It was about time we turfed out the goatherds and grass-growers

Last week Malcolm Turnbull and Immigration Minister Peter Dutton announced changes to the visa arrangements covering temporary skilled workers, 457 visas. When assessing the likely impact of these changes, it is worth bearing in mind what we know about the economics of immigration.

According to one of the world’s pre-eminent experts on the topic, George Borjas of Harvard Kennedy School, the net economic impact of immigration on the recip­ient country is generally positive but not large. The younger and the more skilled are the immigrants, the greater are the economic gains. In addition, the extent of cultural integration on the part of immigrants is positively correlated with the economic benefits.

Borjas also emphasises the distributional consequences of immigration. Employers benefit from immigration as well as workers with complementary skills, but local workers whose skills are in competition with those of immigrants often lose out.

All this makes sense and helps us interpret the criticisms coming from employer groups about the abolition of the 457 visas and their replacement with two new visa classes for temporary workers. The chorus of complaints has been loudest from the information technology sector, hospitality and universities.

By contrast, Bill Shorten has declared that the government’s decision to scrap 457 visas will make no difference, describing the decision as a “con”. But is he right? The alternative point of view is that the changes to the 457 visa arrangements announced last week effectively stole Labor’s thunder.

The culling of occupations on the consolidated sponsored occupations list, from about 651 to 435, looks quite radical but for the fact most of the deleted occupations have never or rarely been used for 457 visas.

While this is largely the case, there are some important exceptions, particularly in relation to several occupations in healthcare and construction. In any case, there was always a strong case for tidying up the list.

That goatherds, homeopaths, turf growers, driving instructors and archeologists have been scrapped is no bad thing; the list itself was close to being discredited without some serious revision.

Note also that there are some occupations specifically retained for temporary jobs in regional areas.

The most significant change to the visa arrangements is the split between short-term workers who can stay for two years with some limited scope to extend, and those who can stay for four years with greater scope to extend.

Workers who enter under the short-term temporary skills shortage category will not be eligible to apply for permanent residence whereas those on a four-year visa will be able to apply for permanent residence along similar lines to 457 visas. While there are a few changes to the new four-year temporary skills shortage visa class — police checks, provision of tax file number, English language proficiency — there is a fair degree of continuity with the old 457 visa arrangements.

Of course, this is a good policy outcome; there are clearly significant benefits from having a well-considered and carefully monitor­ed temporary worker visa cate­gory. (Incidentally, the proposal of having an independent panel assess individual instances of skill shortages is completely unworkable.) It is simply that the scope for entry under 457 visas had become too wide and the conditions attached to the program too lax.

Whether the exact details of the new policy hit the mark in all instances is not clear at this stage. There will be strongly held views on the contents of the short-term skilled occupation list that determines eligibility for the two-year visas and the (shorter) medium and long-term strategic skills list that determines eligibility for the four- year visas. Expect a degree of argy-bargy about these lists and possibly some changes.

The universities also may have reasonable grounds for complaint, including in relation to the need for two years’ work experience and the fact some the occupational groups from which they recruit are on the short-term list.

One way around this may be to reinstitute a separate visa class for academics (as was once the case) although the definition of academic employment would need to be carefully and tightly crafted. The academic labour market is rightfully a global one and visa arrangements need to reflect this.

But let us return to the economic benefits of immigration. Australia had developed a degree of complacency when it came to our formal system of migrant intake, in part because so much political energy had been expended on the issue of refugees.

The fact is that this self-satisfaction was never justified, particularly in relation to entry based on employer sponsorship, both temporary and permanent.

As the Productivity Commission has noted, “the current skilled migration program falls short of generating the best outcomes for the Australian community more broadly. In essence, it does not adequately target migrants who have the potential to make the greatest contribution — that is migrants who are younger, more skilled and who have higher English-language proficiency. It sets a lower bar for migrants who are nominated or sponsored by employers.”

In fact, the government didn’t accept a key recommendation of the Productivity Commission to combine (and refine) the two lists, the skilled occupations list (which is used for permanent independent skilled migrants) and the consolidated sponsored occupations list (used for permanent and temporary employer-sponsored migrants). This would have been a more radical move again but would have achieved “the common overarching objective of contributing to economic develop­ment and to meet labour market needs”.

The bottom line is that the changes to the 457 visa arrangements do represent a significant, justified tightening of policy — they are not a “con”. Some of the details will need to be tweaked but the changes are in the right direction. The politics now demand that the electorate has confidence in the integrity of all immigration policy settings.