Opinion article

Migration after COVID-19 must be about recovery not retreat

CEDA Chief Economist, Jarrod Ball, and Senior Economist, Gabriela D'Souza, argue that in debating immigration after COVID-19, policymakers should consider the wealth of evidence supporting the economic benefits of a strong, well-managed immigration program. With this as a starting point, they argue Australia need to develop an immigration program that considers the rights of temporary workers and addresses skill shortages in a timely manner. 

Late last week, the Prime Minister revealed the full extent of the inevitable migration slowdown from COVID-19 – an 85 per cent reduction in net migration in 2020-21.

Opposition Minister for Immigration and Citizenship and Home Affairs, Senator the Hon Kristina Keneally, has openly questioned just what a return to normal will look like for Australia’s migration program after COVID-19 in terms of numbers and composition, voicing concerns about the impact of temporary migration. Guiding this return to normal is the seemingly simple objective that Australians get a fair go and a first go at jobs.

This is an important discussion and debate, as Australia’s immigration program will heavily influence our post COVID-19 economic recovery. Just as it has been in the past, the growth, make-up and settlement of Australia’s population will be major determinants of Australia’s future economic and social development.

Too often this debate has episodically waxed and waned with political imperatives, feeding off misperceptions and half-truths. No political party has been immune. This is why the Committee for Economic Development of Australia (CEDA) has previously called for immigration policy to be debated and developed in a way that is considered, circumspect and forward-looking. As the global coronavirus pandemic shutters international borders until the virus can be contained and controlled, this call is now more important than ever.

Despite the fundamental importance of the debate, it is not off to a good start. Already there are broad assertions that in recent years the shape and size of our intake has hurt many Australian workers, contributing to unemployment, underemployment and low wage growth.

The available evidence suggests otherwise. CEDA modelling conducted last year showed that recently arrived migrants had not had a negative impact on the wages or participation rates of the existing workforce. On the contrary, our results indicated that an increase in migrants had a positive impact on wages and employment for some workers. CEDA’s analysis is consistent with previous research conducted in Australia, which shows no evidence that the entry of migrants had a negative effect on the labour market outcomes of incumbent workers.

But it isn’t just that Australian workers haven’t been adversely impacted by migration: we have all benefited. Migrants bring valuable skills and experience, along with demand for goods and services in the domestic economy – they produce goods and services and raise the overall consumption level in the economy.

Australia’s largest non-resources export is international education accounting for eight per cent of our exports last year. The second largest category of temporary migrants after New Zealand citizens is international students. These two categories alone make up the lion’s share of temporary migration to Australia.

The much smaller rigorously controlled temporary skilled migration program has brought valuable global skills to Australia, often transferring them and building up Australia’s human capital. Advanced manufacturers like Cochlear and CSL have built their Australian operations off the back of skills transfer from skilled migrants. We have also drawn heavily on the talents of IT and medical professionals, areas of demand that will also grow in the wake of COVID-19. It is no wonder that half of them end up staying in Australia through the permanent program and contributing to our country – mechanics and coders alike.

To top all of this off, temporary visa holders are excluded from free or subsidised government services but still contribute to economic activity and tax revenues, resulting in a boost to budget bottom lines. This has become a major concern at the present time where temporary migrants are excluded from government support payments to manage the job impacts of COVID-19.

None of this is to deny that there are legitimate concerns about aspects of the temporary migration program that we should seek to resolve.

Australia should not unintentionally create a class of perpetual temporary migrants for whom permanent migration and the associated safety nets are always out of reach. Recent cases of wage underpayment affecting temporary migrants have revealed the vulnerability of some temporary migrants and employment laws to exploitation. The recommendations of the migrant workers taskforce chaired by Alan Fels must be implemented and monitored thoroughly to address these issues.

CEDA has also consistently argued that our skills and training system needs to be working harder to address emerging skills shortages before they become acute.

The current debate also highlights the potential role for an independent committee, like the Migration Advisory Committee in the UK, to consult, analyse and provide advice on migration issues to enhance accountability, transparency and confidence in the migration system. The current debate demonstrates that there is a need for an independent advisory body to assess and make recommendations on the composition of the scheme – one that is apolitical and is based on the available evidence. The Federal Government would still retain control over the migration levers.

History shows that Australia’s levels of migration – including temporary migration – ebb and flow with economic conditions, as mining booms emerge and fade and the Australian dollar sinks and rebounds. The future will be no different. We should be strengthening our migration system in a careful, methodical and proportionate manner, ready for Australia’s economic recovery. We need a considered and circumspect debate on migration, a unique feature of Australia’s brand of economic development that has underpinned so much prosperity in recent decades.
About the authors

Gabriela D'Souza

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Gabriela D’Souza joined CEDA as Senior Economist in 2018 with eight years of experience in public policy. She has worked at some of Australia's most well-known and respected public policy think tanks and economics research centres. She has conducted research on a wide range of public policy issues including education, immigration, multidimensional disadvantage, and area-based measures of exclusion. Gabriela has a master’s degree in economics from Monash University and is an affiliate of Monash University’s Department of Business Statistics and Econometrics.

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.