ABUL RIZVI: Privatising visa processing – the alarm bells are ringing (Part 2)

Sep 28, 2018

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. In the first part of this article (see here) we noted Home Affairs had grossly inflated the projected growth in the visa application caseload. They will leave whichever company or companies that win this contract with very little room to further increase visa charges given the eye-watering levels to which these have already been increased.

In this part, we look at other risks associated with this privatisation.

Charging for ‘premium services’ and visa integrity

If the successful company is allowed to create two separate processing streams for each visa type (ie one fast lane and one slow lane), the long-term implications are frightening. Any monopoly provider would want to maximise charges for the fast lane and try to drive as many applicants as possible into that lane. To do so, there would inevitably be an incentive for the company to be more ‘facilitative’ with regard to subjective criteria for applicants who have paid for the fast lane. While Home Affairs would no doubt argue it will put in place mechanisms to detect and punish such behaviour, can the public be confident these would be effective? Remember Home Affairs will be desperate for the private company to be successful.

For applicants and Australian sponsors who cannot afford the higher charges for the fast lane, we are likely to see continuing acceleration of people by-passing standard off-shore visa processes and instead entering Australia on visitor visas and then applying onshore for the actual visa they need. This would perpetuate the visa integrity problems the Home Affairs administration has already exacerbated (ie a blow out in the backlog of people in Australia on bridging visas and visitor visa change of status applications) through what can only be described as extraordinarily poor administration.

Home Affairs has suggested companies that win a contract may also use their position to generate new revenue streams such as through online advertising or provision of ‘wrap-around services’ such as airfares, accommodation, etc. However, giving a monopoly visa service provider such power raises even more issues around both visa integrity as well as potential abuse of market power.

Cutting costs

A final option is for the winning company to cut costs. At present, complex visa services are delivered by relatively low paid staff in Home Affairs, particularly in centralised processing centres in cities such as Adelaide. Because these staff deal with much more highly paid lawyers and migration agents, they must have deep knowledge of the Migration Act; extensive legal skills and good knowledge of common means by which non-genuine applicants try to beat the system.

Any successful company would undoubtedly try to recruit existing Home Affairs staff with such skills but to pay them at a lower rate to maximise profit – we have seen this all too often with other outsourcing projects. The alternative of recruiting and training totally new staff would involve a lengthy and complex process with a high risk of errors. Errors such as an increase in applicants who are not eligible being approved and more applicants who are eligible being refused. The former raises serious issues of visa integrity while the latter would increase the rate of appeals the taxpayer would have to pay for unless the private company can be forced to do so – highly unlikely without lengthy legal battles.

Alternatively, the successful company may seek to transfer the visa processing work to a low wage economy. While this may enable the company to more significantly cut costs, the transition risks in terms of training new staff would be even more significant. In addition, there would be a major increase in the gap between the wages of processing staff and the potential returns from fraudulently issuing visas.

On the black market, an Australian visa can be worth many times the annual salary that might be earned by newly recruited visa processing staff in a low wage economy. What would be the additional costs to Home Affairs to monitor and investigate a much higher level of corruption? And is the Australian public happy to take on such a risk given its attitude to issues such as border control and visa integrity?

We also do not know the extent to which the successful companies would be subject to scrutiny by government agencies such as the Ombudsman and the Auditor-General. Would the Freedom of Information Act still be applicable to the new company? How will issues of national security be addressed when these arise with some applicants? How would the successful company deal with privacy issues given the vast wealth of data about Australians as well as potentially new Australians it would have access to? Given the additional cost to the company of meeting these scrutiny requirements, would it be allowed to sell some of the data it collects as an additional revenue stream?

A further issue will be the charges the successful company seeks whenever government wants to change visa design or visa policy – something that happens very regularly. Experience elsewhere has shown government is not good at keeping such charges to a reasonable level (think of private health insurance premiums). This would particularly be the case for policy changes that may reduce application rates and therefore the private company’s revenue. Moreover, would the prospect of such costs also impact the nature of policy advice Home Affairs gives to government (ie avoid good advice that would result in a large cost to the company and therefore the department)?

Finally, there is the question of what happens to thousands of Australian staff who currently process visas as employees of the Department of Home Affairs. The Department of Finance may seek a cut to the budget funds provided to Home Affairs to pay these staff who would no longer be needed (other than the costs of managing the contracts with the successful company or companies). Indeed, this may already be included in budget figuring for the out years as part of the savings Home Affairs has promised. Moreover, Home Affairs would need to meet the costs of redundancy payments for staff who are no longer needed.

Will the risk plans and business case be made public?

On the basis of the limited information provided to the public to date, the business and risk case for privatising visa processing appears highly questionable. Will the government be prepared to share its risk management plans and business case for this high risk initiative with the Australian public and Parliament?

The media has already picked up on the potential conflict of interest the Prime Minister may have due to his alleged association with the leaders of one of the consortia that may be bidding for this project.

In addition, after just seven months in the job, the department’s Chief Information Officer, Tim Cately, has just resigned. Could he have had concerns about this project?

Most importantly, would the Australian public be comfortable with the extraordinary risks Home Affairs is taking on our behalf with such a core government function? And how long before the taxpayer has to bail out the department because one or more of these many risks materialises?

If your alarm bells are not already ringing, they must be turned off!

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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