Skilled migration benefits and reforms
Friday, 25 May 2012
Address to the National Press Club
When Australia created the world's first dedicated Department of Immigration in 1945, the goal was relatively simple: populate or perish.
There wasn't a sophisticated approach to choosing which skills Australia needed. There was a drive to increase Australia's population as this was seen as the key to Australia's economic growth.
Sixty-five years later, our economic growth and ongoing prosperity is still very much tied up with immigration. As our economy has grown and developed, our focus has turned to skilled migration to fill what are quite specific economic needs.
Australia's economic success over recent years means that our unemployment rate is comparatively low by international standards.
But any objective look at the Australian economy will tell you that there are areas of real skill and labour shortage - both in geographic areas and industry sectors.
Australians expect that every effort is made to ensure that Australians fill those jobs. They are right too.
That is why this government is investing $15.6 billion in skills and training initiatives, including through the Building Australia's Future Workforce strategy announced in last year's Budget.
We have created 130 000 new training places and an additional 150 000 students are now attending university. We have lifted participation in higher level vocational education and training qualifications and there are now more Australians doing a trade apprenticeship than ever before. And we have also doubled investment in school education and upgraded facilities at every school.
But just as true and just as critical is this point: a properly executed skilled migration program is important for creating jobs.
In Australia's patchwork economy, certain sectors and certain areas of the country face - and will inevitably continue to face - skills shortages. And if these jobs continue to go unfilled, work goes undone, putting the handbrake on economic growth.
Take the resources sector for example.
There has been plenty of loose talk in recent years about the impact of the Minerals Resource Rent Tax and the carbon price on mining investment.
But, in fact, mining companies tell me that their biggest challenge when financing their major expansion works is convincing financiers that they will be able to source enough skilled labour to finish the project on time and on budget.
A government that cares about promoting ongoing economic growth and job creation will ensure that skilled migration is calibrated to fill those skills gaps that simply cannot be filled locally.
A well-managed and strategic migration program creates jobs; it does not take them away.
Businesses are expected to invest a record $120 billion in Australia's resources sector over the next 12 months. And there's more of this to come, with a total pipeline of resources investment worth half a trillion dollars, with spill over effects into construction, manufacturing and the services sector. Indeed, Treasury estimates that business investment as a proportion of GDP will reach its highest level since records were kept.
In order to facilitate this growth, we need skilled migration.
But there are other important arguments for skilled migration. Not the least, the need to deal with our long-term intergenerational challenges.
This year marks a decade since the release of the first Intergenerational Report by Treasury. Each report has told a different story, but one very important theme has remained constant: Australia's population is ageing and this presents a significant, but not insurmountable, fiscal and economic challenge over the long term.
There will be fewer workers to support our retirees and children, which will put a drag on economic growth and pressure on budgets.
Without migration, growth in Australia's labour force is predicted to stall by 2036 and then it will start shrinking.
Migration - particularly skilled migration - can ameliorate this challenge because it delivers on each of the famous 'three Ps' - population, productivity and participation.
Migrants tend to be younger than the Australian population. The median age of migrants to Australia is 31 years compared to our overall median age of 37 years. As a result, our skilled migration programs deliver prime working-age migrants who will contribute to Australia socially and economically for years. This helps offset ageing and keeps our labour force growing.
Recent primary skilled migrants have a participation rate of 96 per cent - a much higher participation rate than the 65 per cent for the general Australian population.
Skilled migrants also have a high level of educational attainment. Since 2000, three-quarters of migrants arriving in Australia have had a post-school qualification compared to half of the Australian-born population. Recently arrived migrants are similarly much more likely to have a university education than Australians generally.
A strong reform agenda
The past few years have been a time of significant reform in the Skilled Migration Programs.
Unlike 65 years ago, the key is not simply attracting large numbers of people. As an obviously attractive place to live and work, we get many more applications than available positions each year.
Today, the key is ensuring the proper calibration so businesses that genuinely cannot find domestic workers can fill vacancies without making migration a cheaper or easier option than hiring or training up Australians. It's about making sure our migrants have the best possible skills - and the skills our economy needs.
In 2008, we began reforming our temporary skilled worker (457) program to make it more responsive to the business cycle, while also protecting Australian jobs and conditions. We introduced the Worker Protection Act to protect vulnerable workers, and market wage requirements to ensure that 457 visaholders are paid equivalent wages and conditions as their Australian co-workers.
Further reforms to the 457 program were introduced last year to reward employers who play by the rules by giving them streamlined processing arrangements.
In 2010, we implemented a more targeted Skilled Occupation List for Independent Skilled Migration. The new list is informed by Skills Australia with regard to Australia's genuine need for high-value occupations over the medium to longer term.
In 2011, we introduced a new Points Test for Independent Skilled Migration with a stronger focus on English language proficiency, on the-job work experience and higher levels of education, all of which are factors which contribute towards success in the labour market.
And in another significant reform, from 1 July this year we will introduce SkillSelect, which will speed up visa processing and help to select the best and brightest migrants rather than just those who meet a minimum requirement.
The Opposition would have you believe that our Skilled Migration programs are a 'blunt instrument'. They say the permanent migration program is not catering for the skills needs in Western Australia, for example. That is just wrong.
The case of Western Australia speaks for itself. In 2010-11 that state comprised just over 10 per cent of Australia's domestic population, yet attracted over 15 per cent of permanent skilled migrants.
In addition, with 88 per cent growth in 457 visa applications Western Australia has overtaken Victoria as the second largest user of the 457 visa program. If current application rates continue, Western Australia is set to become the biggest user of the program in 2012-13. And with civil engineers, mechanical engineering technicians and geologists featuring in the top three occupations, it is clear migrants are going to where they are needed.
Temporary skilled migrants help plug skill gaps in Australia's growth industries like mining and construction and health services. For example, mining and construction comprise over one-fifth of the 457 visa program.
They address skills needs in our growth regions like Western Australia and Queensland. For instance more than 40 per cent of our temporary skilled migrants are going to jobs in Western Australia and Queensland.
In light of the current mining boom, the significant investment in the resources sector and the growing pressure for skills, the 457 visa provides an important safety valve for the Australian labour market.
While the community justifiably wants to ensure that Australians get the first go at the job opportunities this boom presents; skilled migrants are critical to getting these projects off the ground.
A good example is Hofmann Engineering, a successful manufacturing business in Western Australia that employs some 600 Australians and exports to around 20 countries.
Through the 457 program Hofmann has recently been able to hire a number of highly experienced, highly specialised welders. This means that Hofmann will be able to bid for more work than they otherwise could have - so that they can keep their business growing. It also means that Hofmann will be able to take on more young apprentices. In fact, they anticipate putting on 25 new apprentices by the end of the year. This is a worthy achievement for a business where, already, around 10 per cent of its workforce is made up of apprentices.
The 457 program is a flexible and adaptable. It's demand-driven so that it is highly responsive to our diverse and dynamic labour market over the economic cycle.
In other words, more 457 visas are issued when the need arises and fewer are issued with business conditions slow. This elasticity ensures that we do not have an oversupply of temporary skilled migrants if the economy slows.
Moreover, there is no limit on the number of 457 visas that can be issued. The program is uncapped. So, if business conditions are such that more migrants meet the criteria, more 457 visas will be issued.
That's why I'm always bemused when I hear some business leaders, who really ought to know better, call for the government to increase the number of 457 visas.
Before the Labor Government reformed the program, much of the public commentary focused on instances of exploitation. But now the 457 program has never been stronger and the vast majority of 457 sponsors do the right thing. Increased applications, faster processing times and stronger integrity measures enshrined in law have redefined how the community and business view the program.
The Opposition Leader claims the government has made the 457 program harder to use. But he is wrong. We have made it fairer, not harder, and the facts speak for themselves: in the year to 31 March, there have been 36 per cent more 457 visa lodgements than in the same period last year. In fact, at the end of March, the number of 457 visa holders in Australia had reached an all-time high of 88 590 people.
Even with the record number of 457 applications, processing times are historically low. The current median processing time for a subclass 457 visa application is just 17 calendar days. We have halved the average processing time since 2007-08, before these reforms were introduced.
What we have done is improve protections against exploitation of 457 workers. If Mr Abbott intends to reverse these protections, he should say so.
As part of the 2011-12 Budget, Labor established a new 457 processing centre in Brisbane, with the aim of reducing the median processing times to 10 days for complete applications. This is working, with the majority of the applications lodged in March 2012 decided within 10 days.
The 457 program also promotes investment in the training of Australians. The program's training requirements compel sponsors to provide evidence of recent training to sponsor overseas workers. This creates a positive joint commitment between business and government to increasing the skills of the Australian workforce: reducing the reliance on overseas workers over time.
Take the new scholarship program, Indigenous Leadership in the Resources Sector, by the Chamber of Minerals and Energy of Western Australia.
This program - entirely funded from the 457 program training benchmarks - will provide scholarships to Indigenous people to undertake a nationally accredited study through the Australian Institute of Management. While the program is off to a modest start, with four scholarships having now been awarded, the program is expected to gather momentum over time.
Enterprise Migration Agreements
This brings me to Enterprise Migration Agreements.
In 2010, the National Resources Sector Employment Taskforce chaired by the then Parliamentary Secretary for Northern and Western Australia, Gary Gray, projected that there could be at least 30 000 construction jobs on new resource projects in every year to 2015. It stated the number of jobs in mining and gas operations could grow by up to 65 000.
The Taskforce recommended a more responsive and flexible 457 visa program with improved processing times. We've done that.
The Taskforce also recommended introducing Enterprise Migration Agreements (EMAs) for 'mega' resource projects to allow those projects to negotiate up-front the temporary migration needs before the project commences.
EMAs will manage the risks that I referred to earlier - the risks that mining companies will not be able to get enough skilled workers to complete new projects on time and to budget. At the same time, EMAs will create jobs and training opportunities for Australians, because without them, there's a real risk that some large projects simply won't proceed.
So today, I am pleased to announce the first Enterprise Migration Agreement has been reached with the Roy Hill Project and we will be signing the necessary documents shortly.
There is no doubt that the Roy Hill Project is one of national significance. This $9.5 billion iron ore project, located in the Pilbara, is expected to produce 55 million tonnes of iron ore each year for 20 years, starting in late 2014.
The project will create significant benefits to the Australian economy through its capital investments, export earnings, and employment and training opportunities for Australians for decades.
More than 6700 Australians are expected to be employed during the construction phase of the project. This represents at least 80 per cent of the total workforce.
The EMA will allow Roy Hill to sponsor up to 1,715 workers for the three-year construction phase through the 457 visa program where they cannot find Australians to fill the positions. It will cover occupations like electricians, mechanical fitters, scaffolders, and boilermakers.
The EMA sets out protections to ensure that visaholders engaged on the project receive the same wages and workplace conditions as their Australian counterparts and that those workers are protected under Labor's Workplace Protection Act.
The government will ensure that visaholders are aware of their workplace rights and obligations through a specific induction program. The government will soon release a multilingual video that will be shown to overseas workers as part of their induction program on the project. Other materials will also be provided directly to visaholders, including contact details for the Department of Immigration and Citizenship, Fair Work Australia and relevant unions.
Of course, the government is committed to ensuring jobs arising from the project are filled locally. To this end, the government will establish a Jobs Board and expects that foreign workers are only recruited after genuine efforts to first employ Australians.
The Jobs Board will also be useful in assessing the case for future potential EMAs.
Indeed, the agreement has specific clauses that will require both Roy Hill and its contractors to continue to prioritise the recruitment of Australians throughout the life of the project. I understand that Roy Hill is launching a major national recruiting drive starting in the coming weeks.
As part of the agreement, Roy Hill will provide up to 2000 training places for Australians. This includes places for more than 200 Australian apprentices and trainees, as well as preparing over 100 Indigenous Australians to work in the construction industry.
Two-thirds of the apprenticeships Roy Hill will offer will go to mature Australians. That is, a tram driver from Melbourne or a bricklayer from Hobart or a taxi driver from Tamworth will have the opportunity to participate in an apprenticeship which will provide them with a trade qualification they can use for the rest of their lives.
In total, Roy Hill is set to invest in excess of $20 million in the training of Australians in a variety of programs including traineeships, apprenticeships, up-skilling and leadership training.
We will conduct regular reviews to ensure lawful and appropriate settings of these arrangements are maintained, including training and occupational health and safety obligations are upheld.
This agreement will ensure that regional and national skills shortages do not constrain this significant project and jeopardise economic growth and local jobs. It will also help ease the pressure on local industries that cannot compete for labour with major resource projects and are therefore placed in jeopardy.
Of course, this government understands that there are Australians looking to take up the opportunities this mining boom offers and that there are people doing it tough as a result of the patchwork economy, particularly in the manufacturing sector. That's why we are establishing a Jobs Board and linking it to the EMA program.
Significant Investor visa
Our migration program is important to our economy not only in the area of skills but also innovation and capital investment. Around the world many countries use a small portion of their migration program to encourage investment. I believe Australia can do better in this regard.
So, today, I can also announce the introduction of a new significant investment visa, together with a suite of reforms to our Business Skills program, now to be known as the Business Innovation and Investment Program, to commence on 1 July of this year.
Australia is well placed to attract investors who are looking for the financial security offered by a stable government and economy.
Of course this new permanent visa will be available to people from other countries on a non-discriminatory basis, but I expect considerable interest from across Asia, and China in particular.
The China Private Wealth Report 2011 cites that the private wealth market of China is ever increasing and that approximately 47 per cent of ultra-high net worth individuals who have investable assets of at least $15 million are considering an application for investment immigration. Australia has the opportunity to tap into this potential market.
The new significant investor visa will be available for people who invest at least $5 million in Australia in either state and territory bonds, Australian Security Investment Commission regulated managed funds or direct investment in Australian companies.
While we are talking about a comparatively small number of people, their investments will offer a disproportionate boost to the Australian economy and the financial services sector, particularly through infrastructure and managed funds.
Diversifying the Business Skills visa program to attract high end investors allows Australia to remain internationally competitive in securing economically valuable migrants.
Attracting migrants of this calibre will increase competition and commercial activity, generate employment in Australia and further develop links with international markets.
It's been almost a decade since our Business Skills program was last reviewed. In 2011, I asked the department to review this program to ensure it was meeting its objectives. Reforms stemming from this review will focus on innovation among our migrant entrepreneurs.
Until now, the program has frankly advantaged businesses like takeaways and small retail outlets which are fairly conservative business choices without an innovation focus. We want to select business migrants with a good track record of entrepreneurship and encourage them to take more innovative, bolder business decisions with greater certainty around their residence status while they are doing so.
We will offer budding entrepreneurs a chance at venture capital funding for commercialising new ideas. We will select entrepreneurs who are innovative; migrants who can bring new ideas and ways of doing business to Australia. We'll introduce a points test and give them recognition for their proven track record of innovation. We'll also give them greater confidence to take risks in business.
Our economy is the envy of advanced countries throughout the world. Skilled migrants make an immediate contribution to Australia by bringing their experience, skills and education with them. Their attributes build participation and productivity and they help to balance what is otherwise an ageing population.
This government has introduced a number of ambitious and wide reaching reforms over recent years. These reforms have consistently struck the right balance: strengthening the contribution of skilled migrants to Australia's ongoing prosperity while ensuring that our first priority of jobs for Australians is not compromised.
As circumstances change, so do the government's migration policies, reflecting the dynamic nature of the Australian economy. This can be seen in the development - and now introduction - of Enterprise Migration Agreements and in the reforms to Business Skills migration.
The government will continue to shape our skilled migration policies to attract migrants who build our productivity and prosperity in the interests of all Australians.
Thank you for your time today.
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Last update: Friday, 25 May 2012 at 14:03 AEST