Musings on Australian migration via Making Australia Great

“Making Australia Great” was excellent for a range of reasons. I want to focus on one.

George Megalogenis’ production had the rare ability to communicate complexity with ease. There have been numerous books, speeches and post-hoc political justifications of GFC in Australia yet this was the most cohesive. More importantly from my perspective, towards the end, he chose to bring a historic tale on Australian migration inside the economic tent. I’m not sure many could have pulled this off but I’m thrilled Megalogenis achieved what he did.

Collectively, we know migration has played a defining role in Australian history yet this has rarely extended to an economic perspective. The cultural and the social dominate Australia’s migration story. The importance of the decision to include migration in an macroeconomic narrative is the timing. Migration in the 21st century is on track to play a more central role in Australia’s economic story than ever before, for better or worse. Yet I worry public and policy understanding of the link between economic and migration policy is poor, making the future more uncertain and liable to populist backlash.

I was struck recently when someone who I think very highly of mused migration in Australia had become normalised.

Living and working in Canberra, I tend to have my head stuck in the sand. Google alerts ping in the morning, legislation whizzes by and a politician says something vacuous about migrants to the media (the far superior number of good words spoken on migration are hidden in Hansard, unreported). The cycle repeats and leaves a focus on all that is bad or requiring fixing. Normalised has not been something I associate with migration in Australia.

Yet the more I think about it, the more I think he is correct. Australia accepts migration. You only need to look at the U.S and the U.K to see two examples of wealthy, democratic societies where this acceptance has frayed and now teeters on a sharp edge.

But what if this acceptance is built on an misunderstanding? Can it come crashing down when the worm turns?

Australia’s migration framework today does not operate how most people think. Perhaps it never has. The image of a ten pound Pom settling in Australia alongside Italians, Greeks and the Vietnamese and becoming “Australians” is rooted in historical fact. But what we don’t think about is the 20-40 per cent of these ‘new Australians’ who would return home. These people lose their voice in our story because they aren’t around anymore. But this critical piece of information reflects how migrants are unnatural. 97 per cent of the global population are not a migrant. Australia is a global outlier of epic proportion when it comes to migration.

The uniting feature of previous migrants was their permanency. If people did return home, that was OK but not expected nor assumed. Today, things could not be more different.

The Australian migrant of the 21st century is temporary. There are about 900,000 long term temporary visa holders who live, study and work in Australia at any one time. There are another ~500,000 New Zealand citizens living in Australia (rather permanently I may add) who are also technically temporary migrants. A total of 1.4 million people living, working and participating. I believe this contrasts starkly with the common imagination of Australian migration: A settler, coming to live in Australia forever. The land of milk and honey.

Understanding this phenomenon is difficult due to the disparate nature of these people. Do not characterise these people in broad strokes as the differences are vast. A 6 month contract working for a global company results in a 457 visa as does someone looking to permanently migrate via a willing employer. A young person escaping economic poverty via a student visa and a life in Australia or the “genuine” student who returns home with a quality education. Revealed preferences only reveal after the fact, something policy makers struggle with.

As a country, the those who remain in Australia should be the focus. These people are temporary in name only. Making up anywhere between 6 to 8 per cent of the workforce, their economic contribution to Australian society far outweighs their cost. This is undisputed, both fiscally and macroeconomic impact. Over different time periods, most of these people will become permanent residents. A minority will remain stuck in limbo.

This is a structural change in Australia’s migration framework that was not present at the time of the last recession. Temporary migration was for all intensive purposes invented in the 1990s after the recession. This brings Megalogenis’ production back to the story.

The underlying point I took away from Megalogenis was the fact 23 years of uninterrupted economic growth did not occur by accident. Hard work happened and a direct consequence was future prosperity. Ken Henry’s point about older people who lost their job in 1991-1992 never working again should be seared into the national consciousness.

Unfortunately, I’m not aware of plans for what happens in the next recession with regard to migration, the labour market and our economy. The 1.4 million people who are temporary residents, without access to the safety net. 1.4 million people – and rising – who will become a central part – perhaps the central part – of how the labour market reacts as macroeconomic conditions deteriorate. How does this population of people gel with a rising number of people looking for work?

The theory of temporary migration hides the ugly truth. The theory goes ‘temporary’ workers, classified by their visa class, leave when the going gets tough. They return home or move onto somewhere else where the situation is relatively better off. History says this is complete garbage. There are many examples of this, best summed up by Max Frisch’s quote, “We asked for workers. We got people instead.”

While an economic slowdown will lead to forces that reduce the trend of new arrivals, the vast majority of people already living here for over a certain period of time are likely not going anywhere.

This stylised fact goes to a central understanding of migration. In technical terms, the “flow” (trend) and the “stock” (population) of migrants, are distinct, separate entities. The problem is they so often get thrown together, blurring our understanding. For example, the 1.4 million number referenced above might move slowly up and down over time periods. But the actual individual migrants that make up that number change more quickly, moving amongst visa categories and in and out of the country.

Predicting what will happen in the next recession is therefore particularly difficult. Assumptions about what decisions people will make are very hard when the terms and conditions governing their livelihood are new.

Perhaps no policy conundrum is more interesting than ‘temporary graduate’ migrants. Driven by policy change in 2011, the Department of Immigration and Border Protection recently mused there may be 200,000 temporary graduates – former international students with an unrestricted two or three year working visa – in the labour market by 2017-2018. These migrants are both temporary in an administrative sense and loaded with human capital. Whereas in the past, migrants were relatively low-skilled, today migrants are relatively high-skilled. They have paid massive sums to attend Australian education institutions and many seek a life in Australia.

Think about this complete change of migration policy in a period of economic recession and a soft labour market. Lower skilled workers get screwed in recessions. This used to mean migrants along with everyone else. But today, instead of ‘temporary’ migrants leaving in droves, it is much more likely lower skilled Australians (and first-generation permanent migrants) will be laid off first while many recent migrants keep their job. At 6.4 per cent unemployment, there is already a small (but loud) group of people and organisations coalescing around an “Aussie’s first” narrative. What happens when unemployment reaches 8 per cent? 10 per cent?

Peter Garrett said “people are not the problem” in Making Australia Great. At the time, I thought it was a bit of a throwaway line. Yet rewatching and thinking about this, Garrett neatly captured a way forward around migration and the economy. If you accept the argument that openness around migration is central to future prosperity, then a response grounded in acknowledging there are serious issues ahead while simultaneously remembering people are not the problem, resonates clearly.

While I believe a level of acceptance on migration does exist, there is little acknowledgment of the seriousness of the issues ahead. The recent Intergenerational Report is a case in point. The net overseas migration figure projected for the next 40 year period is 215,000 in the IGR. This flies in the face of current migration trends and fails to account for how migration has changed. A figure closer to 250,000 might have sparked a more informed discussion of what decisions are required over the medium- and long-term. As George Megalogenis followed up on Twitter, “The point Ken Henry made is the population surge is already upon us. Have to plan now.” This is clearly not occurring.

So what options are there? Regulation comes to mind. Macroeconomic regulation was paramount to past success. The current system of regulation is a work in progress and poorly supported by proper institutional oversight. Binary arguments over 457 visa policy have obscured a more effective focus on improving the status quo (something I have been guilty of). This will require resources for compliance and improving legislative responsiveness. One example is the recent response on 457 visas by Assistant Immigration Minister Cash. An impressive policy package with a clear focus on integrity and weeding out employers who use the program illegally. Despite rooting for the other team, this was clearly a step in the right direction.

A public discussion is also important. The Australian rate of saving went sky high post-2007. I find it hard to think this would have happened to the same extent without a detailed understanding by individual Australian’s about how interest rates and fiscal policy worked. Savers were responding to two decades of being lectured by Keating, Howard and Costello on economic fundamentals. This level of understanding would be impossible to replicate with regard to migration but even a fraction would assist. This is a daunting task for any Immigration Minister yet one so critical to our long-term prosperity and social cohesion.

Even those who do know about migration tend to view it through a prism related to their sphere of influence. Through my job, I try to get out and talk to a range of different people from universities, think tanks, employers, managers and community workers. Most typically have a good understanding of how migration works as it relates to them. Yet it is rare indeed to meet people who understand migration at a macro level and what this means for Australia like you do in other policy areas such as education and increasingly healthcare. Increasing awareness of the migration basics is just as important as advancing innovation in policy.

I understand this minimal level of awareness. Migration is niche, finicky, lacking a strong ideology or grounded in a holistic theory. There is extremely little migration taught at universities and the Minister for Immigration and Department of Immigration are clearly second-tier in terms of prestige both politically and administratively. This is understandable but problematic. Hard work is required and it should start now. Making Australia Great was a firm nod in this direction.

Thank you to the ABC and George Megalogenis. If a tiny proportion of those watching gave even a little thought to the link between the economy, future prosperity and migration, the show was a roaring success for anyone who cares about migration in Australia.


2 thoughts on “Musings on Australian migration via Making Australia Great

  1. I agree Henry that the immigration policy area is a wasteland. Labor promoted a vague “demand-driven” idea but failed to pull it off — eg the failure to effectively integrate employer-nominated categories, temporary and permanent, into Skillselect. They also blamed the victims for previous policy failures in the student and refugee programs. The LNP has since done nothing particularly significant except pretending it has solved the refugee problem by stopping them getting here.

    I also agree that we are facing an unprecedented situation for Australia where new migrants will be near the top of the socio-economic hierarchy and in a better position than locals and long-term residents to survive the next downturn. In the past, in countries where a particular ethnic group has for historical reasons dominated the mercantile class, for example, things have turned out pretty ugly when an economic crisis came along.

    Over the years I have noticed the complete disappearance from the discussion of the concept of “settlement”. It used to be a major fact in assessing migrants as well as in policy development. By settling migrant communities in our midst we created the rich and enterprising culture that we have enjoyed for the last half century and more. The future does not look so settled any more.

    Michael Jones

    1. Thanks for your comment Michael.

      I’m not sure I would agree on a wasteland but without a doubt, much more could be done. I also agree there has definitely been an unwillingness to examine how particular policies may have affected migrants decisions. While the policies for student migration was reviewed, I think there was a failure to think more broadly about what this means over the long-term.

      For mine, settlement is a key starting point. Migration cannot occur in a vacuum away from important social and economic considerations. For example, temporary migrants who are obviously in Australia for the long haul ought to be given the benefit of the doubt in relation to assistance such as English language classes (for spouses). This is just one small example but neatly encapsulates how this entire migration framework is overlooked. I’m probably preaching to the choir.

      The more I think about this, the more worried I am about when the next recession comes. The backlash will likely be substantial.

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