How should Australia cut immigration?

By Leith van Onselen

“Smoke and mirrors”. That’s the best way to describe the current state-of-play regarding Australia’s immigration debate from both major parties.

The Weekend Australian’s front page proclaimed “Turnbull tackles population”, trumpetting the fake 21,000 cut to the permanent migrant intake and the Coalition’s new immigration management brain fart: migrant tag and release in the bush:

A new population policy that could produce sweeping changes to keep new migrants in regional Australia and improve the co-­ordination of infrastructure development to take account of growth trends is being developed by the Turnbull government.

The policy, slated to be released later this year, comes amid increasing backbench pressure for a firmer and more clearly articulated immigration policy, with MPs citing concerns in key Sydney and Melbourne electorates about the impact of population growth on quality of life.

Totally unmanageable, of course, without migrant proof fences and satellite tracking bracelets. Moreover, there was no mention of the surge in bridging visas by 40,000 over the past year (and 90,000 since 2014) as migrants await to hear their applications for permanent residency:

Not to be outdone, Labor over weekend took aim at the temporary migration system, claiming that ‘Mickey Mouse’ courses are undermining the student visa program:

Labor has signalled a tougher line on more than 500,000 overseas students who gain limited working rights when they come to Australia, raising the idea of halting “Mickey Mouse” courses that can be a pathway to entry.

In a significant warning on the migration intake, Labor employment spokesman Brendan O’Connor called for stronger integrity measures on the student program and was open to the idea of putting a cap on the intake.

“We need to see whether we could either cap the scheme or make sure it’s being used properly for the purpose it was intended,” Mr O’Connor said on Sunday.

He also raised the idea of putting curbs on working holiday-makers, a separate visa class with limited work rights and subject to a “backpacker tax” that triggered a political storm two years ago.

The number of overseas students in Australia reached 513,000 last September, up from 342,000 in the same month five years earlier, according to an analysis by the Parliamentary Library.

Meanwhile, Fairfax’s David Crowe questioned the practicality of cutting Australia’s permanent migrant program, asking which area could realistically be cut:

What few politicians can admit is just how hard it is to move the door and limit the migration intake, the biggest factor shaping the population. Without these facts, no promises matter.

Consider three options that would have to be on the table for any further cut to Australia’s permanent migration intake…

Option one is to divide families. The family stream takes about 47,000 people, most of them spouses who come with their Australian partners. Are some of them to be turned away?…

Option two is to punish employers. The skilled stream takes about 111,000 people, a combination of workers sponsored by employers and those who come independently after proving they can fill a labour shortage. How low can this go?…

Option three is to turn away refugees. The humanitarian intake is 16,250 – and the only area in the population debate where political parties compete to go higher…

Reducing Australia’s permanent migrant program back near turn-of-the-century levels (see next chart) needn’t be difficult.

With regards to “option one”, the “family stream” (currently 47,000) could easily be sliced by several thousand by merely following through with the Productivity Commission’s (PC) recommendations and tightening parental visas. These migrants add pressure to an already strained system and do not work, pay taxes, or contribute in any meaningful way to the economy. According to the PC:

The contributory visa charge of just under $50 000 meets only a fraction of the fiscal costs for the annual intake of roughly 7200 contributory parents. And an additional 1500 parents make a minimal contribution. Overall, the cumulated lifetime fiscal costs (in net present value terms) of a parent visa holder in 2015-16 is estimated to be between $335 000 and $410 000 per adult, which ultimately must be met by the Australian community. On this basis, the net liability to the Australian community of providing assistance to these 8700 parents over their lifetime ranges between $2.6 and $3.2 billion in present value terms. Given that there is a new inflow each year, the accumulated taxpayer liabilities become very large over time. This is a high cost for a relatively small group.

Ultimately, every dollar spent on one social program must require either additional taxes or forgone government expenditure in other areas. It seems unlikely that parent visas meet the usual standards of proven need, in contrast to areas such as mental health, homelessness or, in the context of immigration, the support of immigrants through the humanitarian stream, and foreign aid.

Given the balance of the costs and benefits, the case for retaining parent visas in their current form is weak.

Nobody should migrate to Australia with the expectation that they can bring their elderly parents along for the ride at taxpayers’ expense.

“Option two” is where the majority of the cuts to Australia’s immigration intake should take place. At the turn-of-the-century, the “skilled” intake was 35,000. Today it is 111,000 following the Coalition’s latest cuts.

We already know that the common claim by the business lobby that Australia is suffering from “skills shortages” is utterly false. We also know that Australia’s skilled migrant program has been widely rorted, attracting migrants to areas already heavily oversupplied with workers (e.g. accounting, engineering and IT), with most of these migrants employed at levels well below their claimed skills set, and ‘skilled’ migrants generally having significantly higher unemployment and underemployment than the Australian born population:

The heavy weighting towards ‘skilled’ migrants also means that Australia’s immigration system is built around robbing developing nations of their skilled human resources, thus stifling their economic development.

Therefore, the ‘skilled’ program should be phased back to 35,000 over, say, three years and be reserved only for truly world-class leaders in their field that Australia cannot foster internally. Moreover, these highly skilled migrants should have an income pay floor set at the 80th to 90th percentile of earnings.

No longer should employers simply be able to ‘grab a migrant’ to fill ordinary positions in the labour market cheaply. Instead, they would have to lift wages to attract workers (thus countering anaemic wages growth), as well as commit to training local workers.

Let’s also not forget that many migrants come to Australia on temporary visas with the hope of transitioning to a ‘skilled’ permanent visa.

Therefore, if Australia was to remove the carrot of permanent residency by slashing the ‘skilled’ intake, it would also reduce the flow of temporary migrants, since the two areas are intrinsically linked.

The flow of temporary migrants would also be stemmed by raising the appallingly low pay floor on ‘skilled’ temporary workers from $53,900 (non-indexed) to, say, the full-time average salary of $84,682 (which includes unskilled workers).

By maintaining such a low pay floor for temporary ‘skilled’ foreign workers, the government has ensured the system has been overused and abused by employers, thereby undermining the pay and working conditions of local workers. This needs to stop.

Moving on to “option three”, Australia’s humanitarian intake is already fairly low and has not budged much since the turn-of-the-century (see above chart). At a minimum, the humanitarian intake should remain at the current level and could even be increased a little without adding unduly to population pressures.

In summary, by merely cutting parental visas by at least 5,000, and culling the skilled migrant intake by 76,000, Australia could easily reduce the permanent migrant intake back to around 100,000, which includes maintaining a generous humanitarian intake and the same skilled intake as the turn-of-the-century. If we want to go even further, we could tighten the rorted spousal visas.

In any event, Australians should be given a say about Australia’s future population size via a plebiscite at the upcoming federal election, the answers of which would then be used to formulate Australia’s immigration intake to meet the said target.

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Unconventional Economist

Comments

  1. cut skilled visas, lots of the family reunificaiton b.s should simply be eliminated/made not an option. if you move here your family (outside of very immediates) shouldn’t be eligible as well. tighten partner visas; they are very easy to rort if you can find someone to vouch for you. there are some very obvious ways to catch people in their b.s on this front including just getting the two ‘partners’ without warning (unbeknown to one another) to answer questions each other should know (such as what they did with their partner that day, etc) separately, if they give mismatched answers revoke their visas and kick them out. there could even be an immigration secret police that could go undercover in sydney and melbourne to root out rorters, i bet you could find a tonne of unemployed power tripping nerds who would do this for free. solving a lot of the problems of our immigration program would be trivially easy but there is no political will to do so bc our government secretly doesn’t care about rorters.

    • I wonder how Japan does it. How does it stop spouse visa fraud. Maybe they let in so few male immigrants that hardly any brides are imported.

      Only allow Aussie citizens to import a bride once per decade. So if you imported one in 2008 and she dumped you, well, you can not import another till 2018!

      • it’s one every 5 years currently. And it takes a good 3 years to get one, so there is already effectively a one every 8 years rule

      • And you never gain permanent residency … they have the right to kick you out whenever they want. And you never get a passport.

    • Nah the correct way is price signals.

      Want a 457 – ok. Advertise the job for 50% premium in the local market and not this linkedin bs. Tighten the guidelines that show you have a ‘shortage’.

      457 wants to bring wife and kids along – fine. Pay for it. Whole family goes to ‘full fee’ mode. Fares, tolls, education, healthcare, medicines. Calculate the treu cost and they have to pay for it. Should be manageable since they will be getting 50% salary premium on the local market.

      • ytKiowbmJ7MgLMkXXvpi

        > 457 wants to bring wife and kids along – fine. Pay for it. Whole family goes to ‘full fee’ mode. Fares, tolls, education, healthcare, medicines.

        I made an account just to reply to this ridiculous statement. 457 immigrants receive no federal or local benefits (no centrelink, no medicare, no nothing) and _are_ paying for everything – fares, tolls, education, healthcare, medicines. I’d suggest researching the topic of immigration before attempting to comment on immigration issues.

      • I didn’t mention benefits buddy. I’m clearly referring to public amenities.

        Welcome to MB, a place where reading comprehension is a good skill to have.

  2. Thank you Leith!

    It is important to say how immigration should be cut because the propaganda machine pretends that everyone coming here is irreplaceable.

    Which of them would the anti-immigrationists like to ban from Australia? The medical diagnostic radiographer? Suzie from Sussex you proposed to last night at Icebergs? The old digger who just wants to come home?
    Strangely, I am yet to hear an answer on that one.

    https://www.news.com.au/national/politics/immigration-debate-is-just-leftwing-racism/news-story/ee5a958fe3447e9cc247f59fdae8d344

    Leith has answered it now, But needs to repeat the answer. Continue firing the trebuchet at the strawman!

  3. For the price of helping one refugee in the West, we can help 10 in their home region.

    https://www.independent.co.uk/voices/syrian-refugees-will-cost-ten-times-more-to-care-for-in-europe-than-in-neighboring-countries-a6928676.html

    Refugees are only ‘refugees’ for one generation, then they are a permanent addition to the country socially, economically and genetically, with all of the attendant problems. The only source regions of refugees now are the Middle East and Africa (everywhere else has mostly got its sh*t together), and we have seen how poorly groups from those countries have integrated.

    We would be much better off ourselves, and in terms of how many we can help, if we cut the refugee intake to zero, and redirected all the welfare etc. we would have spent on them and their progeny to help refugees in their home country instead.

    • Sure – but if we do that, where will the left get its voting blocks from?

      Also, normal Australia’s are not dysfunctional enough to justify the increases to the ‘social welfare’ budget. And then how will the left pay for its professional agitators?

      Clearly, we need to import more M2F trans Muslim child-refugees from middle east sh!tholes. Think of all the budget increases we could justify by bring those people over and incentivise them to make trouble! Imagine the vibrancy! The diversity!

    • Yeah, good comments.

      Too bad it’s all for naught.

      The two major parties are absolutely bi-partisan on this issue. So it’s another decade or so of huge population growth before the anger will be soaked in enough to being in an Australian Trump.

      We will probably have some external calamity change the landscape in the intervening period.

  4. StephenMEMBER

    End the refugee program – spend the money in their countries or don’t spend it at all
    Cap student visas at 100k and take away work rights for everyone other than subclass 574 (postgrads). Get rid of subclass 572 completely (non-university sector). Also, no onshore applications for student visas – go home and re-apply if you want to change course.
    Delete about 90% of the jobs on the CSOL – can do this and still have a functioning skilled program for legit shortages, not just 1000’s of Harvinders and Kumars working in car washes.
    Jack up the penalties for illegal workers and migration fraud
    Reform partner visas – minimum 5 years on temporary as opposed to 12 months
    Section 501 criminal cancellation appeals to go before a magistrate, not the AAT – also allow victims to give impact statements as part of appeal process
    Increase mandatory exclusion periods from 3 years to 5 for overstaying

    Plenty more I can think of but that’s a start,

      • StephenMEMBER

        Most of these can be changed by the Minister with the stroke of a pen in the Regulations. The others would require (a) passage of parliament and (b) balls.

        The latter being the difficult part.

      • The minister also needs the support of his party. Or, in the absence of support, very very large balls and a tilt for leadership prepared.

        So it ain’t happening, except possibly for the most selfish and cynical motives.

        Expect lies about immigration to get bigger. Expect no action.

  5. I wonder if the move to bridging visas is to avoid them claiming unemployment benefits with the economy turning, forcing them to go home.

    • I don’t know if that’s the intention – smoke and mirrors seems a plausible alternative – but it’s a very likely outcome. I wouldn’t want to be on one of those visas when the economy reverses.

      Certainly delaying the transition for migrants to being eligible for welfare as PR is a bit of ‘have and eat cake’ situation for the government. They get to achieve their goals of wage suppression by having the migrants here with the carrot or pot of gold over the rainbow of PR (which they can just keep delaying) while not suffering the direct budget consequences of paying for them if they’re out of work (and the lack of security will probably dissuade, on the average, those effected from having babies, so need for extra school places also supressed)

  6. It’s easy. Our two main cities are about 9 years ahead of any reasonable previous population projection. Freeze immigration, zero for the next decade.

  7. If you keep immigration at the present level, but divert a % to regional areas for a period of time (say 3 yrs), all you achieve is a 3 yr delay in the pop increase in Syd and Mel by that %. Edited.

    • I’d like to see data showing just how much capacity regions have for extra people & how many jobs they have for them. There may be some small genuine amount but I strongly suspect it’s more likely another sidetracking lie propagated by the duplicitous – Current rurals go to the city for solid reasons!

  8. Meanwhile:

    http://www.propertynoise.com.au/chinese-property-developer-promises-asian-buyers-fast-tracked-visas-if-they-purchase/

    A Chinese property developer is promising investors a ‘high quality lifestyle’ with access to powerful politicians and social welfare benefits as part of a land deal.

    Profit Palace Group boss Jiang Xiao has also promised potential Asian buyers they could obtain a permanent resident visa in six months if they buy a property in an estate in the Hunter Valley in New South Wales.

  9. “The policy, slated to be released later this year, comes amid increasing backbench pressure for a firmer and more clearly articulated immigration policy, with MPs citing concerns in key Sydney and Melbourne electorates about the impact of population growth on quality of life.”

    Backbench is getting nervous….


    • Backbench is getting nervous….

      Agreed.
      We may not get material cuts to immigration, but we do stand a good chance of the spectacle of the major parties tearing themselves apart as a consolation prize.
      The government ignores the nervousness at its peril: some of the most marginal seats in parliament- Chisolm and Dunkley in Victoria and probably Banks in NSW – are in ground zero for migration areas.

  10. haroldusMEMBER

    I don’t mean to bang on about this, but wtf is the “not specified” category.

    Note for India and China 18K + 40% = 25K (approx).

  11. ‘The policy, slated to be released later this year,…’
    And then sat on and not acted upon and then lost down the back of the couch and forgotten about. Remember the claims of clamping down on foreign money laundering into Australian real estate.

  12. Skilled Visas (temporary with view to PR) should only be given for Service Critical roles (high-skilled and or regional shortage health roles for example), or Export Generating roles (jobs which create wealth through exporting goods and services).

    Don’t give PR for those that haven’t proven their economic value and employability in Australia first.

    PR should only come off the back of proving your worth on a temporary visa first.