Economic and Political Outlook 2021
Check out CEDA's new report featuring insights from economists and political commentators on the year ahead.
This article was originally published in The Age on 28 September.
Immigration has long been an important foundation for Australia’s economic development and prosperity, but the COVID-19 pandemic has caused a dramatic slowing of overseas arrivals.
The Morrison Government has flagged that a “reset” of the migration program will feature in the upcoming Federal Budget, now less than two weeks away. Now is the time to take stock of the current system and recalibrate for the future, to help Australia come back better.
Historically, migration trends have followed economic conditions, and we should not expect this crisis to be any different. Policy decisions taken now will have a major impact on Australia’s ability to attract the best and brightest as we start to emerge from the pandemic, as countries such as the United States introduce new restrictions on migration. These considerations must be evidence-based and nuanced.
Providing more information and transparency on skills shortages will be critical to bolster confidence in both our skills and migration systems, at a time when we will see both historically high and rising unemployment, as well as pockets of skills shortages. These circumstances will be challenging for the community to reconcile.
With unemployment rising sharply, many have already been questioning how bringing more workers into the country remains in the nation’s best interests.
But previous CEDA modelling has shown that recent waves of migrants have not had a negative impact on the wages or participation rates of Australian-born workers.
In fact, the results suggest that at certain levels of qualification and experience, an increasing proportion of migrants can help boost wages and employment. The results are consistent with previous modelling for the Productivity Commission by ANU researchers, who found no evidence that the entry of migrants had a negative effect on the labour market outcomes of local workers.
Ensuring we are doing our best to fill critical skill gaps that cannot be met in the short term within Australia will help to ensure that migration supports our economic recovery. On this front, there is room for improvement.
To begin with, changes to migration programs have been made so frequently that it is hard to determine which aspects of the programs are effective in meeting skill needs.
There are also legitimate questions about the nature of skills gaps and the extent to which some gaps reflect difficult working conditions and the desirability of some occupations. More work must be done in this area, and CEDA is looking further at Australia’s skills mismatch in an upcoming report due in late November.
Australia must get serious about better identifying skills gaps and ensuring that temporary skilled migration is working in tandem with a responsive education and training system. A starting point would be to introduce contemporary skills classifications. Ours are well out of date.
Previous CEDA research has also pointed to the benefits of better targeting funds from the Skilling Australians Fund Levy, a charge paid by businesses that want to sponsor temporary migrants, to address training in identified areas of shortage.