Morrison crushes wages with student visa reforms

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As we know, the Morrison Government recently announced its desire to lift immigration back to pre-COVID levels in order to overcome purported ‘labour shortages’.

Specifically, the Government’s Interim Report of the Inquiry into Australia’s Skilled Migration Program recommended opening the migrant floodgates via:

  • Abolishing labour market testing requirements.
  • Lowering costs and speeding up approval times for importing foreign workers.
  • Expanding the skilled occupation list to include almost any role.
  • Providing all ‘skilled’ visa holders with a clear pathway for transition to permanent residency.
  • Granting ‘skilled’ visa holders priority access to flights and hotel quarantine ahead of stranded Australians.

Over the weekend, Prime Minister Scott Morrison admitted that there is “no appetite” from Australians to open our international border, thus rendering its goal of rebooting immigration difficult. As such, Australia’s international border would remain largely shut for the foreseeable future.

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Obviously, closed borders is not what the Coalition’s business backers wants to hear. They want the federal government to give them easy access to low cost foreign workers so they can suppress workers’ bargaining power and keep wage growth to a minimum.

As a workaround, the Morrison Government will announce in the Budget that it will abolish the 20-hour per week work cap for international students, as well as classify tourism and hospitality as “critical industries”, thereby allowing visa holders to remain in Australia for an additional 12 months:

There are around 300,000 students in Australia who face the 40-hour fortnightly limit on their working hours while they are studying…

But in a bid to boost the tourism and hospitality sectors, the government is now removing the existing cap for student visa holders employed in these industries following strong industry feedback…

The decision comes after international students, including those working in these sectors, were among the worst impacted by COVID shutdowns at the height of the coronavirus pandemic last year.

A survey by Unions NSW last year found many were struggling to make ends meet and were forced to take cash-in-hand jobs to stay afloat…

Temporary visa holders working in or intending to work in tourism and hospitality will also be able to apply for the 408 COVID-19 Visa up to 90 days before their existing visa expires.

This will enable them to remain in Australia for up to 12 additional months.

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Immigration Minister Alex Hawke also said the government would further relax visa work rules following consultation with employers:

“I am continuing to take feedback and advice from a range of sectors and will make further announcements on temporary visa flexibility measures and priority skills in the near future”…

Thus, instead of allowing the Australian labour market to tighten and wages to lift, the Morrison Government is hell bent on suppressing wages by lifting the supply of labour via relaxing work rules for temporary migrants already onshore in Australia.

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Allowing foreign students to work more than 20 hours a week raises the obvious question of why they are in Australian in the first place? Have they come here to study and gain an education? Or have they come here to work with the goal of eventual permanent residency?

Remember, when they apply for their student visa, foreign students are supposed to declare that they have enough funds to support themselves while they reside in Australia.

However, the hardship experienced by international students during the pandemic, whereby many could not afford to pay their bills and became reliant on taxpayer assistance and charity, highlights that they instead ‘pay their way’ by working in Australia. For this reason alone, the alleged “$40 billion of education exports” that Australia supposedly earned in 2019 is a giant fraud.

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The reality is that most of the ‘exports’ from international students is in fact expenditure paid for via working low-skilled jobs in Australia, undercutting younger and lower-skilled Australians in the process, and contributing to Australia’s chronically low wage growth.

The Morrison Government has just doubled down on this edu-migration scam.

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.