New ABS migrant research methodology

The ABS recently released a new research paper titled, “Feasibility Study of Linking Migrant Settlement Records to Personal Income Tax Data“, authored by Laura Walsh and Anne Weckert (h/t Gaby D’Souza).

The project aims to match data from ATO income tax records and the Settlement Database, which tracks (some) migrants. This will build on Australia’s already excellent migration statistic framework.

Most of the paper is methodological in nature. I have read it and have nothing more to say given I’m completely ignorant about complex statistical methodologies.

However, if the methodology holds up (which I assume it will), the potential for new research is profound. Here are two examples from the research paper:

Graph 4.1

Screen Shot 2014-08-27 at 3.45.05 pm

Graph 4.5

Screen Shot 2014-08-27 at 3.46.39 pm

Given the preliminary nature of this research agenda, these results “are uncalibrated and are considered experimental”.

This type of information is important. We know, as per the first graph, that migrants on average increase their salaries over time in Australia. We also know as per the second graph, that partners and spouses on average earn less than primary visa holders.

But this level of detail and precision can assist in broader comparisons about the labour market, particularly with native Australians (native is the common term in labour economics to describe those born in the country of reference). We can see for instance how different cohorts of migrants adjust and over time periods.

This becomes especially helpful for immigration policy-makers who can match the results from this research agenda against visa policy settings for different time periods. There are of course a range of other potential benefits to this exercise, many of which will mean we can better understand how Australian migration policy impacts our society and economy.

One note of caution. From my experience at Immigration, the Settlement Database (being used by the ABS to match records) was never the tool I thought it was. There were often significant gaps from missing or dated information. Processes around how the information was managed were also lacking (to a comical degree). This was now sometime ago and I believe progress on these issues has likely been made. However this reminds me that sources of information can be overlooked in terms of how much validity we can place on records.

Lastly, a quick comment on the ABS. This is where the ABS is a pioneer. Survey work is their bread and butter and something they do extremely well. But this type of work highlights the massive potential the ABS has to inform a wide range of policy areas. This is a strong part of the reason why a well funded ABS is so critical across government. Cutbacks of staffing and research capacity might save money in the short-term. But this is an excellent example of where a small team working on an important long-term project will contribute to the better understanding of how we make immigration policy with serious future benefit for all Australians. Trying to sort this out in a cost/benefit model via efficiency dividends is impossible.


Where the media fails badly and repeatedly: 457 visas

Every three months, the Department of Immigration and Border Protection releases a quarterly update on the 457 visa program.

Every three months, media organisations repeatedly misunderstand these statistics with shoddy data analysis and retard the public’s ability to understand immigration policy.

The most egregious example I found was from Natasha Bita in the Australian yesterday, who led with:

RISING  unemployment has dampened demand for migrant workers, with 40 per cent fewer foreigners seeking visas to work here last financial year.”

Rising unemployment, at the margins, has likely dampened demand for migrant workers. Yet Bita ignores a much more pertinent impact that is behind the trends in 457 visas.

On 1 July 2013, the price of a 457 visa increased by between 200 and 800 per cent, depending on how many family members one has. This price rise was flagged before it was introduced, meaning people whose visa was due to expire, say in the following 12 months, applied early to beat the fee increases. We can see this here:

Screen Shot 2014-08-26 at 2.18.45 pm

(Source: Subclass 457 visa quarterly report – June 2014, p.1)

These people who applied for visas in June 2013, without any price rise, would have applied for these visas nearer the date their visas were due to expire sometime in 2013-14. This price increase has meant comparing visa trends from 2012-13 and 2013-14 is highly problematic and should be done with a great deal of caution.

While visa applications fell by 40 per cent between the two years, the number of primary 457 visa holders in the labour market actually increased by 0.8 per cent when you compare 30 June 2013 and 30 June 2014. This can be seen here:

Screen Shot 2014-08-26 at 2.22.49 pm

So we should ask ourselves, has demand for 457 visas “plummeted”? No, it hasn’t. In fact, the three month visa application trend in the first graph shows gradual increases in applications, meaning the window where people applied for their visas early to beat the price rise is likely closing. My guess would be that demand for 457 visas is about the same as it was 12 months ago, perhaps slightly less.

This stuff is on PAGE ONE of the statistical report.

Given this basic piece of data analysis is missing from Bita’s article, any inferred causations should be ignored. Rising unemployment has likely played a role in reducing labour demand for 457 visa applications but the impact of prices is significantly more relevant to this story.

The Australian wasn’t the only example of this reporting. SBS’ Gary Cox writes:

“The food services and accommodation sector is the biggest employer of foreign workers, but the number of staff on 457 skilled visas has halved in the past financial year, with rising costs and paperwork being blamed by employers.”

At no point does Cox challenge or investigate the claims of employers. If he did, he would see their claims are bogus. Cox says “the number of staff on 457 skilled visas has halved in the past financial year”. This isn’t even close to being correct.

On 30 June 2013, there were 10,010 primary visa holders in the accommodation and food services industry (table 1.22). 12 months later, this had increased to 13,940 (table 1.22). This is an additional 3930 people, an increase of nearly 40 per cent.

So employers are claiming rising costs and paper have occurred recently (true) however at the same time, this has resulted in an increase of nearly 40 per cent in the industry compared to growth in the program as a whole of less than one per cent. Gary Cox isn’t just wrong, he has come to the completely opposite conclusion to what he should have.

Some people may dismiss these concerns as journalists simply writing to deadlines with little experience in what they are writing about. Everyone makes mistakes.

But the opportunity cost of this shoddy, second-rate, completely useless journalism is that real policy issues go unnoticed.

Why are the number 457 visa holders for positions like Cooks, Chefs and Cafe Managers going through the roof while other occupations stagnate? Likely because of systematic abuse within the hospitality sector of the 457 visa program. Why is the capacity of the bureaucracy to investigate this so limited? Why do we wail over policy prescription and ignore enforcement and compliance mechanisms?

These questions need answers. The editors at the Australian and SBS should do better. There is a real story to be told but its not the rubbish which is being served up every three months when DIBP releases their quarterly reports.


Links

Swedish Nationalists Rise as Influx of Syrian Refugees Grows“, Bloomberg.com.

Looking at 10 per cent of the vote in a proportionally representative electoral system. Sweden’s ‘One Nation’ moment.

The big dangers of our millionaire visa“, Australian Financial Review

Canadian housing difficulties tied to millionaire visa. Australia’s is quite different but a level of wariness is warranted.

Largest Refugee Population by Country of Destinations“, Migration Policy Institute

A neat visualisation on refugee stocks over the last half century.

Going it alone“, Washington Post

A look into a deputy sheriff on patrol near the U.S.-Mexico border. The level of institutional poverty is horrific.

In Honduras, U.S. deportees seek to journey north again“, LA Times

This policy dilemma is not going away for the U.S. government. The human toll is extremely sad.

Puerto Rican Population declines on Island, Grows on U.S. Mainland“, Pew Hispanic

Economic opportunity appears to be driving Puerto Rican’s to the United States in escalating numbers.

Are migrants good for the UK economy?“, New Statesman

Yes.

Embracing Our Common Humanity – 2014 Angelo Roncalli Lecture“, Penny Wong

This was the best speech I have read recently. Poignant, relevant. It made me proud to be a member of the same party as Senator Wong.

 


Some Coalition statements on immigration

Despite my disagreement with many of his actions and policies, I believe John Howard – in the main – acted on his beliefs to make Australia a better country.

I’m having a harder time coming to this position with Prime Minister Abbott. As someone who believes politicians improve society and the lives of people within it, this is disappointing.

What does ‘Team Australia‘ actually mean? If it means “you don’t migrate to this country unless you want to join our team”, what does that mean? Determining a neat set of social norms and formal rules for the “team” is not apparent in reality. Inequality, unemployment, intolerance. These are tangible matters heavily affecting how people view their position in society.

Presumably, these slogans and statements are intended to bring together. Yet they also have the ability to blur the lines between an Australian society accepting of difference and a country more homogeneous in nature. Promoting unity is important for a sense of community. But this requires care and nuance and context. None of this is evident in the Prime Minister’s words.

In a society where our differences are like shadows, flickering in uncertain light, we are all poorer for it. I think the way this has occurred and the inability to put a political argument against it (who is against ‘Team Australia’?) is a bad outcome. I’m glad Tim Soutphommasane is asking the right questions.

In another Coalition statement, Scott Morrison said:

“It was extremely disappointing that up to 4,000 applicants waiting in the queue missed out on places in this program (the Special Humanitarian Program), and that their places were being taken up by those who had arrived illegally by boat. This practice has ended under the Abbott Government.”

Morrison was talking about 4,400 protection visas (under the Special Humanitarian Program) which have been allocated for Syrians and Iraqis who are fleeing violence.

In the SMH article linked to, the journalist does an admirable job of reminding the reader that under the last government, there were 20,000 people provided with protection visas in 2012-13. This number has been reduced by the Abbott government to 13,750. For those counting at home, that’s 6,250 less.

Further, Minister Morrison did not elaborate on what the difference is between a Syrian or Iraqi fleeing violence by entering an officially-designated UNHCR camp and by boat via Malaysia and Indonesia. This is not an irrelevant question to the policy at hand. These are the opportunities to make the case for Australia’s asylum policy framework but they are ignored in favour of rhetoric.

Refugee advocates rightly call out this behaviour. However there is something even more odious which went unsaid.

The violence in Syria and Iraq is being used as the context to make this decision. This violence is highly regrettable. This policy decision is perhaps the right thing to do (a utilitarian would argue otherwise)

However when Scott Morrison uses this situation to make an explicit political point about previous government policy, he concedes the benefit of the doubt on whether he is acting because it is the right thing to do. He is playing politics born of violence.

There is little Australia can realistically do to help the situations in Syria and Iraq. Taking more refugees is one small way to assist. Making political hay out of this is highly regrettable and highlights the depth of our malaise on asylum policy in Australia.


An update on the Australian Seasonal Worker Program: Good, bad, ugly

New data for the Seasonal Worker Program is available. Unfortunately this stuff seems to be a little bit difficult to access. There is no stats page (which I can see) on the program website. The figures below come from a powerpoint presentation given by a Department of Employment executive at a recent conference.

To recap: the Seasonal Worker Program encourages labour mobility from Pacific countries allowing Pacific citizens to work in Australia. Income from this feeds back into their home communities, with demonstrated benefits for local economic development.

Table 1: Visas granted (program utilisation in brackets)

2012-13 2013-14
Program 1454 (91%) 1979 (99%)
Trial 19 (5%) 35 (7%)

Overall use in the program is growing. The program cap for 2012-13 and 2013-14 was 1600 and 2000 respectively. The growth means program utilisation went from about 91 per cent to 99 per cent. This is very good. We should not undersell this growth. This is a positive sign moving forward for the program and for Pacific island countries who are extremely interest in labour mobility. I’m aware of projects in Timor-Leste and Tuvalu examining how to better foster this mobility from sending countries, two countries where traditionally emigration hasn’t been on the policy agenda.

Less beneficial is the presence of a program cap. If growth continues and visas for 2014-15 look like exceeding the cap, this should be allowed to occur, sustaining good progress on a program which has been troubled in the past. For context, the New Zealand equivalent program has filled 8000 places for the past couple of years for a small labour market. However this appears unlikely given the following note included in the powerpoint:

I might add that to date, the Department of Employment has not had to take steps to control demand, which it may have to consider if demand for seasonal workers was expected to exceed the caps. These steps may include closing the application process to become an approved employer for a period of time. (Powerpoint file supplied by Department of Education, titled “Mark Roddam”)

Closing off the program to potential new employers would be one of the worst policy decisions to impact the program. This would choke off growth and stifle program outcomes regarding economic development. The irony of watching the Department of Employment make a decision to actively prevent employment…

The poorest outcome from the data is the rate of program utilisation for non-horticultural industries. These results are abysmal. This is the second year of a three year trial period and at this point, any learning from these pilots is going to be limited. If non-horticultural industries are excluded from the Seasonal Worker Program proper after the conclusion of the three year trial based on these results, policy-makers will be making a decision based on flawed evidence.

The inability of program managers to successfully integrate industries such as accommodation, cotton, aquaculture and cane into the Seasonal Worker Program is a policy failure. Blaming employers for such a low take up rate is incorrect given nearly every single employer in these sectors appears to have chosen not to take part. This signals the blame lies elsewhere.

Table 2: Visa grants by country of origin (proportion of total in brackets)

Country 2012-13 2013-14
Tonga 1199 (82%) 1497 (76%)
Samoa 22 (1%) 162 (8%)
Kiribati 34 (2%) 14 (1%)
Papua New Guinea 26 (2%) 26 (1%)
Solomon Island 42 (3%) 9 (<1%)
Timor Leste 21 (1%) 74 (4%)
Vanuatu 119 (8%) 212 (11%)
Nauru 10 (1%) 0 (0%)

Country of emigration shows a marginally improving situation. Most countries have only a handful of migrants making the trip to Australia. Tonga continues to provide a large majority of all seasonal workers. However there was a slight decrease in terms of proportion in 2013-14.

Samoa, Vanuatu and Timor-Leste all recorded improvements. Hopefully there are lessons being learnt here, allowing better policy implementation in both these countries of origin and in Australia.

Unfortunately, the Solomon’s and Nauru stand out as countries unable to access to program. This is likely for a variety of reasons, including a lack of capacity within those countries to meet the standards required by Australian policy-makers. PNG also went backwards in terms of proportionality despite the same (low) number of migrants making the trip. Given the population of PNG is well above all the other countries combined, this appears to be a long-term issue. Building capacity within PNG should be amongst the highest priorities. This is particularly true when we consider other immigration policy decisions occurring in PNG.

Overall, I think this data for 2013-14 should be viewed as cautiously optimistic with the major caveat being the lack of progress in the trials.

The rise in total visa grants mean the program is heading in the right direction. While there is the potential this could be stymied in coming years, there remains time to address this particular issue. The increase in migrants from Samoa and Timor in particular is positive. Embedding processes enabling the use of the Seasonal Worker Program in Pacific countries is the most important piece of the puzzle for long-term success. The more countries heading in the right direction will build future capacity, instead of relying solely on migrants from one or two countries.

This does not mean there aren’t improvements to be made. More visas will be granted if the burden on employers to use the program is reduced and by the adjustment of other visa regulations, such as those governing the working holiday maker program. New industries have to be incorporated into the program for serious long-term success to be realised. 2014-15 will be make or break in this regard.

(Note: You can email seasonalworker@employment.gov.au and ask for the 2014 SWP conference presentation files to access this data and other presentations)


A low skilled, employer sponsored visa in Australia? A response to Howe and Rielly

The title stings: “Australia has outsourced migration policy to the private sector“. Reading the first paragraph, you immediately understand this is not something the authors are pleased about.

Joanna Howe and Alex Reilly’s argument is neatly summed up in their second paragraph:

“If there is a single lesson to be learnt from the revelations of rorting in the 457 visa system, it is that Australia’s migration programs need to be opened up to greater scrutiny, and that government, not the private sector should drive migration policy. A dedicated low skilled work visa with appropriate labour market testing could be a step in the right direction.”

The authors are academics at the Adelaide University Law School. It is a real positive to have engagement from different disciplines as immigration is an extremely varied subject area. Both the authors have written extensively about labour migration policy in Australia and know the legislation well.

However I do not believe this proposal would work without radical change in immigration policy, change unlikely to occur and damaging for employers and migrants alike.

A dedicated low skilled work visa will only work if the majority of migrants who currently perform low skilled work are precluded from doing so. This means scrapping the working holiday maker program and removing international students right to work.

Why would this be required?

Simply introducing a low-skilled visa program would mean employers have two options to fill a vacant job. They can either hire a working holiday maker or international student, without any permission required from the immigration department. This is just like hiring any other worker. This option – easy and cheap – will be heavily preferred to engaging with a low-skilled migration program.

We already have evidence for this. Australia has a low-skilled visa called the Seasonal Worker Program for the horticultural industry. However compared to its New Zealand cousin, it is poorly used because horticulturalists do not like engaging with multiple government departments and tend to hire people on working holiday visas. The Seasonal Worker Program has attracted a total of under 5000 visas over four years. In comparison, the New Zealand program attracts about 8000 per year.

There are also international examples. The U.S. has a low-skilled visa program (H2A and H2B) which is massively underutilised because of the supply of undocumented migrants. It is cheaper and easier to hire these undocumented migrants than engage with the government run programs.

So if a low-skilled migration program is to be effective, policy would need to push employers to use it. This means the elimination of working holiday and the right to work of international students, or at a minimum, massive restrictions on both cohorts of migrants. Otherwise it will simply be another visa program, heavily ignored because regulatory burdens would be high relative to other available options.

Should we scrap work rights for international students and get rid of working holiday makers?

I’d argue no. By removing students work rights, the incidence of illegal work will sky rocket. This is very hard to police and protecting students against exploitation (already difficult compared to the average low skilled worker) will become impossible.

The case for keeping working holiday makers is perhaps slightly weaker but still a strong one in net terms. Withdrawing from working holiday maker agreements would see the ability of young Australians to travel and work overseas nearly disappear. These agreements are bilateral. Stopping young Europeans travelling and working in Australia means stopping young Australians travelling and working in Europe.

Perhaps the authors intend for the low skilled visa to be simple to use, where both working holiday makers and students can be utilised (under a dual visa arrangement). However this ignores the ability of policy-makers to introduce a lightly regulated low skilled visa program with sufficient protections for migrants and Australian workers.

I’d argue this is an impossible goal to give the bureaucracy as it is too difficult to implement. Perhaps there are some policy changes available at the margins. But the central idea of a low-skilled visa with the necessary government oversight and regulation must be considered within the broader context of Australia’s immigration framework.

A last word on the title of the article (which is likely site editors, not authors). Yes, Australian migration policy has been partially outsourced to the private sector. About one in four permanent visas are now sponsored by employers. Many more temporary visas are sponsored by employers (about 125,000 in 2012-13). I believe – in the main – this is a tremendously beneficial policy shift. Like floating the dollar and removing tariffs, market forces can be utilised to generate positives, including filling gaps in the labour market.

While there are some issues around wages, working conditions and pathways to permanent residency, I continue to believe they are at the margins. Instead of radical policy shifts to address these problems, a functional, well-funded enforcement system should be better imagined and implemented. Given this will be critical to any future low-skilled visa program regardless of other policy decisions, this should be a focus for government and bureaucrats moving forward. This is likely cheaper and easier than introducing a new visa which very few employers will end up using.


Quotes to remember

“Increases in the number of temporary immigrants in response to short-term labour shortages in one industry or region can address any short-term labour market disequilibrium (box 3.3). This might lead to short-term productivity improvements, for example, in allowing projects to go ahead which otherwise would have been delayed due to the shortage of labour supply. However, in the longer term, the reliance on temporary immigration to address short-term labour supply shortages might act as a substitute for the development of long-term labour supply by dampening signals as to those areas where labour supply needs to expand.”

Source: Productivity Commission Report into the Economy and Immigration, 2006, p.38

I tend to forget this from time to time. I think the use of words “can” and “might” are appropriate and important.

Signals are something we are not very good at picking up on at the best of times. Something to keep in mind.


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