Coalition axes daft visa privatisation

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Earlier this month, a Senate committee rejected the Morrison Government’s planned outsourcing of Australia’s visa processing, warning that it threatens the integrity of the immigration system:

“Outsourcing Australia’s visa processing system is a project fraught with risks and the committee is not satisfied that these risks have been sufficiently addressed,” the committee concluded.

It said international experience, particularly in the United Kingdom, has shown the outsourcing model could have dramatic consequences.

“Profit-making entities are driven to find ways to maximize their profits, and this inevitably leads to reduced service quality and/or higher fees,” the committee reported…

Now, the Morrison Government has axed the planned privatisation:

The federal government has ditched its controversial billion-dollar plan to outsource Australia’s visa processing platform after adopting a new policy that will see it develop a reusable enterprise-scale workflow processing capability…

On Friday, Tudge said the platform procurement had been terminated in light of the government’s “broad new policy approach to the acquisition and delivery of workflow processing capability” in Home Affairs and across government more broadly.

“The Government will implement modern, easy to access, digital services for clients in line with its response to the Thodey Review of the Australian Public Service,” he said.

“This approach seeks integrated enterprise-scale workflow processing capability that could be utilised across the Commonwealth.

“Key to this is recognising the efficiencies that can be generated from large-scale government investment in technology and the re-use of capability across government.”

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Privatising Australia’s visa processing was always unambiguously bad policy.

Visa processing is an essential government service and a natural monopoly. Its sale would have inevitably resulted in end-users being gouged by the new monopoly private owners, as well as a reduction in transparency.

Indeed, the first assistant secretary of the Department of Home Affairs, Andrew Kefford, boasted that visa privatisation is the “most significant reform to the Australian immigration system in more than 30 years”, and claimed it would make the “visa business” profitable by including “premium services for high-value applicants”, while providing “commercial value-added services”.

In other words, the Morrison Government would effectively have made Australia’s visa system ‘pay to win’ and a profit-based. This is exactly what happened in the United Kingdom, which privatised its visa processing in 2014 with disastrous results (see here and here).

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Adding a profit motive and turning the visa system into a quantity-based “pay to win” business would also have eliminated what little integrity there is left, and risked Australia losing complete control of migration numbers.

This whole plan was another case study in the Game of Mates.

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.