Australian Net Overseas Migration and recent legislative change

DIAC recently published the latest version of their “Outlook for Net Overseas Migration“. It’s a very good bureaucratic publication for a range of reasons, not least because it successfully discusses a complex topic in a relatively accessible manner AND includes excellent detailed data (rare outside the ABS and Treasury).  It’s published every quarter and includes forecasts and estimates for net migration up to four years ahead.

What is Net Overseas Migration (NOM)? The official definition is “NOM is the net gain or loss of population through immigration to Australia and emigration”.

People ‘NOM-in’ if they spend 12 of 16 months in Australia. You then ‘NOM-out’ if you spend 12 months overseas. The ‘net’ part comes from arrivals minus departures.  The ABS keeps this data from visitor cards filled out at airports and issues the numbers after counting them up. DIAC uses past trends, visa applications, economic growth indicators (global and domestic), visa policy and I assume a few other bits and pieces to estimate (when a time period has concluded but before the ABS has released its figures) and forecasts.

Who are these people? Mostly migrants; international students, working holiday makers, 457 visa holders, tourists, permanent family and skilled arrivals as well as refugees and asylum seekers. In addition, New Zealand citizens and Australian citizens are counted (I guess New Zealand citizens are migrants too but I think in terms of work rights and they notionally have the same rights as an Australian citizen).

I have one small issue with the latest report from June 2013 and puzzled by a related figure.

Small issue;

“This publication takes into account policies in place as at mid August 2013, including improvements to the subclass 457 program introduced on 1 July 2013.”

The NOM forecasts would be remiss not to account for policy changes regarding different visas. But ‘Improvements’? Give me a break. To call the recent legislative changes improvements is completely euphemistic. It’s not an improvement to the visa holder who has been adversely affected nor the business who lodged an application in June, only to see it rejected on the basis on the new legislation. More broadly, I argue the Australian labour market or societal perceptions about migration in general were adversely affect by the public ‘debate’ earlier this year.

More substantially, the department has formed a position on these policy changes and how they will effect the NOM figure which I find puzzling.

Here is the difference between the March NOM forecasts and the June NOM forecasts for two visa categories, noting the June forecasts account for the 457 visa changes:

Year 457 visas Working Holiday Makers
June 2014 -2,000 +800
June 2015 -2,800 +800
June 2016 -3,300 +1,200
June 2017 -3,800 +1,300

Now this isn’t a perfect comparison given the two visa categories have a very different demographic make up. There could have been some changes in the economic indicators in the three months between the forecasts that have different effects on different visa classes (if so, I’d love to know what it was). But the most significant thing to happen in the three months between forecasts was the new legislation on 457 visas. It is obvious that the department have changed the 457 visas forecasts based at least partially on the new policy settings.

I do not think the policy changes will have these negative impacts. While the changes may be annoying to some businesses and some migrants (they won’t even affect the majority of businesses or visa holders) there is little in the new regulation to stop employers using the program. Any employer who currently uses the program is very probably able to continue to do so.

The department may rigorously enforce the new powers of demonstrating a genuine skill need. There will also probably be a crack down on certain occupations like Chefs and Cooks.  There are also a range of other small tweaks. In addition, visa holders will be charged more than twice the old visa application fee, increased recently to $1,035 (sidenote; if the new Coalition government actually believed in their own hot air about how the ALP hated migrants, then they would seek to reverse this charge but this won’t happen anytime soon).

However at best these measures will slow down the processing speed of the visa applications. The increase in fees is not enough to dissuade anyone given wage gaps between Australia and other nations as well as the comparative cost of similar programs in other countries. The legislative changes will be worked around by corporate migration agents.

Employers respond to price incentives, not a hodge-podge of small regulatory change. The most effective way to reduce 457 visa holders is to rapidly increase the fee charged to employers for hiring 457 visa holders. I don’t advocate this, but responding to price incentives is what businesses, especially large businesses who are the predominant uses of the program, do best. Instead of $330, make it $10,000 per worker for employers with over 200 staff members.

For mine, even relatively small reductions in 457 numbers outlined in the latest NOM forecasts are unlikely to appear in the future due to legislative change. The economy may change, either increasing or reducing demand for labour but this type of new legislation is such a lower order factor it almost isn’t worth mentioning. Legislation can and does have massive effects (in terms of pay and conditions and migrant selection) but the recent changes are not of this sort.

In the scheme of things, this is a small quibble. The report is excellent and the department should be congratulated for how accessible this type of information is.

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