Sustainable Australia president, William Bourke, penned a thought-provoking letter in The AFR arguing that Australia’s permanent skilled migration program is actually diluting Australia’s skills base:
Australia’s record permanent immigration program of around 200,000 that’s diluting our skills base. Although the so-called “skilled” category is two-thirds of the annual program, the government hides the unskilled families of the skilled migrant inside that category.
This means that in truth, only around 50,000 (25 per cent) are bringing in designated skills – that is, if you have faith in the skills list – and worse still, many of those primary skilled migrants are not even working in their area of expertise.
An overwhelming 75 per cent or more of permanent migrants are not bringing designated skills, and so create a massive annual net skills deficit. This dilutes our skills base. The 457 Band-Aid won’t help either, as it includes just as many dependants as primary visa holders.
The only way to secure an economically sustainable Australia with lower skills shortages is to lower immigration back to the long-term average cap of 70,000 per year – and seriously invest in local education and training.
Bourke’s letter got me thinking and promoted me to do some investigation of my own.
First, the below chart shows that so-called “skilled” migrants made up around 129,000 of Australia’s 200,000 strong permanent migrant intake in 2016:
Curiously, the number of skilled permanent migrants, and indeed the overall number of permanent migrants, was higher in 2016 than it was during the height of the mining boom when skills shortages were common.
…within the skill stream, about half of the visas granted were for ‘secondary applicants’ — partners (who may or may not be skilled) and dependent children… Therefore, while the skill stream has increased relative to the family stream, family immigrants from the skill and family stream still make up about 70 per cent of the Migration Programme (figure 2.8)…
Primary applicants tend to have a better fiscal outcome than secondary applicants — the current system does not consider the age or skills of secondary applicants as part of the criteria for granting permanent skill visas…
There are strong grounds to give much greater weight to a primary applicant if the associated adult secondary applicant has skills or other desirable characteristics likely to improve their own labour market prospects. At the very least, for the sake of transparency and future policy development, Australian Government publications should report primary and secondary skill stream immigrants separately and provide more detailed information about the skills and other traits of adult secondary applicants.
The PC also showed that while primary skilled migrants have slightly better labour market outcomes than the Australian born population in terms of median incomes, labour force participation, and unemployment rates, secondary skilled visas, and indeed all other forms of migrants, have much worse outcomes:
Thus, it would appear that William Bourke’s claim that Australia’s mass immigration program is diluting Australia’s skills base is true.
Are also the categories with the biggest surplus of workers:
Thus, the skilled migration system is destroying career prospects for local graduates in these (and other) areas.
In short, it does appear that Australia’s mass immigration system is diluting Australia’s skills base, in addition to placing greater pressure on infrastructure, housing and the environment.
So why are we persisting with such a program? Why not lower the immigration intake back to the long-run norm of 70,000 people a year?
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness.
Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.
