A new report from the Senate select committee on temporary migration has found that Australia’s temporary migration system is “broken” and allowing the easy exploitation of foreign workers.
According to Labor’s committee chair Raff Ciccone, the closed international border in response to COVID has “exposed the dependence our economy has on temporary migration”:
“There is one story that runs true through almost every one of them and that is the story of a broken system that is failing to deliver for those that need it to”.
“Temporary migration has a role to play in areas where we cannot skill up enough Australians quickly to meet demand. That is why we need to reset our migration program to meet the unprecedented economic challenges we are currently facing”
Ciccone also noted that prior to the pandemic, Australia had the second largest temporary workforce in the OECD, with the inquiry hearing “significant evidence” of worker exploitation.
As usual, the inquiry does not recommend reducing temporary migrant flows to improve job prospects and wages for Australian workers, nor alleviate population pressures.
Moreover, the dissenting report from the ‘Big Australia’ Greens also wants permanent residency to be handed out like tic tacs to all and sundry:
In this report, the Committee has recommended (Recommendation 25):
… restoring the alignment that used to exist between the temporary skilled and permanent skilled programme to ensure that where appropriate, migrants have pathways to permanency and citizenship.
As with the report, this recommendation is supported, but the Australian Greens have concerns that, if implemented only for skilled migrants, it would further entrench classes of ‘haves’ and ‘have nots’ within Australia’s immigration program…
The Australian Greens support people who come to Australia under the humanitarian and family reunion visa programs being provided with a pathway to permanent residency and ultimately citizenship.
That migrants who come to Australia with family visas, and with refugee and humanitarian visas, be provided with pathways to permanency and citizenship, and that these pathways begin with permanent residency upon entry to Australia.
Chain migration here we come!
The best recommendation to come from the report relates to raising the minimum wage that temporary ‘skilled’ visa holders must be paid from the current appallingly low level of $53,900:
The committee acknowledges the role the current artificially low Temporary Skilled Migration Income Threshold plays in undermining the attractiveness of employing Australians over temporary visa workers and recommends that the Temporary Skilled Migration Income Threshold be increased to the rate it would have been if it were not frozen in 2013 and that future increases be indexed, as was previous practice…
According to DESE, the Temporary Skilled Migration Income Threshold (TSMIT), currently set at $53,900, is an important safeguard of the temporary skilled migration programme, designed to protect lower paid Australian jobs and ensure skilled migrants can support themselves while in Australia.
While stakeholders were supportive of the TSMIT to allow temporary visa holders to support themselves while in Australia, the committee heard that the threshold does not reflect current Australian wages. For example, the ACTU submitted that TSMIT, set at $53,900, has been ‘frozen’ since 1 July 2013. Unions NSW explained that as a result of the failure to increase the TSMIT, employers are able to employ temporary visa holders on a lower wage than Australian workers:
“This is a clear example of why temporary migration facilitates the stagnation of wages, with the salary expectations on employers lower for migrants than for local workers. The net result is that roles can be filled by migrants on a 2-4 year basis on a lower starting wage and can then be replaced by another who fits that category”.
The ACTU similarly argued that without indexing the TSMIT in accordance with the seasonally adjusted Wage Price Index, the ‘TSS visa can increasingly be used to employ temporary migrant workers in occupations that attract a far lower salary than that earned by the average Australian worker’.
The inquiry is 100% correct on this point. The Temporary Skilled Migration Income Threshold (TSMIT) has been set at the ridiculously low level of $53,900. This TSMIT was $5,900 (10%) below the median income of all Australians in August 2020 ($59,800), which includes unskilled workers (see table).
Setting such a low TSMIT explicitly incentivises Australian businesses to hire low cost foreign workers instead of local workers, as well as abrogates their need to provide training.
The obvious policy solution
The simplest solution to give integrity to Australia’s skilled visa system is to apply a pay floor equivalent to the 75th percentile of weekly earnings ($90,480 p.a. in 2020 – see above table) to both temporary and permanent skilled visa holders.
Doing so would ensure that Australian businesses can only hire foreign workers to fill highly skilled professions, while also eliminating the need for labour market testing or maintaining bogus Skilled Occupation Lists.
These simple reforms would maximise the economic benefits from skilled migration. Skilled local workers would no longer be undercut. Complexity of the visa system would be reduced. And lifting of the quality bar would reduce the overall level of immigration – both directly via having fewer skilled visa holders arrive and indirectly by making it harder for other temporary migrants (e.g. foreign students) to transition to a permanent skilled visa.
Labor should adopt these reforms as policy for the upcoming federal election.