English language testing and the exclusion of Australian citizenship

If you ask people what it means to be Australian, one answer stands out: the ability to speak English. In this 2015 ANUPoll, 92 per cent of respondents said being able to speak English was important to being Australians.

For those who argue the Turnbull government has no political nous, the proposed changes to Australian citizenship suggest this thesis is at misguided at best. Modifying citizenship, including appealing to “values” but more substantively, by formalising an English language test, will prove to be a popular decision. But what will the broader effects be on migrants?

In his press conference, the Immigration Minister said, “There’s a significant change in relation to the English language requirement which at the moment is basic. We increase that to IELTS Level 6 equivalent, so that is at a competent English language proficiency level and I think there would be wide support for that as well.”

He’s not wrong. This is not just a significant change, it is a fundamental break with established norms. To see why, you have to understand how high a barrier IELTS 6 is for many new migrants.

In 2015, ACIL Allen evaluated the Adult Migrant English Program, or AMEP. Their report is the most up to date assessment for the English literacy of recent migrants. Unfortunately, the AMEP does not use the IELTS system so a clean comparison of new migrants scores isn’t possible. Instead, we need to translate the AMEP system – called ISLPR – into IELTS equivalents:

  • In a 2006 Senate Estimates question, the Department of Immigration said an “ISLPR 2” is approximately equal to IELTS 4 or 5.
  • In the ACIL Allen review, an AMEP service provider is quoted saying an “ISLPR 2” is equal to IELTS 4.5.
  • And finally, Dr. David Ingram, the person who invented these language testing systems, references “Universities that require IELTS 6 for entry to particular courses usually require 3 in all macroskills on the ISLPR” in his submission to the Productivity Commission’s migration intake inquiry.

From this evidence, we can infer IELTS 6, the level of English proposed by the Turnbull government to be eligible for Australian citizenship is equal to ISLPR 3.

What proportion of new migrants get a score of ISLPR 3 after completing their government-allotted 500 hours of English training in the AMEP?

None. Zero per cent.

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Based on the enrolments of AMEP from 2004 to 2012 who completed 500 hours of training, 0 per cent of new migrants reached the level required for the new citizenship test.

As per the review, “28 per cent of AMEP clients leave the programme with 0 or 0+ on all four ISLPR elements” and 7 per cent of clients after receiving 500 hours exit at ISLPR 2 (the equivalent of IELTS 4.5).

In 2004-05, about 20,000 new migrants enrolled in AMEP, a number which grew to about 30,000 in 2011-12. 60 per cent of these new migrants in AMEP classes are women and children. Of course, many new migrants do not attend AMEP classes for a variety of reasons. In 2014-15, about 80 per cent of eligible humanitarian migrants attended AMEP, 20 per cent of eligible family migrants and 8 per cent of eligible skilled migrants.

What these figures show is somewhere north of 30,000 people each year will be ineligible for Australian citizenship. While a proportion will increase their English proficiency with time (and outside the classroom), this is a slow and grueling process according to language proficiency literature.

Using conservative estimates of AMEP enrolment trends, the rate of English proficiency improvement over time, and net migration trends, anywhere between 30,000 and 40,000 new migrants each year are highly unlikely to meet the proposed English proficiency level for Australian citizenship in their first decade of settlement.

Over time, this will generate a growing population of people simply excluded from citizenship. It’s impossible to say with any certainty what this will look like over the long-term but available evidence suggests a substantial number of people will never receive Australian citizenship.

Some people might say these new migrants will simply have to learn and this is a good incentive to get it right. A tough love approach. This argument should be called out for what it is: contentment to see people permanently excluded from our society. No voting. No standing for public office. Exclusion from public service employment in many instances. The potential for expulsion from Australia by visa cancellation.

When 35 per cent of humanitarian migrants score the equivalent of an IELTS 2 after their AMEP classes finish, this argument also amounts to specifically refusing citizenship for a proportion of refugee migrants to Australia. This is despite the fact refugees love Australia more than any other group of migrants if you judge this by the number of eligible people who become citizens.

Others might say this means we need to completely tear up English language support and training so people are given the support they need. Perhaps this is true. But we also need to recognise coming to a new country is really difficult. It’s hard enough for rich, English speaking new migrants. Think about a Sudanese single mother with four children who is illiterate in her own language. A formal English language test requiring IELTS 6 is government policy telling this woman she is not welcome as an Australian citizen. And if you think this is a handpicked example on the margins of our migration program, Australia granted 1,277 “Woman at Risk” visas in 2015-16 as part of the annual humanitarian program, for “protection of refugee women who are in particularly vulnerable situations.”

And this doesn’t even get into the issue of married couples separated by an English language test, or children who can easily pass but have to watch their parents excluded.

IELTS Level 6 is by no means perfect English. You can read this practice essay and probably scoff at the simple spelling errors highlighted. The official definition is: “Generally you have an effective command of the language despite some inaccuracies, inappropriate usage and misunderstandings. You can use and understand fairly complex language, particularly in familiar situations.”

But the practical effects are enormous. It amounts to deliberate exclusion of thousands of new migrants from Australian citizenship. Back in 2015, on the same topic, I wrote, “The worst outcome is permanent exclusion from society because barriers to entry are too high. An English language test for citizenship would be such a barrier. This exclusion would occur despite an indefinite right to remain in Australia. A tiered, broken system of residency with little long-term hope.”

While almost all Australians believe speaking English is an important part of what makes someone an Australian, is this the type of society we want to live in?

Asking the wrong question: Changing the 457 visa program

A quick comment on the ongoing 457 visa policy changes playing out at the moment. As the government has not provided sufficient detail for a rigourous analysis of the changes, I’ll stick to a more conceptual issue.

(See this piece on the Conversation for a quick reaction to the changes and this piece for the Lowy Interpreter blog for a more detailed discussion)

Many people have said something akin to “Why were Goat Farmers, Judges and Retail buyers (or insert any occupation) on the occupation list in the first place? We have Australians who can do that job.”

This is the wrong question to ask.

At the heart of any sponsored migration program is an employer. Not a migrant. More people will come if demand for workers is high. Conversely, fewer will arrive when demand is softer (such as the period from 2013 to 2017).

The purpose of the 457 visa program is to allow employers to hire from a larger number of people. But the rationale is they will only do so outside Australia when they cannot find someone in Australia. This is why employers are required to pay the same salary to people on a 457 visa, so they cannot undercut Australian workers.

The process of searching for someone overseas is the natural deterrent. It is presumed to be more costly to employers to look all around the world – and then bring that person here via a 457 visa – than hire an Australian. And in most cases, this is true. However with the number of people being hired on 457 visas who are already in Australia, this means the recruitment costs are lower on average than they have been in the past and it is likely increasing numbers of employers now have a much lower cost imperative to look at Australian workers first.

Instead of asking why certain occupations are on a list, we should be asking what will make employers look more closely at the Australian labour market? This means the central policy mechanism should be about employers being pushed to hire Australians via incentives.

What are some examples of these incentives? Fees. Instead of allowing bureaucrats in Canberra to pick and choose what occupations employers can and cannot hire, employers should be able to hire most occupations but be made to pay for it. This will ensure they look to potential Australian workers first.

I have been saying this since about 2012 when I first left the (then) Department of Immigration and Citizenship.  In a report in 2013, I called for a $1,000 fee. Today, it appears this fee should be much higher, say anywhere between $4000 to $10,000 depending on the occupation and salary of the occupation.

This means we can leave all the occupation lists alone, instead of trying to imagine and pick what different employers needs are across a labour market of 12 million people and many different geographic areas and industry compositions, and if an employer genuinely needs a Goat Farmer (or any other occupation), they are able to hire people on 457 visas after they have paid a penalty.


Regulating migration in the labour market is really hard. The best solutions are often the most straightforward. Instead, the Turnbull government has opted for a hodge podge of ideas and regulatory tweaks which wouldn’t look out of place in a Politburo meeting to discuss the next five year plan. When was the last time you saw a “conservative” government lean so heavily on a regulatory framework to address this type of issue? Not a single initiative is likely to lead to more Australians working. And I’ve yet to hear a full throated defence from anyone in industry (with the honorable exceptions of KPMG’s Michael Wall and AICD’s Stephen Walters).

The 457 visa changes are about politics and appealing to dissatisfied voters. Picking on foreigners only works for so long until people realise foreigners aren’t really the problem.

Via the Lowy Interpreter, ‘Lessons from India on migration’s role in trade policy’

The Lowy Institute’s Interpreter blog were kind enough to publish a few thoughts of mine on Malcolm Turnbull’s decision to walk away from Tony Abbott’s commitment to an India-Australia Free Trade Agreement. Full text below.

Lessons from India on migration’s role in trade policy

Prime Minister Turnbull yesterday carefully signalled a potential India-Australia Free Trade Agreement is not a priority for his government. This comes after the Abbott Government set a very public benchmark for concluding an India-Australia FTA by the end of 2015, an overly optimistic commitment that likely harmed the ability of Australian trade negotiators to make any substantial progress.

There appear to be two major stumbling blocks. The Australian government wants greater agricultural access for Australian farmers into a protected Indian market while the Indian government seeks further opportunities for its citizens to work in the Australia.

Tussles over agricultural protection in trade talks are common. Concessions on both sides get smoothed out during negotiations and eventually lead to a deal presented as a ‘win-win’ outcome using the language of comparative advantage. Regardless of whether the actual deal leads to economic improvements, and there is strong evidence to suggest bilateral deals can be ineffective, the political side of the equation is solved.

Migration is more difficult. People are not equivalent to goods and services. The labour market is more complex and workers, unlike resource exports, can vote. To make matters more complicated, migration does not have a clearly established tradition within trade agreements compared to goods and services. The norms are weaker and tethered to political winds, making what may seem fair in a DFAT negotiating room less so out on the stump in marginal seats at election time. We only need to reflect on the bitter public debate over the migration regulations in the China-Australia Free Trade Agreement (ChAFTA) to see how this plays out in practice.

What exactly does the Indian government want from Australian immigration policy under an India-Australia Free Trade Agreement? The negotiation floor is likely concessions at least equivalent to those in ChAFTA:

  • the removal of advertising job requirements for Indian nationals on 457 visas
  • the removal of mandatory skills assessments for a range of trades-related occupations
  • a framework for Indian companies to enter into bespoke labour contracts with the Australian government to better facilitate concessions around English language proficiency and lower skilled occupations.

In all likelihood, the Indian government may demand additional concessions. Unlike China, India sees migration as a first-order priority as Indian labour emigration is significantly more prevalent than Chinese labour emigration. In Australia, Indian nationals represented 25% of all 457 visa grants in 2015-16 compared to 6% for Chinese nationals. Large multinational Indian companies such as Tata, Infosys and Wipro are among the largest sponsors of skilled migrants in Australia.

This difference in priorities makes concluding an India-Australia Free Trade Agreement more difficult than perhaps any previous bilateral trade deal. Abbott should have been aware of this before he promised action. It is entirely unsurprising Turnbull has had to walk back this commitment as the concessions demanded will be politically difficult. Across the world, anti-migrant sentiment is a potent political force with clear evidence immigration played a primary role in both the election of Donald Trump and the Brexit result.

While the Australian electorate to date appears less susceptible to anti-migration populists, up to 25% of voters have extremely negative attitudes to immigration. Depending on the salience of the issue during the next election, this will manifest itself in support for far-right parties such as One Nation or more mainstream politicians who seek to tap into the discontent. Perhaps a strong, confident government could choose to emphasise trade deals with large implications for migration and appeal to the broader Australian electorate. But the Turnbull government has little political capital to spend and a plethora of domestic issues to contend with.

While Turnbull was right to place this on the backburner at this time, it remains a shame as a careful look at the industry and occupational composition of Indian nationals on 457 visas reflects the opportunity for Australia. Over half of Indian migrants on 457 visas work in the IT or Professional, Scientific and Technical industries. These are skilled people doing skilled work, helping the Australian economy continue a slow transition. As up to three quarters of migrants on 457 visa holders help to train and upskill other workers, the program is an important, if niche, part of the labour market (migrants on primary 457 visas make up less than one per cent of the total labour market). The Turnbull government’s mantra of ‘jobs and growth’ should be ideally suited to building a higher skills base for Australian workers. The tension comes from the need to ensure young Australian skilled workers are afforded opportunities in the labour market while maintaining a flexible migration framework.

We need to recognise migration will play an increasing role for Australian trade and strategic policy in the future. To better manage this, Australia would be well placed if it established a set of principles for migration when negotiating trade and other deals. This would assist in bridging the gap between public attitudes and elite decision makers, removing the possibility of big surprises. The public debate over ChAFTA demonstrated there was a poor understanding of exactly what changes were being made. A set of principles could help to demonstrate what type of migration concessions are available and what should be regarded as non-negotiable. Did ChAFTA hit the sweet spot or did it go too far? If this is too difficult to conclude within the context of a trade deal, there is no reason stand-alone labour migration agreements cannot be forged, including on a regional basis to reinforce migration norms on Australian terms. The Working Holiday program is one example, a migration program built on a series of agreements governing backpacker visas.

In the current global environment, Australia stands to benefit greatly if the last two decades of migration policy change can hold up in the political environment. An India-Australia Free Trade Agreement may assist on the margins of migration policy but it is a long way from the main game. Working to redress and mitigate what drives anti-migrant sentiment will help underpin our migration status quo and with time, further advancements like a set of migration principles will help governments of all persuasions to continue to promote sensible Australian migration policy.

Maladministration: ChAFTA and the Turnbull Government

On 21 October 2015, Andrew Robb and Peter Dutton released a joint media statement detailing the Turnbull Government’s negotiations with the Labor Party to pass the China-Australia Free Trade Agreement. After the Prime Minister referenced the ‘ghosts of White Australia’ and the CFMEU ran an effective anti-ChAFTA campaign, there was bitterness aplenty in Canberra leading up to the Senate vote.


That day, Robb and Dutton committed the Turnbull Government to the following:

The Department of Immigration and Border Protection (DIBP) will include in its annual report details about the number of work agreements signed, including the number of 457 visa holders engaged under the agreements, together with occupations and industries in which they are engaged. This will ensure programme transparency.

They also committed the Turnbull Government to undertake a review of the Temporary Skilled Migrant Income Threshold, more commonly known by the snappy acronym TSMIT:

As recommended by the recent Independent Review of the Integrity of the Subclass 457 Programme, the Government will undertake an evidence-based review of the TSMIT (Temporary Skilled Migration Income Threshold).  This review was scheduled to commence by the end of 2015, but has been brought forward as part of the agreement with Labor.

That was 17 months ago.

A quick search of the DIBP annual report for 2015-16 does not turn up the words “Work agreement” or “Investment Facilitation Agreement” (the new ChAFTA provision). “457 visas” are mentioned fleetingly but not in relation to ChAFTA or work agreements. Flipping through each relevant section, I couldn’t find any reference to the number of work agreements signed, nor the industries or occupations which they are engaged in.

On the TSMIT, the Department engaged John Azarias, who was previously the head of the Ministerial Advisory Council on Skilled Migration. He submitted his report in May 2016 and it was released nine months later on 24 February 2017. Azarias recommended the salary threshold – $53,900 – be indexed from 1 July 2016 according to the Wage Price Index. This did not occur before, during or after the election despite Mr Azarias noting it would be “timely” to index the salary threshold given it had not been done since July 2013.

So in the aftermath of churlish ChAFTA negotiations where hard fought concessions were agreed by both major parties, nothing has changed. Information ensuring “programme transparency” has not been published while indexing the wages at the bottom of the 457 visa program has stalled despite an explicit recommendation to raise them.

With anti-immigration sentiment threatening to break down the door, the Turnbull Government is willing to make promises it does not keep. Peter Dutton gets a dixer nearly every Question Time on 457 visas and he proceeds to squawk about protecting Australian jobs. In reality, his rhetoric cannot hide his and his Department’s inability to be across basic public administration. He has overseen the deterioration of the salary threshold relative to Australian wages.

The Turnbull Government has a responsibility to keep the promises they make. Trade agreements are a red rag to a bull in the very seats the government is trying to fight in at the moment. In the aftermath of the most contentious bilateral trade agreement ever signed, the complete lack of follow through belies any tough talk or ability to connect with the electorate.

In September 2015, I wrote the following:

As is playing out in Donald Trump’s push for the Presidency and the far-right in Europe, nationalism on immigration creates the conditions for autarky. Closing the borders, capping migration numbers and squeezing the rights of migrants already in societies. In OECD countries, this will stymie economies and contribute to demographic nightmares.

Pauline Hanson and One Nation now provide a platform for jingoism and nationalism on Australian immigration. This platform is currently blown out of proportion by the media. But the key point is Hanson doesn’t need any assistance in the form of maladministration by the Turnbull Government on the very same issues renewing Australian populism.

You’ll never believe this one neat trick to fix the 457 visa program

Crappy headline aside, I wrote this op-ed during the week but couldn’t get it placed. I was prompted when David Crowe asked Bill Shorten what he thought about raising the price of 457 visas during his National Press Club address on Tuesday.

Since this is my blog, I’ll add some context: I’m a big supporter of the 457 visa program. But it’s crucial to maintain public legitimacy in the program. At the moment, this isn’t occurring as a small number of employers are exploiting design flaws for their own profit. As I wrote for the Lowy Institute earlier this week, now is not the time to turn away from immigration. But that doesn’t mean we can ignore issues and seek to improve the status quo.

tl;dr Employers respond to prices not paperwork

“Increasing public scepticism towards the political establishment will shape Australian politics in 2017. How immigration intersects with Australian jobs will be one of the most prominent public debates informing this discussion as One Nation continues to gain legitimacy, providing an outlet for anti-migrant sentiment.

Despite being in decline, this means talking about 457 visas. Since the end of the mining boom, the debate over 457 visas has been piecemeal. We’re stuck in the worst of environments: unnecessary regulation burdening good employers while failing to prevent exploitation, and by extension, undermining wages and conditions.

These visas attract lots of rhetoric and politics however underpinning the visa program is a bipartisan consensus. Both major parties agree the program is an important part of Australia’s immigration framework and both also agree Australians should have preference in the labour market. This consensus is the best tool to address the latent anti-migrant sentiment found on the political fringes.

The simplest and most effective policy change is to raise the price employers must pay to hire a temporary skilled migrant. Instead of a new set of regulations which malicious employers avoid with ease, higher fees are a stronger deterrent and impossible to avoid.

I used to believe about 2-4 per cent of people working on a 457 visa were subject to exploitation and poor wages. A proportion like this can be addressed through enforcement. However over the last couple of years, in a labour market unable to create large numbers of new full-time jobs, the power of temporary migrants diminishes compared to their employer and they become willing to accept lower standards. Existing wages and conditions are undercut when this happens, particularly in industries reliant on award wages such as hospitality and retail.

At the moment, it costs $330 for an employer to hire someone on a 457 visa. This is equal to 0.4 per cent of the average full time wage in the labour market. But when you consider employers can nominate a worker for up to four years, the effective cost is often less than 0.1 per cent of an average salary.

This price is nowhere near high enough to deter employers who are willing to break regulatory standards to profit themselves. Deterring these employers up front instead of trying to police them after the fact is likely the only method to create a more robust temporary skilled visa program. A significant increase in the thousands of dollars per nomination is necessary. While an employer with a genuine vacancy will pay a higher price to employ a skilled worker, a malicious employer looking to save money on a wage bill will think twice.

In addition, employers should pay more to be certified as a sponsor. At the moment the price is only $420. From past research and evidence, we know small and medium businesses are more likely to exploit and underpay temporary skilled workers than large companies. Substantially raising this fee to ensure employers are using the program on a needs-basis, not as a process to undermine the labour market, will improve workplace standards.

Industry will ask why they should shoulder this burden when the vast majority do the right thing, in both the spirit and the letter of the law. Unfortunately the business establishment has been missing in action in debates about temporary migration. They have failed to clean up industries rife with exploitation – of Australians and migrants alike – and show no willingness to come up with alternative solutions to soothe public sentiment. As a trade-off, and recognising the vast majority of employers do the right thing, any price rise should be accompanied by the removal of ineffective regulatory settings such as labour market testing and the existing training requirements. These settings have never pushed an Australian into the labour market and represent the worst of a technocratic, administrative approach to tackling the issue of migrant exploitation in the labour market.”

Blog posts published elsewhere

I have two blogs published elsewhere today.

For the Lowy Institute’s Interpreter blog, I write about the opportunities for Australia presented by likely changes to immigration norms:

To date, Prime Minister Turnbull and Immigration Minister Peter Dutton have shown no willingness to explore the opportunities provided by a changing international environment for immigration. The Brexit vote and the Trump Administration’s approach to immigration will upend established processes and trends while formalising new norms. There is no reason these trends and norms should be dictated to us.

From the big picture down into the weeds, in this post for the Development Policy Centre (where I work), Richard Curtain and I outline how recruitment processes in origin countries can shape migration outcomes in the seasonal worker program:

Fiji was not a participating RSE or SWP country until 2015. However in the first full financial year of participation, Fiji had 160 participating workers in the SWP and 104 workers in the RSE. Already in the first half of 2016-17, 168 workers have gone to New Zealand. This stands in stark contrast to participation from Papua New Guinea. Despite participating in the RSE since 2010-11 and the SWP since inception in 2012-13, the number of workers participating is small and refuses to grow. In Australia, only 42 workers participated in 2015-16, while in New Zealand a total of 69 participated, down from the year before.

Finally, I curate a regular newsletter with links to research and blog posts on Pacific labour mobility and other bits and pieces about Australian immigration for my day job. The first edition for 2017 will be sent tomorrow. If you would like to subscribe to this, let me know on Twitter or shoot me an email: henry.sherrell@anu.edu.au

Analysing Australian migration: Getting beyond common sense

I want to give Carrington Clarke, an ABC business journalist, the benefit of the doubt. His piece on Thursday titled “Immigration masking Australian economic decline” hints at an important point often missed but the litany of negative inferences and weak claims which follow, unsupported by any evidence at all, is hard to accept. Clarke highlights how adding more people to the economy is not necessarily good for everyone as individuals. Throughout, the author infers migration to Australia is one reason why individuals are going backwards in economic terms. The way he does this is by using ‘common sense’ arguments about migration, e.g. how more people will push down wages because that’s what Economics 101 dictates.

In the simplest terms possible, if you add an extra person to the economy, it is going to grow in the aggregate. But it may not grow in per capita terms, or for each individual. This is because each extra person may have a positive, negative or nil effect on the average. Say the average wage in an economy is $50,000 but the new worker earns $40,000. She is adding output to the total but reducing the average, ‘dragging down wages’.

Clarke concludes, “High migration makes it nearly impossible for Australia to fall into recession” as migration means the aggregate economy will keep growing.

This is debatable but no-one can deny migration has improved aggregate GDP growth over the past two decades. The net migration trend – the number of people immigrating to Australia minus the number of people who have emigrated – has been high when compared to the 1970s and 1980s. As others have pointed out, net migration to Australia from the Global Financial Crisis onwards may have been the most important factor keeping Australia out of recession alongside the mining boom. From Bob Gregory, an ANU economist and former RBA board member:

“Our extra ordinary economic success since the GFC owes a great deal to the increased level of national income produced by the unforeseen population expansions generated by our new immigration program.”

“It is possible that the economic magnitude of the immigrant policy change over the last decade has been as large as the mining boom impact.”

(Source: A good Chris Bowen speech from September 2016)

This is essentially Clarke’s point but while he is focusing on the potential negative effect on the individual, others focus on the positive national effects. He takes this point to an extreme by saying it is ‘nearly impossible’ for Australia to experience a recession. Given the recent aggregate GDP figures, and the declining rate of net migration, I don’t buy this claim as migration trends can change relatively quickly and it is entirely possible Australia could fall into recession.

And this is my main concern. By failing to explain why migration has changed, Clarke isn’t able to place these migration trends in context and explore the question. If you can’t do this at the ABC, where can it occur in mainstream journalism? You shouldn’t be able to discuss immigration and economic changes since the 1980s without noting the transformational policy changes that have occurred. Migration changed from a process controlled strictly by governments to a mixed system where economic demand itself influences the rate of migration as well as government decisions.

Regardless of an interesting main point, this is no excuse for poor supporting analysis without any substantial evidence.

Claim One: “The truth is, migration to Australia is still proceeding at a record clip.”


(Source: ABS, Net Migration)

Net migration figures show quite clearly immigration trends since the high of 2009 are slowing. This is akin to the rate of GDP growth slowing but the economy as a whole still growing. When the latest GDP figures come out, there is almost universal focus on the rate of growth as opposed to the size of the economy. This is sensible as in many cases the total size is less relevant than the rate of change. In migration, the equivalent is total number of migrants in Australia, or the stock figures of various visa categories.

Clarke uses the stock of temporary migrants in Australia as evidence. While the table he highlights notes 12 month changes, he fails to mention permanent migrants (accounting for about 40 of net migration) as well as any emigration at all (where citizens and others leave Australia). Net migration, not the total number of temporary migrants, is the primary tool used by policy makers to assess migration trends. The latest estimates of net migration from the ABS in December 2016:

“The preliminary estimate of net overseas migration (NOM) for the year ended 30 June 2016 (182,200 people) was 3.0%, or 5,300 people higher than the net overseas migration recorded for the year ended 30 June 2015 (176,900 people).”

Is 180,000 a record clip? That’s about 0.75 per cent of the population on an annual basis. The latest Intergenerational Report helpfully puts this into a historical context:


A net migration rate of 0.75 per cent is lower than the last decade average of 1.1 per cent as well as the post-war net migration rate of 1.0. It falls somewhere between the heights of post-war Australia and the lows of the 1970s to 1990s.

All of this means the “truth” is migration to Australia is not proceeding at a “record clip”. In fact, it is falling in trend terms and perhaps people should be talking about this more as it likely reflects a soft labour market and economy. This is particularly true if you exclude international students (which are growing strongly) and focus on visa categories which are influenced by relatively global strength and domestic labour demand, like 457 visas, working holiday makers and New Zealand citizens.

Claim Two: “New workers mean greater competition for jobs, which suppresses wages.”

Unfortunately Clarke doesn’t provide any evidence for this claim, except to note how wage growth has been falling in recent times. It’s true migration could be affecting wage growth but all the evidence we have suggests this is not the case.

There is a pretty clear consensus among labour economists that migration – regardless of the workers who are joining an economy – doesn’t have large employment or wage effects, on average. What matters is composition: “the skills of migrants, the skills of existing workers, and the characteristics of the host economy” (source: Martin Ruhs, Migration Observatory, United Kingdom). In Australia, this is the rationale behind a skilled migration program. If we take Clarke’s point literally, more doctors and IT specialists will reduce the wages of doctors and IT specialists, making it cheaper for people to see a doctor and for companies to get IT assistance. Then, these new doctors and IT specialists will spend their incomes on goods and services, rising the demand for things like hairdressers, accountants and construction workers. When you throw all this in together, any number of scenarios are possible, including positive, negative and no effects.

The real take away is to consider demand and supply effects, with regard to the labour market fundamentals which already exist and the characteristics of new migrants. While I acknowledge there isn’t much space in an 800 word analysis piece, it’s not hard to note some of these trends and effects in passing.

So what does the evidence say? Here are a couple of statements which show why Clarke’s claim about suppressing wages should be taken with a large piece of salt:

Productivity Commission (2016):

“International studies find that the overall impact on the local labour force is small (either positive or negative).”

“Research commissioned for this inquiry suggests that over the decade since 2001 (generally a period of robust economic growth), on balance and in aggregate, recent immigration had negligible effects on the labour market outcomes of the local labour force.”

Migration Observatory (2016):

“Empirical research on the labour market effects of immigration in the UK suggests that immigration has relatively small effects on average wages but more significant effects along the wage distribution, i.e. on low, medium and high paid workers.”

Claim Three: “More people also mean more demand for scarce goods and services. When there’s already a tight supply of a particular good, it can mean huge price rises.” (talking about housing)

It’s undoubtedly true that demand for scarce goods and services leads to higher prices. But as has been acknowledged by almost every serious policy guru in the country, the reasons for housing scarcity are numerous, including demand-side policies like negative gearing and capital gains tax, as well as supply pressures such as zoning and urban planning. Lumping Australia’s housing market onto new migrants is a particularly low blow when this was a major election issue.

Yes, more people will increase demand for housing and other services. But as the graphs above show, migration has not come out of nowhere and is a known quantity. Planning for this, instead of passively ignoring it, is a much better approach than scapegoating migrants. Understanding migration flows as response to underlying economic conditions, instead of an exogenous force or shock imposed by governments, helps understand why blaming migrants is not the way forward on housing policy.

Claim Four: Migration ‘Good for business, governments’ but “But it isn’t necessarily good for ordinary workers.”

As with the effects on wages and employment, this question is compositional. It depends where you live, what you do and what your skills are. However this is the very reason underpinning Australia’s skilled migration program. It is deliberately set in the “national interest” or for ‘ordinary workers’. Skilled workers increase supply at the top of the labour market, most assisting those at the bottom of the labour market. Skilled migration is a mitigating force on inequality in Australia, albeit likely a small one (but opening up more low-skilled opportunities to Australia would better assist global inequality instead of national inequality). For example, while 457 visa holders make up less than one per cent of the labour market, their salaries are about 20 per cent higher than the average full time wage. English-speaking migrants do better on average than the average labour market participant while non-English speaking migrants do slightly worse. In addition, the economic demand created by new migrants is propping up entire industries – construction and higher education come to mind – and while this is not a reason to run a migration program, it must be considered when assessing the effect on ‘ordinary workers’. Clarke also fails to note how migration may drastically improve the lives of new migrants themselves. Should we consider this? Again, it depends on the policy goal of governments.

The real people who feel the biggest brunt of new migrants are likely the migrants who are already here. Numerous studies show this and it’s because these groups are often the most similar in any economy, therefore having higher rates of substitution on employment and wages.

Normally, any analysis of non-asylum migration to Australia is a positive as it is drastically underexposed in mainstream media outlets. Kudos to Clarke for taking the time to write about an interesting aspect of migration to Australia, the differences between aggregate and marginal benefits/costs of migration. However it would have been good to see a broader discussion about why migration is the way it is, a broader set of possible effects and some of the well-established evidence about these questions. Particularly for analysis on the ABC, which should be held to a higher standard, the four claims above deserve more scrutiny than they received.