The potential benefits of reforming migration policies to address South Australia’s needs: report 3 policy solutions

Immigration Economic development Labour supply South Australia


SACES was commissioned by a consortium of businesses and peak bodies to explore national immigration policy in the context of challenges facing economic and business development in South Australia, particularly for regional South Australia (SA). It specifically focusses on barriers that current visa regulations may impose on utilising international migration to the benefit of the SA economy, and in particular any aspects of the migration system that may be less effective for South Australian businesses relative to those in more populous, higher wage, states. In doing so, it not only considers skilled labour migration, but also business, student, and temporary graduate student visa access. The study is built on a series of interviews with businesses and organisations representing business in SA, in particular in regional areas, but also in and around Adelaide. Additional interviews were conducted with Regional Development Agencies (RDA) in SA, organisations providing or promoting training, especially in the vocational education and training sector; and the Local Government Association (LGA). The interviews were conducted by phone, face-to-face or, in one instance, by email. In addition to gathering the views and experiences of businesses, business representatives and economic development agencies, the study analysed secondary data about key demographic trends in South Australia, the structure of the South Australian economy, including wages and costs of living, demographic and migration statistics. Due to the complexity of the subject matter, and the significant amount of information collected, the research has been split between three reports. This report (report 3) concludes the research exploring a range of policy options that could lead to the Australian international migrant visa system being more responsive to changing economic environments and, specifically, make a better contribution to supporting the South Australian economy and South Australian employers. Chapter 2 summarises some of the key challenges with the migration system as it currently operates. Chapter 3 identifies potential policy changes that are consistent with the broad overall approach to managing Australia’s international migration, but which would address some of the challenges caused by the existing visa rules and Departmental practices. Report 1 provides a brief overview of the national and international evidence on the impact of migration on existing residents. It then goes on to review South Australia’s current economic challenges and reports the experiences, opinions and suggestions we received from our interviews with regional and metropolitan businesses, business organisations and education providers with respect to skill shortages and the challenges of the current visa provisions, including for recent international graduates, from their point of view. Report 2 takes a closer look at the concerns raised by business owners and representatives in the course of the consultations with regard to aspects of the Australian visa and immigration system, the potential impacts of the recently announced changes, as well as the opportunities that changes to the existing immigration system may present in light of SA’s economic challenges.

South Australia’s economic challenges

The current economic and demographic challenges faced by SA are important background to the issues raised by those we consulted with, although these challenges are not the focus of the report. South Australia lags the rest of the country in economic output and employment growth whether measured in absolute terms or per capita. The SA population is amongst the oldest in Australia and is getting older over time, as well as decreasing as a proportion of the country’s total population due to lower population growth rates. Over the last three decades, the state’s annual population growth rate of 0.74 per cent was roughly half that of Australia as a whole (1.37 per cent) (SACES 2016c). There seem to be three main causes for South Australia’s economic underperformance:  Weaker initial economic conditions stemming from the adjustment (or lack thereof) to the first set of trade liberalisation in the early 70s  Persistently lower population growth; and  An older population The Potential Benefits of Reforming Selected Migration Policies to Address South Australia’s Needs: Report 3, potential solutions Page iii South Australian Centre for Economic Studies, University of Adelaide Final Report September 2017 The two latter factors have both been exacerbated by the relatively high level of net interstate migration loss, which is disproportionately concentrated amongst South Australians of prime working age. South Australia’s business community is also older than average, creating issues in terms of succession planning and maintenance of businesses.

Current Migration Policy Settings

Immigration is centrally administered by the Australian Government Department of Immigration and Border Protection (DIBP) and applies uniformly to the whole of the country, with certain specific provisions for areas classified as ‘regional’ by the Department giving a greater degree of flexibility to local employers and visa applicants intending to reside and work in these areas. The Commonwealth Government recently made a number of changes to the skilled migration programs, and some specific aspects of the operation of visas noted by employers have changed (or will change shortly). These changes are summarised in Section 2.2. It is important to note that these changes are designed to address perceived over use/inappropriate use of skilled visas and so the changes do not address any of the concerns raised by employers in our research. Indeed in many cases the announced changes exacerbate the existing situation of South Australian employers (particularly in regional areas) not always being able to access employees with the skills they require. Access to most of the skilled visa categories is governed by occupation lists, which detail which occupations are eligible for applications under which visa category. Immigration policy in Australia is currently geared towards facilitating and managing the influx of skilled labour though various temporary and permanent migration programs with eligibility criteria such as the lists defining visa eligible occupations together with the Temporary Skilled Migration Income Threshold (TSMIT) used for 457 visas adopted to maintain a strategic focus on addressing longer term skills needs with the Business Innovation and Investment Program (BIIP) used to attract high level international investment and business acumen. TSMIT and the occupation lists are experienced as barriers to the hiring of migrant labour in the absence of suitable local labour supply. TSMIT stipulates a minimum market rate of pay for a job vacancy to be able to be filled by a 457 visa holder, with this minimum level above the going market salary rate of many occupations with supply shortages in regional SA. The occupation lists too have been criticised for not reflecting the needs of SA businesses, in this case through failing to accurately match job titles and job contents. As a result, indemand occupations are missing from them. At the same time, there is a mismatch between the semi- and low-skill needs of many regional businesses in SA and immigration’s focus on skilled labour. The bureaucracy and cost of lodging visa applications and the time taken for visa processing were also criticised.

The extent to which the current migration system meets the SA economy’s needs and options for reform

The Australian temporary work and business investment visa systems present both opportunities and challenges for the SA business and education provider communities. The SA economy faces a triple challenge of population and labour force ageing, a disproportionate reliance on owner managers of unincorporated businesses with an old age structure, and regional depopulation. In combination, the three lead to and accentuate skill and more general labour shortages in particular, but not exclusively, in regional SA. These labour shortages affect semi and low skilled occupations as well as skilled occupations. Our research found a number of aspects of the current migration system that did not meet the needs of the South Australian economy or South Australian firms:  the use of a single level for the TSMIT makes visas which are required to meet it much less useful in lower wage regions, which is most of South Australia;  the use of ANZSCO definitions to classify jobs to occupations and skill levels can disadvantage employers in sectors where ANZSCO no longer reflects contemporary usage;  the skills gaps identified by many regional South Australian employers are often for occupations that require Certificate III or equivalent, but such occupations are not typically eligible for skilled worker visas;  the lack of regional flexibility on the occupations listed, and the fact that such lists do not take into account that in rural areas an employee will often be required to cover aspects of several jobs, means that the occupation lists do not do a good job of reflecting the needs of regional SA (or indeed regional employers elsewhere); Page iv The Potential Benefits of Reforming Selected Migration Policies to Address South Australia’s Needs: Report 3, potential solutions Final Report September 2017 South Australian Centre for Economic Studies, University of Adelaide  South Australian owner/managers of small businesses have a high average age, making identifying potential purchases for their businesses important. In theory, the BIIP visa could allow South Australia to draw on the savings and business experience of potential migrants to meet some of this need. However, the value of investment required for a the Business Innovation stream of the BIIP visa is high relative to the typical value of South Australian small and medium enterprises, making most of them ineligible for purchase by someone entering on such a visa;  South Australia’s educational institutions currently recruit a large share of their students (and a larger share than other jurisdictions) from countries which are treated by the Department of Immigration and Border Protection as higher risk under the new Simplified Student Visa Framework. Visa applicants from these countries must meet particularly stringent evidentiary requirements to demonstrate that they are a genuine temporary entrant, and can complete their course. If this discourages such students from applying, and/or results in student visa refusals, then South Australia’s share of international VET students (already disproportionately low) may fall further; and  it was felt that BIIP visas generally do a poor job of increasing the number of entrepreneurs in Australia, or in assisting retiring business owners find potential purchasers, and that the local business environment, and the national investment levels set for key streams of this visa made it even less suitable for South Australia’s needs.

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