New regional visas summon the global unwashed

By in Australian Economy, Featured Article

| 27 comments

Australia’s much maligned ‘skilled’ visa system is about to become even more unskilled, judging by Morrison Government’s new region visas:

New regional visas have launched this week, giving migrants in more occupations a chance to stay in Australia…

Migrants need to commit to life in regional Australia for at least three years…

But if they can become part of a regional community, it opens to the door to permanent residency for overseas workers from a wider range of occupations than before — including real estate agents, call centre managers, actors, historians and even kennel hands…

Professor James Raymer argues she is an exception.

Migrants in a regional or remote area have a “very low chance” of staying in that area, he said, and this pattern has been “very consistent over time”.

Professor Raymer has led a team of Australian National University researchers to collect and refine almost 40 years of localised immigration data.

“Most migrants will leave [a region] within a five-year period — over half, if not 70 per cent — and if they’re going to stay in Australia they’re going to go to one of the big cities, probably Sydney or Melbourne,” he said.

“What we actually see in the data, the chances of them leaving remote and regional areas has been increasing for a lot of the newer migrant groups”…

There will likely be 25,000 regional visas granted during 2019-20, up by around 15,000 on 2018-19, mostly at the expense of independent points-based visas without geographic requirements.

Actual pay rates for ‘skilled’ workers are already below the general population.

According to the Department of Home Affairs’ Continuous Survey of Australia’s Migrants, the median full-time salary 18 months after being granted a skilled visa was just $72,000 in 2016, below the population median of $72,900. This is shocking given the population median includes unskilled workers, which obviously drags the nation-wide median full-time salary down.

Therefore, adding a whole bunch of low-skilled professions to Australia’s skilled visa system, such as “real estate agents, call centre managers, actors, historians and even kennel hands”, is only going to push median pay rates down even further, undercutting locals and crushing overall wage growth.

Moreover, once these migrants gain permanent residency, most will head to Melbourne and Sydney, like they have always done, adding to already chronic population pressures.

Rather than creating policy gimmicks to distract voters’ concerns over excessive immigration, Australia’s skilled visa system needs a complete overhaul to ensure that it only brings in migrants to fill genuine skills shortages, and to maximise productivity benefits.

The easiest solution is to make all skilled migrants employer-sponsored and require them to be paid at the 80th percentile of earnings, or indexed to double the median wage. This would ensure that the skilled visa system is used sparingly to import only the ‘best of the best’, not as a general labour market scheme to undercut local workers.

Of course, our policy makers have no intention to actually fix the system. To them, mass immigration is a tool to juice headline growth and to feed the growth lobby both consumers and cheap foreign workers. The welfare of ordinary voters is ignored entirely.

Leith van Onselen

Leith van Onselen is Chief Economist at the MB Fund and MB Super. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.

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Comments

      • St JacquesMEMBER

        ie., we can’t allow a wage rise and improvement in work conditions to happen can we? It would be a disaster to allow wage rises so as to attract locals. Let’s declare a “skills shortage” and import coolies. How good’s Straya?

      • ArthurMEMBER

        That must be a fvckn joke?

        At Singh’s Truck Driving School, we have instructors and assessors who can get you the training you need for your dream profession before you start the job. We are confident to put confidence into someone who has no confidence driving trucks with confidence. We have taken the fear out of many learners and now they are operating in the trucking industry, some of them are highly successful.

        We are proud to see them on road waving at us.

        This barely scratches the surface of the patently ridiculous errors all over the site…

        Making roads more safer

        Commited and dedicated

        It has to be a spoof

    • SnappedUpSavvyMEMBER

      The logistics council claims the industry struggles to attract women and people from diverse backgrounds……. and every friggin truck in Sydney is currently being driven by an Indian student LOL this logistics council could be chaired by Innes willox it’s so openly corrupt and anti Australian

      • PeachyMEMBER

        What do you reckon is worse – the importation of truck drivers or if Gladys let Jimmies ride public transport for free?

  2. St JacquesMEMBER

    >>>”Moreover, once these migrants gain permanent residency, most will head to Melbourne and Sydney, like they have always done, adding to already chronic population pressures.”<<<<

    Precisely what is intended to keep the ponzi going; coolies for the regions and then fresh coolies and debt serfs for the major city ponzis. How good’s Straya?

  3. Stephen Morris

    “Of course, our policy makers have no intention to actually fix the system.”

    Our policy makers’ intention – above all else – is not to jeopardise the prospect of their million-dollar-a-year directorship when they retire from office. That mean boosting the profits of their future patrons by any means possible, no matter how much damage it does to the Australian economy and to Australian society.

    It is unpalatable to say it out loud but Australia’s problem is corruption – entrenched corruption at all levels of government. It is corruption which lies beyond the reach of bureaucratic “anti-corruption” commissions. It is the corruption which stems from the way in which elective government adversely selects narcissistic, machiavellian megalomaniacs to high office.

    The next time you hear a corrupt politician droning on about “simply wanting to serve”, try asking if he or she would be prepared to undertake an Implicit Association Test. (https://www.sciencedirect.com/science/article/abs/pii/S009265661830148X?via%3Dihub)

    Unless and until that it corrected there is no hope for any of us.

    There is no hope. No hope.

    We are on the path to re-feudalisation.

  4. Stephen Morris

    Why Australians Migrate to Capital Cities (posted on Macrobusiness 13 April 2018):

    Once again, the entire theology of New Economic Geography (Withers’ claim concerning the “benefits in rates of innovation that come with denser populations”) is fatally flawed. It assumes income to be equal to output. In other words, like so much simplistic economics, it simply ignores economic rent.

    Net incremental output is actually income LESS the economic rent component LESS the deadweight losses incurred in extracting that rent.

    Contrary to the naive theory, the well-documented high incomes of metropolitan centres do not necessarily reflect high efficiency in production. They may reflect highly effective rent-seeking.

    This is true not just of overt rent-seeking of the K Street variety.

    It also includes rent extracted by those professional and commercial networks which rely on “proximity bias”. Proximity bias is a cognitive bias that causes people to favour and reward those who are physically proximate. See, for example, “Out of sight, out of mind. People who work from home are less likely to be promoted”, The Economist, 13th October 2012. (http://www.economist.com/node/21564581)

    It is also true of rents extracted by well-organised voting blocs which achieve outsized influence over government policy, especially under non-democratic (for example, elective) systems of government..

    This is especially relevant to Australia’s Westminster system of “elective dictatorship”.

    Under the Westminster system – with its generally supine Legislature – the Cabinet has vast discretion to disburse economic rents to the Ministers’ favourites. Combined with the proximity bias this creates a powerful centripetal force drawing people in towards the “Fountainhead of Rents”, the Cabinet. Proximity to Cabinet is a “positional good”.

    This phenomenon has been known to historians (but apparently not economists) for centuries. It is the reason that Courtiers had to remain at Court. Absence from Court was a death sentence.

    With the evolution of Absolute Monarchy into the Elective Dictatorship of the modern Westminster system, this effect has not gone away. Court has simply been replaced by Cabinet. Ministers reward those modern-day courtiers – the “primary rent-seekers” – who are physically proximate. Primary rent-seekers need to live within “lunching distance” of the Cabinet.

    The elevated incomes of the primary rent-seekers draws in a second circle of “secondary rent-seekers”, who in turn draw in further circles, the ripple of rents radiating outwards from the “fountainhead”.

    This realpolitik model of metropolitan rent-seeking undermines the naive (and transparently self-serving) theories of economists like Ed Glaeser who argue that cities come into being because of agglomeration efficiencies and should even be subsidised to promote that supposed efficiency.

    To be sure, SOME cities will form due to agglomeration efficiencies. The paragon of this type of city is Silicon Valley where the planet’s highest concentration of intelligent individuals – sharing ideas – are literally re-designing the world we live in. And making fortune.

    Even here, however, the effect is overstated. Even the vast wealth of Silicon Valley relies on:

    a) the system of intellectual property rights which concentrates enormous rents in the hands of a few dominant firms, far in excess of the returns required to attract investment in such fields (hence the “Gold Rush” effect of the 1990s Tech Boom); and

    b) a refusal by governments to uniformly tax economic rents, either directly through Rent Taxes or – like the Swiss cantons – indirectly through annual tax on the capitalised value of future rents (i.e. a wealth tax).

    But if there is some error in applying New Economic Geography to Silicon Valley, there is vast error in applying it elsewhere. That is simply the Fallacy of Generalising from the Particular.

    Intuitively one might expect that where Executive government has wide discretion (as in the Westminster system) power and wealth would concentrate around that Executive, whereas in those countries with a more powerful Legislature (for example the US) agglomeration efficiencies would prevail.

    We can see the effect in the UK where far-and-away the largest per capita recipient of identifiable public spending (excluding social welfare and agriculture) is not Scotland or Northern Ireland as one might imagine, but London! (https://fullfact.org/news/are-english-paying-lavish-scottish-spending-promises/)

    Of course, the metropolitan apologists argue that Londoners deserve more being spent on them because (as everybody knows; just ask a Londoner) they are the clever, virtuous, hard working (shall we throw in “good looking” as well?) people who “create all the wealth”. Just look at their high incomes!!

    But that is a chicken-and-egg argument. Do Londoners deserve lavish spending because they generate wealth, or are they wealthy because the government lavishes spending on them??

    To give an example, as a child I lived about a mile from Lord’s Bridge Railway Station, the first stop outside Cambridge on the Cambridge-Oxford railway (the so-called “Varsity Line” or “Brain Line Railway”). The Varsity Line was spared the Beeching Axe in 1963 but you won’t find Lord’s Bridge Station on modern maps. That’s because in 1967 the government decreed that money should be dedicated instead to improving the speed of services into and out of the political capital. To go cross country from Oxford (or further south and west) to Cambridge (or further north or east) one would travel to Paddington, cross London by Tube to Liverpool Street, then resume the train journey.

    On 31st December 1967 the Varsity Line was closed, the infrastructure dismantled, and the track bed meticulously ploughed back into the farmland.

    Fifty years later the policy of concentrating traffic through London has necessitated the 18 billion pound Crossrail Project to ease the congestion!

    But hey!! That 18 billion pounds increases the incomes of Londoners, thereby “proving” (at least to people like Ed Glaeser) how productive they are!

    Isn’t economics wonderful??

    Meanwhile back in Australia, we have metropolitan rent-seeking at every level:

    a) at the State level, mineral royalties prop up Brisbane and Perth;

    b) top class health and education facilities are concentrated in the capitals;

    c) arts and sports funding is concentrated in the capitals;

    d) lucrative public works contracts are handed out to Mates in the capitals;

    e) at the federal level, company tax on commodity exporters is disbursed – largely per capita – to the capital cities;

    f) special imposts such as fuel excise act as a “tax on distance”, sucking money out of the regions (and even from the poorer outer suburbs which rely more on car transport) to be disbursed to the capitals;

    g) specific industry protections inflate metropolitan incomes. The policy of mandatory superannuation (for example) is now diverting over $30 billion a year into the hands of Sydney and Melbourne funds managers and their support industries. But just because thousands of people are running around in circles complying with the red tape of a needlessly inefficient pensions system does not mean that they’re producing anything of value. It is properly accounted for as part of the deadweight loss of rent-seeking: a pointless mis-allocation of resources that exists only so that politically powerful rent-seekers can divert income into their pockets; and

    h) the acceptance of oligopolies in major (metropolitan) industries further increases metropolitan incomes.

    And because of all those people crammed into the metropolis, trying to be within “lunching distance” of the Cabinet, we see projects like the $17 billion WestConnex which cost more to build that a green-fields city somewhere else!

    But hey!! That $17 billion increases the incomes of Sydneysiders, thereby “proving” how productive they are!

    Isn’t economics wonderful??

    Of course, an economic theology that tells wealthy and powerful people that their wealth and power is well-deserved (and perhaps should even be subsidies) will be readily accepted by those beneficiaries . . .

    . . . even if the theory is fatally flawed.

  5. matthew hoodMEMBER

    MB, could you please sign up Stephen Morris to do some guest post or even a weekend link post.

  6. HadronCollision

    Christ it’s good to have Stephen Morris back

    Also, REAL ESTATE AGENTS?

    FMD. We don’t need more of those in regional NSW

  7. Mr SquiggleMEMBER

    I’m still hoping to stumble across the key piece of information. does the increase in regional visas represent a drop in other visas, or are they additional to other visas? the whole conjob from the Libs before the election was to boost migrants to the regions to reduce the pressure on the cities…so are these visa just an uplift in total visas or an offsett against other categories?

    • Jake Peters

      There will be no drop on any visa numbers. They might frame it as a drop in a particular number of visas, but it’ll increase in other areas or they’ll make it even easier to switch visa types. Scummo cannot be trusted.

  8. Britney Walker

    I live in regional NSW. The local employment market is basically completely dead (you need to be a born and bred local with connections to get a job here) and half the population is either getting an age or disability pension, or unemployed on the dole.

    I find it impossible to fathom why on earth any government would be trying to divert an influx of foreigners to come here or to any other town with a similarly bleak economy (aka nearly all of them). It’s almost like they have it in for the already impoverished locals of these places.

  9. chrisr

    And from the ABC article, w t f is the ‘Migration Institute of Australia’? Some university renamed with a refreshing bit of honesty?