Government must prioritise selection over attraction with migration, says e61

While the “large economic opportunity” of migration presents the potential use of temporary visas as a screening stage for permanent migration, economists suggest a nuanced approach to migration reform.

As Australia’s sentiment on the size of migration intake continues to shift, e61 Institute economists Elyse Dwyer and Harshit Shah, in an insights piece, noted that with the government’s reforms to its migration “points test” to favour younger, more educated, and higher-skilled migrants, acknowledging the further changes to its Working Holiday Maker program, and greater funding for skills recognition.

“Considered individually, these sound like tweaks. Together, they suggest a rethink of what Australia’s migration system is for,” the economists said in an e61 Institute insights piece. Migration presents a large economic opportunity for Australia, making the prioritisation of selection over attraction the “central policy focus”, the economists said.

The institute stressed that despite the importance of selection, much of what determines whether a migrant thrives in Australia is not visible from an offshore application. “Language ability, motivation, and how well a person’s skills translate to Australian workplaces all unfold over time,” the economists said.

They noted that since outcomes cannot be precisely predicted from observable characteristics, temporary pathways provide valuable information for selection, along with helping to meet short-term workforce needs and supporting education exports. “Temporary visas are now the most common path to permanency, but serve multiple other policy goals along the way,” they said.

“There is a coherent case for treating temporary study and graduate work as a screening stage for permanent migration. But the pathway has not always delivered on this and has left many students stuck in temporary status.”

Since last year, the government has tightened its approach to visa hopping and post-study work rights. A previous e61 study revealed that the share of graduate visa holders taking out further student visas rose from around 2.5 per cent in 2009 to more than 25 per cent in 2018, with only one in three of these “visa hoppers” obtaining permanent residency within five years.

With the government’s restrictions on “visa hopping” and changes to post-study work rights potentially aimed at reducing the number of migrants who stay in temporary visa status, other e61 research revealed that extending post-study work rights encouraged international graduates to stay and attracted more students, the economists found. “... the extra time did not improve earnings or job quality, and the graduate visa holders were less likely to obtain permanent residency within three years,” the economists said.

The government appears to be moving from persistence to prospects, e61 said. “Restrictions on visa hopping, shorter post-study work rights, and a proposed redesign of the points test all suggest less weight on how long someone can remain in the system, and more on their expected long-run contribution,” it added.

“It appears to be moving towards stronger labour-market signals. More employer-sponsored places and better skills recognition suggest greater emphasis on whether migrants can use their skills in productive work.”

The current Permanent Migration Program for the next financial year will remain at 185,000 places; however, it will have a shift in compilation, with employer-sponsored places rising from 44,000 to 58,040 and regional places falling from 33,000 to 14,110, the economists found.

The economists said that fewer pathways that reward waiting, greater emphasis on labour-market prospects, and a clearer distinction between supplying workers now and selecting future citizens may be the emerging organising principle.

“Migration cannot be judged only by wages or fiscal returns. It must also be fair to migrants, workable for employers and credible for regional communities. But these incremental steps move in the direction of greater clarity and more focus on the overall economic contribution to Australia,” the economists said.

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Carlos Tse

Carlos Tse is a graduate journalist writing for Accountants Daily, HR Leader, Lawyers Weekly.