Atlassian co-founder Scott Farquhar has warned that Australia must become more appealing to the best US-based technology talent and increase immigration, in order to help the emerging band of budding tech giants realise their potential.
Speaking on the sidelines of Atlassian’s first European customer summit in Barcelona, Mr Farquhar discussed the company’s plans to ramp up growth in Asia and named Microsoft as its chief rival, rather than emerging specialists like Slack.
Mr Farquhar’s joint chief executive and fellow Australian Financial Review business person of the year, Mike Cannon-Brookes has already offered a balanced reaction to the government’s recent decision to abolish 457 immigrant employment visas, but warned that the government was going dangerously overboard with nationalistic language.
Mr Farquhar said the government needed to change the impression Australia was giving to tech experts from around the world, at a time when many were looking for new options after becoming disillusioned by the political landscape in the United States…
“If I had my way we would want to increase immigration versus decreasing it, because if you look at Silicon Valley, a huge percentage of the best companies that have grown and created lots of jobs were built by immigrants,” Mr Farquhar said.
Mr Farquar is fresh from buying the most expensive residential property in Australia which is fair enough if you’ve got the dough. But, doing so while also campaigning to keep Australian immigration at extreme levels, which is clearly one factor in historically low local wages growth, is a bad combination if you’re trying to win friends and influence people.
The Australian Population Research Institute’s (APRI) recent report entitled “Immigration overflow: why it matters”, examined the widespread rorting of Australia’s 457 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…
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, thus debunking the view that skilled migration is required to meet Australia’s economic needs:
The Department of Employment’slatest report on IT Professionals also revealed that 457 visas have grown much faster than the growth in IT jobs, despite a large pool of applicants available per advertised job and large numbers of IT graduates being unable to gain full-time employment:
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A key feature of the IT labour market is the large number of candidates competing for available vacancies. There were, on average, around 29 applicants per surveyed vacancy and most employers were able to choose between multiple suitable applicants (an average of 3.1 per surveyed vacancy)…
Notably, a number of employers recruiting for graduate or junior level vacancies had applicants who they considered to be overqualified for the advertised position….
While 457 visa grant numbers for IT professionals are variable over time, grants have been generally trending upwards since 2005-06 (when the data series began).
The number of IT professional 457 visa holders is increasing at a faster rate than the number of employed IT professionals. In 2009-10, the number of 457 visa holders equated to 3.0 per cent of employed IT professionals, but by 2014-15 it had risen to 4.3 per cent…
A range of data suggests that there is some spare capacity in the graduate labour market at present. Notably, graduate outcomes for students studying in the field of Computer Science (which includes the vast majority of students studying in the Information Technology field of education) have been declining for four consecutive years…
In 2015, 67 per cent of computer science graduates were in full-time employment four months after graduation, below the average of 69 per cent for all graduates. Graduate outcomes are now 17 percentage points below the level recorded in 2008 (84 per cent).
Now, it may be that Atlassian has some need of expertise that is unavailable in Australia. Again, fair enough. But Mr Farquar is arguing for much broader open borders here for his sector and that is clearly not in the interests of local workers, nor the economy, recalling what I told Mr Farquar’s business partner recently:
The billionaire political economy space is rarefied. As an uber-wealthy individual one need not fill it, but if he so chooses to his words carry spectacularly undue weight. So, what has and might Mr Cannon-Brookes achieve?
His recent interjection into the energy crisis suggested that he is, at least, a rational human being with a commitment to science. He is young, after all, and the beard as well as casual Gen Y demeanor mark him out as a progressive sort of gent so that’s is encouraging.
But, let’s be honest here, when he is discussing 457s, Mr Cannon-Brookes is also talking his book. Atalassian would rather import talent than build it in Australia. Perhaps some of that is vital but it’s not to the wider IT sector, nor many other sectors that have overused and abused the visa system.
This abuse is not benefiting Australia. Neither is the mass immigration that is a part of the same set of policies. The open borders approach of the major parties is not just “free markets”, it is designed to support particular industries at the expense of many others. The winners are housing, banks, retail and services that derive benefit from a rising headcount even as standards of living fall per capita owing to:
a housing bubble and household debt;
declines in competitiveness by keeping interest rates and the currency too high, and
sinking local wages.
The losers are the tradable sectors, such as IT (and Atlassian) as everything else is hollowed out, and the vast majority of people as their cut of the pie is divided between ever more folks.
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The last thing that the Australian political economy needs is another open borders billionaire talking his book. How about the Atlassian boys set about campaigning for greater transparency in migration and/or training up some more folks in their home country?
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.
