Immigration policy and the Australian labour market

Economic Papers (Economic Society of Australia), March, 2003 by Bob Birrell

This growth in demand has been such that in May 2002 DIMIA increased the pass mark for the Independent category (though not the smaller Skilled-Australian Sponsored category) by five points to 115. The consequence will be to further concentrate selection on those with 60 point occupations. Very few of the thousands of prospective applicants amongst overseas students presently studying in Australia in fields like marketing and management (which are classified as 50 point occupations) will be successful in gaining permanent residence.

6 Conclusion

The evidence cited supports the original hypothesis that immigration policy in Australia is now tied to labour market outcomes. The conclusion must be tentative because the paper has not considered other explanations for the policy direction explored. Since immigration policy is highly politicised it could be argued that electoral factors are involved, most tellingly the entry of the One Nation party and the emergence of immigration as a significant election issue. One Nation's collapse perhaps opens the door for business interests to successfully press a more expansionist case. Nevertheless, immigration will remain contentious. One looming issue is the equity implications (from the point of view of domestic aspirants) of increased reliance on former overseas students to fill much of the growth in high paid and high status professional positions in Australia.

In my view a revival of late 1 980s policies is unlikely. Successive Commonwealth governments and the Departments which serve them, remain under pressure to minimise expenditure. To this end, all engage in user pay's principles when possible. DIMIA has not been immune. The Department has had to show that it can deliver a migration program with minimal costs to the Australian taxpayer -- thus the emphasis on migrants who can make an immediate contribution in the labour force.

There is an emerging consensus in policy circles that the only major gains from immigration will come from targeting highly skilled migrants. The international setting is conceived as one in which many developed nations are competing to tap into the limited ranks of highly skilled but footloose experts. But because this market is thought of as highly competitive it is also conceded that Australia can only hope to - draw. selectively from it. Thus there are constraints on the scale of Australia's program. If it is pushed too large the quality of the migrants selected is likely to fall off.

This is certainly the Coalition government's view. But even long standing advocates of high migration like Ross Garnaut now take this position. In a recent analysis he acknowledges the 'disturbing picture' revealed by the low ratio of employment to population for migrants in Australia relative to migrants in the United States and to native born Australians (Gamaut, 2002, p. 154). This finding is also highlighted by Richard Bridge (Director of the Migration Policy Analysis Section of DEWR). His analysis shows that this outcome is mainly attributable to the low labour force participation of migrants from non-English speaking countries (Bridge, 2001, p. 52). While there are many factors involved (including the older age distribution of migrants compared with the native born) these findings have prompted Garnaut to emphasis the importance of focussing on high skilled migrants.