Pearls and Irritations

Australian governments have always cut the immigration intake in response to a recession. The 2020-21 intake will be no different. While the Government may announce a ‘ceiling’ that is not much below that for 2019-20, the actual planning level, which may well remain secret, will be well below the ceiling.

In 2019-20, the Government delivered a migration program around 20,000 places below the ceiling of 160,000. A record 70 percent of the skill stream was delivered to people already living and/or working in Australia. For the family stream, 56 percent of visas were to people already living in Australia. The balance would have been even more tilted towards onshore visas after March 2020 as the Department of Home Affairs suspended processing of offshore visa applications (possibly unlawfully).

The trend towards more onshore visas in the migration program will continue in 2020-21 to avoid putting pressure on the overseas arrivals cap but also due to concerns about the weak labour market and expiry of the suspension of the four year wait for access to social security by most newly arrived migrants. The suspension is scheduled to expire on 31 December 2020.

If the suspension is not extended, there will be added pressure on charities to support recently arrived permanent residents who are currently on Job Seeker and/or we will see an increase in permanent resident departures. It would also make governments reluctant to use visa categories where the potential migrant does not already have a job.

Table 1: Migration Program

Source: 2019-20 Migration Program Report, DHA Website, Author Calculations

Despite its extraordinarily high risk nature, the Global Talent Independent (GTI) is Minister Tudge’s favourite visa with its almost unlimited flexibility, no formal skills assessment or English language test or age requirement and no employer obligations. This visa has low costs and rapid processing.

With migration agents and processing officers encouraging potential applicants to use this visa, there were 2,448 applications on hand at end June 2020. Together with Tudge’s announcement of his new Global Business and Talent Attraction Taskforce, it is likely he will want a larger allocation of places for this visa.

But with over 80 percent of the visa being drawn from people already in Australia, and covid restricting offshore processing in 2020-21, Tudge will struggle to allocate more than 7,500 places to this visa without further significant dilution of the targeted industry sectors and assessment of applicants’ “potential earnings capacity” in a very weak labour market.

Just putting the word “tech” beside the name of an industry such as agriculture or mining doesn’t really make the applicant any more skilled than if they had entered via another skilled migration category.

This visa has essentially drawn applicants away from employer nomination, skilled independent and state/territory nominated visas rather than attracted new super-duper talent that Tudge was crowing about.

In the Permanent Employer Sponsored category, application rates have been falling sharply from 34,966 in 2017-28; to 28,370 in 2018-19 to 25,096 in 2019-20. The number of applications on hand have fallen from 30,975 at end June 2018; to 20,840 at end June 19 13,023 at end June 2020.

The effect of the ham-fisted changes to employer sponsored visas made by Peter Dutton, combined with a very weak labour market, will mean applications in this category will fall significantly further in 2020-21.

While Tudge’s more supportive approach to employer sponsored migration has led to the grant rate in this category increasing significantly (ie fewer applications being refused for trivial reasons or because information provided became out of date), that will not be enough to offset the decline in applications. Applications in this category in 2020-21 are highly unlikely to exceed 15,000. It would be difficult for Tudge to allocate more than 20,000 places to the Permanent Employer Sponsored category in 2020-21.

Over 90 percent of these visas in 2020-21 are likely to be granted to people already in Australia, most likely on a skilled temporary employer sponsored visa.

Tudge can increase or decrease the size of the Skilled Independent category as needed – it has always been the ‘swing’ category in delivering the migration program.

In the first two invitation rounds in 2020-21, Tudge issued only 610 invitations with only 110 invitations in August. As a substantial portion of this visa category has traditionally been to people outside Australia, Tudge will be reluctant to issue invitations at a rate much faster than this.

The total allocation to this visa category is unlikely to be more than 10,000 with the vast bulk of these going to New Zealand citizens who have been living long-term in Australia.

The State/Territory Nominated permanent resident visa (sub-class 190) has been allocated 2,430 places for the four months July to October 2020. This suggests Tudge will take a cautious approach to this visa, especially in a weak labour market. If Government decides not to extend the current suspension of the four year wait for social security for newly arrived migrants, the full year allocation for this visa is unlikely to exceed 15,000 in 2020-21.

State/territory governments appear to be taking a very cautious approach to this visa and will be reluctant to nominate people outside Australia other than for skills that are desperately needed (mainly in health and aged care and possibly engineering and construction if governments invest heavily in infrastructure development as part of the economic recovery).

Similar considerations arise for the State/Territory Nominated provisional visa (sub-class 491). For the period July to October 2020, 1,715 places have been allocated. On this basis, a full year allocation of around 10,000 is likely.

The new Regional Employer Sponsored (provisional) category has only 2,393 applications on hand with a very low application rate. Without major changes to the design of this visa, there will be very few new applications in 2020-21 and as a result the full year allocation may be no more than 3,500.

The BIIP visa grouping has become an enigma for Tudge. On the one hand, he has established a new taskforce to attract more business migrants. He is right to point out that additional business migrants can create more jobs through investment in new businesses. On the other hand, Tudge has allowed a backlog of over 31,000 business migration applications to build up, mostly from mainland China. That may be of concern to security agencies.

He seems on the lookout for more business migrants from other nations but generating those will be difficult. Additional business migrants from overseas will also put more pressure on the overseas arrivals cap.

These factors will limit how many places Tudge can allocate to business migrants. Most likely, he will struggle to fill more than 7,000 places unless he is prepared to process more applications from mainland China (he will need to eventually process the applications from China or the courts will force him to do so).

That gives a total of 73,200 places in the skill stream which would be more than 20,000 less than the 2019-20 outcome which itself was significantly below that in 2018-19.

If Tudge insists on retaining the two thirds to one third balance in favour of the skill stream over the family stream, he would need to limit the family stream to around 35,000 places compared to a family stream in 2019-20 of almost 42,000.

A key factor in trying to limit the family stream to 35,000 is the visa management provisions of the Migration Act (ie s85, s86 and s87). These dictate how visas must be processed and which visas can be capped and which cannot. The spouse and dependent child visas cannot be capped. However, as the Department of Home Affairs has largely ignored these provisions since Morrison was immigration minister, it will most likely continue to do so until a court orders it to abide by the law.

Another major limiting factor will be the overseas arrivals cap. Unless this cap is very significantly expanded, Tudge will be reluctant to process too many offshore family stream visas. On the other hand, processing more offshore visas may force state/territory governments to more quickly expand quarantine capacity or to put pressure on the Commonwealth to do so.

There are more than enough onshore family visa applications on hand at end June 2020 to fill a family stream in 2020-21 of 35,000. The issue then is how this will be distributed across the different family stream visa categories.

A possible distribution is suggested in Table 1.

In terms of the humanitarian program, Tudge may continue to forestall processing of offshore applications and only allocate places to onshore asylum seekers. That would suggest a humanitarian program planning level of between 2,000 and 3,000 in 2020-21. Unless of course the Government uses the spare places within the humanitarian program ceiling to grant permanent residence to temporary protection visa holders who have been in Australia for over seven years.

A total migration program of less than 110,000 and a humanitarian program of 2,000 to 3,000, with almost all of it delivered to people already in Australia, would mean the program contribution to net overseas migration in 2020-21 may be close to zero if not negative due to permanent resident departures.

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