AUSTRALIA’s Low-Skilled, Low Wage Permanent Visa System Exposed

Australia’s low-skilled, low-wage permanent visa system exposed

By Unconventional Economist in Australian Economy

December 2, 2019 | 7 comments

On Friday, the ABS released its Personal Income of Migrants survey for 2016-17, which tracks the median earnings of permanent migrants aged 15 years and over who have arrived in Australia between 1 January 2000 and 30 June 2019.

According to the ABS, permanent migrants earned a lowly $49,438 median income in 2016-17:

Australia’s 1.9 million migrant taxpayers generated $112.3 billion in total personal income in 2016-17 according to figures released by the Australian Bureau of Statistics (ABS) today.

ABS Migration and Small Population Insights Director, Jenny Dobak said most of this migrant income ($102 billion, or 91 per cent) was earned by employees.

“With new data for 2016-17 now available, we have a better understanding of the personal income earned by migrants,” she said.

“For example the data shows the median employee income of all migrant taxpayers in 2016-17 was $49,438, which was slightly higher than the median employee income for all Australian taxpayers ($49,412)”.

Skilled migrant taxpayers

The 2016-17 data shows that 61 per cent of migrant taxpayers held a skilled visa and they reported $81 billion in total personal income, an increase of 5.8 per cent in real terms on 2015-16.

“We also know that migrants from the skill stream had the highest median employee income of migrant taxpayers ($59,304)” said Ms Dobak.

Family migrant taxpayers

Migrant taxpayers with family visas reported $25 billion in total income, and were most commonly born in the United Kingdom (13 per cent) and China (12 per cent).

Humanitarian migrant taxpayers

The data also showed that migrants with humanitarian visas reported $3.4 billion in total income and had a median employee income of $32,792, below the Australian taxpayer median employee income ($49,412).

Predictably, big business lobby group – the Migration Council of Australia (MCA) – tried to spin the survey as positive and argue that it justifies increasing Australia’s permanent migrant intake:

The “pervasive myth” that mig­rants are a drain on the economy has been busted by new Australian Bureau of Statistics data showing migrant employees’ median income is no different than for other taxpayers.

The ABS data, which reveals the nation’s 1.9 million migrant taxpayers generated more than $112bn in total personal income in 2016-17, prompted Migration Council Australia to call for a fresh look at increasing Australia’s permanent migration program, after the annual intake was reduced from 190,000 to 160,000 during the term of the last Coalition government.

The median employee income of all migrant taxpayers in 2016-17 was $49,438, the data reveals, slightly higher than the median employee income for all Australian taxpayers at $49,412.

“The income and tax revenue generated by migrants is critical to our economic growth and to maintain the government’s budget bottom line,” said Carla Wilshire, CEO of Migration Council Australia.

“We need to recognise the power of the migration program to foster growth, fuel investment, build trade linkages and develop new industries. Migration has ­always been a key economic lever and as global economic conditions weaken, we need to consider increasing Australia’s permanent migration program as a stabiliser.”

Federation of Ethnic Communities Councils of Australia chair Mary Patetsos said the ABS figures “confirm just how strong a contribution migrants make to the Australian economy”. “The figures also dispel the pervasive myth that migrants are a drain on the economy and government services,” Ms Patetsos said.

“The median income for ­migrants is slightly higher than it is for all Australians, which means the tax paid by migrants to help fund our hospitals, schools and other services is also likely to be about the same or slightly higher than the median for all Australians.”

*Anyone with an ounce of statistical nous knows there are major compositional flaws with comparing the median income of permanent migrants with the median Australian.

*The median Australian income is weighed down by kids and university students working casually, mums working part-time, seniors working part-time, etc.

By contrast, 60% of Australia’s permanent migrant intake arrive under the skilled stream. They are purported to be highly qualified and brought into Australia to overcome ‘skills shortages’.

*These ‘skilled’ migrants should, therefore, predominantly work full-time and be paid way above the population median, otherwise why import them?

*Thus, for permanent migrants to only have earned $26 more than the median Australian (which includes unskilled, part-time and casual workers), and for skilled migrants to only have earned a median of $59,304, is a disgrace and suggests that Australia’s purported skilled permanent migration program is instead a low-paid, low-skilled migration program used to undercut Australian workers.

Further evidence is provided by the Department of Home Affairs’ Continuous Survey of Australia’s Migrants, which revealed that the median full-time salary 18 months after being granted a skilled visa was just $72,000 in 2016, below the population median of $72,900. This is another shocking result given the population median includes unskilled workers, which obviously drags the nation-wide median full-time salary down.

*With employers hiring low-skilled, low-paid migrants en masse, no wonder Australia’s wage growth is so low.

Unconventional Economist

Leith van Onselen is Chief Economist at the MB Fund and MB Super. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.