A modest proposal for immigration policy

Recently there’s arisen a debate about having a debate on immigration and also an attempt to relive the glory days of asylum seeker politics. Whilst attempts to link the two have been cynical, I believe there might be a good reason to link them.

Why not draw almost all our new migrants from asylum seekers; more specifically, from boat people?

Lets work from the ground up.

I have no idea of the “carrying capacity” of the continent, and I don’t know how capable we are of actually calculating it, but I think it’s safe to say it’s in the range < infinity. Additionally, whilst we may not be anywhere near such a point at the moment, there will be a point where the weight of migration will completely overwhelm the existing culture. For reference note that my family has seven or so generations here but still has managed to avoid learning a single indigenous language. From this two points we can establish that there has to be some upper limit, no matter how high, on immigration intake. Some kind of quota.

Such a  quota necessitates some kind of selection mechanism. We could just do a first come first serve, or a lottery, but both would likely be unpopular and probably suboptimal from our perspective. A mechanism whereby we auction off immigration places would be likewise unpopular.

Instead we have consensus around a policy of selecting “the best” to settle here (apart from family reunion schemes).

But what is “the best”. At the moment we’re trying a skills based system. This has large flaws. Firstly it relies on the ability of bureaucrats to ascertain what specific talents are needed in Australia at any given time to create a list of desirable skills. There is no reason why any bureaucrat, no matter how diligent or competent should be expected to have such exceptional knowledge and judgement. It also relies on the ability of agencies here and abroad to correctly give accreditation and determine whether a given individual has, or has not skills. It also has led to the expansion of a very suss education sector now belatedly being reformed which also is effectively a cash for visa system. This is unpalatable to many people for the same reasons as an auction scheme, but the government isn’t even receiving revenue.

A way of determining quality based less on pieces of paper and which could provide revenue to government may be in order.

Maybe “the best” in migrants are not those with pieces of paper but those with certain character traits. Determination to improve their lot, entrepreneurial spirit, “get up and go” etc. Any person willing to uproot themselves and adapt has these qualities in some measure, and this has served Australia and other countries like New Zealand, America and Canada well over the years. In fact, from the first people bobbing in canoes across the Torres Strait to the our current migrants only a few have been passive guests of His Majesty (my ancestors included).

Unfortunately technology has lessened the fortitude required for migration. When a journey takes hours rather than months or years, and a return journey and communication is simple, the act of migration is less effective in filtering out “the best”.

Except of course the minority that are willing to risk their lives in leaky boats across the ocean. These people have some stones on them, I certainly couldn’t imagine myself doing that (but of course my ancestors were brought here in chains). They really, really are keen to be here. They certainly have more drive to contribute than a backpacker inspired by visions of lazy days on beaches or a student undertaking a diploma of attendance on their parent’s purse.

Maybe we should accept these people as the best.

There is a common perception of these people as jumping a queue. I have no idea where this queue is, or whom it’s inhabitants are. I assume they are meant to be doe eyed children in refugee camps, passively awaiting benevolent immigration officers. If these people exist, should we be allowing people whom are willing to be passive and await assistance. Surely these are the migrants whom would be “unemployed bludgers”. Why not take the self improvers who will “take our jobs” instead?

Of course this raises an awkward issue of  allowing people smugglers to thrive and security issues (no matter how remote). This can be rectified by having our intelligence agencies to run smuggling operations. This would both produce ample revenue to government and allow them to conduct surveillance on something other than student groups and Australians with beards.

We thus have a natural selection method for “the best” determined by their actions rather than pieces of paper, and we deliver revenue to government rather than shonky operators.

Could this be the ideal immigration policy?

About Richard Tsukamasa Green

Richard Tsukamasa Green is an economist. Public employment means he can't post on policy much anymore. Also found at @RHTGreen on twitter.
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Don Arthur
11 years ago

Richard – I hope your readers note the title of your post before getting too worked up.

Ken Parish
Admin
11 years ago

It’s a nice idea Richard, one that may give some of us a warm inner glow because we could convince ourselves that our humanitarian impulses might just coincide with economic self-interest.

Unfortunately the facts don’t bear out your hypothesis of the ruggedly enterprising refugee who happens to make the best migrant in an economic sense. The old Bureau of Immigration Research undertook extensive studies which showed (from memory) that skilled stream migrants were on average a net benefit to the Australian economy within 12 months of arrival in Australia, while those from the refugee and humanitarian stream remained cash flow negative (i.e. they received more on average in social security benefits etc than they generated in income) for around 5-7 years.

Current Department statistics (see http://www.immi.gov.au/media/fact-sheets/14labour.htm) suggest that this has not changed. The unemployment rate of skilled stream independent migrants (those with skills deemed in critical demand by bureaucrats) is around 7% after 18 months in Australia; skilled Australian linked (sponsored by employers, state or territory governments or eligible Australian resident family members) is 6%, and even the family reunion stream achieves just 13% unemployment. The humanitarian stream by contrast (which includes both “boat people” and offshore humanitarian stream) has an unemployment rate of 43% after 18 months in Australia.

Of course it’s always possible that the inherent enterprise/initiative of the refugees simply takes longer to emerge because they have language and other difficulties to overcome before they become productive citizens, but that once they overcome them they will outstrip the others. However the old BIR research suggests that if this is true it takes a very long time to emerge.

Refugee advocates generally insist (rightly in my view) that we should not assess refugee and humanitarian arrivals as economic units in the way we might properly do with the general migration stream (skilled, business, family reunion etc). Our motives for receiving these people are humanitarian not economic. We need to decide how many humanitarian arrivals our society can comfortably accommodate, and in doing so be honest about the fact that this will involve absorbing people who on average will take a long time to become productive citizens and who have language, culture and trauma difficulties to overcome, with which they need community support and assistance. Inventing fantasies of rugged, self-sufficient refugees doesn’t really assist IMO.

My own view, for what it’s worth, is that Australia CAN afford to absorb more refugee and humanitarian arrivals (say 20,000 as opposed to the current 13,000 or so) in an overall migration program of 180,000 plus a similar number of extended temporary stay migrant worker visas (457 visa etc). But in making that decision we shouldn’t delude ourselves that we are somehow miraculously choosing the best migrants in an economic sense. We’re not and that isn’t the purpose of the humanitarian process. Not everything can be measured by economic indicators.

Don Arthur
11 years ago

Ken – I agree that refugee and humanitarian arrivals shouldn’t be assessed on economic grounds.

But on the issue of “net benefit to the Australian economy”, one strategy for maximising net benefit is to deny migrants access to welfare and other benefits (I’m not saying this is a good idea).

A while ago Will Wilkinson suggested that illegal immigration might be a good idea if governments couldn’t be persuaded to adopt a guest worker program:

Anyone really committed to Friedman’s stated view about welfare and immigration should by no means try to restrict immigration, but instead should try to enable illegal immigration. A devout Friedmanite should stand stoutly against every fence, every border cop, every increase in the INS budget, any proposed database check for a new workers’ legal status, etc. I think it makes more sense to argue first for a guest worker program. But if that is in fact impossible, then Friedman has it right: more illegal immigration is the best we can do.

What reminded me of this was a comment by Monash’s Andrew Marcus. Discussing the increase in temporary migration he said: “The government has more flexibility in meeting economic needs but without everyone having full welfare and citizenship entitlements.”

Ken Parish
Admin
11 years ago

Don

As I’m sure you realise (and have raised the point to tease this out) the Wilkinson/libertarian position on migration is intellectually supportable only if you totally discount egalitarian principles (or assume that the invisible hand of the market will magically achieve more egalitarian or at least more prosperous overall outcomes in the big picture).

The logical outcome of WW’s scenario is that we should feel completely comfortable about seeing illegal workers who lose their jobs starving or begging in the streets and/or dying agonising deaths because they’re not eligible either for Jobsearch/Newstart or Medicare. No doubt there would be lots of desperate people from the third world who would be perfectly happy at the outset to trade away all such entitlements for the economic opportunity to work in the Lucky Country. But whether they would remain of that mindset or soon begin lobbying for inclusion in the benefits enjoyed by everyone else is another matter. And whether the rest of us should welcome the creation of a society with a large desperate underclass is another question again. It sounds a bit like large parts of the US. If I wanted to live in a country like that I’d move there. As it is, I’d prefer that Will Wilkinson and his mates stay where they are so that I can read about their ideas from a comfortable distance.

Nicholas Gruen
Admin
11 years ago

“As I’m sure you realise (and have raised the point to tease this out) the Wilkinson/libertarian position on migration is intellectually supportable only if you totally discount egalitarian principles (or assume that the invisible hand of the market will magically achieve more egalitarian or at least more prosperous overall outcomes in the big picture).”

Ken, the migration is pretty obviously egalitarian in the first instance so long as you include foreigners in the population in which you value egalitarian outcomes. It has a second order affect on the distribution of the incomes of those who are here in the first place, but a first order effect in raising the incomes of some pretty poor people in the world – the people who manage to get here.

Don Arthur
11 years ago

Ken – Wilkinson’s first option is a guest worker program. You’ve supported 457 visas in the past:

Australia also is now beginning to rely heavily on guest workers under the 457 visa scheme. 40,000 of them were issued in 2006-07, more than 50,000 457 visas were issued in 2007-08 and an even greater number is anticipated for 2008-09. They don’t get any access to social security, indeed they get deported if they lose their job and can’t find another sponsoring employer. However, they can bring their immediate family with them and the kids can attend public schools, and they can receive Medicare benefits if they come from a country which has a reciprocal medicare agreement with Australia (but not otherwise).

457 visas are issued for up to 4 years and quite a few apply successfully for permanent migration at the end of that time. It’s arguably quite a good solution because it matches immigration with demand in a flexible, market-driven manner, and the prospective migrant gets a chance to “test drive” Australia (and vice versa) before deciding to migrate permanently.

Ken Parish
Admin
11 years ago

Don

I don’t have a problem with 457 visas, as long as regulations are in place to ensure that they aren’t used to drive down wages and conditions of other workers i.e. they must receive wages and conditions similar to other workers in the same industry. The visas should only be able to be used to deal with genuine labour shortages rather than to drive down wages in areas where no such shortage exists.

As Nicholas’s comment highlighted, my concern is with the “second order effects” on inequality within Australian society rather than on the illegal migrants or guest workers whose living standards will undoubtedly rise (as long as they stay in employment).

From that perspective, the critical distinction between a Wilkinson proposal where the doors are simply opened to illegal migrants, and a 457-style guest worker scheme, is that when the guest workers lose their job they are deported. They don’t stay around creating an unstable, desperate underclass.

The “second order” effects of large-scale illegal migration on Australia’s economy, culture, society and environment would be enormous and almost wholly negative from the perspective of today’s Australian community. It would be a courageous decision in a Sir Humphrey Appleby sense, and it’s never going to happen.

OTO we already have a rather large guest worker program under 457 and other similar visa classes – around 180,000 visas per year until about 18 months ago when it was wound back a bit in response to the GFC. Generally speaking it works fairly well.

The same is true of the overall permanent migration program. Australia is currently operating the largest migration program the nation has ever seen and it is causing very little social unrest and having overwhelmingly positive economic consequences (the long-term environmental and planning consequences may be another question). It’s a little bizarre that the current very small influx of “boat people” (relative to the overall migration program) is causing very thoughtful people to canvas radical alterations to the overall migration program without either attempting to analyse the effects of such changes or attempting to analyse the current system or how well it actually works. In fact my view is that Australia’s current migration program (both under Howard and now Rudd) is almost miraculously effective and efficient in delivering rapid, peaceful and economically beneficial growth. In modern times only Canada has achieved anything remotely like it, and Australia’s current growth rate is faster than Canada at its peak. At current rates Australia’s population will double to more than 40 million by 2050.

Jack Strocchi
11 years ago

Ken Parish@#7 said:

my view is that Australia’s current migration program (both under Howard and now Rudd) is almost miraculously effective and efficient in delivering rapid, peaceful and economically beneficial growth. In modern times only Canada has achieved anything remotely like it, and Australia’s current growth rate is faster than Canada at its peak

.

Your view is right, but for the wrong reasons. In OCT 2008, just after Lehmans went down, I correctly predicted that AUS would escape the worst ravages of the GFC “relatively less-scathed”, whilst “a recession appears to be odds-off”. The immigration boom was causing a housing shortage which was forcing up rent. Which paid for the loans on residential investment properties which meant that bad debts were very low. Which meant that the banks balance sheets were solid which meant that there was no credit crisis. Which meant that econonmic growth continued which meant that there was no recession.

So immigrants, Yay!

OTOH your view could do with a little statistical normalisation. For sure immigration bumps up aggregate economic growth. But it depresses per capita economic growth.

The SMH is always a population booster, more people = more readers = more advertising $. Jessica Irvine, one of the SMH economic columnists, points out that

as the respected economist Saul Eslake has pointed out, immigration helps our economy to grow. Had we not had the same level of population growth, we would be officially in recession right now. Economic output per capita has in fact shrunk for four consecutive quarters, but because we’ve had more people, we’ve continued to grow.

Bizarre that she does not realise that the point of economic growth is to get a bigger slice of pie per person, not just a bigger pie for the sake of it. This is a journalist who gets paid to do this for a living, yet makes a duffer’s howler.

And then theres the adverse impact of huge population flows on the distribution and level of disposable income:
degraded education standards,
stagnating wages;
unaffordable accommodation.

So the nation becomes a harbour for degree-mills, sweat-shops and slum-lords.

Of course even the decline of per capita economic growth and disposable income does not capture the enormous negative externalities of rapid population growth:

destruction of natural environment (eg Murray Darling)
destruction of built environment (eg Windsor)
overcrowding of mass transit (eg M1, railways)
overcrowding of community services (queues for hospitals and schools)

In particular the environment is on its last legs with all elements – earth, wind, air and fire – being stressed out:
stripped top-soil;
dying river systems;
carbon-choked air;
raging bush-fires.

So immigrants, Boo!

In reality population growth is like most other political issues, a zero-sum game. Some people win, others lose, most are not affected too much or cant be bothered to complain.

Its no longer “which state is best” (Plato) but “who, whome” (Lenin).

conrad
conrad
11 years ago

Jack,

since most immigrants are living in cities, I really can’t understand how they are responsible for things like (a) bushfires; (b) stripped top-soil; (c) the Murry river; and (d) everything else that happens in country Australia.

It seems to me that most of those things would have happened no matter what Australia’s population happens to have been and will become since they’re basically due to poor agricultural practise (much of which is food for export), and, more recently, climate change. Whether, say, Melbourne has 2 million people, 4 million people, or 6 million people, won’t change that very much.

Also, I find your argument about GDP per person simplistic, since it’s not clear what the baseline should be. For example, if the migrants didn’t come, then we may well have had negative growth after all the services and industries that rely on them fell to pieces. Thus it’s not clear to me that some migrant groups are diluting the GDP per person equation at all by coming — indeed, many are probably entirely additive, and the same is true of service provisions (think about that next time you go to your overseas trained doctor).

TJW
TJW
11 years ago

“I have no idea where this queue is, or whom it’s inhabitants are.”

I think that some people are talking about the offshore humanitarian entrants – those in UN run refugee camps. By ‘queue’ they usually mean a yearly quota.

I personally would probably behave in the same way most boat arrivals do were I in their position. The thing I have difficultly with is that we are denied an opportunity to assess where they fit relative to other refugees and therefore they may displace other eligible humanitarian candidates who are in more desperate need of relocation but lack the financial means to travel here and thus must rely upon our offshore resettlement system.

Edward Carson
11 years ago

“A mechanism whereby we auction off immigration places would be likewise unpopular.”
Yeah right, and you think drawing almost all our new migrants from ‘back door’ boat people wouldn’t be?
I fail to see why unpopularity is a reason to dismiss a suggestion in the world of the theoretics. After all Richard, you are not the Minister for Immigration who would have a responsibility to connect policy with some degree of the people’s will.
On a blog ideas should be judged only on their merits, and I personally think residency via the auctioneer’s block would have a lot of merits.