15 Aug Immigration policy about to undergo massive shake-up
The Albanese Government is determined to pull Australia out of the immigration policy mess brought on by the Coalition (Image by Dan Jensen)
The coming months will be fraught for immigration policy and administration as the Government tries to fix the mess inherited from the Coalition, writes Dr Abul Rizvi.
WHILE THE CURRENT debate is focused on record net migration in 2022-23 driven by cover-era policy settings and a hot labour market, that will soon be history as the next 12-18 months will turn much of that on its head.
Forget Treasury’s recently updated forecast for net migration of 315,000 in 2023-24. If Treasury’s forecast of a rapidly weakening labour market is right, there is no way net migration will get to 315,000. The two forecasts cannot both be right.
Net migration has always fallen sharply whenever the labour market has weakened (’74-’76; ’81-’83; ’91-’93; ’08-’09; ’14-’15 and the early stages of the pandemic).
As the labour market weakens, temporary entrants such as students, working holidaymakers and temporary graduates, as well as newly arrived permanent migrants, are amongst the first to lose their jobs or have their hours reduced. Temporary entrants have no access to any form of social support. Most newly arrived migrants now face a four-year wait for social security.
Many will have no choice but to leave Australia, driving down net migration, while others will be unable to do so having invested significantly in a possible pathway to permanent residence. The latter will rely heavily on charities and/or face exploitation by unscrupulous employers taking advantage of their vulnerability, including work rights limitations. This will be in the context of the rising cost of living, particularly rental accommodation.
The 100,000-plus asylum seekers currently in Australia will be especially vulnerable in a weak labour market. The tens of thousands of asylum seekers trafficked to Australia since 2014-15 will also have significant debts they must repay to traffickers at high interest rates.
But there are some additional factors that will make the situation more dire than ever before.
Over the next 12 months, the Government will implement three sets of very significant policy changes:
Removal of COVID-era policy settings
From 1 July 2023, the Government will undo a range of COVID-era policy settings. These were implemented by the Coalition Government due to pressure from business lobby groups desperate for labour but with little interest in what happens to the temporary entrants and new migrants in an economic downturn.
The most significant of these COVID-era policies was former Immigration Minister Alex Hawke’s decision to provide overseas students with unlimited work rights. The record surge in offshore student visa applications in 2022 and to date in 2023 was driven by that decision. Hawke trashed the reputation of Australia’s international education industry.
From 1 July 2023, student work rights will be restricted to 48 hours per fortnight. This will impact over 580,000 students currently in Australia — a number that will keep rising until the impact of restricted work rights becomes better known amongst both current and potential new students.
The financial calculations these students will have made, with many of them having borrowed huge sums of money to pay tuition fees, are unlikely to have allowed for the re-imposition of restricted work rights, a sharply weaker labour market, high interest rates and rapidly rising cost of living.
As offshore student visa applications decline, many international education providers will face a significant reduction in tuition fee revenue over the next 12-18 months compared to 2022-23. Some providers will switch to delivering six-week courses in aged care or may go out of business as they did in the early 1990s and after the Global Financial Crisis. The Government will come under pressure to financially help lower-tier universities in particular as they lose existing students to private vocational education and training (V.E.T.) providers switching to delivering courses in aged care.
Both the Coalition and Albanese Governments have made temporary graduate visas more attractive with longer stay provisions. This led to the number of temporary graduates in Australia rising from 88,694 in mid-2021 to 183,175 at end March 2023. This is despite large numbers of temporary graduates over the same period securing permanent residence through state/territory government nomination, a skilled independent visa or an employer-sponsored skilled temporary visa.
As the labour market weakens, temporary graduates will find it increasingly difficult to secure a long-term skilled job that enables them to be nominated by a state/territory government, qualify for a skilled independent visa or be sponsored by an employer for a skilled temporary visa. Note the minimum salary for this visa will rise to $70,000 from 1 July 2023 after being held down by the Coalition for a decade. That was designed to keep wages generally down.
As their temporary graduate visas expire, many will have no choice but to either go home thus reducing net migration, return to a student visa, become overstayers or apply for asylum to delay departure. The latter would be a very poor policy outcome.
Special COVID-visa stream
The Coalition Government also established a special COVID-visa stream with full work rights that was predominantly taken up by overseas students and temporary graduates whose visas were expiring but could not leave Australia due to travel restrictions. There are over 50,000 people currently in Australia on this 12-month visa.
This visa will be closed to new applications from 1 July 2023. But the crucial question is what will happen to these people when their 12-month visa expires?
Some may depart Australia, thus reducing net migration, while others may try to return to a student visa (many will try to do a six-week course in aged care given the development of a new aged care labour agreement). But most will not be able to either leave and some may not be able to afford even a six-week student visa. A substantial portion may either become overstayers or apply for asylum to further delay departure.
The Coalition Government also made major changes to the Working Holiday Maker (WHM) and the Work and Holiday (W&H) visas including increasing caps on the W&H visa by 30 per cent in 2022-23 only, allowing visa holders to work with the one employer for longer than six months, enabling these visa holders to apply for a third visa and increasing age limits.
These changes rapidly increased numbers of WHM/W&H visa holders in Australia from 19,324 in early 2022 to 136,621 at end March 2023. In the short term, that trend will continue. But from 1 July 2023, WHM/W&H visa holders will need to change employers every six months. That will be difficult in a weak labour market and may force many WHM/W&H visa holders to leave Australia earlier than they had planned. That, too, would reduce net migration.
Two other changes that will take place on 1 July 2023 will be the introduction of the Pacific Engagement Visa (PEV) and direct access to Australian citizenship by New Zealand citizens who have been in Australia long-term (around 350,000). The PEV is essentially a humanitarian visa in that it provides immediate access to social security.
While PEVs will find it hard to secure a job in a weak labour market, the Government has assumed a large portion will fall back on social security. That is a poor policy outcome that should lead the Government to re-design this visa.
The Parkinson review has made a range of recommendations the Government is currently considering. The Government’s detailed response may be announced later this year. Most of the recommendations would lead to a tightening of policy and a decline in net migration. The major impact will be on students, WHMs, temporary and permanent employer-sponsored visas and skilled independent visas. There is no evidence Treasury has taken that into account in its net migration forecasts.
Immigration compliance activity
Despite its border protection and visa integrity rhetoric, the Coalition Government presided over the largest decline in immigration compliance activity I can remember over the last 40 years. That decline contributed significantly to leaving the visa system wide open to abuse by labour traffickers and other unscrupulous agents.
In response to a Nine Network investigation titled Trafficked (Part 1 and Part 2), the Albanese Government commissioned former Police Commissioner Christine Nixon to undertake a review of visa integrity. I wrote on the need for such a review last year.
While the Government has not yet released the Nixon report, The Age appears to have sourced a copy and says the findings are absolutely scathing.
The recent Budget allocates funding to significantly increase immigration compliance activity. But much of that will be needed just to enforce the visa changes that start from 1 July 2023.
An editorial in The Age demanding action will put pressure on the Government to go much further, especially in terms of the massive abuse of the asylum system to traffic labour to Australia. As the Coalition and the Murdoch press have belatedly entered the debate on abuse of the asylum system, there will also be political pressure to act.
Once again, there is no evidence that Treasury’s net migration forecasts take into account either the interim or full policy response to the Nixon report.
The next 12-18 months will indeed be fraught for immigration policy and administration as the Government tries to manage its way out of the mess it has inherited. The focus will not be so much on the level of net migration, which will inevitably fall, but on how immigration policy is managed as the labour market weakens and a growing number of temporary entrants and new migrants face destitution.