Inside Story

Skill up or sink

Labor has taken bold steps towards recasting Australia’s migration system, but difficult questions remain

Peter Mares 28 April 2023 2123 words

No more “guest workers”: home affairs minister Clare O’Neil at the National Press Club yesterday. Lukas Coch/AAP Image

“Australia’s historic migration success is rooted in permanency and citizenship,” says home affairs minister Clare O’Neil. But the system is “fundamentally broken,” dominated by a large, poorly designed temporary migration program.

It might sound like the minister wants to go back to the future, and revert to a twentieth-century model in which permanent settlement was the norm and temporary migration the exception. But O’Neil has no intention of returning to the past — and that would be impossible anyway for an Australia that depends on visa holders to pick our fruit, process our meat, deliver our takeaway, care for our sick and fund our universities.

What the minister wants to do is to build a simpler, more efficient and fairer migration system that simultaneously boosts productivity, fills pressing skills gaps in the labour market and delivers greater benefits to business. She envisages a streamlined visa system with pathways to permanent residence, and eventually citizenship, for temporary migrants who want to stay and whose skills are in high demand.

In the process, she hopes to end workplace abuse and release long-term visa holders from the limbo state of being “permanently temporary.” Australia, she says, needs “a skilled worker program, not a guest worker program.”

The aims are laudable, but balancing the competing interests won’t be easy.

To take one example, O’Neil promises simpler, faster pathways to permanent residence for international students who, after graduation, possess the qualifications and capabilities Australia needs. Yet she also wants to improve the integrity of international education by “tightening the requirements for international students studying in Australia” to ensure that students are here to study rather than work.

Stricter visa rules for international students would hit the bottom line of universities and vocational colleges, who have come to rely on those students’ fees to fund their operations. They would also reduce the supply of international students to stack supermarket shelves, serve in restaurants, staff late-night convenience stores and much else besides. These are low-paid jobs, and in an already tight labour market they won’t be easy to fill with local workers.

The government’s approach is predicated on an understanding that Australia is in an increasingly intense global competition for talent. We are facing off against other migration countries — Canada is often mentioned — in a race to attract the best and brightest to our shores.

Rather than the postwar impulse to “populate or perish,” the twenty-first-century challenge is to “skill up or sink.” A simplified visa system, clear routes to permanent residency, and a crackdown on workplace exploitation are presented as the keys to success.

The government has already taken three decisive and welcome steps. The first two tackle the limbo experienced by two groups of temporary visa holders. The third seeks to “skill up” temporary migration.

Step one, in February, was to begin the process of enabling refugees on temporary protection visas to become permanent residents, fulfilling an election promise and easing the distress for people who arrived in Australia by boat and have been living with uncertainty for a decade.

Then, just before Anzac Day, step two brought a straightforward pathway to citizenship for New Zealanders who live in Australia long-term. New Zealanders have long had the right to stay in Australia permanently. But the Howard government amended the definition of “Australian resident” in social security laws to block their access to most government services and payments.

New Zealanders who arrived after that 2001 change might “settle” and build lives here but they would remain on a special category visa and never become legally “resident.” While they could work and get Medicare, they were denied most other forms of public assistance. In hard times, for instance, they weren’t entitled to unemployment benefits or other income support.

Howard’s change also had flow-on effects in some states and territories. In some places, New Zealanders might be denied emergency housing or find that their children were not eligibility for disability services. When the National Disability Insurance Scheme was introduced, New Zealanders were required to pay the levy but weren’t eligible for support.

And the only way New Zealanders could become permanent residents was by applying for another visa, usually a skilled visa. That was impossible for many, and expensive for all, with the result that hundreds of thousands of New Zealanders were permanently marginal.

Long-term campaigners for a better deal for New Zealanders were surprised and elated by the Labor government’s new pathway to citizenship, which exceeded their expectations. It not only resolves a longstanding irritant in trans-Tasman relations by treating New Zealanders much more fairly but also enhances Australia’s democracy. Hundreds of thousands of long-term residents who were previously unrepresented in our political system can now join the electoral role, cast a vote and lobby their MPs as citizens.

Then came the third step, announced by Clare O’Neil in her address to the National Press Club: a sharp increase in the Temporary Skilled Migration Income Threshold, or TSMIT. This is the minimum income that an employer must pay if it wants to bring a migrant worker to Australia on a temporary skilled visa.

The Abbott government froze the TSMIT at $53,900 in July 2013. In the decade since then, it has not risen in line with inflation or wages and has fallen far below what most full-time workers earn. From 1 July this year, it will jump to $70,000.

The new threshold follows a recommendation by the Grattan Institute, which argued that the frozen TSMIT “allowed employers to sponsor a growing number of low-wage workers with fewer skills” and left them vulnerable to exploitation and abuse. Grattan says these low-paid workers also lacked the bargaining power to secure wage rises. In O’Neil’s words, it allowed a skilled worker program to become a guest worker program.

For many migrants and their employers, this change will make no difference. According to the most recent data, the average nominated base salary for temporary skilled workers is already above $100,000, and it’s even higher in sectors like finance, IT, healthcare, mining and construction. More likely to be affected are sectors like hospitality, retail and agriculture, where the average nominated salary for temporary migrant workers is much lower.

More than 1000 cooks are in Australia on temporary skilled visas, for example, and they are regularly included in the top fifteen professions nominated by employers. Yet Seek reports that the average wage for a cook is between $55,000 and $65,000. How commercial kitchens will fill these jobs after 1 July remains to be seen, but a sudden rush of Australians into this hard, low-paid work seems unlikely.

Lifting the Temporary Skilled Migration Income Threshold is the government’s first response to the review of the migration program by the former secretary of the prime minister’s department, Martin Parkinson, and migration experts Joanna Howe and John Azarias.

The government has also released the outline of a migration strategy indicating the direction it will take in responding more fully to the review.

Key initiatives include:

• A simplification of the welter of highly specific visa subclasses that create a “bureaucratic nightmare” for migrants, employers and government, and force a heavy reliance on the professional services of migration agents for even straightforward applications.

• A redesign of the points test, which tabulates factors such as age, English-language proficiency and qualifications to determine whether a skilled migrant is granted a permanent visa.

• A formal role in the migration system for the government’s arm’s-length advisory agency Jobs and Skills Australiato determine the extent and location of skills shortages. Drawing on advice from government, business and unions, this process will replace the cumbersome, complex and inflexible “skilled occupation lists” currently used to decide which occupations are eligible for visas. O’Neil says the aim is for Jobs and Skills Australia to integrate the migration system and the education and training system when it comes to meeting labour market needs.

• Better coordination between the Commonwealth and the states and territories on the impacts of migration and population growth (for example, demand for housing).

Labor’s renewed focus on Australia’s migration system is long overdue. With its obsessive focus on boats and border security, the previous government downgraded the role of migration in nation-building and social inclusion. And by profiling minority groups — remember the “African gangs” that made Victorians feel unsafe to go out at night — it undermined the ethos of Australia as a cohesive, multicultural society.

The Coalition allowed processing times to blow out, stranding hundreds of thousands of people on bridging visas for months and then years (a backlog the new government has been working hard to address). Despite consistent and mounting evidence of labour exploitation, the Coalition did next to nothing to address the workplace abuse of temporary visa holders. And when Covid-19 hit, prime minister Scott Morrison simply told them to go home.

Yet O’Neil’s claim that Australia’s skilled worker program “morphed into a guest worker program” while Peter Dutton was in charge of immigration is partisan hyperbole. The permanent shift towards temporary migration began long before Dutton’s reign and runs much deeper.

It was the Hawke government that began internationalising the education sector by allowing Australian universities to accept full-fee international students. By 1996, the immigration department was already granting more than 100,000 student visas each year and education was on the way to becoming a major export industry.

The first temporary skilled worker visa (the 457 visa) was an initiative of the Keating government, although it only came to fruition under John Howard. In 2005, when the agricultural sector was losing workers to the booming mining sector, Amanda Vanstone enticed backpackers to pick fruit by transforming the working holiday scheme from a predominantly “cultural” visa into a labour market program.

It was the Rudd government that trialled and then implemented the seasonal workers program for Pacific Islanders in 2009, and it was the Gillard government that established it as an ongoing program three years later. It was Gillard, too, who introduced the 485 post-study work visa that enabled international students to stay and work in Australia after graduation, though not necessarily in the field for which they had studied. Around 167,000 of these visa holders are in Australia at the moment, almost all of whom will end up spending at least five years here without necessarily qualifying for a visa as a skilled migrant.

The shift in emphasis from permanent to temporary migration is not the result of bureaucratic bungling by the previous government. It is a long-term trend in response to global economic change and demographic forces.

The government has signalled a pushback, at least when it comes to skilled workers. The greater emphasis on pathways to permanent residency is the right thing to do and will make Australia a more attractive destination for young, highly qualified professionals who can help build the nation’s economy and contribute in other ways to society.

Yet big questions remain, particularly about how the government will manage the demand for lower-skilled workers.

Take the example of health and aged care. “Our ageing population will demand more workers in health and aged care than our domestic population can supply,” O’Neil said yesterday. That’s true, though many of those jobs won’t be classified as skilled and attract salaries over $70,000.

O’Neil added that we need “to create proper, capped, safe, tripartite pathways for workers in key sectors, such as care.” But what this means is unclear. Will low-paid caring roles be reclassified as skilled and have a route to permanent residency?

If so, this would run counter to government programs like the Pacific Australia Labour Mobility scheme, which specifically targets the aged care sector as a potential employer. The PALM scheme recruits workers from Pacific Island nations and Timor-Leste to fill “unskilled, low-skilled and semi-skilled positions” but limits a migrant’s stay in Australia to a maximum of four years, with no prospect of settlement. It is a guest worker scheme by another name.

The same issues arise when it comes to filling lower-paid jobs in childcare, disability care, horticulture, meat processing, tourism and many other sectors.

If the government is determined not to have a class of guest workers, then the big question arising out of its reform of the migration system is how Australia fills those low-skilled gaps in the labour market. And how how does it do that without resorting to a system of temporary visas that offer no prospect of a transition to permanent residency and a shadow workforce of international students and other temporary visa holders “who bounce from visa to visa” and end up being permanently temporary.

Clare O’Neil says she wants a conversation about migration that is “direct and honest.” There are more difficult discussions to come. •