Productivity is the holy grail of economic policy, and public concern about immigration is running hot. These two issues intersect in Australia’s rural labour market.
Horticultural producers rely heavily on two sources of seasonal labour – backpackers from the 50 countries with which Australia has working holiday agreements, and Pacific workers arriving under PALM, the Pacific Australia Labour Mobility scheme.
Backpackers’ dominant reason for working on farms is to extend their stay in Australia, with those completing three months of “specified work” such as fruit picking eligible for a second 12-month visa. Since 2019, backpackers can also get a third 12-month visa after six months’ work. The country’s 30,000 or so PALM workers come to Australia to earn money that can transform the lives of their families and communities.
In researching the PALM scheme, I met Stanley Tamanoah from Vanuatu, who told me he can save $20,000 in a 9-month season. After his second rotation to Australia, he bought a Landcruiser which his nephew on the island of Tanna drives as a taxi to earn extra income for the extended family. Saturnino Soares from Timor-Leste has been to Australia on a working visa eight times. Back home, he’s built three houses – two for family, one to rent – and is funding his sister to train as a health worker and his brother to study engineering.
It’s hardly surprising that Pacific workers keen to help their families are more highly motivated than backpackers hoping to extend their visas.
Mossmont Nurseries is a thriving 170-year-old family business outside Griffith in the NSW Riverina that used to rely on working holiday makers to meet its seasonal labour needs. Owner Jonathan Moss says most backpackers left for the coast as soon as they’d clocked up enough days to extend their visas. He was constantly training new recruits, some of whom quit after a few days because they didn’t like the work.
When farmers employ backpackers in place of Pacific workers, the nation misses out on the productivity gains of the PALM scheme.
For the past eight years, Mossmont has employed Pacific workers, who return annually, retaining and building skills. Moss says that if he had to revert to backpackers, he’d need to employ a third more workers to maintain the same production.
This is consistent with research by the Australian Bureau of Agricultural and Resource Economics and Sciences that found Pacific seasonal workers were, on average, 20% more productive than working holiday makers.
Yet this opportunity is being missed. While working holiday maker numbers are rising, seasonal labour under PALM is in decline. In December 2025, there were about 226,000 working holiday makers in Australia, an increase of 85,000 from December 2019, before Covid-19 hit. Record numbers of backpackers contributed to the post-pandemic surge in net overseas migration, and many want to stay on after their two- or three-year visas end.
By contrast, the number of seasonal workers from the Pacific has fallen by more than 20% from its peak in 2023. Why? Because many employers see backpackers as an easier option. Employers need government approval to join the PALM scheme and are monitored to ensure compliance with workplace standards. They must contribute to Pacific workers’ travel costs and attend to their welfare. Working holiday programs have no such requirements.
But when farmers employ backpackers in place of Pacific workers, the nation misses out on the productivity gains of the PALM scheme. Unlike working holiday makers, who only need to fulfil a three-month “specified work” obligation, most Pacific seasonal workers stay for nine months. If Australia employed more PALM workers, it would need fewer backpackers, and less migrant labour overall.
However, the PALM scheme is not without its problems. It has been plagued by reports of worker exploitation, underpayment and substandard housing – the same issues afflicting the working holiday scheme, but with fewer protections and supports. Where backpackers can at least leave an unsafe workplace, PALM workers are tied to a single approved employer. They are also often reluctant to challenge mistreatment for fear they might be sent home or not invited back the following year.
To address these issues, the Australian government should swing the balance back in favour of PALM. A first step would be phasing out the third working holiday visa introduced under the Morrison government. The scheme should also be reformed so workers can move more easily between approved employers. This would further boost productivity by allowing them to go where their skills are most valued and best utilised. Since two-thirds of all PALM workers are employed by labour hire agencies, a starting point would be to let workers move between the 111 approved firms within this sector.
Switching out backpackers for PALM workers, and adjusting the scheme to increase fairness and flexibility, would bring another benefit. It would maximise Australia’s soft power credentials in the Pacific while allowing workers to improve their own communities.
Peter Mares is the author of Improving PALM: The Pacific Australia Labour Mobility Scheme, published this month by the Scanlon Foundation Research Institute. These are his personal views.
