1 Introduction

In the Australia Constitution, immigration is designated as a Commonwealth or federal power. Disputes about the jurisdiction of the Commonwealth and the States are never ending, with both jealously guarding their authority. The Commonwealth is not about to concede anything to the States; indeed the trend is towards the Commonwealth increasing its role in areas where the Constitution does not allocate it specific powers. This accretion mainly stems from the Commonwealth’s domination of tax revenue, thereby enabling it to trade revenue grants to the states in return for policy influence, such as in areas like education and health.

As would be expected, given this context, the Commonwealth has been reluctant to allow the Australian States and regional authorities a take on a significant role in the management of immigration movements.

Nonetheless, the States and regional authorities do administer some designated state and regional migration programs. However this role is limited in scope by comparison with the role employers now play in determining the scale and characteristics of migration movements. The reasons for this outcome, can only be understood in the historical context within which Australia’s immigration policy has evolved. After sketching this context the chapter then identifies the major factors shaping the policy since the 1980s. On this basis, developments in the main permanent and temporary entry visa programs are explored.

As we will see, there have been some fundamental reforms to Australian migration policy since the 1980s. These have been largely determined by the Commonwealth Government’s commitment during the 1980s to open Australia’s economy to the international market place. Subsequent to this decision, the Australian economy has experienced an extraordinary economic boom driven by mining investment. This boom accelerated during the 2000s. It has been accompanied by reforms to the immigration program. These have facilitated a massive increase in the number of temporary and permanent migrants, and as noted, a greater role on the part of employers in selecting these migrants.

The story ends, however, with immigration policy in a state of flux as a consequence of what appears to be the peaking of the mineral investment boom in 2012.

2 The Historical Context

Australia is a settler society and as with Canada and the USA there is a predisposition towards an active migration program. This is partly a consequence of a cultural heritage in which successive waves of migrants have been celebrated as nation builders. There is also a build-up of vested interests with a stake in continued migration. Since World War 2 this is most obvious with industries dependent on growth in the domestic market. These include the housing and construction industries and manufacturing, but also a wide array of other influential industries, including the banks and retailers.

However immigration policy is far more politically volatile and contested in Australia than in Canada or the USA. Since the 1970s, public support has been grudging at best, with majorities almost invariably opposed to increases in the intake (Betts 2010).

Asylum seeker policy illustrates the point, a prime example being the Liberal/National party Coalition Government’s retention of power at the November 2001 national election. At the time there had been a surge in the number of asylum seekers landing on the Australian coast without authorisation. Their arrival engaged Australia’s obligations as a signatory to the International Refugee Convention to assess their claims to be refugees.

In August 2001 alone, some 1,212 arrived. The issue came to a head during August when the Norwegian flagged bulk carrier, the Tampa, picked up 433 asylum seekers from their stricken boat and sought to land them on the Australian territory, Christmas Island. In response, the Coalition Government implemented what came to be known as the ‘Pacific solution’. This involved interdicting asylum seeker boats before they reached the Australian coast and transferring them, mainly to Nauru. At this point their asylum cases were heard but without access to Australian courts should they wish to appeal a negative decision. Those who were recognised as refugees, were (initially) denied the right to locate in Australia. This policy, as well as in a few instances the towing of boats back to international waters, had the effect of virtually stopping further boat arrivals.

The Coalition justified its action by claiming that its measures reflected public concern that asylum seekers were deciding who should become Australians. They were allegedly choosing to join the Australian community without reference to the views of the host community. This stance plugged into one of the strongest threads of Australian nationalism: the notion that Australians constitute a unique community sharing a common identity, and thus have the right to determine who should become a member.

Since the current Labor Government came to office in late 2007 it has been reminded of these public attitudes. In 2008 the new Government abolished the Pacific Solution. It allowed those who made it to an Australian territory (notably Christmas Island) to remain there to have their claims for refugee status processed by the Immigration Department. If these claims were rejected it allowed them to pursue the matter under the protections of Australian law and to take up residence in Australia if their claims were affirmed. As a consequence, the numbers making the boat trip surged again, with some 17,202 arriving in 2012. As in 2001, this surge was accompanied by a public backlash which forced the Labor Government to reinstate the Pacific Solution.

This background also explains why multiculturalism has also been far more controversial in Australia than in Canada. The emergence of a strong ethnic movement in the 1980s was accompanied by the propagation of a form of multiculturalism which advocated that Australia should become an amalgam of separate ethnic communities. There was a strong reaction against such advocacy. (FitzGerald 1988, pp. 11, 31, 59) Partly as a result, ethnic community leaders have lost much of the influence they had in the 1980s in shaping immigration policy—especially on family reunion issues.

One implication of these controversies for immigration policy is that those responsible for managing it have been anxious to convey the impression that the selection process is ‘under control’. This means reassuring the public that those chosen as permanent residents reflect Australian priorities, including that they are prepared to join the Australian community on its own terms.

The task of managing immigration movements has been in the hands of the Commonwealth Immigration Department for almost the entire post-WW2 period. This is an unusual situation which contrasts sharply, for example, with the USA. There, immigration policy is diffused through various committees in the House of Representatives and the Senate as well as within diverse branches of the executive government.

One consequence of this administrative arrangement is that the Australian Immigration Department (currently entitled the Department of Immigration and Citizenship—DIAC) has been relatively free to craft the detailed rules governing migration entry. For example, the oft-changing rules governing Australia’s skilled visa points system (explored below) are normally announced without any preliminary assessment by the Australian Parliament.

Though DIAC is currently a large department, it has to take into account the views of other departments, particularly those that shape economic policy. These are the Department of Prime Minister and Cabinet, the Treasury and the Department of Finance. DIAC’s proposals to Cabinet are all mediated by these departments as well as by the bigger strategic issues which shape Cabinet decisions. Cabinet’s attitudes on these issues are in turn a product of the larger political setting. All changes to the regulations shaping the various permanent and temporary visa categories, as well as target numbers for the permanent program, have to be approved by Cabinet. DIAC’s proposals have to be framed to accommodate the diverse interests represented around the Cabinet table, as well as any big picture political issues—like appeasing the public on asylum seeker policy.

Since immigration issues are frequently in the headlines, the task of managing the immigration intake has proved to be problematic. Australia is a highly attractive destination for those living in low wage countries who wish to migrate temporarily or permanently. As DIAC often complains, one of its dilemmas is that ‘there have been many more applications for skilled migration than there are places available in the program’ (DIAC 2012, 47).

3 The Public Policy Setting Since the 1980s

The 1980s can be read as the last phase of the post-WW2 population building era in Australia. The ends that policy makers had in mind included strengthening Australia’s defence capacity and enlarging the domestic market. This was in order to create the scale economies needed for Australian protected manufacturing industries to flourish. The first priority was settlers from the UK who would make Australia their home. If they were skilled so much the better, but this was not the key concern. When interest in moving to Australia from the UK declined the Australian Government recruited people from Southern Europe, most of whom were unskilled.

During the 1980s when interest from Southern Europe also waned, the Australian government turned to Asian sources. By this time the focus was on skilled migrants. However generous family reunion provisions were also extended to siblings, parents and spouses. This stance reflected the growing political influence of Australia’s ethnic communities. A welcome mat was laid out. All those granted permanent residence during the 1980s (including family members) could access, on arrival, the full range of labour market and pension benefits available to existing residents.

These arrangements were transformed during the 1990s and 2000s. Beginning in the early 1980s under the Hawke Labor Government, successive commonwealth governments have opened up the Australian economy to the international market place. Amongst the major changes, the Australian dollar was floated in 1983, and tariffs were reduced in the late 1980s and early 1990s to very low levels. In addition, successive governments have instituted a program of micro economic reform designed to maximise market competition within Australia. These measures included the dismantlement of the longstanding centralised wage fixing system in favour of enterprise bargaining. Australia’s welfare system has also been put under the microscope in order to encourage greater participation in the labour market. The objective was to create a leaner, more competitive environment in which (it was hoped) globally competitive enterprises would flourish.

In this context, the arrangements shaping migration policy in the population building era came under critical review. Some economists even argued that, with the mineral boom of the late 1970s (notably coal to Japan), Australia’s comparative advantage lay with its commodity industries. Since these were not large employers of labour, it followed that there was no longer any justification for sustained high migration. However such advocacy was trumped by business interests. One prominent argument used by these interests was that, in the new competitive environment, Australia needed a large population base, including of skilled Asians, if it was to sell knowledge intensive goods and services into the growing Asian market place (Garnaut 1989).

From the 1990s, successive governments put more emphasis on the selection of migrants who would best serve Australian interests in the new economic setting. The story falls into three phases: one from the 1980s up to the beginning of the latest mining boom in 2004, the second since the boom got underway until 2011 and the third since mining investment levels appear to have peaked in 2012.

4 The Long Reform: Pre Mining Boom

  1. a.

    Family reunion

The Labor Governments of the late 1980s and early 1990s took some tentative steps to rein in the family reunion program, a move that was intensified by the depth of the economic recession that occurred in the early 1990s. However after the Liberal/National Party Coalition won government in 1996 it took a scythe to the family reunion program. Prior to 1996 the visa subclasses which allowed Australian residents to sponsor their relatives (other than spouses and parents) were separated from those for independent skilled migrants. The Coalition Government incorporated these visa subclasses into one set of skilled, points-tested visas, with siblings and other relatives being given points concessions. But as DIAC tightened the requirements of the points test through the late 1990s and into the 2000s, these concessions were gradually removed.

The rights of residents to sponsor parents and spouses were also curtailed, despite opposition from the ethnic communities. The Hawke Labor Government had introduced a Balance of Family rule in 1989 which prohibited the sponsorship of a parent unless more than half of the children were resident in Australia. In 1997 the Coalition legislated to give the government the power to cap the number of parent visas. Thereafter, the number of parent visas was cut sharply to around 1000 a year. Since 2007 the Labor Government has increased the number of parent visas to 8,000–10,000 a year.

In the case of spouses, attempts to put a cap on the number of visas issued each year failed in the Parliament. However legislation was passed, with Labor support, whereby most spouses (whether in married or de facto relationships) were initially granted 2-year temporary visas. These were converted to permanent entry visas if the partners could subsequently prove that their relationship was ‘genuine and continuing’.

In another striking piece of legislation, given the contrast to the welcome mat laid out in the 1980s, the Coalition Government (again with support from the Labor opposition) put a 2-year moratorium on access to unemployment benefits for all new migrants, except those entering under the Humanitarian program. (This subprogram includes migrants granted refugee status.)

  1. b.

    Skilled permanent migration

By the 1980s there was a greater focus on attracting skilled migrants. They were valued not just because they might fill skilled vacancies but also because, even if there was no immediate vacancy, they would add to Australia’s stock of human capital. In the ensuing decades the criteria for selection were toughened, with a much sharper focus on migrants who could actually fill skilled vacancies.

A crucial first step was taken in 1989 when the points test used to filter applicants for skilled visas was restructured. The previous system, which emphasised educational credentials (and other elements of human capital) resembled the current Canadian arrangements. After 1989, an applicant for a permanent entry skilled visa had to possess the credentials necessary for an occupation in Australia at trade level or above. Applicants had to first satisfy the relevant occupational authority that their credentials met this standard and were recognized in Australia. The occupational authorities were generally national in reach, such as the Australian Computer Society in the case of the information technology professions and Engineers Australia in the case of engineers. The Australian states have had no role in this accreditation process.

If an applicant did not possess credentials acceptable to the relevant accrediting authority, the application could not proceed. One consequence was that applicants with generalist degrees as in arts or science, but without any accompanying vocational credential (such as in teaching or accounting), were no longer eligible for selection. It was not enough to be well educated: the education had to be related to job requirements in Australia (Birrell 2003).

Beginning in 1992 the Australian Government gradually increased its English-language requirements for skilled visas. Previously, proficiency in the English language was one of the criteria taken into account, but it relied on self-assessment. Since 1992, all Independent skilled applicants have had to have their English-language skills assessed via a formal English test.

In 1999 the Coalition Government specified that all those seeking a points-tested skilled visa had to attain a minimum standard on the four modules tested for speaking, reading, writing and listening under the International English Language Testing System (IELTS). This minimum was ‘vocational’ English, or band 5 on the IELTS scale. According to IELTS, those reaching this level have a ‘partial command of the language, coping with overall meaning in most situations, though likely to make many mistakes’ (IELTS 2006). The next level up, band 6, is labelled as ‘competent’ English. Persons at this level are considered capable of managing normal commercial and social relationships. This level is well short of the English standard required by university students in class room situations or by professionals in dialogue with each other or with clients. For this standard, level 7, or ‘proficient’ English is required. Nevertheless the 1999 ruling was a tentative start on a pathway to much tougher standards (described below). The English language requirements for other visas, including those sponsored by employers or by the States (discussed below) are generally lower than those required for the main points tested visa subclasses.

By the late 1990s the Australian economy had recovered from the recession of the early 1990s. The mineral investment boom, which was to get underway from around 2004 was still to come, but signs of skill shortages were emerging and business interests were agitating for a larger skilled immigration program. At the time, the priority was skills relevant to the so-called ‘new economy’, particularly in information technology (at least up until the dot.com bust in May 2000). Australia was alleged to be lagging behind other advanced economies in training for such fields.

This advocacy prompted a crucial innovation in Australia’s immigration selection system, which was to ramify until the present day. In the early 2000s the Australian government decided to privilege skilled applicants who had come to Australia on student visas and had completed certain degree or diploma courses at Australian universities or vocational colleges. They were given points concessions for the attainment of such qualifications and, unlike all other applicants, the requirement of several years relevant job experience applicable to other applicants was waived. These students were encouraged to apply for permanent resident visas immediately after completing their studies. If they did so within six months of graduation they did not have to leave Australia and apply from offshore locations (as had previously been the case for applicants with Australian credentials).

  1. c.

    Skilled temporary migration

Beginning in 1996 the rules governing employer sponsorship of migrants under the 457 visa for temporary periods of work of up to 4 years in Australia were transformed. These initiatives reflected the Australian Government’s objective to enhance the international competitiveness of Australian based enterprises. Prior to 1996, organisations sponsoring temporary workers had to test the labour market. They had to demonstrate (as through job advertisements) that the job or jobs to be filled had been first offered to Australian residents and that no such suitable residents were available (Kinnaird 1996).

The new rules for 457 visas largely dispensed with labour-market testing (all remaining vestiges of this were removed in 2001). Employers were allowed to sponsor as many migrants on 457 visas as they required, as long as they could establish that the jobs existed and that they were skilled jobs (at trade level or above). In contrast with the credentials assessment required for points-tested migrants described above, it was left to the employer to decide whether the skills of the sponsored migrant were adequate. The government’s rationale was that, if enterprises based in Australia (including multinational enterprises), were to flourish in the global market place, employers had to be free to employ the staff they needed.

5 Reform in the Mining Investment Boom Era

From around 2004 Australia’s economic revival became supercharged as a mining investment boom, driven by China’s surging demand for minerals, got under way. This situation has had a profound impact on immigration policy in Australia.

The mining investment boom sharply increased the level of investment in Australia. It also fed both business and consumer confidence which has been reflected in strong housing and office construction and in related investment in the major metropolises. Australia’s economic experience during the 2000s stands apart from that of other developed countries. Real GDP increased throughout the 2000s without the severe downturn that occurred elsewhere at the time of the Global Financial Crisis (GFC). Unemployment fell to near 4 % in 2008 and peaked at just short of 6 % in 2009. Investment in new mineral projects surged again after 2009 as a consequence of the Chinese Government’s decision to initiate a massive economic stimulus package in 2009. This flowed on to renewed growth in demand for and the price of commodities, particularly iron ore. Partly as a result, unemployment in all the states has, since the GFC, fallen to around 5 % (Stevens 2012).

Employers involved in the construction phase of the mining boom were begging for workers. They needed to attract construction workers at a time when the demand for such workers was also strong in the major metropolises. It was not until late 2011 and 2012 that Australian workers have had cause for concern about migrant competition for jobs. This removed a major potential restraint on the development of immigration policy.

From the Commonwealth government’s point of view, the fear was that the boom could burst if labour shortages undermined the economic viability of the pipeline of resource projects. In this context, DIAC was expected to contribute by augmenting the supply of the required labour. The focus had to be skills targeted to meet employer needs. The result, since 2004, has been a shift in emphasis towards outsourcing the choice of migrants to employers themselves. This has occurred primarily via the 457 visa system, but also through an expanded permanent entry employer sponsorship program. As is explained below, it is in this context that the Australian states and regional authorities have also been given an expanded role in selecting migrants. The rationale was that employers and the states and regional authorities were the best judges of the skills that were needed within their respective jurisdictions.

Various initiatives to this end were put in place after 2004. By 2008 the Australian government was ready to pronounce that employer sponsorship was now at the centre of its immigration policy priorities. According to DIAC:

The decision to move to a (sponsored) demand driven program in early 2008 was predicated on the philosophy that skilled migrants settle more easily and make the greatest contribution if they are able to come to a job. The decision highlighted a significant and growing mismatch between the skills on offer and those demanded by the Australian labour market (DIAC 2011, p. 28).

This statement incorporates a stark criticism of the flow of skilled migrants ‘on offer’ from the points-tested permanent visa subclasses. The basis for this harsh judgment will become evident as our account of developments in these subclasses unfolds.

6 The Points-tested Permanent Visa Subclasses

As noted, by the early 2000s the selection criteria for the points-tested visa subclasses favoured former overseas students who had completed Australian university or vocational qualifications. These arrangements generated a series of unanticipated consequences.

The number of overseas students enrolled in Australian educational institutions escalated during the 2000s. This escalation turned out to be driven not by the value of the qualifications gained for employment outside Australia, but rather by the opportunities that studying in Australia opened up for participating in the Australian labour market. Most students came from Asia, particularly China and India. For these students employment in Australia promised to deliver vastly greater financial returns than could be obtained at home. As the rules on the points tested visas were tightened the students who were no longer eligible proved to be both tenacious and resourceful in exploring all the visa pathways open to them stay in Australia and work (Baas 2010). These included the permanent and temporary visa subclasses which involved employer or state sponsorship

By 2005, students who completed courses which satisfied the requirements of the relevant occupational assessment authorities were virtually assured of a permanent entry visa under the points tested visa subclasses. By this time the Australian government had made an attempt to target the occupations it wanted to attract migrants for. It established a list of skilled occupations which were judged to be in short supply by the Department Education and Workplace Relations (DEWR). This was entitled the Migration Occupations in Demand List (MODL). A student with a qualification acceptable in one of these occupations could normally expect to be granted a points-tested permanent visa.

DIAC did not anticipate the speed with which universities and Vocational Education and Training (VET) colleges would open up courses which the relevant accrediting authorities would deem to meet the required credentials in the occupation in question. Nor did DIAC anticipate the escalation in the number of overseas students who would enrol in these courses. Almost all Australian universities and VET colleges sought to enter this market. This was because overseas students could be charged high fees and the universities in particular were all struggling to finance their operations. Australia’s regional universities were especially enterprising in this regard. Some set up customised campuses in central Melbourne and Sydney which catered exclusively to overseas students. The focus was on Masters courses in accounting and IT, both of which occupations were listed on the MODL. Students could complete the curriculum required by the accrediting authorities in these two fields within 2 years. Those enrolled in these Masters courses had to have an undergraduate degree qualification (from any country), but it could be in any field. Thus an educational investment covering just 2 years could be converted into a very valuable permanent resident visa.

In the case of VET courses, the focus was on cooking and hairdressing. The accrediting authority (which in this case was a branch of DEWR) deemed that 1 year’s full-time training in either of these two fields (with no on-the-job experience) was equivalent to the skills attained by a 3 year apprenticeship in these occupations (which in the past had been the accepted pathway to trade level positions in these occupations). No competency test in cooking or hairdressing was required. DEWR simply accepted the certification of the college conducting the training that these standards had been achieved. Few other trades were open to overseas students because most of the traditional trades in Australia, as with carpentry or metal working, required several years of on-the- job training as an apprentice. The other significant feature of the VET sector was that successive Australian governments had encouraged the entry of private colleges into trade training. The response from entrepreneurs catering for the new overseas student market was extraordinary. Private VET colleges specialising in cooking and hairdressing proliferated.

Commencements in universities by overseas students grew strongly from 65,089 in 2004 to 77,961 in 2008, but they exploded in the VET sector from 32,056 in 2004 to 105,752 in 2008. Most of the latter growth in enrolments was students from India and Nepal, followed by China (Birrell and Perry 2009).

By 2008 around half of all visas granted under the permanent-entry points-tested visa subclasses were granted to former overseas students, with accountancy being by far the largest single occupation. Meanwhile an enormous wave of accounting students within the universities and cooks and hairdressers within the VET colleges were still to complete their courses. DIAC was by this time well aware that these students, too, would be anxious to stay in Australia. If they succeeded this would make a mockery of the government’s desire to attract migrants with skills needed by employers. At the same there was a flood of media stories about recently created VET colleges catering to the demand for cooking courses where the motive appeared to be maximising fees from enrolment regardless of the quality of the instruction provided.

There were also concerns about the English-language capacity of the students graduating from the universities. As noted, at the time, the minimum level of English required for the points-tested visa sub classes was 5, or ‘functional’ English. DIAC did not initially require overseas student applicants to take an English test. Overseas students had to satisfy minimum English standards before being enrolled. In any case, DIAC assumed that, if they had completed a university course, their English should have improved. By living and studying in Australia, so it was expected, overseas students would acquire the English skills needed for professional roles. When it came to allocating the points for language skills overseas student applicants were deemed to have achieved ‘competent’ English—or level 6.

Suspicion that some overseas students were not achieving this level prompted DIAC, in mid-2004, to require all overseas students to document their English competence by providing the results of a recent IELTS test. It turned out that a sizeable minority of those being granted permanent-entry visas were poor English speakers with no better than ‘vocational’ level 5 English (Birrell 2006). This finding prompted much soul searching. How could graduates with such a low level of English competence pass their university exams? How would they fare in accounting and other professional job markets, where capacity to communicate with clients was essential? No satisfactory answers were provided. This prompted radical changes to the selection system. It also contributed to decisions to increase the role of employers and the states in selecting skilled migrants.

7 Reforms to the Immigration System Since 2008

Beginning in 2009, the new Labor Government (following DIAC’s lead) initiated a series of radical reforms to the points-tested visas subclasses. They were instigated because of the issues just discussed and because the Labor Government had began to worry that the influx of students was contributing to record high levels of Net Overseas Migration (NOM). These numbers were raising concerns about the capacity of Australia’s metropolises to cope with their surging populations.

The reforms had to run the gauntlet of some powerful interest groups. By 2009 the export of educational services (generated by the expenditure in Australia of overseas students) was said to have reached some $ 17 billion (for an analysis of doubts about these claims, see Birrell and Smith 2010). This amount was only exceeded by revenue from the export of iron ore and of coal.

Yet DIAC was able to get its reform proposals through Cabinet. This outcome was driven by the damage being done to the integrity of the migration program, the widespread impression that the government was ‘losing control’ of the program, and the tenuous link between the skills being recruited via the points-tested visas and employer needs. The reforms implemented were momentous.

A new Skilled Occupation List (SOL) was announced in mid-2010 which did not include cooking or hairdressing. Thereafter overseas students with these credentials were no longer eligible for a points-tested visa. In one stroke, the government destroyed the business model of the VET colleges catering to overseas students. The number of student visas issued for VET courses since 2010 has plummeted.

As of mid-2011 a new points-tested visa regime was introduced which diminished the prospects of overseas students graduating from Australian universities being granted a permanent visa. Former students applying from within Australia now normally need at least 1 year’s work experience in Australia in their professional or trade field. Though most overseas students can obtain a graduate skill visa which allows them to stay on in Australia for up to 18 months with full work rights after completing their course, most have difficulty finding professional work. This is because employers are reluctant to invest in training a graduate who does not have permanent residence and thus may not stay within their firm.

The minimum English standard under the new system is 6 on the IELTs. But in reality it is higher for most of those with professional occupations. This is because DIAC has encouraged the professional occupation accrediting authorities to increase their English standards. Almost all (though not the Australian Computer Society responsible for accrediting IT graduates) have increased the minimal level of English required to level 7 on the IELTS test. This is a major hurdle for applicants from a non-English-Speaking-Background, especially those from China.

The new system also abolished most of what remained of the concessions granted to residents wishing to sponsor their relatives under the points-tested visa subclasses. The sharp decline in the numbers visaed under the Skilled Australian Sponsored category in 2011–2012 and planned for 2012–2013 shown in Table 7.1 reflects this reform. The only remaining concessions for those sponsored by relatives are for a provisional visa category which requires those sponsored to live in a designated regional area for 2 years after which they can apply for a permanent residence visa (Birrell et al. 2011, p. 22).

Table 7.1 Skilled visa outcomes from 2007–2008 to 2010–2011 and planning levels for 2011–2012 to 2012–2013. (Source: DIAC, Includes principal applicants & accompanying family)
Full size table

Starting from July 2012, a new Skill Select system has been introduced, the main innovation being that prospective applicants (including those hoping to be sponsored by a State or Territory) must first lodge with DIAC an Expression of Interest detailing their occupation and other qualifications relevant to the points test. The prospective migrant can only proceed to a formal visa application if invited to do so by DIAC, or by a State/Territory Government in the case of State-sponsored visas. The invitation depends on the applicant achieving a minimum number of 60 points on the selection system—with DIAC reserving the right to select those who score the highest points if the number of applicants exceeds the planning target for particular visa subclasses. This innovation also gives DIAC the opportunity to make its selection in the light of ‘the changing needs of the labour market’ (DIAC 2012, p. 45).

The Skill Select system was also motivated by DIAC’s concern to remove the opportunity for overseas student graduates to obtain a bridging visa to stay and work in Australia while their onshore skilled visa application was finalised. As noted below, the numbers doing so were large. Skill Select removes this option. Prospective former student applicants must now leave Australia while they wait for an invitation to apply for a skilled visa.

The net effect of these innovations has been to attenuate the nexus between completing a VET or university course in Australia and access to a points-tested permanent visa. As noted, the consequence for the VET colleges has been catastrophic because of their reliance on students enrolled in cooking and hairdressing courses. The impact on university enrolments has also been severe, because of the sharp contraction in the number of overseas student graduates who can meet the new qualifying standards. By 2011 and 2012 the number of new student visas issued overseas had halved relative to the levels in 2008 and 2009.

Finally, the Government has reduced the share of skilled migrants visaed under the points-tested sub-classes in favour of skilled migrants sponsored by employers and the States. These priorities are reflected in the outcomes for the different skilled components of the immigration program shown in Table 7.1. The number of visas issued for the Employer Sponsored visa subclasses have doubled since 2007–2008. The number of visas issued for the State/Territory Sponsored visa subclasses have tripled, though from a lower base.

But not all has gone to plan. The number of visas issued in the Skilled Independent and the Skilled Australian Sponsored visa subclasses did decline in 2009–2010 and 2010–2011 but, in the case of the former, have increased again in 2011–2012 and 2012–2013.

This outcome is a consequence of the decisions covering transition to the new arrangements for former overseas students. Those who had already applied for a points tested visa but whose applications had not been processed by 2010 were given the right to be evaluated on the rules in place when they applied. Those who were holding a graduate student visa or who had applied for such a visa before 2010 were given a similar concession. There were tens of thousands of such persons. The extra visas issued in 2011–2012 and 2012–2013 reflect the start of the processing of this backlog (Birrell et al. 2011, pp. 23–24). Meanwhile all the students and former students in question have been issued with bridging visas as described above.

The education industry story is not over. The industry has pressed successfully for new concessions. These have been granted in the form of an easing of the requirements for overseas students to establish their bone fides and the amount of money required before a visa will be issued. In addition, from March 2013, all overseas students who graduate with an Australian university degree can stay on for at least 2 years with full work rights. This is more generous than the previous skilled graduate visa which was for 18 months and which required the student to possess the credentials required for an occupation listed on the SOL. However, there have been no changes to the reforms described above which lessened the connection between an Australian credential and access to a points-tested visa.

8 State/Territory Sponsored Visa Subclasses

The Commonwealth began offering the states a role in selecting immigrants in the late 1990s. This was partly in response to vigorous lobbying from states like Victoria, which was anxious to stimulate the local economy through population growth.

However, as Table 7.1 shows, after 2007–2008 the number of permanent entry skilled visas sponsored by the States and Territories expanded rapidly. This reflected the Commonwealth Government’s anxiety about providing scarce skills to the industries at the front line of the mineral investment boom. Skilled migrants sponsored by the States and Territory Governments now rank in the DIAC processing priority below employer sponsorships, but above the other points-tested visas discussed above. As noted, the rationale for this priority is that the states were expected to have a good understanding of the skill needs within their jurisdictions.

The selection of these State/Territory sponsored migrants occurs within the Skill Select framework described above. Prospective migrants must achieve a minimum of 60 points on the points test. When applying they are required to indicate a preference for State sponsorship and the State they wish to be considered by. The main reason why a prospective migrant would chose the State sponsorship route is that it is a concessionary category. They receive a five or ten point bonus (depending on the visa subclass within the State/Territory suite of visa subclasses). This can be very important for applicants on the margin of selection. The range of occupations eligible is also much wider than is the case for the SOL which determines eligibility for the other points tested visa subclasses.

The incorporation of the State/Territory sponsored program within the Skill Select system has led to some tightening of the rules on this visa subclass. They must now meet a minimum English language requirement of 6 on the IELTS test. There has also been a tightening of the numbers and occupations eligible for state sponsorship. States used to be able to sponsor as many migrants as they pleased and in whatever occupations they chose (as long as the occupation was at trade level or above and was listed on the SOL). Beginning in 2010–2011, each State/Territory must negotiate a state migration plan with DIAC, the result of which is that each State or Territory is allocated an annual quota of sponsorships. State/Territory governments are also required to indicate the occupations eligible for sponsorship and to provide target numbers for each of these occupations. The latter are guidelines rather than strict quotas.

There is a degree of politicking in the setting of these quotas, though the Commonwealth is the final arbiter of their size. The South Australia Government continues to receive a relatively high quota (considering its small population and the slow pace of economic growth within the state). By 2012–2013, however, the major sponsoring government was Western Australia (WA). This reflects the extraordinarily rapid growth in employment in that state (because it is the epicentre of the mineral investment boom) and the keenness of the Commonwealth Government to facilitate the WA Government’s desire for a high migrant intake.

Most of those visaed under the State/Territory visa subclasses have been professionals (as has been the case with the other points tested visa subclasses). However there is a wider spread of occupations. This is partly because of the capacity of the States and Territories to decide which prospective migrant to invite and partly because most of those invited have applied from offshore. As a consequence there has been no parallel to the concentration of accountants described earlier in the case of the other points tested visa subclasses.

9 Employer Sponsorship

Since 2008 skilled migrants sponsored by employers have been DIAC’s number one processing priority. As Table 7.1 shows there has been a strong response from employers with the number of visas issued to sponsored migrants and accompanying family doubling since 2007–2008. Most of those being sponsored are professionals, particularly nurses and engineers. A significant minority have been tradespersons, particularly metalworkers.

The criteria employed in determining eligibility for sponsorship incorporate major concessions relative to the points-tested visa subclasses. The occupations of those sponsored do not have to be listed on the SOL. Almost all trade level and above occupations, including cooks, are eligible for sponsorship. In addition, the minimum English standard is very low—just ‘functional’ or level 5.

There is no requirement for the sponsoring employer to test the labour market. Employers are regarded as the best judges of whether the migrants possess the skills required. This outsourcing of migrant selection is consistent with the prevailing official ethos that, not only must Australia be open to flows of talent, but also that employers should be free from government constraints in making choices about whom they employ.

The majority of those sponsored for an employer-sponsored permanent visa are already living in Australia, most of whom are already working on a 457 temporary visa. Where this is the case, as long as the migrant has worked for 2 years with the sponsoring employer there is no requirement that the applicant must first achieve a successful assessment of his or her occupational credentials (as is the case for the points- tested visa sub classes). The exception is for registered professions, like medicine and nursing, where accreditation is a condition of employment.

This circumstance means that the characteristics of most of the migrants sponsored for the permanent-entry employer sponsored subclass reflect those of persons sponsored under the 457 visa subclass (see below).

The permanent residence employer nomination program also incorporates a significant regional component which allows employers to sponsor migrants to particular jobs on concessional terms relative to those just described. These concessions include lower English language standards and more opportunities for the sponsoring of semi-skilled workers. This outcome partly reflects the lobbying from regional interests worried that the mining boom will attract migrants away from regional areas not benefiting from the boom.

The Labor Government’s willingness to promote regional migration also reflected debate about the urban quality of life implications of metropolitan population growth. This debated peaked during 2010 when the Government produced a report indicating that Australia’s population was likely to grow from 22 million in 2010 to reach 36 million by 2050 with the immigration policy settings then in place (the various perspectives on this debate are explored in Australian Government 2010). The Labor Government has framed its recent promotion of regional migration in the context of public concerns about rapid metropolitan population growth.

The State Governments are not involved in administering this regionally based component of the employer sponsorship program. The only element of devolution of authority to the regions has come in the form of the appointment of local Certifying bodies which advise the Commonwealth Government about the extent of skill shortages in semi-skilled occupations in each (usually sub-state) regional labour market.

10 Changes to the 457 Visa Since 2004

The 457 visa subclass has been the most contentious of the Australian government’s visa subclasses. The Australian government has sought to promote the visa as part of its policy of outsourcing migrant recruitment of employers.

As noted earlier, migrants can be sponsored for employment on a 457 visa without any requirement for labour market testing. Any employer can sponsor a 457 visa holder regardless of the location of the employer or the occupation, as long as it is classified at trade level or above. The minimum English standard required since 2009 is 5 on the IELTS test.

Employers have responded to the opportunities. The number of 457 visas issued to primary applicants (not including accompanying family) increased from 46,680 in 2006–2007 to 58,050 in 2007–2008. After a downturn during the GFC the number of 457 visas issued surged from 48,080 in 2010–2011 to 68,310 in 2011–2012.

A crucial advantage of the 457 visa regime from the employer’s point of view is that the sponsored migrant must stay in the employ of the sponsor or risk losing the visa (unless another employer can be found to provide an alternative sponsorship). Because a high proportion of those holding 457 visas hope to be sponsored by their employer for a permanent-entry employer-sponsored visa, most 457 visa holders have a powerful motive to remain with their initial sponsor.

This aspiration is especially evident among those 457s attracted from Asia. Their share of the program has been increasing, as has the proportion of those sponsored who are already in Australia (around 40 %) (DIAC 2013). Their number includes thousands of the overseas students marooned in Australia following the reforms to the points-tested visas detailed above.

People on 457 visas who are keen to gain employer sponsorship for a permanent-entry visa are vulnerable to exploitation on the part of employers who may require them to accept pay and conditions below those acceptable to resident workers. DIAC has only limited resources to investigate whether such exploitation is occurring. However there has been widespread publicity of disturbing stories about such conditions. The trade unions have also complained that some employers are using 457 visa holders in preference to resident workers because they give the employer a competitive advantage relative to those employing resident workers.

The Labor Government responded by introducing new rules for the visa in 2009, the most important of which was a requirement that employers must pay the market rate of pay in the industry and occupation in which the 457 visa holder is employed. There is also a minimum rate (currently $ 51,400) which the employer must pay if the market rate is below this level.

11 Other Temporary Entrants in Australia

As Table 7.2 shows, by December 2011 there were 130,612 principal applicants holding 457 visas in Australia. This was just a small fraction of the total of 1 million temporary entrants in Australia at this time. As would be expected the number of those on student visas has declined since 2009. However the number holding Working Holiday Makers’ visas, visitors’ visas and other visas (including former students holding graduate skilled visas or bridging visas pending decisions on their applications for a points tested visa) have increased. Apart from those on visitor’s visas almost all these temporary resident visa holders were permitted to work in Australia.

Table 7.2 Stock of temporary entrants as at 31 December 2009, 2010 and 2011 by major visa group. (Source: DIAC, Immigration update; various issues excludes New Zealanders, includes primary and secondary visa holders)
Full size table

There is not space to provide more detail on the implication of this huge stock of temporary residents on the Australian labour market. Suffice to say that successive Australian Governments have put in place liberal arrangements for these various temporary entry visas. This has been a deliberate policy, consistent with the priorities which shaped the focus on employer sponsorship, that is, of providing an ample supply of labour during the mining boom era (Birrell and Healy 2012).

12 Immigration Policy Since 2011

The economic environment in Australia changed in late 2011. The price of iron ore fell from around US$ 180 a tonne to $ 80 a tonne. It has since risen (to around $ 130 a tonne in 2013). Both thermal and coking coal prices also subsided during this time. The shock in Australia was profound. The pipeline of new mineral projects that had seemed bottomless suddenly truncated because many were no longer viable at the new price levels. As a consequence the expectation of ever increasing demand for construction and mining workers also evaporated.

These events coincided with the fruition of Labor Government plans to allow big mining projects special concessions on the sponsorship of 457 visa holders on what were called Enterprise Migration Agreements (EMAs). These allowed big mining projects to sponsor semi-skilled workers as well as skilled workers.

By 2011 and 2012, the rate of job creation in Australia had slowed sharply relative to the years prior to 2011. Employment in the construction industry across Australia also contracted during this time, making access to the highly paid work available on mining and liquid petroleum projects very appealing. The trade unions representing construction workers seized on this development. They asserted that the welfare of resident workers should be paramount. There followed a tumultuous debate about the merits of allowing employers the freedom to import labour at a time when locals appeared to be available for the work in question. This debate drew in major players, including the peak union body, the Australian Council of Trade Unions (ACTU). The ACTU asserted in a parliamentary submission that:

The starting point for unions with EMAs is that Australian workers (citizens and permanent residents) must have enforceable first rights to all jobs on major resource projects.

The submission further declared that:

If major project owners and employers covered by EMAs wish to make use of 457 visa labour and other forms of temporary migration they should first have to demonstrate they have made every possible effort to employ locally to fill vacancies (ACTU 2012, p. 5).

In the face of this advocacy, the newly appointed Minister for Immigration in the Labor Government, Michael O’Connor, announced on 23 February 2013 that the government would reform the 457 visa system. DIAC’s compliance and enforcement powers would be beefed up to ensure employers were not abusing the system (as by paying below market rates of pay). As well, employers would henceforth have to ‘demonstrate that they are not nominating positions where a genuine shortage does not exist’ (O’Connor 2013).

This message was taken up by Julia Gillard, the Labor Prime Minister, in March 2013. She declared in reference to the 457 controversy that Australians should be ‘at the front of the queue for available jobs, not at the back’.

13 Current Politics of Immigration

As noted at the outset, the public narrative about immigration in Australia supports the expectation of continued high migration. This situation is consistent with Freeman’s theory that high immigration is the default position in settler societies where there are powerful vested interests lobbing for it (Freeman 1995). Support within the wider community may be lukewarm (at best) but, especially in an economic boom, few residents are likely to feel directly threatened by migrant competition.

The peaking of the mineral investment boom may change this situation. As noted, there has been a softening of the Australian labour market since 2011, not just in regard to the mineral industry but also across a spectrum of industries vulnerable to international competition (including manufacturing and tourism). Since 2011 the net growth in jobs in Australian has fallen to just over 100,000 a year compared with double that number prior to 2011.

Opinions differ as to whether this is a temporary phenomenon. If it is not, Australia’s migration program is vulnerable in part because it has been justified by claims that it is directed towards filling skilled vacancies which cannot be met from resident sources. If residents with the skills being targeted are without work, yet employers continue to sponsor migrants in large numbers, the system may lose legitimacy. This is the moral foundation of the trade union campaign against the 457 visa regime. It appears to have aroused widespread community feeling that the Australian government’s first obligation should be to ensure that residents have priority in filling job vacancies.

It is this response that has fuelled the tumultuous public debate that followed the Prime Minister’s rhetorical intervention that Australians should be put at the head of the queue rather than migrants sponsored on a 457 visa. Legislation requiring a limited form of labour market testing for 457 visas was passed in the Commonwealth parliament in August 2013 (by which time Labor was being led by Kevin Rudd).

As Julia Gillard was surely aware, once such issues are publicised they may bring into play concerns about the impact of migration on urban quality of life and on the changing ethnic make-up of Australia’s population. These are concerns that normally do not have much traction but, if tacked on to the job issue, could mobilise a sizeable constituency.

The response of those anxious to maintain migration at a high level has been to highlight other advantages, including offsetting the ageing of Australia’s population, the role of immigrants in promoting demand and thus high aggregate economic growth, and the value of Asian migrants in the enhancement of business linkages with our Asian neighbours (among others). Critics have also been at pains to undermine the legitimacy of the PM’s intervention on the grounds that it amounts to dog whistling, that is, communicating in a clandestine way with this wider constituency. She, and her supporters, have, on this account, been accused of xenophobia and racism, including by the media baron Rupert Murdoch (Hannan, and Kelly 2013).

The depth and volatility of this debate suggests that Australia might be entering a new and contested era as regards immigration policy. The historical record (detailed above in the case of the asylum seeker issue) shows that large numbers of voters can be mobilised on immigration issues. Time will tell.