The mineral boom and immigration policy: skills Australia debunks the myths.
Birrell, Bob ; Healy, Ernest
The Australian Labor Government has pursued a high migration policy
since it came to office in late 2007. This has been justified by claims
that it is needed to provide scarce skills for the resources industries.
Modelling of employment demand by industry by Access Economics for
Skills Australia shows that this justification is based on myths.
INTRODUCTION
The recent announcements on population policy by the new Prime
Minister, Julia Gillard, have invigorated the population debate.
Gillard's insistence that population policy must reflect
sustainability objectives appears to be in conflict with the policy
prevailing during the Rudd Prime Ministership. Confusion now reigns as
to what sustainability considerations may mean for the scale and
composition of Australia's immigration program. Do they imply that
the previous policy commitment to high migration was mistaken and that
immigration should be reduced? There are now even conflicting messages
among government and media commentators, as to whether Labor ever was
committed to a target figure of 35.9 million persons by 2050 (which was
the middle range projection published by the Treasury in the Third
Intergenerational Report (IGR3) in February 2010). Journalist Josh
Gordon, in The Sunday Age, exemplifies the view that the Labor
government had not committed to such a target:
Australia has never had a specific population 'target'. This is
exactly why Rudd appointed Agriculture Minister Tony Burke as
Australia's first population minister. It was Burke's job to examine
the question of how big we want to become, balancing competing
environmental, planning and economic imperatives. (1)
Until we see firm indications that Labor will reduce immigration,
Labor's talk about sustainability is mere window dressing. Since
the Rudd Government came to power in late 2007, it has pursued a
record-high migration policy. The government has also stated a long-term
commitment to net overseas migration (NOM) of around 180,000 per year.
This would deliver at least the 35.9 million population projected by the
Treasury in IGR3. Furthermore, as indicated below, the Department of
Immigration and Citizenship (DIAC) has repeatedly affirmed that the
government's immigration policy is designed to deliver the required
level of NOM and that it believes this policy to be in the national
interest.
Nevertheless, Prime Minister Gillard is correct in highlighting the
Labor government's previous failure to consider sustainability
issues in its framing of immigration policy. The continued neglect of
these issues was recently acknowledged by Labor's Immigration
Minister, Senator Evans. During the 2010 Senate Estimates hearings, he
stated that: 'There were no mechanisms when we came to government
for dealing with how we set migration program numbers and what the
impacts were of those numbers'. (2) Admitting that no serious
account had been taken of sustainability issues, he went on:
... as you know, the permanent migration program in this country is
run largely on the basis of demand for labour, and that is obviously
linked to our economy. What we do need to do is [to] discuss ... the
sustainability issues that go with population growth. I, for one, am
very interested in us making progress on that, because I think it has
been a neglected area of public policy. (3)
This article examines the rationale behind the Labor
Government's and DIAC's stance of privileging the delivery of
migrant skills over all other factors in setting immigration policy. The
core of this rationale is the skill needs of the resource industries. We
then examine this rationale in the context of recent research
commissioned by the Labor Government's new advisory body on skill
training, Skills Australia. This research makes a strong case that
Australia's migration program is about meeting the skill needs of
the city-building and people-servicing industries in the major cities.
It has little to do with Australia's resource industries.
IMMIGRATION POLICY UNDER THE LABOR GOVERNMENT
The drive to recruit skilled, blue-collar workers
Shortly after gaining office, in February 2008, the Rudd Government
added 6,000 places to the skilled migration program for 2007-08. At the
time of the May 2008 Budget there was a further increase to the skilled
program to 135,300 for 2008-09. (4) This was 33,500 higher than the
original 2007-08 skilled program set by the former Coalition Government.
The stated reason was that increases were needed to pre-empt skill
shortages, particularly in the resource industries.
The incoming Rudd Government feared that these shortages might lead
to a wages break-out or perhaps to bottlenecks in the construction phase
of major resource projects. The resource industries were most worried
about shortages of skilled trades-persons. According to our informants,
(5) all government departments, including DIAC, were instructed by the
Prime Minister's Department to prioritise their activities in order
to meet this challenge. In DIAC's case, the instruction was to
maximise its efforts to recruit skilled migrants.
The influence of concerns about shortages of skilled tradespersons
and other blue-collar workers can also be seen in the government's
early priorities for domestic training. The incoming government
announced that it intended to massively increase the number of
vocational training places. In April 2008, the new Productivity Places
Program was introduced to fund 711,000 additional training places over
the period 2007-08 to 2011-12. All these places were to be at the
vocational certificate II, III, and IV levels and, to a lesser extent,
at the diploma level. (6) By contrast, since it came to power, the Rudd
Government has promised to fund only 50,000 additional university
places. (7)
This was an extraordinary decision given that, at the time, most of
the job growth in the Australian economy was at the management,
professional and higher technical levels where a degree is normally the
minimum entry requirement. (8) Partly as a consequence, most of the
skilled migrants attracted to Australia in recent years have held
professional qualifications. (9) There were some shortages in the trades
area in 2007 and 2008, particularly amongst persons willing to work in
remote mining locations. But overall, the rate of growth of employment
in trade occupations has been about half that of growth in employment in
the professions. (10) Yet, the notion that present and likely future
skill shortages are primarily in the trades and operative area persist
to this day. Here is the Minister for Immigration, Senator Chris Evans,
again speaking to the Senate Estimates hearings in February 2010. Evans
stated that:
... we are more likely to see shortages in the next little while in
key engineering, construction and trades areas as the economy picks
up and because of the investment in infrastructure we are starting to
see some shortages in those areas. Skills Australia and others will
make assessments as to which trades may be in short supply. For
instance, in my own state of Western Australia a number of very large
projects are likely to take off in the next year or two--oil and gas
and mining with Rio, BHP et cetera. Construction workforces are going
to be required in their thousands. Already we are starting to hear
concerns about skills shortages in some of those construction and
mining trades areas. I am just signalling clearly that that is where
pressure is going to be ... (11)
Short-term policy morphs into long term commitments
This short-term migration policy has since morphed into a long-term
commitment. Without any preliminary public discussion, the Rudd
Government stated at the time of the May 2008 Budget announcements that
it had "begun to develop a longer-term planning framework (LTPF)
for migration, based on an average net overseas migration range of
between 150,000 and 230,000 people per year'. (12) The implication
was that net overseas migration (NOM) would continue at around 180,000
to 190,000 per year. This level was about double that which had
prevailed in the late 1990s and early 2000s. The Second
Intergenerational Report (IGR2), prepared by the Treasury in 2007, is
the best indicator of this change in policy. The mid-range projection in
IRG2 assumed a NOM of 110,000 per annum (compared with the 180,000
assumption in IRG3).
It was no accident that the Treasury chose the 180,000 NOM
assumption. Migration at this level has been the Labor Government's
policy objective since the May 2008 statement and it still shapes
DIAC's decisions on immigration planning.
DIAC planning for long-term migration targets
DIAC has relied on long-term concerns about the ageing of
Australia's population and an impending slow down in the rate of
labour force growth to help justify its high long-term migration
commitment. DIAC asserts that, while providing for the alleged skill
needs of the resources industries, high migration will also slow down
the rate of decline in workforce growth and offset demographic ageing
within the general population.
DIAC has depended heavily on commissioned research to make its
case. Its main source is work completed during 2008 by Peter McDonald
and Jeromey Temple of the Australian National University. The authors
were tasked to explore the workforce and population outcomes of various
levels of NOM. They affirmed that, without high net overseas migration,
Australia's labour force growth would slow sharply over the decades
to 2050. McDonald and Temple showed that, if Australia's labour
force growth were to be kept at around one per cent per annum to 2030
and then to about 0.75 per cent thereafter, this would require a
constant level of NOM of around 220,000 per year. This would deliver a
population of around 34.5 million by 2050. (13) (This is lower than the
1GR3 projection for 2050 of 35.9 million, which used an assumption of
180,000 NOM, because the latter projection incorporated higher fertility
and longevity assumptions than did McDonald and Temple.)
The ANU report also showed that a NOM of around 180,000 was optimal
in regard to the impact of migration on Australia's age structure
as it affected the rate of labour force participation. NOM levels higher
than 180,000 would deliver 'diminishing returns' on this
variable. (14)
The report does more than offer various labour force growth
scenarios. It strongly advocated a high-migration policy response.
Mirroring the Rudd Government's position, (15) McDonald and Temple
write that:
The mining boom can be expected to continue for many years. Long-term
contracts are already in place. The mining boom, directly and
indirectly, has been a major driver of increased labour demand and we
can expect this situation to continue. (16)
As with DIAC and the federal Labor Government, McDonald and Temple
privilege the labour contribution of migration over all other factors in
the setting of immigration policy. More recently, in a May 2010 op-ed
piece, McDonald asserts that Australians must accept high migration,
notwithstanding its effect on housing shortages, congestion and the
like. He argues that this is because of the crucial role of migration in
helping to solve shortages in the resource industries. He writes:
Australia is facing the challenge of accommodating the rapid growth
of the resources sector and its multiplier effects in the context of
an absolute shortage of labour. Labour demands from the resources
sector and allied industries will be very great during the next
decade, particularly during the construction phase we are now
entering. (17)
McDonald goes on to lament the fact that no Australian government
has estimated future labour demand across the economy over an
infrastructure planning cycle of about 15 years. He says: 'unless
these estimates are made, the debate about immigration and population
growth is mere rhetoric'. Fortunately, Skills Australia has
conducted just such an empirical inquiry.
ENTER SKILLS AUSTRALIA
Skills Australia was set up in March 2008 to provide independent
advice to the Department of Education, Employment and Workplace
Relations (DEEWR) on current and emerging skill needs in Australia. Its
first Board was appointed in April 2008. It was composed of a mixture of
academic and business representatives, including Heather Ridout, the
Chief Executive Officer of the Australian Industry Group, and Keith
Spence, formerly Chief Operating Officer of Woodside. Its Chairman is
Philip Bullock who was formerly CEO of IBM Australia and New Zealand.
Skills Australia began its work by issuing a background paper that
provides a broad perspective on the evolution of Australian industry and
the demands it will place on skill formation. (18)
Access Economics was engaged to model the likely industry and
occupation outlook for Australia to 2025 and, on this foundation, to
estimate the likely demand for skills at the higher-education and
vocational level. Access Economics did not begin with a blank sheet. The
Skills Australia Board set the parameters it had to work within. The
Board prescribed three economic scenarios on which Access Economics
based assumptions about the overall level of GDP growth, workforce
growth and population growth likely in each scenario. Access Economics
then did its modelling for industry and occupation growth on the basis
of these parameters.
The scenarios were based on a template drawn from a 2005 Shell
(Corporation) International study. This offers three scenarios. One is
Open Doors, which assumes a government commitment to free trade,
deregulation, industry autonomy and free movement of migrants. The other
two scenarios are entitled Low-Trust Globalisation and Flags. Both are
characterised by a more protectionist and nationalist stance as well as
by strict limits on the free flow of migrants.
Skills Australia is strongly supportive of the Open Doors scenario.
Under this scenario, the Australian economy is assumed to grow by 3.93
per cent per annum over the period to 2025. For this growth level to be
achieved, there will have to be a significant increase in the rate of
workforce participation of the Australian population and a high rate of
overseas migration. The latter is assumed to be even higher than that
projected by the Third Intergenerational Report. For the Open Doors
scenario, immigration is assumed to grow at one per cent per annum (from
net 220,000 in 2010 to 250,000 in 2025). (19) The Skills Australia
stance illustrates again just how pervasive the assumption of continued
high migration has been with the Labor Government and its bureaucracy.
ACCESS ECONOMICS MODELLING
The Access Economics modelling was based on the three scenarios and
on the parameters just described, including the 3.93 per cent economic
growth rate for the Open Doors scenario. Our main interest lies in the
industry and occupation projections that Access Economics produced,
based on these assumptions. They provide an informed estimate about
industry futures over the very 15-year period to which McDonald and
Temple had referred. The results of the projections of industry demand
for labour under the three scenarios are shown in Table 1.These
projections are 'driven by detailed labour market projections of
employment by industry and occupations'. (20) That is, they
incorporate Access Economics' information on the likely employment
implications of investment in major industries.
Table 1: Average employment growth per annum 2010 to 2025 by industry
under three scenarios, percent
Open Doors Low-Trust Flags
Globalisation
Agriculture, forestry and 1.1 -0.2 -1.8
fishing
Mining 1.0 0.5 -0.7
Manufacturing 0.0 -1.0 2.3
Electricity, gas, water and -0.3 -0.6 3.2
waste services
Construction 1.8 1.0 0.5
Wholesale trade 1.2 0.2 -1.2
Retail trade 2.2 1.7 0.6
Accommodation and food 2.3 1.6 0.5
services
Transport, postal and 3.1 2.3 1.1
warehousing
Information media and 2.4 1.7 1.1
telecommunications
Financial and insurance 2.3 1.6 0.5
services
Rental, hiring and real 2.8 2.2 1.1
estate services
Professional, scientific 3.1 2.5 1.3
and technical services
Administrative and support 2.7 2.1 1.0
services
Public administration and 2.8 2.2 1.0
safety
Education and training 2.2 1.5 1.0
Health care and social 2.9 2.4 1.3
assistance
Arts and recreation 2.4 1.8 -0.4
services
Other services 1.9 1.2 0.3
All industries average 2.1 1.5 0.9
Source: Access Economics, Economic modelling of skills demand, 2009,
Tables 6.1 to 6.3.a
Most of the industry demand for labour projected by Access
Economics is in the service industries, particularly in the
professional, scientific and technical services, education and training
and health care and social assistance industries. Moreover, because the
employment base in these industries is so large, they dominate the
overall growth in jobs in Australia over the projected period.
Access Economics only provides estimates of numbers of persons
employed by industry for the end point of its projections in 2025.
However, the significance of these projections can be appreciated by
comparing the employment by industry estimates for 2009 (Table 2) with
Access Economics' projections for 2025. In the case of mining in
the Open Doors scenario, employment is projected to grow from 157,000 in
May 2009 to 240,587 in 2025. By comparison, employment in the health
care and social assistance industry, alone, grows from 1.17 million to a
projected 1.73 million. (21)
Table 2: Past and future employment growth by industry
Projected job growth May 2009 to 2013-14
Past growth
Industry Employed Share May 5 years Share of
May 2009 2009 May 2009 past 5
'000 per cent '000 growth
per cent
Agriculture, forestry and 358 3 0 0
fishing
Mining 157 1 55 5
Manufacturing 997 9 -54 -5
Electricity, gas, water and 140 1 50 4
waste services
Construction 985 9 195 16
Wholesale trade 395 4 13 1
Retail trade 1,210 11 108 9
Accommodation and food 712 7 55 5
services
Transport, postal and 602 6 116 10
warehousing
Information media and 223 2 5 0
telecommunications
Financial and insurance 388 4 40 3
services
Rental, hiring and real 178 2 1 0
estate services
Professional, scientific and 767 7 140 12
technical services
Administrative and support 347 3 8 1
services
Public administration and 685 6 91 8
safety
Education and training 790 7 77 6
Health care and social 1,172 11 208 17
assistance
Arts and recreation services 212 2 57 5
Other services 444 4 24 2
Total 10,763 100 1,188 100
Projected growth
Industry To 2013-14 Share of projected
'000 growth of per cent
Agriculture, forestry 35 6
and fishing
Mining -12 2
Manufacturing -61 -11
Electricity, gas, water 8 1
and waste services
Construction 8 1
Wholesale trade -9 -2
Retail trade 68 12
Accommodation 50 9
and food services
Transport, postal 40 7
and warehousing
Information media and 9 2
telecommunications
Financial and insurance services 7 1
Rental, hiring and 8 2
real estate services
Professional, scientific 54 10
and technical services
Administrative and 16 3
support services
Public administration 23 4
and safety
Education and 101 18
training
Health care and 182 33
social assistance
Arts and recreation 16 3
services
Other services 8 1
Total 551 100
Source: DEEWR analysis and projections using trend datataken from
Skills Australia, Workforce Futures: Background Paper One, 2009, p. 26
Employment growth in the mining industry is of minor significance.
As Access Economics notes in its report:
Continued productivity growth will keep jobs growth in check in
agriculture and mining (with the latter also affected by climate
change mitigation strategies). Indeed, while mining employment growth
is below the economy wide average in each scenario, mining output
growth is still expected to be strong thanks to Australia's rich
resource deposits. There remains strong potential to expand mining
activity, perhaps primarily LNG and iron but also other areas. These
new projects will typically employ large workforces during
construction phases (which would be classified to the construction
sector), but also typically are highly capital intensive in operation
and so only require small operational workforces. (22)
Access Economics estimates are consistent with DEEWR's count
of the actual growth of employment by industry over the past five years
and its projected short-term (five year) forecast for employment growth
by industry to 2013-14 (Table 2). The rate of employment growth forecast
is far lower than that assumed in the Open Doors scenario, but the
dominance of the service industries is the same. Again, mining is a
minor player. The mining industry accounted for just five per cent of
the growth of employment in Australia over the five years to May 2009
and is forecast to constitute minus two per cent of this growth in the
five years to 2013-2014. The service industries (not including retail,
but all other industries from financial and insurance services and below
listed in Table 2) accounted for 57 per cent of jobs growth over the
five years to May 2009 and are forecast to account for 75 per cent of
jobs growth to 2013-14. (23) Access Economics projections are consistent
with the recent pattern of employment growth in Australia. This is
overwhelming about the provision of services to rapidly-growing
metropolitan centres.
RESOURCE INDUSTRY EMPLOYMENT CONTROVERSY
The employment outlook described above for the resource industries
may surprise since it contrasts so sharply with what some resource
industry representatives and what the Labor Government have been saying
about the industry's workforce needs.
There has been a recent upsurge in optimism about a new resources
boom. This is reflected in DEEWR's 2010 revision of the short-term
employment outlook. For the five years to 2014-15, DEEWR now forecasts
that employment in the mining industry will grow by 28,400 from 172,400
in February 2010 to 200,800 in early 2015. (24) If so, this increase
will represent just 2.8 per cent, rather than -2 per cent in the five
years to 2013-14 of the overall forecast growth in employment to
February 2015 of 1.01 million. (25)
There are more bullish estimates. The recently published Discussion
Paper of the National Resources Sector Employment Taskforce (NRSET)
indicates that, according to the Australian Bureau of Agricultural and
Resource Economics (ABARE), there are some 74 'advanced' major
resource projects in the pipeline with a value of $112.5 billion. These
include the massive Gorgon and Pluto Liquid Natural Gas (LNG) projects.
Advanced means 'committed or under construction'. (26)
Again, according to ABARE, operational employment for these
advanced projects will only be around 30,000. These figures arc broadly
consistent with the Access Economics projection for employment in the
mining industry under the Open Doors scenario of 240,587 in 2025.
What about the flow-on employment effects from resource projects?
Australian based firms have an impressive record in providing skilled
professional services for the resources industries. But it needs to be
remembered what minimal functions are involved in the mining and
transhipping of minerals. In the case of the two largest industries,
coal and iron ore, these involve open cut mining, railway transport to a
port, then transference direct to foreign owned ships crewed by
foreigners. There is no processing in Australia at all. The LNG industry
is different but, even here, processing is about freezing the gas before
transferring to LNG ships. The drilling rigs, pipelines and processing
plant are mostly imported.
The mining industry's greatest employment impact is on the
demand for construction workers during the start-up phase of new
projects. There are no official statistics on the construction workforce
employed on resource-related projects. However, the NRSET Discussion
Paper indicates that, according to ABARE, the construction workforce
required for the $112.5 billion of advanced projects cited above may be
up to 100,000. The great majority of these projects will be in Western
Australia. (27)
The final report of NRSET, released on 20 July 2010, estimates that
at any one time the number of construction workers required for these
projects could peak at 45,000 in 2012 and 2013. (28) However, the
reports adds the rider: 'on the basis of experience, that some
projects will likely be delayed or changed and others will nit proceed
at all'. (29) Employment on this scale would involve a major
increase in the current contruction workforce in regional Western
Australia. As Table 3 shows, by 2009 the number of construction workers
living in Western Australia (outside Perth) was 33,200. (30)
Table 3: Persons employed in the construction industry by selected
locations and share of change, Australia, 2000 to 2009
Capital city/state balance 2000 2002 2004 2006 2008 2009
persons (000s)
Melbourne, Sydney Adelaide, 443.9 453.3 500.4 566.9 603.4 615.5
Brisbane, Perth and Hobart
Balance of New South Wales 75.8 81.8 101.2 105.6 111.4 103.1
Balance of Victoria 46.6 44.6 47.9 58.9 55.2 55.5
Balance of Queensland 78.9 79.9 100.9 122.6 151.3 138.0
Balance of Western 22.4 21.5 22.6 29.9 33.7 33.2
Australia
Australia remainder 26.2 24.2 29.6 32.5 36.3 40.3
Australia total 693.8 705.4 802.6 916.4 991.3 985.6
per cent
Melbourne, Sydney Adelaide, 64.0 64.3 62.3 61.9 60.9 62.4
Brisbane, Perth and Hobart
Balance of New South Wales 10.9 11.6 12.6 11.5 11.2 10.5
Balance of Victoria 6.7 6.3 6.0 6.4 5.6 5.6
Balance of Queensland 11.4 11.3 12.6 13.4 15.3 14.0
Balance of Western 3.2 3.1 2.8 3.3 3.4 3.4
Australia
Australia remainder 3.8 3.4 3.7 3.5 3.7 4.1
Australia total 100.0 100.0 100.0 100.0 100.0 100.0
Capital city/state balance 2000-2009 per cent
change share
of total
construction
workers
Melbourne, Sydney Adelaide, Brisbane, 171.6 58.8
Perth and Hobart
Balance of New South Wales 27.3 9.4
Balance of Victoria 9.0 3.1
Balance of Queensland 59.1 20.2
Balance of Western Australia 10.9 3.7
Australia remainder 14.1 4.8
Australia total 291.9 100.0
Melbourne, Sydney Adelaide, Brisbane,
Perth and Hobart
Balance of New South Wales
Balance of Victoria
Balance of Queensland
Balance of Western Australia
Australia remainder
Australia total
An extra demand of 50,000 construction workers over the next couple
of decades would strain the capacity of the industry, given that as of
May 2009 total employment in construction in Australia was 985,000.
However, the industry has grown rapidly as indicated by the increase in
employment in construction by 195,000 over the five years to May 2009
(see Table 2). This growth indicates the capacity of the industry to
expand rapidly.
The problem from the point of view of the resources industries is
that, while they are tooling-up for a new boom, Australia is
simultaneously experiencing a city building boom in the big cities. It
will be hard to shift construction manpower to resource projects while
demand for the same skills is strong where most construction workers
live.
Table 3 details the growth of employment in the construction
industry by metropolitan and rest-of-state areas over the years 2000 to
2009. It shows that most of the 291,892 growth in employment in
construction over this period occurred in Australia's main
metropolitan centres and in non-metropolitan areas which are not major
players in the resources boom. Some 59 per cent of all the growth in
construction employment over the nine years occurred in the six capital
cities listed. By 2009, just 17 per cent of construction employment in
Australia was amongst persons living in the balance of Queensland and
Western Australia. Much of this employment in the balance of Queensland
would have been amongst persons living in the Gold Coast and Sunshine
Coast.
IMPLICATIONS FOR THE DEMAND FOR SKILLS
As noted, the Access Economics modelling provides estimates of
growth in demand for those qualified at the degree, diploma and
certificate level for each scenario. To compute this figure, Access
Economics converted its industry projections to estimates of occupation
by industry. Because of the rapid projected growth in the service
industries, there is a rapid consequent growth in professional and
managerial employment and thus of demand for persons with degree
qualifications. This demand is further amplified by the application of a
skill-intensity factor to each occupation. For example, for the Open
Doors scenario, Access Economics projects that the proportion of persons
employed in professional occupations with degree qualifications will
increase from 68 per cent in 2007 to 81 per cent by 2025. (31) The
combination of these factors results in a massive projected increase in
demand for those with degree or above qualifications. When Access
Economics compares this projected demand with its estimates for the
projected supply of domestic residents with such qualifications, it
concludes that there is likely to be a serious shortage of persons with
degree qualifications. By contrast, the projected rate of growth in
demand for those diploma and certificate III/IV qualifications is lower.
(32)
In its discussion of Access Economic's work, Skills Australia
acknowledges that: 'By the end of the 2000s, service industries
accounted for some 77 per cent of GDP, and Australia had a larger
proportion of its workforce engaged in services than most other OECD
countries'. (33) Yet, curiously, Skills Australia does not draw the
obvious conclusion, that the focus of Australia's post-school
education system should shift from the vocational sector to the
university sector. Why this is the case is beyond the scope of this
article. Perhaps Skills Australia, too, continues in to be in thrall to
the myths about the alleged domination of the resource industries in
shaping Australia's skill needs.
CONCLUSION
The analysis indicates that the Labor Government's
high-migration policy has little to do with the skill needs of the
resources industries. Rather, high immigration is driving a boom in
metropolitan city construction and in the service industries whose
growth is directly linked to the number of metropolitan residents. These
latter industries include the job- and skill-rich health, education,
administration, community services and private sector professional
services industries.
Almost all the net growth in overseas migration currently locates
in the Australia's major metropolises or the adjoining growth areas
like the Gold Coast. This is unlikely to change while employment
opportunities abound in these locations. Most of Australia's
metropolitan population growth to 2025 and beyond will derive from
migration should the current high migration policy continue. This
migration will drive further demands for skilled labour in the
construction and people servicing industries and thus for more
migration, in an endless circle.
If migration were sharply cut, it would slow the city building and
people services boom and would reduce aggregate economic growth. Should
this be of concern?
Among the positive consequences of such a policy, it would provide
a welcome respite to cities that, manifestly, are not coping well with
accommodating the current surge in the number of their residents.
Ironically, another beneficiary would be the resources industries. A
slow down in city building would diminish the competition the resource
industries will face for construction skills if the Australian
Government continues to encourage a simultaneous resources and city
building boom.
A smaller, more targeted migration program would be sufficient for
the resources industries, if it was focussed on skill shortages in
industries which are competing in the international marketplace.
A smaller migration program would require an enhanced Australian
training effort, particularly at the higher education level. As Access
Economics affirms, the greatest demand for skills will be for the
professionals needed in the people-servicing industries. More residents
will have to be trained for these occupations if the migrant flow is
reduced. This can be done. Australia's record of domestic training
is miserable. The latest data show that the number of domestic students
who completed undergraduate degrees onshore at Australian universities
has hardly moved in the past decade. There were 106,162 completions in
2002 and 111,691 in 2008. In key areas like engineering the story is
similar. Engineering completions were 6,062 in 2002 and 6,178 in 2008.
An expansion in domestic training would create a more productive
workforce, implying that a slowdown in population growth should not mean
any decline in per capita economic growth. To the contrary, if
Australia's scarce capital and skills were concentrated in
internationally competitive industries rather than in building our
cities, productivity per worker should increase.
References
(1) J. Gordon, 'The PM's dilemma: letting the
"right" people in', The Sunday Age, 4 July 2010, p. 19
(2) Hansard, Senate, 9 February 2010, Legal and Constitutional
Affairs Legislation Committee (LCALC), p. 41
(3) ibid.
(4) Parliamentary Library, Background Note: Overseas students:
immigration policy changes 1997-May 2010, May 2010
(5) The informants in question were serving at a high level in the
federal public service at the time. For privacy reasons the names cannot
be revealed.
(6) Workforce Futures. Background Paper One: What does the future
hold? Meeting Australia's skill needs, Skills Australia, October
2009, p. 72
(7) ibid., p. 71
(8) B. Birrell, E. Healy and T.F. Smith, 'Labor's
education and training strategy: Building on false assumptions?'
People and Place, vol. 16, no. 1, 2008, p. 41
(9) ibid., p. 53. See also B. Birrell, E. Healy, D. Edwards and I.
Dobson, Higher Education in Australia: Demand and Supply Issues--A
Report for the Review of Australian Higher Education, Department of
Education, Employment and Workplace Relations (DEEWR), September 2008,
p. 11.
(10) ibid., p. 3
(11) Hansard, Senate, 9 February 2010, LCALC, p. 38
(12) Australian Government. Budget 2009-10, Budget Paper No. 2,
Part 2: Expense Measures, Immigration, p. 6
(13) P. McDonald and J. Temple, Demographic and labour supply
futures for Australia, Australian Demographic and Social Research
Institute, Australian National University, Canberra, December 2008, p.
17
(14) ibid., p. 34
(15) ibid., p. 5
(16) ibid., p. 4
(17) P. McDonald, 'Demand for workers will outstrip fears
about resources', The Australian, 10 May 2010, p. 14
(18) Workforce futures, 2009, op. cit.
(19) ibid., p. 12
(20) Access Economics, Economic modelling of skills demand, 22
October 2009, p. 35
(21) ibid., p. 37
(22) ibid., p. 36
(23) Workforce futures, 2009, op. cit., p. 28
(24) Australian Jobs, 2010, DEEWR, 2010, p. 10
<www.deewr.gov.au/Employment/ResearchStatistics/Pages/AustralianJobs.aspx> accessed 12 June 2010
(25) ibid.
(26) Resourcing the Future: National Resources Sector Employment
Taskforce, Discussion Paper, Australian Government, March 2010, p. 3
(27) ibid., p. 13
(28) Resourcing the Future: National Resources Sector Employment
Taskforce Report, Australian Government, July 2010, p. 2
(29) ibid., p. 8
(30) Birrell et al., Higher Education, 2008, op. cit., p. 42
(31) ibid., p. 49
(32) Access Economics, 2009, op. cit., p. 55
(33) Skills Australia, Australian workforce futures: a national
workforce development strategy, 2010, p. 14
<www.skillsaustralia.gov.au> accessed 12 June 2010
