ABUL RIZVI. Privatising visa processing – the alarm bells are ringing (Part 1)

Major ICT transformation projects conducted ‘in partnership’ with a big IT company are high risk. Privatisation of core government functions such as visa processing are also high risk, especially when undertaken under the cloak of commercial-in-confidence type secrecy. Doing the two together multiplies the risk big time. But that is exactly what the Home Affairs department is doing. 

What could possibly go wrong you ask? Plenty is the obvious answer so let’s dig a little deeper.

The government first announced its intentions in the 2016-17 Budget through a measure titled ‘Reforming the Visa and Migration Framework’. This was expected to deliver significant downstream savings for a relatively modest up-front investment. In the 2017-18 Budget, these savings were deferred for two years through a measure titled ‘Immigration Reform – changes to Australia’s visa processing arrangements’. The up-front investment was increased to $185 million.

But don’t count the savings quite yet – this so called ‘reform’ has a long way to run. The department’s January 2018 request for information says privatisation of visa processing will take place progressively in eight separate bundles. On 18 September, The Australian newspaper reported Bundle 1 may be contracted relatively soon and includes development of a ‘global delivery platform’ and delivery of certain low risk visas that can be auto-granted. Subsequent bundles involve offering companies the opportunity to deliver more subjective and complex visa categories and functions (the ones which have the largest backlogs). In total, this work may be worth in the order of a billion dollars over ten years according to evidence given by Home Affairs to Senate Estimates.

In its request for information from companies interested in delivering visa services on behalf of Home Affairs, the department says it is “faced with never before seen volumes of visa applications…volumes of visa and citizenship applications are forecast to increase by around 50 percent by 2026-27”.  Yet Home Affairs provides no publicly available analysis to support its claim of a 50 percent increase in applications by 2026-27.

Based on current policy directions the claim is patently misleading:

  • the department’s own forecast of net migration in the 2018-19 budget shows a steady decline over the next four years – and it is likely this decline may be a substantial underestimate;
  • the 2017-18 migration program was delivered well below the level of recent years and this trend appears likely to continue unless the new minister takes a different direction to Peter Dutton;
  • policy on skilled independent entry has been tightened very significantly, including the pool entry mark being increased by five points;
  • applications for employer sponsored temporary and permanent entry are falling rapidly;
  • applications for working holiday maker visas have been in decline for a number of years;
  • the growth in offshore overseas student applications is plateauing and will slow further as pathways for students to extend stay in Australia have been narrowed significantly.

While visitor visa numbers (and some onshore visas) are likely to continue to grow, processing of low risk visitor visas has been automated since the mid to late 1990s. Processing of visitor visa applications from higher risk countries could also be further streamlined as risk levels fall.  The idea that application fees for visitor visas could be increased significantly to cover the costs the private company would incur in developing and operating the proposed global online platform would be met with trenchant opposition from Australia’s tourism industry.

It is certainly true there are ballooning application backlogs and blow-outs in processing times. But these are due to a mixture of poor visa design changes leading to extra workload without a commensurate increase in resources; uncertainties around how the migration program is to be managed, particularly for spouse visas and employer sponsored visas; reduced resourcing priority for visa processing relative to other Home Affairs functions; visa processing staff being intimidated by constant ‘fearmongering’ messages from the department’s leadership and demoralised by the increasing complaints and inquiries associated with large backlogs drawing resources away from actual application processing.

No private company will take on these backlogs without eye-watering levels of compensation. No, Home Affairs will need to clean up its own application backlog mess. Moreover, any company that takes on this role will demand further recompense if it is expected to get processing times back to the levels before the current leadership took over while maintaining high levels of visa integrity. This will be essential to prevent the re-emergence of new application backlogs, this time owned by the ‘successful’ private company or companies.

An improved online visa processing platform is of course worth pursuing as well as examining the option of using robotics and artificial intelligence as the department suggests. But why can’t government pay for this given the Productivity Commission found in 2016 that “at an aggregate level, revenue collected from visa charges is three times the administrative cost and, over recent years, visa fees have been rising at considerably faster rates than administrative costs, suggesting that charges are not based on processing costs?” (Page 530) And this was before massive increases in visa charges in recent budgets so the excess of revenue over visa processing costs would now be even wider!

As there is no chance Treasury will relinquish this lucrative stream of visa application revenue, companies that win a contract to deliver visa services would need to either increase visa charges even further, use their monopoly position to find new revenue streams, reduce processing costs or rely on a growing caseload.

Any company that relies on the last of these is taking a very big risk. This is unless Home Affairs has guaranteed a minimum rate of caseload growth in which case taxpayers would be taking on the risk and/or Home Affairs would be forced to find ways to drive application rates up – hardly conducive to good border protection and immigration policy!

The request for information suggests while successful companies will be allowed to charge for premium services, the overall charges must not be greater than those of key competitor nations. In its report on the migrant intake, the Productivity Commission noted “charges for Australian visas appear to be higher than in Australia’s major competitor countries” (Page 529).

Additional charges for high volume visas are likely to be strongly opposed by key Australian industries such as tourism, export of education and agriculture. Home Affairs should not be allowed to wash its hands of this increase in charges just because they are being imposed by a private company. At this stage, we do not know if these major export industries are conscious of the potential further increase in visa charges and the impact of these on our international competitiveness.

Abul Rizvi was a senior official in the Department of Immigration from the early 1990s to 2007 when he left as Deputy Secretary. He was awarded the Public Service Medal and the Centenary Medal for services to development and implementation of immigration policy, including in particular the reshaping of Australia’s intake to focus on skilled migration. He is currently doing a PhD on Australia’s immigration policies.

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