Generating skilled migration? The Australian Pacific Technical College and labour mobility

Michael Clemens, Stephen Howes and Colum Graham have a new paper out, titled “Skill development and regional mobility: Lessons from the Australia-Pacific Technical College”.

The Australia-Pacific Technical College (APTC) was thought up by the Howard government as an alternative to an immigration pathway for Pacific labour. The authors do an admirable job of highlighting how the dual purpose of the APTC was both skill development and regional mobility yet only the first objective has been met. Does this mean the $300m spent over the past eight years has been wasted? Probably not. But this does speak to how we should judge success in development policy.

The scale of failure on fostering labour mobility under the APTC is alarming. Just 1.2 per cent of graduates from the APTC have migrated to Australia or New Zealand. Between July 2012 and March 2013, “the APTC recorded 988 new graduations but only 4 newly migrating graduates (all to Australia)—that is, 0.4% of new graduates” (p.7).

There are many parts of this excellent article but I’ll limit myself to those touching on immigration.

The paper does a public service by highlighting the cost of migration. It’s not cheap. Complying with regulatory requirements and transaction costs such as flights and visa fees runs into the thousands of dollars.

When discussing immigration policy in Australia, we often underestimate this cost as a factor in shaping migration flows.

When working at the Department of Immigration, I remember sitting in on a working group about a new fee structure for visas. A consulting firm had drawn up a framework which would raise visa fees across the board, purportedly to bring Australia into line with other similar countries (actually, it was a cash grab which raised ~$250m for a government searching for a fiscal surplus). At one point, the only trained economist in the room asked if the consultants had factored any demand elasticity into their modelling. They hadn’t. We were talking about increasing visa fees, in some cases, by 300-400 per cent and the possible impact on the movement of people was ignored. Needless to say, the economist was rather unimpressed and this highlights how the cost of migration is largely ignored, even in the Department of Immigration.

Another useful contribution in the paper is outlining how the lack of labour mobility is no mystery. The authors clearly establish there is demand to emigrate. Previous surveys and other immigration programs, such as the Pacific Access Category to New Zealand which are currently over subscribed by 900 per cent (p.9) means the lack of labour mobility is mostly falls under the headline of “supply of migration opportunities”.

When the discussion turns to the supply of migration opportunities, I think the authors get a bit off track. For instance, I’m not sure why so many words were devoted to discussing the points-tested visa. Pacific migrants with APTC certificates III and IV are highly unlikely to qualify for a points-test visa. I’ll go out on a limb and say not a single person would qualify, from over 4000 graduates. In addition, none of the graduates would meet the obligations for the Skilled Occupation List (SOL), which is not mentioned in the article. This visa pathway was never intended to facilitate labour mobility. It is for long-term, highly specialised skill shortages.

The authors discussion of sponsored visas, primarily the 457 visa, is a more appropriate avenue for APTC graduates to immigrate to Australia. That said, they get caught up almost exclusively on recognising skills. Under the 457 visa program, citizens from some countries in some occupations have to pass in-person tests, assessing their technical skills.* This is an expensive and resource intensive process. However the authors state all APTC graduates would have to undertake this test. Under policy, the only graduates of the APTC required to take the test would be citizens of Fiji and PNG. As these two countries produce about two thirds of all APTC graduates, this isn’t something to dismiss lightly but the authors should note other citizens are exempt from a formal skills recognition.

The 457 visa is the right pathway for APTC graduates. Instead of focusing exclusively on recognising skills, another factor that could have been analysed in detail include the lack of employer linkages in the Pacific. This could have been shown via existing 457 visa statistics. Despite citizens of Fiji and PNG being forced to sit technical assessments, these two countries are the only Pacific nations with a substantial presence in the 457 visa program. In March 2014, out of the 1389 visa holders in Australia from eligible APTC countries, 1289 were from Fiji and PNG, a full 92 per cent. Vanuatu, the Solomons, Tonga and Samoa each have a very small footprint of 457 visas, at less about 100 in march 2014. Exploring this seeming inconsistency might have helped draw out how to better integrate the 457 visa and APTC to foster more labour mobility. Perhaps the recognition of skills isn’t the major issue? I’m unsure but an analysis of the occupations of these visa holders might have shed more light on where exactly the barriers to labour mobility are.

Lastly, I was struck by a couple of remarks in the paper.

When talking about Global Skill Partnerships (immigrant countries subsidising emigration countries training costs), the authors state, “In such a setting, migration has the potential to become an engine of human capital creation rather than depletion.” (p.3)

By framing the argument in this way, one immediately thinks about ‘brain-drain’. “Human capital depletion” is a strong charge to level at immigration programs, even in the abstract. This seemingly undermines the argument that the movement of people is a positive, regardless of the contextual environment. The reason I raise this is that Michael Clemens is the foremost critic of the ‘brain-drain’ concept, arguing persuasively that any potential negative effects of skilled migration from developing countries are heavily outweighed by other positive factors.

Finally, the authors say, “The gains to migrants from Pacific Island states to Australia are in the hundreds of percent (McKenzie, Stillman, and Gibson 2010; Gibson and McKenzie 2012), but low-skill immigration is a political battlezone in Australia, and many Pacific Island states fear that skilled migration drains away skilled workers they need.” (p.1).

Low-skill immigration is not a political battle zone in Australia, its a political dead zone with few major supporters or prominent advocates. Some might argue the Foreign Minister, the Hon. Julie Bishop is an advocate or the ALP is an advocate as they introduced the SWP. I would argue both of these would be flawed arguments. Bishop has only said platitudes about low-skilled migration to date and any policy evidence is to be determined. The ALP introduced the SWP seemingly against its own wishes, which is why the program has ended up such as a regulatory mess.

This isn’t semantics. Without strong advocates, it is very difficult to progress unique and promising policy ideas. It’s hard to even reform existing policies, such as the APTC. The APTC was created by a dying government, bequeathed to a new government who moved towards a Seasonal Worker Program to ‘solve’ the issue of labour mobility. The authors note this in the paper but I think its a major issue of first-order of concern. A battle zone would be infinitely better than a dead zone.

Despite this, I’m optimistic. The APTC is established and producing graduates. This is the hardest part of the journey. Linking employers, in comparison, is substantially easier. There is a visa pathway which can facilitate labour mobility. While there are a few other barriers also, such as the cost to migrate and language ability, the foundations of increasing Pacific labour mobility are stronger because the APTC exists. The authors are to be congratulated to this helpful analysis and history.

* If you were thinking, that sounds odd, you’re right. The list of countries required to take a test; Brazil, China (including Hong Kong and Macau), Fiji, India, Papua New Guinea, Philippines, South Africa, Thailand, Vietnam, Zimbabwe. Note the lack of white people on this list. But that discussion is for another day.

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