Articles published elsewhere: 457 visas, seasonal workers and temporary parent visas

I’ve got three pieces published elsewhere today.

I argue in Crikey Bill Shorten and Labor are taking the wrong approach to ‘Australia first’ with their proposed regulatory changes to the 457 visa program (full article below the fold as it is paywalled). Governments should be using price-based mechanisms combined with more enforcement activity if goal in Australian employment.

I now spend most of my work life at the Development Policy Centre, based at ANU. Here is a short update on how the Seasonal Worker Program grew nearly 50 per cent in 2015-16 and why this is a good outcome.

Finally, I write with Peter Mares and Anna Boucher in the Guardian how the proposed Temporary Parent visa threatens to create a permanent second-class of Australian residents. Despite the good intentions of bringing together migrant families, this is a dangerous precedent to establish and should be reconsidered.

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Quick thoughts on the Innovation Statement from a migration perspective

I haven’t got around to reading Laura Tingle’s new Quarterly Essay yet. However I read the extracts and the commentary surrounding it and felt a little bit aggrieved. While I’m sure the public service has changed radically over the past three decades and not always for the better, I’m optimistic sound policy advice can be found within the APS and the system is not broken.

With this in mind, I was quite looking forward to today’s Innovation Statement. I can’t remember the last announcement in Canberra flagged with such enthusiasm.  The opportunity to dust off some well considered ideas and throw them into the political arena should be welcomed. After the announcement, Tingle herself wrote how the Prime Minister has been “prepared to take some policy risk, but wherever possible, aligning the risks with the best people to assess them”.

Four hanging yellow light bulbs. Perpetual motion. Idea concept.

I can’t speak for 22 of the 23 policy announcements detailed in these “fact sheets“. But on what I can speak to – immigration and visas – there is scant evidence of agility and even less for innovation. My immediate take is this seems like a wasted opportunity in a policy area where there are few fiscal constraints and new ideas are only limited by imagination and an ability to persuade. Malcolm Turnbull should be the person for the job.

There are three ideas in the migration space:

  • Providing more points to people who hold STEM and ICT post-graduate degrees under the Independent permanent visa pathway.
  • Establishing a new Entrepreneur visa (with consultation on the details to come)
  • Using the diplomatic service to better promote Australia as a destination to ‘talented individuals’

The third idea has merit. However Australia’s presence around the world is already stretched according to many. In this context, it is difficult to see how this will be achieved.

I’m less enamoured with the first and second ideas. Take the example used in the fact-sheet for dot-point one:

“Aiko has studied in Australia for many years and will soon graduate with a PhD in biochemistry. She would like to stay and work in Australia, but because she hasn’t yet obtained much work experience, she doesn’t meet the points test threshold to be eligible for a Skilled Independent Visa. Under the new arrangements, she will be eligible for more points, allowing her to stay in Australia and provide valuable skills for local businesses.”

In a vacuum, this would be a good policy idea. But Australia already has a well regarded immigration policy framework that in all likelihood looks after someone like Aiko.

If Aiko is aged between 25-32, had a PhD and can speak “proficient English” (equivalent to a 7.0 IELTS score), she already has 60 points in the points test, regardless of her job experience. If she has studied for an eligible occupation, this is already the requisite number of points to receive a visa based on current trends. If her English is “Superior”, she will likely receive an invitation for a visa within weeks of submitting an expression of interest.

What purpose will additional points assist Aiko? I’m genuinely stumped.

Further, even if Aiko falls short of the required points for some unknown reason (and I cannot think of a reason unless she is over 40 years old), she would very likely remain eligible for a different type of visa: the Temporary Graduate visa. As Aiko has undertaken a PhD, she is eligible for a four year work visa requiring no sponsorship from an employer. This work visa has no limits on occupation or industry, so if local businesses seek her ‘valuable skills’, they will hire her.

This policy idea reeks of offering something up that sounds good to outsiders but in fact will change very, very little in terms of immigration outcomes. Allowing all PhD holders immediate access to permanent residency would have been slightly more agile, stripping back regulation and making research in Australia marginally more competitive.

Moving on, an Entrepreneur visa certainly sounds more innovative than extra points in the points-test. Yet it too is likely more for show than anything concrete.

These visas have been tried elsewhere and failed. Why? It’s bloody difficult to think of a brand new business idea in one country, pick it up and get cracking in another. Scaling up a new business idea is really hard. Achieving this in a foreign marketplace exponentially increases the risk of failure. Consumer markets, supply chains and regulatory frameworks are just a few of important contextual factors that differ radically across countries. These are not easy barriers to adjust to and ensure business ideas that can succeed in Australia are more likely to be created by people who already live in Australia. Understanding this premise is pretty important.

Hopefully I’m wrong and this government can unlock the puzzle of entrepreneur visas. As there will be consultation around the details, I plan on being as helpful as possible in trying to help it succeed. However I do not have high hopes and it looks like people who have a poor understanding of how migration actually works have pushed this to the front of the queue in terms of new ideas.

Perhaps this sounds like sour grapes. I do not intend it that way. I genuinely believe immigration has a role to play in terms of innovation policy in Australia. I helped co-author this paper released last week titled, “Immigration and Innovation in Australia”. It outlines three ideas: a streamlined sponsorship for Startup businesses, expanding the reach of accelerators and incubators and a visa lottery for international students across the world to come to Australia.

To me, the three ideas in the Innovation Statement are not bad, they just won’t achieve much of anything. They are shiny on the outside but lack substance. This appears to be an opportunity missed, at least in terms of immigration and innovation.

A test of character

Imagine being deported to a country where you knew no-one. Where you had no connections. Where the moment you land, you feel like an intruder.

Ian Wightman is a 51 year old man who has lived in Australia for 50 years. Yet he is not an Australian citizen and after spending 15 months in jail, he is now being detained and likely to be deported to the United Kingdom.

Five decades in Australia including time spent in the Australian reserve forces count for naught. Locked up on Christmas Island, it’s impossible to understand what Wightman is thinking.

If I didn’t know better, I’d assume this was fiction. However fiction doesn’t repeat itself.

Take Ko Rutene. A New Zealand man living in Australia who has committed no crime. A decorated war hero who served in Afghanistan and was part of John Key’s personal protection. Rutene’s visa has been cancelled as he was a member of a motorcycle club. He is being detained in a high security prison.

This scares the shit out of me. With over 27 per cent of Australia’s population born overseas, including 1.6m people on temporary visas at any point in time, recent legislative change has created a nightmare scenario where long-term Australian residents are subject to disproportionate, draconian police-state powers.

In October 2014, amendments to the Migration Act introduced mandatory visa cancellation for non-citizens who had spent 12 months or more in jail. Under Section 501 of the Act, applicants visas are cancelled and then as they do not hold a valid visa, subject to mandatory detention. There are no exemptions and the only avenue is one opportunity for the Immigration Minister to overturn the decision. This process is not reviewable, there are no second chances.

This is a black and white approach to a very murky area. While there are undoubted convicted criminals who many would support the detention and deportation of, there are also those mixed up in the arbitrary nature of these laws. There are those, like Ian Wightman, who have a lifetime connection to Australia and amongst the strongest moral claims to remain. Spending 98 per cent of your life in a country – regardless of the crime you commit – creates bonds that should be more difficult to break. There are those, like Ko Rutene, whose life has been upended without due process.

In today’s Fairfax papers, the New Zealand Interior Minister called this a ‘frontier approach to justice‘. It is hard to find fault with this assessment. We have created a system without discretion where these individual stories will continue to arise. Migration and residency are not black and white but subject to temporal and social norms and experiences. People – particularly migrants – do not live homogenous lives where the law can easily define right from wrong. This is why there are entire sections of migration law which rest heavily on discretion. This is why there are multiple institutions dedicated to due process and appeal.

Today this seems almost foreign. With visa cancellations from character grounds up over 500 per cent in the past 12 months, it is time to question why these changes occurred in the first place and walk them back. Reading the google alerts I set myself each morning has become more than a chore it once was. There is a sense of despair. While there may be larger issues going on in the world of migration right now, if we cannot get this basic stuff right, what hope is there for genuinely difficult questions?

I had no idea these laws were being passed last year and I should have paid closer attention. For this I apologise. Even a little bit more attention shined at the time may have led to a different outcome. Perhaps naively, I like to think those who did consider them did not expect these outcomes and the opportunity exists to redress such unfair treatment of people who have given so much to Australian life.

How to understand 457 visa statistics: Don’t read the Australian

 

In August last year, I wrote about some poor reporting on 457 visa statistics. Natasha Bita in the Australian wrote:

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

This was nearly completely incorrect. The “demand” didn’t really do anything. Instead, a giant price increase on 1 July brought forward thousands of visa applications into June 2013:

This price increase did not create demand. Instead many visa holders already in Australia applied for a renewal a bit earlier than they would’ve otherwise and a number of businesses brought forward overseas hires. All of this masked what was a very standard year in 2013-14.

Ten months later. Same journalist, same paper… same mistakes:

Indian, British and Chinese workers are queuing for jobs in Australia, with applications for 457 work visas jumping by 15 per cent in a year.”

By definition, if you have artificially low numbers for 2013-14, you are going to see increases the following year even with the status quo. The same price hike on 1 July 2013 is “causing” the current rise in visa applications. This is because the 15 per cent “jump” is occurring in 2014-15, referenced against 2013-14, the year with artificially low numbers.

This isn’t rocket science. The current movements in visa application trends are probably about 10 per cent related to the labour market and 90 per cent related to the decision in the 2013-14 Budget to jack the fees of 457 visas by 200-800 per cent (depending on family size). This should wash out of the system over the next 6-12 months.

The public are told a nice narrative that correlates succinctly with the numbers. What a shame the narrative is completely unfounded.

There are many culprits here.

Let’s start with the Department of Immigration and Border Protection. They could have mentioned even a little bit of this background in their quarterly reports (March 2015). Instead, they are making the reports harder to understand by taking away some important contextual graphs on page 1. Of particular note was the graph that showed the actual number of 457 visa holders in the labour market, “Number of primary subclass 457 visa holders in Australia at the end of each month”:

Screen Shot 2015-07-06 at 8.56.38 pm

Looking at the graph, you see the number of 457 visa holders in the labour market moves slowly over time and never erratically (noting, of course, the dip in December as people holiday outside of Australia).

Unfortunately, you cannot see this graph in the latest report. For some reason, it has been removed. You instead need to dig into a pivot table that currently has a broken link. Yet even the text report says “The number of primary visa holders in Australia on 31 March 2015 was 106,750.” An extra couple of clicks and you can find out that the number at 30 June 2014 was 108,870. Doesn’t sound like a rollercoaster ride of 15 per cent increases and 40 per cent slumps to me.

I’d be very surprised if Natasha Bita read my previously blog post. Reading obscure migration blogs is not recommended for reporting in national newspapers. However I would’ve happily taken her phone call in my day job at the Migration Council Australia. I’ve spoken to numerous journalists – including three from the Australian – about migration trends and what my interpretation is of the latest statistics. I know a handful of other people who provide similar opinions. Instead, her article is a complete grab-bag of seemingly random statistics with a misleading central point (noting it is not deliberately misleading).

Lastly, I’ll take some of the blame. I got really hot under the collar when I read Ms. Bita’s article from last August. I made a commitment to myself that I would work harder to try and explain migration and the labour market – as I see it – to more people in the media, whether this be by random emails or actively following up what I regarded as mistakes. I started strong but a disappointing experience in March this year dissuaded me from keeping it up. My resolve has firmed once again.

There are really interesting, difficult policy questions regarding migration policy and the labour market in Australia. Yet the tosh that gets served up in the media makes it all but impossible for even interested readers to understand what is occurring. More damagingly, poor reporting prevents policy settings from being more closely examined. The hospitality industry continues to run rampant with the 457 visa program, with little regard for policy goals, the people they exploit or wages they seek to undercut.

This is horrible for policy outcomes and underpins ignorance in the community on how migration effects the labour market. The rising public debate about the migration provisions in the Chinese-Australia Free Trade Agreement will demonstrate how this ignorance can harm social cohesion and attitudes to migrants in the community.

Increasing migration restrictions in the UK: working holiday visas

The UK Government has been on a five year journey to lower the number of migrants arriving. To this point, they are failing spectacularly given recent economic growth and migration numbers are higher than at any point in the Cameron government. Despite this, they continue to believe in a fantasy of reducing these flows to under 100,000 per year.

The latest strategy is to “tighten the rules” on working holiday visa holders from outside European Union countries.  As Jacquelin Magnay points out in the Australian:

“Current unrestricted movement throughout the EU has resulted in more than 318,000 new migrants in the past 12 months. Fewer than 16,000 Australians now arrive in Britain each year to work, well down on the 40,000 of a decade ago.”

The new rules will create a backlog, a deliberate queue to try and stop these people arriving.

Just like trade barriers, further increasing migration barriers in an increasingly globalised world will have a range of effects. The most insidious will be the long-term lack of good will on migration policy amongst countries. This British rule will place substantial limits on a soft institution that hundreds of thousands of past Australians have enjoyed.

More troubling, this will likely be used by future Australian governments to go down the same track. As we see on the citizenship debate, the “reforms” to British citizenship have been rolled out as an example and justification for the current push for more restrictive policies and increasing executive power.

Australia has one of the most open working holiday visa programs in the world. This comes with a range of policy issues which have long been ignored but at its essence, it is a positive program that can foster closer ties between individuals, communities and countries.

When one country unilaterally imposes migration barriers, reciprocity in a global system will take a hit. This is another example of the increasing trend for countries to impose more barriers to people movement in contrast to everything else we hear about an ever more globalised world.

 

The Chinese-Oz FTA and Australian immigration policy

To be honest, I thought there would be more of an uproar about the Abbott’s decision to include migration in the Chinese-Australian FTA. Instead, mostly silence. The Australian chipped in with this effort from Ewin Hannan. Unfortunately all the article does is underscore just how poorly most of the media understand non-asylum immigration policy in Australia.

From what I can tell, there are two things to note about the Chinese-Oz FTA and migration.

An “Investor Facilitation Arrangement” (IFAs) has been created for Chinese organisations who have a capital investment of more than $150m. The IFA will create a formal contract between the company and the government to modify the standard conditions of the 457 visa program.

An important point to begin with is that this process already exists in migration law. Companies can negotiate “labour agreements” which are a contract between an organisation and the government using 457 visas. A labour agreement typically allows two exemptions; the hiring of ‘semi-skilled’ workers and a small loosening of English language standards. These contracts take years to negotiate and are spurned by most employers as not worth the effort. From memory, there are only 150-200 of these contracts in the entire labour market.

The IFA process introduced under the FTA is basically a streamlining of this process for Chinese companies with a capital investment over $150m. From the government’s public comments, there will be no exemptions on salary requirements currently mandated under 457 visa regulations.

What was announced was the default option when you do not want to introduce legislation because the politics are too hard: put everything into policy and contracts. To be honest, I’d be surprised if there were more than a handful of these contracts in place before the next election. They might end up covering anywhere between 1,000 and 5,000 workers who would not have been able to come to Australia within the standard system.

To answer Mr. Hannan’s question about the lack of detail from the government, this is simply because nothing significant is going to happen until a company requests a contract and negotiations begin. Sure, they could have done a better job explaining what was happening but I don’t believe they are actively hiding anything either.

The second subject of note is the introduction of a Working Holiday Maker agreement Chinese citizens. What I found interesting is if you look at the December 2013 report from the Working Holiday Maker report (page 4) you will notice China is not on the list of countries where negotiation is underway. Given the Chinese-Oz FTA has been in negotiation for 10+ years, this might be a sign that Working Holiday Makers were included very late in the piece. Perhaps the government stood firm on other types of immigration and this was used as a compromise? Who knows.

There will be 5000 places per year for young, educated Chinese people to spend one or two years in Australia “backpacking”. While Working Holiday Makers can tell employers to get nicked and remain in the country, they are excluded from addition protections found in the Migration Act for 457 visa holders. Instead they fall completely under the Fair Work Act along with everyone else. My gut feeling says the majority of exploitation of temporary migrant workers likely occurs in the WHM program. It’s impossible to generate even an educated guess on the magnitude of this issue given the complete lack of information on the program. The lack of capacity to enforce regulation in marginal parts of the labour market is the main reason exploitation is likely to occur. Both the ALP and the Coalition fail on this score over the past decade. When you only have a handful of inspectors and compliance officers trying to enforce complicated regulation on a program of over 100,000 people and 30,000 businesses, of course you’ll see mistreatment and abuse.

China was always going to have a capped number given their population size. However it is interesting to compare the maximum possible number of Chinese working holiday makers with other countries whose citizens use the program. Here is the number of visa holders from various countries who were in Australia on 31 December 2013:

United Kingdom 30880
Taiwan 28572
South Korea 23059
Germany 19278
France 16680
Italy 11780
Ireland 10104
Hong Kong 9331

I wonder what Chinese policy-makers think of the 5000 hard cap given there are nearly double that number of Hong Kong migrants in the program at the moment? Given there were a total of 178,982 working holiday makers in Australia on 31 December 2013, another 5000 is not going to make much of a dent in terms of actual labour market outcomes.

On the one hand, it was good to see there wasn’t a massive stink about this. Migration should be included in trade agreements (although it would be better at a regional level). Placing some some solid policy infrastructure around migration policy can help countries muddle through expanding their openness. Australia has a role to play in the region here as the movement of people is only going to increase a policy priority in the coming decades. What happens when China starts opening up a skilled migration program because of their demographic transition? It will be better for Australia to be inside the tent when that day comes and these are the baby steps necessary towards that point in time.

This doesn’t mean everything is hunky dory in the 457 visa program. The most pressing issue to be concerned about – which I haven’t seen raised once in national media – is the freezing of the Temporary Skilled Migration Income Threshold at $53,900 for up to two years.

By refusing to index the salary floor for temporary migrants, the government is squeezing real incomes for migrant workers. Further, they are creating an incentive to hire overseas workers instead of Australians given ‘market wages’ for migrants are not rising in line with the labour market. This has horrible medium- and long-term consequences yet the mechanics of these processes are so poorly known we do not hear about it.

Innovation and the H-1B program

Skilled migration and innovation go hand in hand, right?

Perhaps not say Kirk Doran, Alexander Gelber and Adam Isen. In their paper, “The Effect of High-Skilled Immigration on Patenting and Employment: Evidence from H-1B Visa Lotteries“, they find that H-1B migrants (the 457 visa equivalent in the United States) have an ‘insignificant average effect on patenting’. (h/t Ryan Edwards)

Further, their results “generally rule out the claim that an additional approved H-1B visa has no negative effect on the employment of other workers at the same firm” (p.4). Meaning H-1B workers – skilled migrants in large organisations – are substituting other workers.

The interesting thing about this paper is the process used. The authors study firms instead of geographic locations because of their data. They match up data from the Immigration Bureau, the Tax Office and the Patent Office [think for a moment if this was possible in Australia] and include a random sorting process because in 2006-07, companies oversubscribed to the H-1B lotto. This means its possible to compare winners and losers of which companies get to hire migrants.

These results are a serious addition to the literature and should be engaged with. The authors acknowledge how their findings go against the grain of some other research where patents have been associated with migrants but their study has an excellent methodology.

This research is difficult to apply to Australia. In the U.S. about 60 per cent of H-1B visas are computer-related, such as software engineers. In Australia, the comparative figure is about 10 per cent. While there are similarities – highly skilled relative to the native population, higher than average salaries, a majority of visas being granted onshore (continuing employment) – the nature of skilled migration in the U.S. and Australia is different. Australia has a much more diverse range of migrants by occupation type than the U.S. and the link to permanent residency through employer-sponsored is much stronger.

This does not mean we should ignore this research. Indeed, Australian policy-makers should be attempting to try and figure out exactly these questions by matching processes. The ABS is currently working on a matching process using ATO and DIBP data for migrant incomes. One assumes there is little standing in the way of a similar exercise to look at companies.

Hopefully more work on these questions will emerge, providing a detailed picture on the micro-effects of migration across different labour markets.