate for this visa is now in decline and as a result, the flow-through application rate for employer-sponsored permanent migration is also declining.

The Committee is highly unlikely to further tighten these policies. Indeed, the Government may need to look for ways to arrest the decline in applications for this visa if it is to deliver the 30,000 places set aside for employer-sponsored migration and 10,000 places for the new regional employer-sponsored visa once existing backlogs are cleared.

Another major temporary entry category is working holidaymaker (and the generally higher immigration risk work and holiday) visa. The number of people in Australia on this visa has also been in steady decline due to rising competition for these high yield tourists, extensive media reports of these visa holders being abused by employers as well as the introduction of a special tax targeting these visa holders.

While the Committee may seek to remove the requirement for these visa holders to undertake 88 days work in regional Australia to obtain a further working holiday visa, that would be strongly opposed by both the agriculture and tourism industries. A better approach for the Committee to take would be to strengthen measures to address the risk of these visa holders being abused and exploited.

There has been a sharp growth in the number of people on bridging visas — these are mostly people in Australia waiting for a decision on their substantive visa applications or a review of a decision. The number of people on bridging visas has grown from 110,894 in December 2011 to 216,141 in December 2019. This growth is being driven primarily by the surge in asylum seekers arriving on visitor visas, partners of Australians who are not prepared to wait two-plus years before they can live together in Australia and slow visa processing more generally.

Each of these areas is ripe for the Committee’s attention.

Another issue the Committee will need to consider is the likely rapid increase in the number of temporary parents in Australia over the next few years and the impact of that on Australia’s health system. This new temporary visa started on 1 July 2019 and is capped at 15,000 places per annum.

But the issue that requires the greatest attention from the Committee are measures to reduce the risk of exploitation of temporary residents. That is required in conjunction with the challenge of dealing with wage theft of Australians more generally.

Abul Rizvi is a former Deputy Secretary of the Department of Immigration and is currently undertaking a PhD on Australia’s immigration policies. You can follow Abul on Twitter @RizviAbul.

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