Friday, 19 October 2018

Address to the Migration Institute of Australia National Conference, Sydney


Ladies and gentlemen.

It is a pleasure to be here this morning to be a part of your national conference. I would like to thank the Migration Institute of Australia's Board of Directors, as well as Chief Executive Officer, Peter Vymys, and his staff for the invitation to speak today.  I also acknowledge my parliamentary colleagues who I understand will be addressing you today as well.

Our nation's history is one of immigration, and we should be proud of it. 

Every town, every suburb, every sporting club, every church in our nation has immigration success stories.  We should celebrate these successes.

Overwhelmingly, migrants have added to our nation.  More than seven million people have immigrated to Australia since the Second World War. The vast majority of these people have come to Australia to make a contribution, not to take a contribution.  They have worked hard, played by the rules, and built a better Australia.  They have made our nation a better place, not least because they have helped stimulate stronger growth and more jobs in our economy. And stronger growth and more jobs provide better opportunities for Australian families to get ahead.

Of course our first priority must always be to fill available jobs with Australian workers.   That has been and remains our key focus.  We have seen that reflected in the unemployment rate falling to 5%, and record job creation across the Australian economy.

But there is no question that our economy would be weaker, and our living standards lower, if we had not embraced immigration. It's incumbent on those of us who make public policy to have careful regard to the past, in making decisions about the future.  

In that context, it's important to take a step back and reflect on what immigration has given us.  Today I want to talk specifically about the economic benefits of immigration.  

It's our immigration programme, and it must reflect our choices. 

Those choices should be squarely focused on our national interest and based on facts.  Let's first review the evidence of the economic benefits of immigration in Australia.

Since the Howard era our immigration programme has emphasised skilled migration. In the 1997-98 programme year, skilled migration represented more than 50 per cent of the migration programme for the first time in our history.  

Applicants entering through the skilled stream have very high participation rates in the workforce. Australian Bureau of Statistics analysis from 2016 found that recent migrants in the permanent skilled stream had a participation rate exceeding 82 per cent, which was significantly higher than the average participation rate of just below 66 per cent.

For the 2017-18 programme year, about 70% of permanent migrants were skilled stream migrants. Within the skilled stream, primary employer sponsored applicants have an average taxable income of around $90,000. This is well above the country's median income and underlines the contribution that migrants make to Australia's economy. Employer-sponsored skilled migrants have high incomes and high participation rates – a good combination for our economy.

Because skilled migrants have a high workforce participation rate, they drive up the proportion of people paying taxes in Australia. Without migration, our workforce participation rate would have fallen 2.1 percentage points in the period 2000 to 2016, as opposed to increasing 1.4 percentage points as it did. This is important, because higher workforce participation broadly translates to increased tax revenue for the Government, which makes the delivery of better essential services possible.

Further, in the absence of migration, the Productivity Commission estimated in 2016 that the proportion of the population aged 65 years and over would increase from around 15 per cent in 2014 to around 30 per cent by 2060. In this scenario, the full costs of a declining tax base and increased demand for government services would have been borne by the declining proportion of Australians in work.  By adding workers, migration offsets the impacts of an aging population and helps enable us to pay for the essential services we all need.

Migrants create a lot of businesses.  In fact, in 2016 the ABS found that 1 in 3 owner / managers of small businesses were born overseas. Think about that: 1 in every 3 small businesses in Australia was started by a migrant. In addition, migrant business owners have been estimated to employ more than 1.4 million people across Australia.  These are powerful statistics that make intuitive sense: just about every shopping strip and industrial park in Australia contains migrant success stories.

Another key area that shows the importance of migration is education. In 2017, Education Services generated $30 billion in export revenue for Australia. It is our third largest export industry. To put that into perspective, we generated four times as much revenue from education as we did from beef, at $7 billion, and five times as much as we did from wheat, at $6 billion.

International students in Australia generate substantial economic benefits through tuition fees, accommodation and living expenses and expenditure on goods and services. Visits by family and friends of international students also contribute to our tourism, hospitality and retail sectors, both in metropolitan and regional Australia.

In 2017, over 230,000 international visitors came to Australia to visit an international student, spending $994 million. Around 56,000 international visitors came to Australia to attend an overseas student graduation in 2014, contributing $208 million to the economy. Students support high skill, high wage jobs in the education sector – a big positive for our economy.

It's true that migration is strongly positive for the economy overall.  But it's also true that different categories of immigration have different economic impacts.

Deloitte Access Economics estimated that together, the 2014‑15 cohorts of the Permanent Migration Programme, the Humanitarian Programme and the 457 Temporary Skilled Programme would contribute a net fiscal benefit of $9.7 billion over 50 years.  Bear in mind that's just one year of immigrants – a significant positive benefit.

It's important to note, though, that the primary-applicant permanent skilled category alone was estimated to have a $9.8 billion benefit. So taken together, all the other categories had a roughly neutral fiscal impact.

That's not to say that all immigration must be skilled immigration. We have important humanitarian obligations, and of course the family programme will always be key. But the fact is that skilled migration provides the vast bulk of the economic benefit in the programme.

The Productivity Commission has stated that over the long term, selecting migrants with higher rates of workforce engagement and employment in skilled and high-demand occupations is likely to deliver improved economic outcomes. The Government has already acted to take further steps in this direction.

For example, we announced in April last year that the 457 visa would be scrapped, and replaced with a new Temporary Skill Shortage––or TSS––visa. This was part of a package of reforms to strengthen the integrity and quality of employer sponsored skilled migration programmes, better targeting the skills that Australia genuinely needs.

Changes included tighter English language requirements and mandatory criminal checks, as well as mandatory labour market testing with limited exemptions; a new non-discriminatory workforce test; a market salary rate assessment and a new two-year work experience requirement. All with the objective of ensuring that Australian workers are given the absolute first priority for jobs, while enabling businesses to temporarily access the critical skills they need to grow where skilled Australian workers are not available. And the results have been compelling.

Both the salary and skill level have increased in the TSS visa programme compared to the 457 visa programme in 2017-18. TSS visa holders have a $15,000 higher average remuneration package - $110,000 compared to $95,000 for the 457 visa programme - and are much more likely to be at the highest skill level for the programme – 83 per cent at the highest level versus 68 per cent under 457s.

It is our immigration programme, and it must reflect our choices.

I can tell you today that the choices I make about our immigration programme will have a sharp focus on the economic benefits to Australia.

Firstly: we know that more highly skilled migrants generate the best economic contribution for Australia.  So it stands to reason that we should do everything we can to ensure that the skilled programme is developed and supported.

Secondly: not all elements of the skilled programme are equal. The best results in the programme come from employer-sponsored applicants.  There is an opportunity to increase the focus here, leading to direct and substantial economic benefits.

Thirdly: we know that age is an important determinant in the economic impact of migrants.  Younger migrants have more working years ahead of them, during which they participate in the economy and pay taxes.  Older migrants have less working years ahead of them and are closer to retirement, at which point large costs to the taxpayer are incurred.  The best economic results generally come from migrants who are skilled and young.  Our policies should reflect that fact.

Fourth: we know English is critical to making a strong economic contribution here in Australia. The vast majority of jobs require at least functional level English.  It's in the interests of the migrant, and the broader economy, for migrants to be able to speak English.  

Finally:  there are economic gaps in regional areas which immigration can help to fill. There are some solutions to this challenge available now, such as through the Designated Area Migration Agreement (or DAMA) scheme.

In recent weeks I have instructed officers of the Department of Home Affairs to visit Orana in central northern NSW, Cairns in far north Queensland and Warrnambool on the Victorian coast to meet with local representatives to accelerate DAMA negotiations. These agreements are a practical way of addressing skills gaps in regions, and I expect to finalise a number in the coming months.

In addition to DAMAs, the Government is closely examining other options to increase the flow of economic immigrants to regional areas.

As I've said, migrants have overwhelmingly added to our nation.

Our humanitarian and family programmes are fundamental to our immigration system, but it's clear that more highly skilled migrants generate the greatest economic contribution for Australia. Skilled migrants supplement and complement the Australian workforce. The Government's priority will always remain putting Australians into work, but immigration also has a role to play.

The Australian economy has completed its 27th consecutive year of growth, more than one million jobs have been created since the Coalition Government was first elected in 2013, and ours is an economy in which businesses are prospering. Our migration programme is key to ensuring Australia's continuing economic growth, and this is one of my highest priorities as Immigration Minister. Thank you.