Kruno Kukoc - First Assist. Sec. Migration and Visa Policy Div. addressing the 2012 CPD Immigration Law Conference - Friday March 9, 2012, hosted by the Immigration Lawyers Association of Australasia (ILAA). Below is a detailed and authorized transcript of pending reforms to Australia's Migration Progam. These changes go into effect from July:
It is a great pleasure to have the opportunity to speak with you this morning. I would like to thank the Immigration Lawyers’ Association of Australasia, particularly Maria Jockel, for the invitation to speak today. I would also like to acknowledge the traditional owners of the land.
I am sure that many of you will note with interest the reforms to the permanent Employer Sponsored category announced by the Minister in his address this morning. This announcement caps off almost 12 months of work within my division to examine the program settings of this category.
The aim of this work was to ensure that the Employer Sponsored category aligns with the government’s priorities of addressing skill shortages within critical occupations, while ensuring that migrant labour complements, and is not a substitute for Australian workers.
In line with the government’s social inclusion agenda, we sought to ensure that temporary migrants, who have come to Australia to fill critical roles, have a pathway to permanent residence. Such an approach provides eligible 457 visa holders, with an ongoing role in the workforce and greater certainty for themselves and their immediate families. I am confident that the reforms agreed to by the government, and announced by the Minister today, will achieve these aims. They will position the employer sponsored programs to make a greater contribution to Australian economy and productivity in particular.
There will be a plenary session immediately following morning tea which will discuss the practical implications of these reforms. Some of my team members, Peter Speldewinde, Michelle Pearce and Elizabeth Carter, will be on the panel for the plenary.
To avoid incurring their wrath by covering their topics, I thought that I would take a different tact. I would like to use this opportunity to outline some of the issues we face in administering the temporary and permanent programs. I will also update you on other reform measures being implemented by the department.
The importance of a responsive migration program
As the Minister mentioned in his address, migration policies can have profound effects on Australia’s prosperity and economic and social outcomes.
This is evident when you look at Australia’s experience over the past 15 years. During this period, Australia has had increasing migrant intakes, and a growing number of long-term temporary residents with work rights.
Over the same period, you will also note that we have had consistently low levels of unemployment. We have also had above-trend growth in living standards across the entire income distribution. Certainly, on historical experience, migration must be making a positive economic contribution to Australia.
The correlation between these two observations is not incidental. Migration has a direct effect on the three key factors which can impact economic growth – population, participation and productivity.
Firstly, migrants add to the population. Given that the migrants are, on average younger than the Australian born population, they lower the average age of our workforce. This has a positive effect in lowering the age-dependency ratio.
Secondly, migrants entering through our skill stream categories, particularly through employer sponsored categories, have participation rates higher than the Australian average.
Thirdly, skilled migrants alleviate skill shortages in critical occupations and industries. This contributes to improved productivity outcomes and effectively addresses bottlenecks across the economy.
Well managed migration, therefore, greatly enhances Australia’s economic prosperity over the long-term. But just as the economy changes over time, so must our migration policy settings. Particularly with new industries emerging and others in decline. For example, 15 years ago, our resources sector was much smaller than it is today. Its skilled labour demands were primarily met by the domestic labour force.
Today, however, with employment within the resources sector growing at around 10 per cent each year, its skilled labour needs are far in excess of that which can be met by the Australian workforce. This trend precipitated the need for the creation of Enterprise Migration Agreements, which streamline the recruitment of offshore workers into this strategically important industry.
Our skilled migration settings therefore need to be dynamic and responsive to the needs of our economy. They need to be underpinned by a solid understanding of the current economic climate. They need to accommodate projected future trends.
From my regular interaction with stakeholders of the migration program it comes across clearly that regular reviews can create some degree of uncertainty. Indeed, our democratic system, and our free market economy are arguably underpinned by the concept of legal certainty. So I agree that certainty in migration law is a good thing. But ‘certainty’ should not be confused with ‘familiarity’, and the dynamic nature of migration law will always mean that there will be a need for migration advice professionals to undertake continuing professional development (CPD). It is also why one of the highest priorities of my Division is engagement and communication with our stakeholders. In this regard you will note that speakers from the Department have a strong presence on the agenda for this conference.
Meeting Australia’s unique skill needs through a flexible program
A key theme of my speech is that that Australia’s migration program needs to be responsive to the changing needs of the economy. We have been through a series of landmark reforms to help achieve this. Beginning with the 457 reforms of 2009, to the implementation of the Skilled Occupation List in 2010, to the new points test in 2011 and now to the introduction of SkillSelect in mid-2012.
With this reform agenda in mind, I would like to briefly discuss the need for our migration settings to be flexible and responsive to the needs of the labour market at each stage of the business cycle.
At present, global uncertainties continue to dominate our economic outlook. The World Bank downgraded longer term world growth forecasts earlier this year. However, much of Australia’s economy continues to grow at an above trend rate. Our economy is located in one of the fastest growing regions of the world. It remains resilient despite the on-going challenges in Europe and North America.
It is also fair to say that Australia’s labour market is diverse, both in the geographical context and in a skill distribution context. Our multi-speed economy means that while skill shortages continue to plague many industries, particularly in regional Australia, other parts of the economy have been experiencing negative or stagnant employment growth. This is due to the pressure of a high Australian dollar, growing overseas competition and the structural changes occurring in our economy. As can be seen from this chart, employment growth has not been evenly spread across all industries. While DEEWR expects positive growth in most industries, there is still much discrepancy in the rates of growth and supply of domestic labour to these industries.
Having a flexible, demand driven program is crucial if we hope to harness migration to supplement the domestic labour force to meet our labour needs.
This flexibility is the hallmark of our employer sponsored programs.
These programs have been very responsive in meeting employer needs. This is especially the case in industries and regions experiencing strong growth and critical skill shortages.
To illustrate this point, it is worth looking at the distribution of 457 workers in the growth construction and mining industries. As can be seen from this table, some 8 per cent of all 457 workers are employed in mining, 13 per cent are employed in construction, and 14 per cent areworking in health care and social assistance industries.
As can be seen, the demand-driven nature of the Employer sponsored programs means that they are very efficient in supporting industries with critical skill needs.
Just as importantly, migrants are filling positions in locations where they are needed. As can be seen from this graphic which illustrates the distribution of 457 applicants, a large number fill positions in regional areas of Australia, with especially high representation in the resource and mineral rich regions of Western Australia, the Northern Territory and Queensland.
These demand driven visas essentially let the market determine the number of migrants and skill sets entering Australia. However, the department is still responsible for maintaining the integrity of these programs.
We also need to ensure that processing times enable employers to source labour within an appropriate time frame. Likewise, the department has a role in ensuring that our programs do not compromise
conditions for Australian workers. The payment of market rates for 457 applicants, and now Employer Sponsored applicants, is a prerequisite for sponsoring these workers. Program integrity is absolutely essential to the success of our programs. This is not just because of the reasons that I have outlined above, but also because public confidence in the integrity of the migration program is essential.
Indeed most of the reforms in recent years have had, at their heart, a focus on restoring integrity. Major reforms in 2009 to the 457 temporary skilled worker program struck a balance between streamlined processes for reliable sponsors, protecting the rights of overseas workers and not undermining employment and training opportunities for Australians. Overseas workers cannot be used as a source of cheap labour, or to undercut Australian employment conditions.
The department has also made significant improvements in the time taken to process 457 visas. In fact, the median time to process a ‘decision ready’ subclass 457 application has almost halved in the last five years and is now around 19 days.
Likewise, the reforms to the General Skilled Migration (GSM) program in 2010 were largely driven by a need to strengthen our integrity measures. Unlike the 457 reforms of 2009, the concern was not about migrants being exploited, but rather about our skill migration stream not delivering the type of skilled migrants our economy needed.
As most of you would be aware, the period preceding reforms to GSM was characterised by a spike in th number of international students coming to Australia. This growth was sudden and unusual. It was partly driven by incentives provided within our migration settings rather than the benefits of study in Australia.
Specifically, the generous concessionary points afforded for onshore study under the Points Test, and the expansion of the Skilled Occupation List to include ‘easy to obtain’ courses, provided an easy pathway to permanent residence.
These policy settings led to a situation where many international students were coming to Australia, and basing their course of study, with a view only of achieving an immigration outcome.
Eventually the number of international students in Australia with expectations of a permanent residence outcome completely overwhelmed the capacity of our capped annual permanent migration program.
The integrity to our skilled migration program was restored by breaking the automatic nexus between study and permanent residence. With non-educational pull factors removed, the number of non-genuine students fell.
None of this detracts from the fact that under our new student visa and skilled migration arrangements there may be a possible (and wholly positive) immigration outcome following genuine study. But such an outcome is certainly not guaranteed and will be driven by genuine labour market needs. Therefore the principal reason for entry on a student visa has to be for study.
Recent reforms under the Knight Review, such as the introduction of a Genuine Temporary Entrant criterion, reinforce these important integrity measures.
It is important that as a department, we stay on top of our programs. For this reason we continually review our programs and their outcomes.
LTMPF and other Divisional work
I can’t say that further reviews will not be necessary in the future. I will say, however, that I think that we have our program settings just about right for the foreseeable future. Our skilled migration program is more responsive to the needs of employers than ever. It also provides a framework which fundamentally protects migrant workers and Australian jobs.
Our migration policy settings provide levers to control the size and composition of our migration intake, and be responsive to business needs.
In recent years, the department has invested heavily in improving its analysis of current programs and the economy. Indeed, the outcomes of the recent review are, to a large extent, a result of this work.
My division is currently preparing the first ever Long Term Migration Planning Framework (LTMPF) which is planned for publication later this year. The LTMPF will enable the government to take a more strategic, long term view of our permanent and temporary migration policies and settings. The development of a LTMPF will enable us to better map the linkages between our programs and the economy.
A big part of the LTMPF is the Net Overseas Migration (NOM) forecasting, which we have been publishing now on our website for about a year. Another big part is future labour demand modelling, which is not yet published, but which will appear in the LTMPF when it is publicly released.
Our current NOM forecasts show that NOM has stabilised below 200,000 in recent years. The ABS preliminary NOM estimate for June 2011 is 170,300 and our forecast for NOM at June 2012 is for 186,700. This is well below the 315,700 experienced in June 2008. You will recall this was at the time that ourpopulation debate began to emerge. The current NOM estimates and forecasts are within the ideal range for GDP per capita growth and for addressing our long term demographic challenges.
On top of this work, the department continues to work towards a simplified and deregulated visa framework. The department aims to reduce the number of temporary work visa subclasses by 50 per cent this year. This is followed by an overall reduction of 50 per cent across all visa subclasses by 2015. My division is also close to finalising the review of the Business Skills visa program. This review addresses number of integrity concerns in the caseload, which have arisen under current policy settings.
Recent analysis by the department has shown that this program is not introducing the intended high value innovation. We expect to see the outcome of this review in the coming months Out of these reviews, across all of our programs, there is a clear message - in order to maintain the integrity of our migration processes, the rules and procedures cannot be static.
Historically, Australia has experienced high growth and economic stability even in times of global economic downturn. It is important, however, that when setting our Migration Program and developing our policies we are aware of external influences on our economy.
We need to provide opportunities to our domestic workforce above all else. We need a migration program that complements, rather than competes with, Australians and the skills that we already possess.
We need to be conscious of current needs and future trends. Our programs, both temporary and permanent, must remain flexible in order to do this. Outcomes show that demand driven programs do work. And while we face new challenges, the more we let the market select our migrants, while maintaining integrity, the more we can provide Australia with the best migration program possible.