Higher education funding and international students

Published on my last day working for the Parliamentary Library, Hazel Ferguson and I authored a quick guide to overseas students in higher education. The document is a short summary of key figures and legislation covering overseas students who study at Australian higher education providers (this deliberately excludes the VET and ELICOS sectors).

To me, the most interesting figures are those intersecting funding and overseas students. I’ve modified Table 6 from the publication below, by including the last column:

Total revenue ($’000)Overseas student revenue ($’000)Overseas student revenue divided by total revenue (%) Overseas student revenue growth divided by total revenue growth (%)
2008$18,955,909 $2,946,127 16%
2009$20,468,862 $3,414,687 17%31%
2010$22,158,466 $3,881,656 18%28%
2011$23,658,742 $4,124,064 17%16%
2012$25,210,033 $4,134,768 16%1%
2013$26,332,964 $4,290,808 16%14%
2014$27,751,858 $4,741,973 17%32%
2015$28,609,979 $5,349,879 19%71%
2016$30,147,079 $6,249,049 21%58%
2017$32,028,091 $7,457,002 23%64%

There is no secret overseas student numbers have been increasing steadily in recent years, resulting in revenue growing from $2.9b to $7.4b over the decade from 2008 to 2017.

Two things stand out to me from these funding figures. The first is the proportion of total revenue generated from overseas students is growing for the higher education sector, particularly from 2014. But the magnitude of the change, from the 16-18 per cent to 23 per cent in 2017, is not astronomical.

The second trend is more important. Total revenue growth is becoming more dependent on overseas student revenue growth. In the period 2015-17, 63 per cent of all total revenue growth for higher education in Australia was accounted by growth in overseas student revenue.

Clearly, the marginal dollar in additional revenue for a university depends more heavily on overseas students today than in the past. I’m no higher education expert so I do not know what this means in terms of teaching and research.

But in relation to overseas student trends, there seems to be a sense in the air Australia could be approaching a peak in terms of growth and aggregate numbers. I don’t share this position (for reasons I’ll document in the future) however it appears pretty clear any future slowdown of revenue growth from overseas students will be considerably more difficult to deal with for universities today than it was in the past (such as the 2012 calendar year).

Lots of people know this topic better than me. But the one point I’d like to make is the myth that the median overseas student wants to study in Australia primarily because they are motivated by permanent residency. Figures from the Department of Home Affairs show about 16 per cent of overseas students (all types, not just higher education) transitioned to permanent residency between 2001 and 2014. This means the vast majority did not. Further, it is becoming more difficult to make the transition given recent government policy change to reduce the number of permanent visas available and tighten eligibility requirements.

People can infer whatever they want from this but to me, it feels like Australian universities are responsible for both the successes and failures when it comes to attracting overseas students. Changes in visa policy are probably only responsible for very marginal effects.

Creating labour exploitation in Australia: A third year for the Working Holiday visa

The Morrison Government’s extension of the Working Holiday program, introducing a third 12 month visa, will give licence to unscrupulous employers seeking profit at the expense of young migrant workers, Australian workers, and employers who pay their workers according to the law. The extension of the visa is simply a copycat provision, mimicked from the worst aspects of the Howard Government’s fourth term.

The Migration Amendment (Working Holiday Maker) Regulations 2019 was tabled in the Australian Parliament on Budget day, 2 April 2019. This followed a compromise brokered in November 2018 by the Prime Minister after denying his Coalition partners, the Nationals, the introduction of a standalone agricultural visa. The Amendment will introduce a third 12 month visa for people who already hold either type of working holiday visa, if they complete six months specified work in regional Australia during their second 12 month visa.

Working holiday visas were introduced in the mid-1970s as Australia sought to promote cultural affinity with similar countries: the United Kingdom, Canada and Ireland. Since then, agreements between Australia and other countries have proliferated and there are 42 agreements in place or being negotiated. The visa allows people under an age limit (traditionally 30, now being increased to 35) to work and travel in Australia for 12 months.

Like many facets of temporary migration visa policy, the Howard Government upended the working holiday program by signing agreements with 17 countries and introducing a work-based incentive for people to acquire a second 12 month visa. By working for 88 days in regional Australia, predominantly in the horticultural and broader agricultural industry, people were eligible for a second visa. As Stephen Howes documents, the number of second 12 month working holiday visas granted went from 2,500 in 2005-06 and peaked at 45,950 in 2013-14. There were just over 36,000 second visas granted in 2017-18.

Since 2006, the working holiday program has became a de-facto work visa, without any associated regulatory oversight. The result has been increasing migrant exploitation coupled with the erosion of labour norms in the horticultural sector. Instead of rectifying this situation by promoting regulated alternatives such as the Seasonal Worker Program, the Morrison Government’s third 12 month visa will expand the opportunity for those employers willing to exploit young migrants.

While the Prime Minister, his Home Affairs Minister, Peter Dutton, and the then Foreign Minister, Julie Bishop, are to be applauded for preventing the introduction of an agricultural visa, the addition of the third year visa for people in the working holiday program will exacerbate exploitation and the erosion of labour norms. People will now need to spend six months in regional Australia working on farms and associated packing centres. More people will give up income just to tack on extra days. More people will pay for forged payslips to escape before six months is up. More people will agree to work for below award wage rates.

The incentive to work for time to spend in Australia undermines the very core of any employer-employee relationship. Instead of wages driving the supply of labour, visa rules are inducing work from migrants. Yet because the horticultural industry has plentiful vacancies combined with low barriers to entry in terms of skills, farmers and processing centres essentially have a monopoly over these migrants seeking another year in Australia. It is difficult to think of a more vulnerable position for a worker than one where there is little competition for employees and where the wage rate is relatively divorced from the choice of who to work for. This is a clear example of government policy creating monopsony power in Australian labour markets, with the result being income moving from labour to capital.

If people who hold a working holiday visa care more about a third year in Australia than the wage they are receiving, certain employers will reduce wages to maximise profit. This exploitation in turn hurts existing workers and those seeking to enter the labour market, as they cannot compete given they seek the minimum award wage (or higher). And perhaps most importantly, this behaviour spreads and is then institutionalised as employers who seek to do the right thing are now faced with a higher relative wage share. These employers will face difficulties competing in supply chains, as well as lower overall profits.

Based on current trends, if one in four people eligible for this visa seek to apply by working for six months in regional Australia, an additional 9,000 people will be induced into these labour markets. These people will be among the most vulnerable workers in Australia: relatively isolated in regional and rural areas, working in an industry where employers trade on visa eligibility instead of income. In addition to these 9,000 people, the third visa will induce additional people to Australia in the future on working holiday visas, who would’ve otherwise not arrived.

Ever since August 2015 when the joint ABC-Fairfax investigation into 7/11 was published, exploitation of migrants holding temporary visas in the labour market has become a mainstream political issue. Yet despite this, the Morrison Government’s copycat working holiday provisions will further cement exploitation in the Australian labour market.

There are 14 Parliamentary sitting days left for 39 Senators to vote for a motion to disallow the Amendment and prevent additional exploitation. Labor, the Greens and Centre Alliance makes 37, effectively placing One Nation as the decisive voting bloc to remove the third year visa from the working holiday program. I view this as highly unlikely given the support working holiday visas have from the farming sector and the vocal opposition that would arise if the Senate tried to undo these changes. That said, the Amendment will undoubtedly increase the number of temporary migrants in Australia, something Senator Hanson has spoken against unceasingly since re-entering the Senate in 2016.

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.”