ABUL RIZVI: Will the number of temporary entrants continue to grow?Aug 17, 2018
Apart from Senator Anning’s appalling speech, the other big immigration news this week was that the stock of temporary entrants in Australia was over 2 million as at 30 June 2018. Since 2012, the stock has grown by over 400,000. This has been a long-term trend since the recession of the early 1990s. But is it inevitable this trend will continue, and if so, is that a good idea?
Other than around 300,000 visitors, the vast majority of these people have work rights in Australia. They must pay taxes on their income, sometimes at the higher non-resident rate, but have no access to social welfare. While the 600,000 New Zealanders have access to most government services and benefits, the majority of other temporary entrants generally do not.
Over 1 million of them are associated with either our international education industry (our third largest export) or our tourism industry (our fourth largest export). They make a disproportionate contribution to our economy and to government budgets. They create more jobs than they take, add significantly to the productivity of the economy (which is key to wages growth) and slow the rate of ageing of our population. Temporary entrants who are in Australia for 12 months out of the past 16 months are counted as part of the population.
On the other hand, these people add to congestion and pressure on infrastructure that concerns Australians. Many are from Asia, and some are muslims, which seems to bother parts of the Australian community. This includes some political leaders (not just Anning but also Abbott, Bernardi and others) and media commentators such as Andrew Bolt and Judith Sloan.
So what should our policy approach be to temporary entrants for the future? This question needs to be considered on a broad category by category. So here goes.
Skilled Temporary Entrants
The former sub-class 457 visa became the object of much opprobrium that eventually led to Dutton taking a sledgehammer to this visa. This was announced in April 2017 but not taking full effect until March 2018. Unless there is considerable unwinding of the changes, we will see the stock of people on a skilled temporary visa continuing to decline. It has already fallen from 195,083 at end June 2014 to 147,339 at end June 2018.
This visa has been a key pathway to employer sponsored permanent residence – by far the permanent residence visa that has contributed the most to Australia’s economy and budget over the past 20 years. The consequent decline in visa applications for employer sponsored visas will help Dutton further reduce skill steam migration once the current backlog of employer sponsored visa applications is cleared – but at what cost?
Apart from a short hiatus after 2008-09, student numbers have grown strongly since 2000 with the stock now approaching 500,000. This has been driven by a combination of streamlining visa design and processing together with opening up pathways to permanent residence. Dutton closed these pathways very significantly in 2017-18 and continues to do so. This will in time impact on both the growth in new student arrivals as well as forcing an increase in student departures (although the rate of decline may not be as severe or sharp as after the 2008-09 tightening).
Managing the departure of such as large number of students, many of whom have been studying and working in Australia for four or more years, will be a challenging task as many students will press to be allowed to remain (thus further increasing the stock of people on bridging visas). The increased rate of student departures will impact key businesses in central Sydney and Melbourne in particular.
Working Holiday Makers (WHM)
The stock of WHMs has fallen from 160,503 at end June 2013 to 134,909 by end June 2018. This has been driven by a mixture of media reports on exploitation of WHMs, an increase in the tax rate applying to income earned by WHMs and increased competition for these high value tourists from competitor countries. The decline would have been more rapid had the government not negotiated new agreements with countries such as China, Spain, Chile, Argentina and Indonesia with more agreement countries to come on stream (eg India). A return to growth in the program will depend on the level of the caps these new agreement countries. This will be offset by further decline due to tightening of opportunities for WHMs to extend stay in Australia via skilled temporary and permanent entry categories.
New Zealand Citizens
The stock of some 600,000 New Zealand citizens has been growing relatively slowly in recent years, partly due to the relative strength of the New Zealand economy. Long-term net arrivals from New Zealand is currently at a relatively low level. Changes in the performance of the two economies can change that quite rapidly. The new permanent residence visa for New Zealand citizens will, all other things equal, reduce the stock of New Zealand temporary entrants in Australia to a modest degree.
Temporary Graduates and Professional Development
The stock of people on these visas has grown rapidly from 26,608 at end June 2015 to 71,155 at end June 2018. With tightening of policy on other pathways for overseas students to extend stay in Australia or to migrate permanently via the skill stream, we will see a rising portion of the 500,000 students in Australia transitioning to these visas. But many holders of these visas will find they have come to a dead end if they have not acquired sufficient time working in a relevant skilled occupation.
They would then need to depart, most having spent five or more years studying and working in Australia.
The number of people on bridging visas has climbed from 94,625 at end June 2014 to 176,216 at end June 2018. This is a function of rising processing times and growing backlogs. The indications are that the number of bridging visa holders will continue to rise over the next few years even if clearing the backlog is given greater priority, especially as people who have spent many years in Australia look for means to remain in Australia and/or appeal refusal decisions.
Where to now?
Dutton needs firstly to prevent the immigration system becoming gridlocked. A gridlocked system means both reduced efficiency and less integrity. Applicants and their Australian sponsors will become more frustrated and seek to skirt around the ‘greater scrutiny’ of offshore applications that Dutton says he has implemented by entering on visitor visa and applying for onshore change of status thus further increasing the bridging visa backlog. In these circumstances, staff processing applications will become more demoralised.
But Dutton also needs to develop and explain a longer-term plan for population and immigration policy, including a rational role of temporary migration within this. In this regard, he may wish to consider this recent speech to business economists by the Governor of the Reserve Bank Philip Lowe and this joint Treasury/Home Affairs report. He could even read this Productivity Commission inquiry on our migrant intake.
He needs to understand, being Immigration Minister is more than just trumpeting his latest deportation efforts. The nation-building and social cohesion responsibilities are just as important as is making sure the immigration system is operating with efficiency and integrity.
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.