One immigration number matters more than most – The Australian Financial Review

One immigration number matters more than most - The Australian Financial Review

Officials were quite open about the fact that these would be dribbled out over the period leading up to the budget. And, indeed, on Tuesday came some figures on the cost of the missiles component of the reconstructed spend.

So many media opportunities to be had. So many eye-watering spending numbers to leave voters catatonic.

The Migration Review, on the other hand, is something else: a substantial piece of work that will have significant implications for the budget, and the broader economy, but about which we don’t really need to know too many more numbers.

Any mention of migration these days elicits an almost visceral response from many people about Australia’s very significant housing crisis.

And a lot of the headlines about the review, as a result, focused on whether its recommendations would mean more people coming into Australia, or fewer.

The net overseas migration number for the current year – which includes both temporary and permanent arrivals – has been confirmed at 400,000. That’s huge. And compares with the budget forecast of 235,000.


But it is considered to be something of a one-off surge, post lockdowns.

Focusing on the overall number, however, misses the point of the review’s recommendations.

The review, chaired by former senior bureaucrat Martin Parkinson, doesn’t start – or finish – with the question of how many migrants should come here.

It’s about the fact the system isn’t working. And how its structure currently erodes labour-market conditions, productivity and gives us exactly not the mix of people we ostensibly are trying to attract in a migration program ostensibly focused on skilled migration.

On the way through, it shines a light on what is effectively a crucial price in the economy to which most of us are oblivious, but may at least partially answer some questions about why wages have been so sluggish, and productivity so poor.

And, along with other changes being made to the migration program announced this week, it could profoundly change the ecosystem of both the non-university international students sector, and ultimately conditions in low-skill, low-paid jobs. Particularly in the hospitality and personal care sectors.


It’s called the TSMIT – the temporary skilled migration income threshold.

Set for the past decade at $53,900, it’s the minimum rate an employer has to undertake to pay a sponsored worker under the temporary skills program. And it also the minimum rate for the employer sponsored part of the permanent migration program.

There are about 120,000 people here at the moment on the so-called 482 category visa who must meet the TSMIT test.

It’s not a huge chunk of the workforce, or even a huge chunk of the hospitality workforce. But it’s interesting to contemplate the downward pressure on wages in the sector more broadly from employers knowing that – at $53,900 – they can be paying well below average earnings to workers who are effectively bound to them if they want to stay in Australia.

Work by the economic consultancy E61 has found many of these workers are employed in the least productive sectors of the economy. There might be a reverse cause-and-effect thing happening here: employers who can constantly tap a reserve of cheap labour for short periods of time have no real incentive to train staff up and, as a result, lift productivity.

The government has announced it will lift the TSMIT rate to $70,000 from July 1: the rate it would have been at if it had been indexed all this time.


Just why it hasn’t indexed since 2013 is not entirely clear. A review of the rate under the incoming Abbott government took 2½ years before it confirmed that the rate should be indexed.

But the government – by this stage represented in the immigration portfolio by Peter Dutton – chose not to follow the recommendations.

We don’t know for sure whether this had anything to do with particularly vocal and persistent lobbying from the hospitality sector on the issue, even when most business lobby groups conceded the need for the rate to rise.

One of the reasons why it has been broadly acknowledged that the rate has to rise is that it is one of the factors that has helped flood the pool of people seeking to become permanent residents – or at least to keep rolling over temporary visas – with relatively low-skilled workers and made it more difficult for higher skilled workers to get into the country.

Most of the people who end up on a temporary skills visa arrive as international students or on a working-holiday visa.

Their capacity to work in Australia is also going to change on July 1.


New applicants for student visas will be limited to 24 hours a week of work, instead of virtually unlimited work rights that have been in place as a result of the pandemic.

Think about how just these two changes will affect the incentives to come to Australia for those who ostensibly come as students but who really come here because it gives them the right to work.

In the year to February, there have been about 580,000 enrolments in tertiary education by international students. About 315,000 of those have been going into universities – slightly down on pre-pandemic levels.

Vocational training enrolments, on the other hand, are up a staggering 20 per cent on the same period pre-pandemic at 179,000.

While some vocational training courses offer legitimate training, it remains the case that a lot of providers don’t.

The aim of some of these reforms is to remove the incentives to come here and work as what the minister and others effectively say are guest workers, and to improve the visa system so people with the skills we need can more easily become permanent residents.


It’s not about lifting the number of migrants but lifting the quality of the contribution they can make to our skills base and productivity, stopping labour exploitation and possibly plugging a hole that explains our sluggish wages growth.

They are certainly the sorts of numbers any government should be thinking about ahead of the Budget.


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