Immigration must never be included in trade agreements

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By Leith van Onselen

India has threatened to scuttle a potential ‘free trade agreement’ (FTA) with Australia if the Turnbull Government proceeds with its plan to reform ‘skilled’ temporary visas. From The ABC:

Indians make up a quarter of 457 visa holders, the most of any nation.

India had been seeking an expansion of approved skill categories — essentially to allow more Indian professionals to work in Australia.

In response to the Government’s changes, India’s Ministry of External Affairs issued a terse statement, saying that it was “examining the consequences” of the new policy, adding that it would look at the matter “in the context” of trade negotiations.

…one Indian migration agent is warning the changes will harm Australia’s longer-term ability to attract both skilled workers and students with an eye to their futures.

Anisha Gupta is a migration agent, and yesterday her phone ran hot.

“I’m receiving a lot of calls from the applicants, as well as the people who have already applied for the visa — how will that affect them?” she said.

Seriously, who cares what India thinks? Indians have been behind much of the visa rorting under the 457 system, not to mention the rorting of student visas.

Before you accuse me of being ‘racist’ or ‘xenophobic’, go back and watch the below 7.30 Report segment from June 2016, which featured Melbourne Indian community leader, Jasvinder Sidhu, explaining his first-hand accounts of blatant visa rorting and corruption by his fellow countrymen in both skilled and student visas:

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NICK MCKENZIE: The visa scam came as little surprise to Jasvinder Sidhu. He knows of many Indians who’ve paid large cash sums to corruptly obtained skilled or student visas in an effort to get permanent residency.

JASVINDER SIDHU: I’ve been hearing it eight, nine years and the last time I heard was last week when somebody paid $45,000 cash.

NICK MCKENZIE: Now Sidhu is determined to expose what he’s learned about Australia’s immigration underworld.

JASVINDER SIDHU: These people will then create your fake timesheets, fake pay slips and they will pay in your bank account and obviously everything else will also be fake, which is superannuation and other related documents.

NICK MCKENZIE: So you’re paying for a fake, a phantom job and in return you get your skilled visa?

JASVINDER SIDHU: Yes. So you are paying extra to get or create a job which doesn’t exist and to create a service which was never delivered and you’re getting permanent residency, which is not fake. This is a real output.

Alternatively, you can read the Australian Population Research Institute’s (APRI) recent report entitled “Immigration overflow: why it matters”, which examined the widespread rorting of Australia’s visa system, especially by Indian IT firms:

One of the findings from this report was “the high and increasing numbers of IT professionals being granted 457 visas”, which “constitute by far the largest occupation group within the 457 program”:

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The APRI showed that Indian IT service companies have been successful in winning a major chunk of Australia’s IT consulting work on the basis of these 457 visa holders, partly because they are paying them much lower salaries than the market rate for IT professionals in Australia:

As Table 2 shows, some 76 per cent of the 7,542 457 visas issued in the three IT occupations listed were to Indian nationals. The great majority of these were sponsored by Indian IT service companies as intra-company transferees…

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Once in Australia their staff are being paid at much lower rates than experienced resident IT professionals and in some cases even new local graduates.

Even more disturbing is the relatively high proportion of these Indian IT professionals (28 per cent) whose 457 visas were approved at the extremely low base salary of $53,900 or less. This is despite the fact that only eight per cent of the 457 visas granted to Indians in the two ICT occupations in 2014-15 were aged less than 25.

The median starting salary for local ICT graduates under the age of 25 is around $54,000. Coincidentally, the 457 minimum salary ‘floor’ is set at $53,900…

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The report also showed how the biggest sources of skilled permanent migrants – engineers, accountants and IT professionals – are also the areas with the biggest surplus of workers:

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The fact of the matter is that immigration should never be included in FTAs to begin with. Immigration is covered in Australia’s ‘Migration Programme’, and there is little sense in negotiating away control of our sovereign borders to another nation – and in the process diluting Australian wages and working conditions – for slightly improved market access.

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FTAs should be for trade and nothing else.

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About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.