Migration policy: All about numbers

Bob Birrell and Bob Kinnaird

[This post was first published in the March 2017 newsletter of Sustainable Population Australia. It has been republished on John Menadue’s blog – Pearls and Irritations]

The permanent skilled migration program should be cut by nearly half, from 128,000 (primary and secondary applicants) to around 70,000. This includes migrants granted visas under the points test and those sponsored by employers.  

Our political leaders have prioritised growth in the migrant intake over other pressing concerns. These include the migrant contribution to city congestion and housing costs. You might think that our leaders would also be worried about the job competition for locals. Almost all proclaim their concern about jobs for Australians. Yet they are mute about the obvious clash between current immigration policy settings and Australian jobs.

This article summarises our research on the seriousness of this clash and how migration advocates manage to avoid critical scrutiny. Our focus here is on the permanent entry program rather than on the 457 program – detailed in the published report.[i]

The ABS estimates that Australia’s total population growth (some 340,000 a year) is adding around 280,000 a year to the civilian population aged 15 plus. If past work force participation rates continue, 65 per cent (or some 180,000) of this additional population will enter the labour market.

Yet in the year to November 2016, the growth in the number employed in Australia fell to just 87,000. Other signs confirming a weakening labour market are that almost all of the growth of employment in the last few years has been in part-time work and that there has been no growth in the total number of hours worked by those employed.

This is hardly a time to be running a record high permanent entry migration program of around 205,000, or to be encouraging the intake and prolonged stay of those holding temporary visas with generous work rights. These include students, Working Holiday Makers and temporary workers on 457 visas. An egregious example is the rule allowing overseas students to apply for tourist visas when their student visa expires. 35,877 were granted such visas in 2015-16. Does the government really think that many of these former students, with expenses to cover, will not work illegally?

The total stock of these temporaries has risen to around 1.3 million, excluding New Zealanders. They are providing ferocious competition for young job seekers. That is why the unemployment rate for persons aged 15-24 has reached 13 per cent and why increasing numbers are forced into internships and other forms of unpaid work.

Yet there is little sign from leading politicians and commentators of any rethink on the migration policies contributing these outcomes.

Why is this? The answer may be obvious to SPA members. Population growth is seen by the government and business interests as boosting the economy at a time when expenditure on resource industry investment has fallen from around 8 per cent of GDP in 2012 to around 4 per cent in 2016. The views of the current Governor of the Reserve Bank, Philip Lowe are typical. He has declared that population growth is the key to offsetting Australia’s current difficult economic setting. He argues that if Australia continues with the fastest rate of population growth amongst OECD countries this will drive Australia’s economic growth since migrants ‘will require somewhere to live, to work and to play’.[ii]

How do our political leaders get away with it? It is partly because they have created a smokescreen of (false) claims that the ‘skilled’ permanent and temporary entry programs only recruit highly skilled persons in short supply in Australia. On this basis, they assert that these recruits do not worsen local job opportunity. Our recent research, summarised below, refutes these claims.

The skilled migration smokescreen

The permanent resident skilled program

This is currently set at 128,000 (primary applicants and dependents). About two thirds are selected via the points-tested visa subclasses and the rest mainly via employer sponsorship. The Australian points-test and its alleged success in recruiting highly skilled migrants is regularly touted as a model for European nations to emulate as they struggle to manage their migrant influx.

These claims are taken seriously because of one key feature. This is that eligibility for the points tested visa subclasses is limited to those in occupations listed on the Skilled Occupation List (SOL). This list was introduced in 2010 at a time when the previous selection system was in disarray because of the huge number of cooks and hairdressers being visaed. The 2010 SOL was limited to managerial, professional or trade level occupations judged to be in overall national shortage. Cooks and hairdressers were not included.

On the face of it, this policy remains intact. The Australian government conducts an annual review of the SOL, where the public is invited to submit their views about whether particular occupations should be on the SOL or not. But this is a façade.

The growing evidence of oversupply in major professions like accounting and engineering has had little impact on the SOL. For example, the Department of Employment has recently recommended that accountants be removed. The Department of Health did the same for general practitioners (and some other health professions, including dentists) in the course of the 2015-16 review of the SOL.[iii] This advice was rejected.

The government has justified this stance by changing the criteria for judging when an occupation is in oversupply. SOL listing is now determined not by the current state of the Australian labour market, but by the government’s expectations about the medium to long term demand for skilled workers in the relevant occupations.

The Coalition Government makes no bones about its position. Its advice to those putting submissions on the 2016-17 SOL is that the SOL is concerned only:

With ‘medium to long term’ skills needs rather than immediate skills shortages. As such, the Department of Education and Training is only seeking information on longer term trends rather than immediate shortages and costs. ‘Medium to long term’ means 2-10 years.[iv]

No matter what is said in the annual review of the SOL about oversupply problems in particular occupations right now, the government can (and usually does) claim that when ‘normal’ rates of economic growth and job demand return, additional skilled migrants will be needed. This policy stance hides the government’s main priority, which is achieving its skilled migration numerical target. This would be gutted if currently oversupplied occupations like accounting, engineering and ICT were removed from the SOL. This is because they comprise nearly half of all the migrants granted visas after passing the points test.

So much for the claim that the program complements the domestic workforce. What about the boast that the migrants recruited are highly skilled?

Nearly two-thirds of those visaed under the points-tested visa subclasses were offshore applicants. All they have to do to meet the skills criteria of the test is attest that they have experience in their nominated occupation (usually at least eight years) and that they possesses degree level qualifications (from any of a vast number of educational institutions across the globe with greatly differing standards). There is no assessment at all as to whether they are ‘highly skilled’ or that their work experience is even relevant to employer needs in Australia.

For applicants applying in Australia, success is guaranteed if they hold bachelor level qualifications from an Australian university in any of the occupations listed on the SOL (like ICT or accounting), are aged less than 33 and have reached ‘Proficient’ level English (level 7 on the IELTS test). No job experience in their occupation is required. When these former overseas students enter the Australian job market, they add to an already oversupplied graduate labour market that puts a premium on experience and face the same problem as local graduates.

The employer sponsored permanent skilled program

In contrast to the points-tested category, the government claims employer sponsored permanent visas do ‘fill (current) skills shortages in the Australian labour market’.

But this claim is also mostly a facade. There is no genuine and rigorous testing of the Australian labour market to establish that no Australian workers are available at going market rates. The main ‘test’ is simply that the sponsoring employer says there is a shortage of Australian workers. For some employer-sponsored visas in regional Australia, the State government department responsible for regional development assesses whether Australian workers are available ‘locally’ (not nationally). These agencies usually have regional population growth as part of their charter.

Employer-sponsored permanent migrants may be less skilled than the points-tested skilled migrant group as lower skill levels and lower English language requirements apply. In 2015-16, only 26 per cent of employer-sponsored permanent migrants had occupations listed on the SOL.

The permanent skilled program could easily be cut in half by removing occupations like ICT, accounting, engineering, GPs and specialist doctors currently oversupplied from the SOL and by restricting employer-sponsored migrants to occupations on the SOL combined with rigorous labour market testing.

Dr Bob Birrell is President and Bob Kinnaird is a Research Associate, of the Australian Population Research Institute.

[i] Bob Birrell, Ernest Healy and Bob Kinnaird, Immigration Overflow: Why is Matters, The Australian Population Research Institute, December 2016

[ii] Phillip Lowe, 2014, Building on Strong Foundations, Address to the Australian Business Economists Annual Dinner, Reserve Bank, 25 November, p. 5

[iii] On the issue of GPs, see Mike Moynihan and Bob Birrell, December 2016, Doctor Oversupply-Ignoring the evidence, The Australian Population Research Institute.

[iv] <https://submissions.education.gov.au/forms/archive/2015_16_sol/documents/CPA%20Australia.pdf>

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GP Oversupply and Medical Migration

By Bob Birrell, republished from John Menadue – Pearls and Irritations   13 January 2017

There are many indicators of GP over-supply in Australia.  … One consequence has been an escalation in the cost of GP rebates to the taxpayer. … Better distribution of GP services could be achieved by restricting new provider numbers to under-supplied districts.  

There are many indicators of GP oversupply in Australia. Over the decade to 2014-15 the number of GPs accessing primary care rebates on Medicare increased by 47.4 per cent. Over the same period Australia’s population increased by 18.7 per cent. The result was a sharp increase in the per capita number of GP services billed, from 4.7 in 2004-05 to 5.7 in 2014-15. The increase in per capita service provision was even stronger in Australia’s metropolitan areas, where GPs have been concentrating and the oversupply is most acute. Australia is close to the top in the ratio of working doctors to population within OECD nations.

GPs practicing in oversupplied locations have to chase patients. This has encouraged high throughput medicine, in which doctors prescribe multiple tests and recommend repeat patient visits. Patients, for the most part, accept this because they do not pay the costs. Currently 85 per cent of all GP services are bulk-billed. High throughput medicine depends on bulk-billing. Any GP that charges a co-payment in an oversupplied area will quickly lose patients.

One consequence has been an escalation of the cost of GP rebates to the taxpayer, from $3.3 billion in 2004-05 to $6.8 billion in 2014-15 and $7.2 billion in 2015-16. The costs for Pharmaceutical Benefits and screening tests have jumped as well.

These costs will continue to rise because of the increase in the number of domestic medical school graduates, from 1,320 in 2005 to 3,055 in 2015. The number of these graduates taking up GP training places has grown from 450 in 2004 to 1,529 in 2015. Once these Australian Trained Doctors (ATDs) obtain their GP Fellowship they can practice where they wish. Despite a raft of incentives to serve in undersupplied areas the great majority are choosing to practice in metropolitan areas.

Large numbers of Overseas Trained Doctors (OTDs) are adding to the metropolitan supply. This arises as follows. Since the early 2000s successive Australian governments have dealt with shortages of GPs in regional areas by facilitating the recruitment of OTDs on 457 visas. These 457 visas are only issued for specific jobs in GP practices and hospitals in locations defined as Districts of Workforce Shortage (DWS). Thousands of such visas are issued each year, including 2,320 in 2015-16. An indication of the scale of this recruitment is that it is more than the 1,529 GP training places allocated in 2015.

After serving a prescribed period in a DWS (from 5-10 years depending on remoteness of location) OTDs can bill on Medicare where they please (just like ATDs). Most move to metropolitan areas or to major regional centres. This movement is the main contributor to the rapid growth in the number of GPs billing on Medicare in metropolitan areas.

Given current medical migration policy this metropolitan flow will continue, because the government is allowing employers in DWS to sponsor replacements for the OTDs who leave. They are doing so in large numbers, as is indicated by the 2,320 457 visas issued in 2015-16. In time, many of these OTDs will move to metropolitan areas, where they will compete for patients with the impending surge of ATDs described above.

The Department of Health takes a stand

In 2016 the Department of Health (DoH) admitted the seriousness of the oversupply situation and announced some radical proposals affecting the recruitment and location of GPs. This arose in the context of the 2016-17 review of the Skilled Occupation List (SOL). The DoH recommended that GPs (and most specialists) be taken off the SOL. The significance of SOL listing is that migrants seeking permanent entry visas under the points-tested visa subclasses must have an occupation that is included on the SOL. The SOL does not affect eligibility for a 457 visa since almost all professional, managerial and trade occupations are open for sponsorship.

However DoH accompanied its SOL recommendations with a statement that it intended to reduce medical migration and to ensure that newly minted ATDs fill the resulting vacancies in underserviced areas. DoH can stop OTD recruitment on 457 visas by abolishing the DWS arrangements. At present OTDs can only be sponsored for a 457 visa if their employer specifies a GP position in a DWS.

The Coalition Government rejected this advice. It did so for two reasons. The first was that it does not want to remove major occupations from those eligible for its points-tested visa subclasses. To do so would gut the migration program, an outcome the government will not countenance. To this end the government has changed the criteria determining listing on the SOL. It has stipulated that the current state of the labour market in particular occupations is no longer relevant. All that now matters is the ‘medium to long term’ skill needs for the occupations under review.

To illustrate, the Department of Employment and Training’s recent surveys show clear evidence of excess numbers of applicants to job vacancies for accountants, ICT professionals and engineers. Yet each of these occupations remain on the SOL. All the occupations listed, as well as doctors, remain on the SOL because according to the government’s judgement of the medium term outlook, there will be a need for additional professionals in each field.

Our investigation indicates that these judgements are being made on the basis of outdated employment projections prepared during the resources boom era. The DoH recommendations for doctors were particularly interesting in this context because they challenged these projections (even if to no avail).

The second reason for the government’s reluctance to accept the DoH advice was fear about the likely reaction of organised medicine. If medical immigration ceased and ATDs entering the workforce were required to fill the resulting vacancies, this would abrogate the longstanding right of ATDs to practice where they wish. The policy would be labelled as conscription.

This is not the case. GPs are public servants, as the 85 per cent bulk-billing rate indicates. Public servants, such as teachers, can choose to work wherever there are vacancies. Likewise for GPs. Under the reforms implied by the DoH, GPs who finish their training would be free to work in any of the many locations — mainly in regional Australia, but also in after-hours service in metropolitan areas — where their services are needed. This could easily be accomplished by restricting new provider numbers to undersupplied districts.

This article is drawn from Mike Moynihan and Bob Birrell, GP Oversupply – Ignoring the Evidence, The Australian Population Research Institute, December 2016.

Bob Birrell is head of The Australian Population Research Institute. 

Australian temporary work visa concessions in the Singapore FTA package

Bob Kinnaird
26 May 2016

Prime Minister Turnbull announced the Australia-Singapore ‘Comprehensive Strategic Partnership’ (CSP) on 6 May last, just a few days before he called the 2 July election.

Cynics will suspect the timing and also see the Singapore announcement as something of a consolation prize. The much bigger FTA fish for the Turnbull government was the elusive agreement with India. This was originally promised by the end of 2015 but Special Trade Envoy Mr Robb this week said only that a deal is now possible around mid-2016.

With the CSP announcement, Mr Turnbull can now claim a second FTA on top of the Trans Pacific Partnership (TPP) to match the three North Asian FTAs of his predecessor Mr Abbott. As the Turnbull government’s FTA ‘success’ is trumpeted as a key part of its re-election campaign, this ticks the public relations box.

There are three significant Australian immigration commitments in the Australia-Singapore CSP that probably signal what is coming in the much larger India agreement.

1 Australia’s commitments to ‘waive’ labour market testing (LMT) in the 457 and the 400 visa program
Labour market testing (LMT) means employers have a legal obligation to look for suitably qualified and experienced Australian citizens and permanent residents, and show that none are available, before employers can access temporary visas for foreign workers.

In the 457 visa program, Australia has committed to ‘waive’ LMT for all Singaporean nationals and all ‘intra-corporate transferees’, ie all other foreign nationals who are employees of Singapore-based businesses transferring to an Australian branch of the Singapore-based business.

This LMT waiver will apply to persons in all 651 occupations on the 457-eligible list, including tradespersons and professionals, and Singaporean students studying in Australia.

In the 400 visa program, Australia has similarly committed to ‘waive’ LMT for all Singaporean nationals visaed as ‘installers and servicers of machinery and equipment’.

Australia has also committed not to apply any numerical caps to the number of visas granted to the above categories covered by the 457 and 400 visa commitments.

The LMT waivers and the commitment to no caps will be binding international obligations which effectively cannot be reversed by future Australian governments.

As with the TPP and the China-Australia Free Trade Agreement (ChAFTA), these irreversible concessions on the 457 and 400 visas were not publicly disclosed by Prime Minister Turnbull in his lengthy media conference on the CSP. Neither were they disclosed by Immigration Minister Dutton in his media release on immigration measures in the CSP package or the DFAT CSP ‘Fact Sheet: Immigration’ posted on DFAT’s website.

As with the TPP, it was Labor’s Senator Penny Wong who extracted the CSP visa information from DFAT officials at Senate Estimates. This included an admission that ‘the outcomes are broadly consistent with our approach on the TPP’.

Singapore makes up only a tiny fraction of the 457 program – just under one per cent. But that is not the point, which is the incremental removal by stealth of Australian Parliament and government control over key aspects of its main temporary migration programs.

2 Work and Holiday visa program
This program will at least be reciprocal, unlike the one-sided ChAFTA program that provided work and holiday 462 visas to 5,000 young Chinese. The Singapore agreement commences with 500 per year on each side, with increased numbers to be negotiated over time.

The official CSP documentation provides a very misleading description of the 462 visa on which the 500 Singaporean nationals will come to Australia. The DFAT CSP Fact Sheet on Immigration says the 462 visa allows visa-holders to ‘undertake short term work and/or study to supplement their holiday and cultural experience’.

This downplays the role of the 462 visa as a work visa. The fact is the 462 visa allows young foreign nationals to work for the entire 12 months stay in Australia. Many do so or work for most of their stay. The only notional work restriction is 6 months with the one employer, but Immigration policy allows many lawful ways around that visa condition which is poorly regulated anyway.

For example, 462 visa holders working not as direct employees but as so-called ‘independent contractors’ or ‘ABN workers’ can lawfully work for the same employer for 12 months straight, provided they do a few days work ‘on paper’ for someone else. This practice is widespread in industries such as construction and contract cleaning. It undercuts wages and conditions of Australian employees, and contributes to visa-holder exploitation and tax evasion by employers and their visa workers.

From November 2015, the Coalition government has also allowed 462 visa holders in ‘Northern Australia’ to work 12 months with same employer in certain sectors: construction, mining, agriculture and tourism, plus aged and disability care. ‘Northern Australia’ includes all of the Northern Territory and those areas of Western Australia and Queensland above the Tropic of Capricorn – and is a prime target for investment under the Australia-Singapore CSP.

A prudent Australian government would place a moratorium on any more Work and Holiday visa agreements with other countries, until this temporary visa program has been thoroughly cleaned up. The abuses of this visa program have been well documented in the media and a Senate inquiry for more than two years. Instead the Turnbull government will probably continue to use the program as a bargaining chip in trade and investment deals.

3 A Pilot Internship Program for Singaporean Students
This immigration measure is a new feature in an Australian FTA package and is potentially a far-reaching one.

The DFAT CSP documentation says ‘a pilot internship program will aim to give 100 Singaporeans studying in Australia more internship opportunities with leading Australian companies’ but gave no more details.

Senator Richard Colbeck, Minister for Tourism and International Education, provided this:

‘Singapore and Australia have agreed a pilot internship program which will aim to give 100 Singaporeans studying in Australia more internship opportunities with leading Australian companies….

‘The agreement also provides opportunities for Singaporean students to gain work experience in Australia.

‘Australia will be seeking to include similar agreements in other trade arrangements to enhance our opportunities to grow international education – further building on the National Strategy for International Education 2025 released last week.’

A pilot program for only 100 Singaporeans in Australia might sound minor. But the Minister’s words imply we can expect something similar for India shortly, with others to follow. Based on overseas student numbers, Australia could be offering India up to 500 additional internships, not just 100.

So far no Turnbull government Minister has explained what the Australian government will actually do to meet the agreed aim of more internship and work experience opportunities in Australia for Singaporeans; or crucially whether the ‘internships’ and ‘work experience in Australia’ will involve paid or unpaid work.

The Turnbull government currently has a problem on its hands with its proposed PaTH ‘internships’ for unemployed young people. Under these arrangements, young people would be paid $4 an hour on top of their social security payment to do an internship placement with a prospective employer.

It could have another problem with these internships for overseas students if the Professional Year Program (PYP), outlined below, is any guide to the Coalition’s intentions.

Senator Colbeck said the internships arrangement will be reciprocal, and ‘more than 700 Australian students will study and undertake internships in Singapore in the first three years of the New Colombo Plan (2014-16).’ The number of Australian students undertaking internships (vs study) in Singapore is not known, nor are the terms and conditions of these Singapore-based ‘internships’ including whether they will be paid or unpaid.

Domestic political considerations in Singapore may influence the scale and nature of these internships for Australian students. As in Australia, there is considerable community concern in Singapore about government policies allowing foreign workers access to the domestic job market.

As one member of the Singapore elite said, ‘It’s your PMETs, the professionals, managers and executives and technical people who worry that foreigners are prepared to come in to work for less pay and they (Singaporeans) are marginalised’ (Ambassador-at-Large Chan Heng Chee, chairman of the Lee Kuan Yew Centre for Innovative Cities, interview with Singapore Prime Minister Lee, 2 August 2015).

Professional Year Program (PYP)
The PYP is an Australian government-endorsed scheme and has operated since 2008 for overseas student graduates from Australian universities who cannot make up sufficient points for a points-tested skilled permanent resident visa. These graduates are granted a 485 temporary visa and do a program of around 44 weeks duration. The PYP fee ranges from around $9,000 to $12,300 per participant.

The program includes an ‘unpaid internship’ of around 12 weeks, for a minimum of around 220-240 hours or so. Given that participants actually pay money to do the PYP, the ‘unpaid internship’ is really an internship that the participant pays for – between $2,500 and $3,400 (based on 12 out of 44 weeks, or 27% of the total PYP fees).

The PYP is currently only available in accounting, IT and engineering. Around 2,000 485 visa-holders undertake the PYP each year, the majority (over 60%) in accounting followed by IT. According to a 2010 survey, around 70% of PYP graduates find professional-level employment, often with the company providing the Internship.

The PYP program is highly contentious because of the 12 weeks ‘unpaid internship’. It will be even more so if the government intends to expand these programs as part of its international education strategy, commencing with Singaporean students and commitments written into international economic agreements. This will set up even more intense competition with Australian graduates for entry-level graduate jobs. Employment outcomes for Australian graduates have been deteriorating. Between 2008 to 2015, the proportion of new bachelor degree graduates in full-time employment 4 months after graduating has fallen from 85% to 67%.

This apparently is exactly the Turnbull government’s plan. One ‘Key theme’ in its National Strategy for International Education 2025 is: ‘employability – to provide greater opportunities for work, integrated learning and internships for international students’.

The Coalition government should have a fight on its hands over its shift in international education provision to more work-based arrangements, with no regard for adverse impacts on Australian graduates. It will have its first fight if it expands ‘internships’ for international students and graduates, especially if they are unpaid as in the PYP.

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Bob Kinnaird is Research Associate with The Australian Population Research Institute and was National Research Director CFMEU National Office 2009-14.

An earlier version of this blog was first posted on John Menadue’s blogsite Pearls and Irritations.