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457 visas: All Australia had to do was hold the line

Instead of grasping the opportunity presented by anti-migrant sentiment across the world, the Turnbull Government yesterday decided to join the party.

457 visas: All Australia had to do was hold the line
Published 19 Apr 2017   Follow @henrysherrell

Instead of grasping the opportunity presented by anti-migrant sentiment across the developed world, the Turnbull Government yesterday decided to join the party. And while the talking points and headlines will likely be greeted with satisfaction in some pivotal marginal seats, the rhetoric and policy decisions will undermine Australian immigration, our greatest nation-building institution, with unknown costs for our future. 

On average, people migrating to Australia do not steal jobs, nor do they drive down wages. The 457 visa program represents less than 1% of the entire labour market. About three in every four people who hold these visas say they train others in their organisation. On average, these are highly skilled people receiving salaries of $88,500, above full-time average earnings for the labour market as a whole. Instead of a program threatening Australian jobs, there is the genuine possibility any crackdown will marginally harm the labour market in aggregate.

This does not mean we should turn a blind eye from malicious employers who seek to profit by exploiting migrants and outsourcing Australians. Any large increase in specific occupations and wage levels should be closely examined to ensure Australian workers are not being substituted. However this is not what the Turnbull Government has proposed. Indeed, the most straightforward approach to cleaning up rorting are to increase the number of compliance officers monitoring employers and to raise the fees paid by employers to sponsor a migrant, neither of which have been proposed by the Turnbull Government.

The starting point with employer-sponsored visas should always be the employer. Labour demand, not the supply of migrants, is what drives how many people are on 457 visas (or the equivalent) in the labour market. Missed in the noise is the fact that the number of people on 457 visas is actually on the decline, as a soft labour market fails to spur employer interest. This is exactly how the program is designed to work. Put clearly, there is no policy case for abolishing and replacing the 457 visa program. Senate inquiries and the Government's own review into the program never called for this. There was nothing mentioned about it in the election campaign of 2016. The lack of evidence is astounding.

While the Government has attracted praise in some quarters for cleaning up occupation-categories that should not be available to employers, this misses the broader point. My initial analysis suggests less than 10% of visa holders in Australia in June 2016 were employed in occupations the government has removed from eligible lists. So while it sounds good to say goat farmers, judges and detectives have been removed in the name of 'Aussie jobs', in reality only a handful of employers ever used these categories in the first place. Like much migration policy, the rhetoric is different to the effect – or, as economists like to say, the stated preference may be different to what is revealed. For example, the refusal to index the minimum salary threshold ($53,900 since 2013) despite being urged to by independent advice speaks volumes about what exactly the Turnbull Government is prepared to tackle.

There have been a number of retrograde policy changes that, combined with the Turnbull Government's nativist rhetoric, will likely hurt Australia. As a small, open economy, we rely on immigration more than any other major developed country in the world; over 28% of the population is born overseas. Removing the ability for many migrants to become permanent residents after spending a period of time in Australia will make it harder for employers and other organisations like universities to attract global talent.

Both 'chief executive' and 'university lecturer/research fellow' will be restricted to the Short-term Skilled Occupation List. This means they are eligible for a two-year visa, able to be renewed once, but ineligible for the common permanent employer-sponsored visa, the Employer Nomination Scheme. Imagine being the chairperson of a Big Four bank or major law firm and not being able to offer potential CEOs a five-year contract due to visa restrictions? Innovation is difficult when universities are unable to hire the best people in the field, as higher education research is truly a global labour market.

The real tragedy for Australia is that all the Government needed to do was hold the line.

As other countries ratchet up their anti-migration policies, more people will look for alternatives. Despite what we like to think, Australia is at best a second-tier destination for potential migrants after the US, Canada and the largest countries of Europe. The migration framework slowly reiterated since the mid-1990s by both major parties is well placed to attract these dissatisfied people. Just look at New Zealand. As the New York Times noted, a small expression of interest for software developers earlier this year attracted over 48,000 interested people from the likes of Google, Amazon, Facebook and NASA. Instead of the 'Australia First' rhetoric, why not provide visas directly to PhD graduates from eligible institutions, just as other countries are making it harder for these people to work after their study?

Instead, we are left with a Liberal government turning it's back on immigration by ripping up the premier temporary skilled visa program while being cheered on by segments of the business community. The hypocrisy is almost breathtaking when you consider recent history. Non-asylum immigration policy was once devoid of poisonous partisanship, but it is now on full display, despite the fact that popular anti-migrant sentiment is more muted in Australia than the US and UK. With hints there is more migration policy change to come, it would be nice to see a concerted campaign to highlight why skilled migrants are important to Australia.

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