Opinion article

Send migration signal to compete in global talent war

Reinvigorating Australia’s post-pandemic immigration system requires a dedicated, deliberate and persistent strategy, writes Jarrod Ball in the Australian Financial Review.

The Immigration portfolio may not have scored a cabinet guernsey in Anthony Albanese’s first ministry, but this should not prevent it being integral to the economic agenda in this term of parliament.

As Australia’s jobs market continues to roar and the economy overheats, migration is only limping back to pre-pandemic levels.

The numbers are stark – about 500,000 fewer temporary migrants on our shores and net migration of 41,000 this year compared to 235,000 in a typical year before the pandemic.

Before the pandemic 83 per cent of net overseas migrants were of working age, highlighting the incredible shock to the skills pipeline playing out across the economy right now, from restaurants to construction sites.

We are in an economy more akin to the mining boom than our pre-pandemic malaise, yet we have granted just 23,000 temporary skills shortage visas in the nine months to March this year compared to 68,000 in a year at the height of the mining boom.

This decline in our migrant intake has significant short and long-term ramifications, yet barely rated a mention from any party during the election campaign.

In the short term, businesses including those in construction, health and technology are struggling to complete their project and investment pipelines. CEDA’s recent survey of CFOs found almost 70 per cent of respondents suggested access to appropriately skilled workers would be important or very important for driving their investment decisions in the next 12 months.

But it isn’t just the immediate effect on our workplaces – it’s also our failure to compete in a global war for talent. This global competition will only escalate as Baby Boomers across the world retire. The number of Australians intending to retire in the next 12 months is at its highest level in the last two decades.

Attracting more global talent will be critical to reinvigorating productivity growth. Two of the biggest levers to lifting our lacklustre productivity growth are companies lifting their game on tech and management capability. This will not be achieved without injecting new global expertise and perspectives into our economy.

The signals Australia sends to the rest of the world about migration really matter. Australia’s border closures were among the strictest in the world during the pandemic, and we failed to extend emergency assistance to temporary migrants in Australia at the beginning of the pandemic.

In contrast to Australia, other countries supported all migrants during COVID-19 and have not been shy about putting a spotlight on their migration aspirations.

Recognising the need for a COVID-19 catch-up and the demographic tidal wave coming at it, Canada got on the front foot, meeting its goal to welcome 400,000 new permanent migrants in 2021. Though 70 per cent of these people were already onshore on temporary visas, the signal it sent to prospective migrants was resounding. 

Reinvigorating Australia’s post-pandemic migration system requires a dedicated, deliberate and persistent strategy. The new Immigration Minister Andrew Giles should begin by publicly outlining the government’s strategic priorities for migration in the next term of parliament. 

There are at least four priorities if we are to build a sustainable and competitive approach: getting skills alignment right; more expedited visa pathways; better pathways to permanence; and better system governance.

Our skills and training, and migration systems must complement each other and be calibrated to meet current and future skills needs.

CEDA’s research shows 23 per cent of permanent skilled migrants to Australia end up in jobs below their skill level. When employers are associated with the recruitment process this mismatch falls.

In the short term we should better align both the temporary and permanent skilled migration systems with skills demands by overhauling the skilled occupation classification lists to better reflect the contemporary labour market. 

In the longer term, the introduction of a skills-matching platform accessed by employers and incoming migrants would improve these outcomes. This is likely to be a better long-term solution than a renewed push to substantially lift the minimum income threshold for temporary visa holders.

Though the threshold is overdue for an increase, going too far will ride roughshod over sectoral and regional peculiarities of our labour market and exacerbate current labour shortages.

Employers navigating current labour and skills shortages need more expedited pathways. The government could quickly implement the recent recommendation of the Joint Standing Committee on Skilled Migration to introduce intra-company transfers to ensure trusted multinational companies can get expedited access to the talent they need here.

A pathway to permanency and making the visa process quicker and easier will be critical to prospective migrants. They will be looking for increased certainty and will be hesitant to move to a country that does not offer clear paths to permanent residency. Permanency also recognises that Australia’s demographic challenges and critical skills needs are not going to disappear any time soon.

The governance of Australia’s migration system also needs modernising to support the post-COVID-19 migration challenge. More timely and transparent data on system performance and more efficient processing would be good places to start.

This government must bring migration firmly on to the post-election policy agenda. Our future living standards depend on it.

This article originally appeared in the Australian Financial Review on June 2, 2022.

About the authors

Jarrod Ball

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Jarrod Ball joined CEDA as Chief Economist in 2017 with over 15 years of experience as an economist across the public and private sectors. He has held senior roles at the Business Council of Australia, in EY’s advisory services practice and more recently at BHP. Jarrod also worked in the Federal Government and was a lead adviser on microeconomic reform for the Victorian Departments of Premier and Cabinet and Treasury and Finance. He is a member of CEDA’s Council on Economic Policy and the Melbourne Economic Forum. Jarrod holds a Masters degree in Economics from Monash University and undergraduate degrees in Business (Economics) and Arts from the University of Southern Queensland.

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