Recent publications: visa trends, population, and the Australia-New Zealand relationship

I’ve had a couple publications released in the last day.

In each new Parliament, the Parliamentary Library collates a series of articles outlining key themes for the Parliament. The ‘Briefing Book’ is a good starting point for a short background of policy areas and what is in store for the 46th Parliament. I had two articles published in the collection, one on permanent and temporary visa trends and one on population. Here is the key issue from each piece:

“Recent changes to permanent and temporary visa policy is changing the nature of Australian immigration. Historically, the Australian Government has had tight control over the number and type of migrants arriving. However over the past two decades, the importance of other actors has become clear, including employers, higher education providers and migrants themselves.”

and…

Australia’s population, compared to other nations, is: mid-sized; briskly growing; ethnically diverse; middle-aged; sparsely settled yet highly urbanised; and characterised by high life expectancy and a middling birth rate. The changing nature of the population raises policy challenges across a number of areas, including immigration, infrastructure and the labour market.

And this morning, the Lowy Interpreter published my analysis on the Australia-New Zealand relationship, through the prism of the Character Test. Over the past five years, over 1,600 Kiwis have been deported from Australia due to the introduction of new mandatory visa cancellations powers. The Morrison Government is now proposing further visa cancellation levers for the Minister of the day. Prime Minister Ardern has called this ‘corrosive’ to the relationship between the two countries.

Australia’s English Problem: a new report on AMEP

James Button has written a new narrative, a proposal to renew the Adult Migrant English Program (AMEP), for the Scanlon Institute [disclosure: I am affiliated with the Scanlon Institute’s Research Committee].

Titled “Australia’s English Problem: How to renew our once celebrated Adult Migrant English Program“, the report details the deterioration of the AMEP over time and the consequences this has for new migrants today. Recently the number of participants has dropped and teachers are leaving without being replaced, however Button rightly notes the demise began decades ago.

Many migrants in the program are unable to attain the recommended baseline of English proficiency in the number of hours allowed. In addition, inflexible service delivery means the twin pillars of migrant settlement – language and employment – are too often in direct tension with each other at the very time when migrants need the most support to begin their lives in Australia.

Below are the key messages and a set of recommendations from the report.

Key messages

  • English language learning is central to Australian nation building, and should be central to immigration and settlement policy.
  • The Australian Government has a long and proud record of helping migrants to learn English. That record is threatened today.
  • The groups most at risk of not speaking English well are sections of the Chinese community, refugees, and some women.
  • Five large-scale shifts in the economy, the source countries of Australia’s migrants, diaspora communities, and the practice and philosophy of government have created significant difficulties for the 71-year old AMEP program.
  • The program, which has been a world leader in language learning, suffers from a lack of clarity in balancing its settlement and employment objectives.

Considerations for how to improve the AMEP

  • Extend the time in which migrants can enrol in and complete the AMEP, while
    continuing to encourage migrants to start the program as soon as possible after arrival.
  • Uncap the AMEP Extend sub-program, so that all students can study at least 1000 hours.
  • Maintain and extend the AMEP sub-program, the Settlement Language Pathways into Education and Training (SLPET).
  • Restore government funding for independent research on the AMEP.
  • Promote a diversity of ways to deliver the AMEP, notably in online and distance learning.
  • Restate the settlement focus of the AMEP as part of developing more sophisticated and realistic outcome measures for the program.
  • Incorporate English language learning into more personalised approaches to settlement services.

Contribution to CEDA report: the Effects of Temporary Migration

I was pleased to be able to contribute the opening chapter to this new CEDA report, titled the Effects of Temporary Migration: Shaping Australia’s society and economy.

My chapter focuses on the rise of temporary migration policy, a brief overview of the numbers involved, and the relationship between temporary and permanent visas, including the effects on population trends.

I agree with the recommendations contained in the report (with a caveat there other things that need to occur, particularly around better enforcing protections against exploitation). The Australian business community need to do much more in relation to actually showing how and why these policy matters are important. With a few exceptions, it is very difficult to understand what role a new worker plays within a large organisation because basically no ASX200 members say anything with any depth about migration. I applaud CEDA (and Gaby d’Souza in particular) for their attempt to move things along.

Re-reading what it means to be Australian

I was recently re-reading this excellent ANUPoll by Jill Shepard, ‘Australian attitudes towards national identity: citizenship, immigration and tradition‘, published in April 2015. The first question in the poll is the most interesting, asking what does it mean to be Australian?

Before I saw this poll, I’d always assumed being born in Australia would be considered the a critical factor when it comes to understanding what makes someone Australian. Turns out that’s not the case. Language skills and holding citizenship are clear markers over birthplace.

There are other interesting bits here as well. Respect for political institutions and laws is almost universal in terms of what it means to be an Australian. Yet in the same year, the Scanlon Foundation social cohesion survey found just 16 per cent of respondents consider the system of government ‘works find as it is’. Trust in politics, the media, and a raft of other institutions is stuck compared to where it was a generation ago. Clearly trust and respect as not mutually exclusive but the sheer size of the disparity feels important.

We’re four years removed from these results and a fair bit has happened in that period in relation to public debate on migration and citizenship. I imagine there has been some movement on the margins but I’d be surprised if there was wholesale change in the general shape of opinion, given the way these attitudes tend to form and hold over time.

In the last Parliament, the Turnbull Government’s proposed citizenship changes were defeated, primarily due to opposition to a higher English language test and the restrictiveness this would engender. The public debate was a rarity. Not since the introduction of the citizenship test by the Howard Government had the relationship between citizenship and recent migrants made such a splash in politics.

But the debate remained straightforward: imbuing value by generating a more exclusive citizenship, and opposition to this. We never moved past the legislative proposals and into a more substantive discussion. No-one was challenged if they said ‘citizenship is a privilege’. Personally, it strikes me as only half the equation. If we accept we live in a liberal democratic state, we should not ignore the responsibilities of the state to maintain a threshold number of citizens.

Re-reading the results above prompted me to think about what I’d like to see more when it comes to thinking about the settlement journey of recent migrants. A bigger conversation about how governments of all jurisdictions can make learning English easier. A more critical examination of how recent migrants access citizenship and what it means to them. And while I recognise these are not questions that fit neatly into a news cycle, they remain prescient for proactively shaping the society we want to live in instead of simply responding to a more negative alternative.

A jurisdictional debacle: New migrants and the NSW Government foreign resident surcharge

The main gripe from state governments concerning migration is a lack of agency. Before the 2019 state election, Premier Gladys Berejiklian called for a halving of net migration to NSW. Unhelpfully for the NSW Government, Section 51 of the Australian Constitution means the Premier is unable to do much about this except jawbone. The jurisdictional intersection between state and federal government is basically a one way street. This has real and abiding consequences, particularly for the process of how migrants settle into Australia.

Federal Governments of both persuasions have transformed Australia’s migration policy framework in recent decades without any material input from their state counterparts. While there are visa categories allowing state governments some oversight, in reality, what state governments are able to do is mostly tinkering at the margins.

Recently, it feels like there is an increasing awareness about how migration policy has changed. You can see this in more substantial public debates about how many migrants come to Australia and when various policy debates around temporary visas make a splash, such the English proficiency of international students in higher education.

However this general awareness has yet to seep into a generally agreed set of social norms in relation to how migrants should be treated by the State (governments of all jurisdictions). Perhaps it is simply too contemporary to grasp. But in the meantime, big decisions are being made, that have a myriad of effects, not least the signal we send to new migrants in terms of how they settle into our shared society.

A prominent example is taxation. Migrants pay income tax and GST like everyone else. But increasingly, some migrants are paying more tax than others because of the visa they hold. In the 2016-17 Budget, the same NSW State Government now calling for a large reduction in migration, introduced two revenue measures to be paid by ‘foreign residents’. These measures were:

  • a four per cent ‘surcharge purchase duty’, for residential real estate, to be paid in addition to stamp duty, and,
  • a 0.75 per cent ‘surcharge’ residential land tax.

The following Budget in 2017-18 increased the surcharge purchase duty to eight per cent and the residential land tax to two per cent. To give some idea of what this is worth, a quick google uncovered this two bedroom apartment near Blacktown station in Sydney going for $499,950. To purchase this apartment, a “foreign” buyer would need an additional $39,996 for the surcharge purchase duty and then an ongoing two per cent payment on whatever land entitlement is attached to the apartment.

Who pays these surcharges? The definition of ‘foreign resident’ becomes central and as stamp duty is a state government tax, state governments decide. In the past, before Australia’s migration framework was upended from the mid-1990s onwards, this was a relatively straight forward process. Anyone in Australia who was not a citizen or permanent resident was generally classified as a ‘foreign resident’.

Today, this definition largely remains in NSW, with a couple of exceptions for partner visas and New Zealand citizens. But as at 31 March 2019, there were about 1.6 million people who hold a temporary visa in Australia excluding the Kiwis. A strong majority do not intend to settle in Australia long-term. This figure includes tourists, students, backpackers and others. But a minority do intend to settle in Australia and transition to a permanent visa in due course. We can see evidence for this as about one in two people who gain a permanent visa are already in Australia.

Take someone who is sponsored by their employer as a skilled migrant. When my family migrated to Australia in 1989, we gained permanent visas on entry courtesy of an employer sponsorship. Today, we would have almost certainly been offered a temporary visa, the Temporary Skill Shortage visa (formerly the 457 visa). Historically, about 50 per cent of people who gain a temporary skilled work visa have transitioned to some form of permanent residency in the future [recent policy change is likely reducing this proportion].

These people are not ‘foreign residents’ in the traditional sense. All are meant to have permanent, skilled employment with a salary above $53,900 [noting there are clear issues in certain industries for this visa category]. They are not here on tourist visas surveying the investment property landscape. Yet according to the NSW State Government, people who hold temporary skilled visas are ‘foreign residents’ because their visa has a end date.

I assume the introduction of these fees will dissuade people living in Australia as ‘foreign residents’ but who intend to gain a permanent visa in the future from purchasing a house. And while not purchasing a house will not raise any revenue for the NSW Government, there will be effects. There are currently about 70,000 people who hold some form of temporary skilled work visa in NSW at the moment, all of whom are liable for these new surcharges. My family bought a house almost immediately, a decision allowing us to settle in a part of Melbourne which linked me to a school and a broader community. Placing severe financial barriers in place upends this process.

To go along with a more precarious employment situation (being tied to a single employer, with limited ability to move), new migrants who intend to settle in Australia but hold a temporary visa in Australia’s ‘global city’ are now second-class non-citizens in relation to housing.

[A couple of caveats here. (1) I don’t have anything against taxes and levies on housing investment for genuine foreign residents. My personal belief is housing should be for people to live in, not an investment vehicle for speculators to make money from. But the current situation in NSW points towards a jurisdictional intersection that is broken when it comes to new migrants and how they settle into Australia. And (2), this intersection of policy should not tied up with general support or opposition for these types of visa categories. Those decisions need to be focused on employers given they are the source of labour demand generating the visa in the first instance.]

A number of recent policy decisions will exacerbate these types of challenges. The Morrison Government’s introduction of two new regional visas from November 2019 is the most obvious example. Both of these visas, an employer-sponsored and independent skilled, will be provisional. A provisional visa is not a permanent visa but puts the person who holds it on a defined track towards a permanent visa. People who hold these visas will, under the current regulations, be required to pay the eight per cent stamp duty surcharge, despite not being able to settle in Sydney. I imagine it will be difficult for regional NSW towns to hold onto new arrivals if they are precluded from purchasing a house because of their visa status. In addition to additional waiting periods for welfare support and citizenship, a provision visa in NSW will mean an additional waiting period to buy a house.

To me, this relatively small policy issue sums up a central theme emerging across Australian migration policy: migration has changed but everything else hasn’t, driven mostly by self-interest from a range of actors that is harming the social bonds which hold together our community.

I hope to write more about these types of policy quirks in the future, about how migration rules and regulations are not the only, or even the primary, factors influencing how migrants settle and live in Australia today. If you have a suggestion for a topic, please let me know either by email (henry.sherrell[at]gmail.com) or tweet me @henrysherrell.

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.