Crispin Hull / The Real Impact of Immigration on Skill Shortages

It is just plain silly to continue doing something over and over again and hoping that the result will be different. Einstein reputedly said it was the definition of insanity.

So why then, for more than 20 years, have Australian Governments thought that the solution to “skills shortages” has been to ramp up immigration. It began in 1999 when the Howard Government more than doubled immigration from around 70,000 to 160,000 or 200,000 a year to meet “skills shortages”. And still, 23 years later, we l have “skills shortages”.

Has anyone stopped to consider that the higher immigration does not solve skills shortages, but in fact causes them.

Since 1998 we have brought in four million people and still we have “skills shortages”. Surely, if we continue doing the same thing, we will get the same result – more “skills shortages”.

But no doubt next month’s jobs summit will pour more of the same snake oil over the fire of population pressure.

Why can’t business be honest and tell us they just want more cheap labour to keep wages down in areas like retail and hospitality? Why can’t government be honest and tell us that to the extent we cannot find enough doctors, nurses and teachers, it is not because of a skills shortage but a pay and conditions shortage?

Both are slowly being caught out.

Last week, business inadvertently made a major admission. Australian Chamber of Commerce and Industry chief executive Andrew McKellar, in an address to the National Press Club, condemned any idea of raising the salary floor for temporary skilled visas from $53,000 a year. (And by the way, “temporary” invariably leads to “permanent”.)

But the $53,000 floor is only 25 per cent over the minimum wage. This is not bringing in skills. It is bringing in cheap labour.

Even a floor of $90,000 a year would be less than the average wage. Surely, truly highly skilled people would need more than the average wage to be attracted.

But we are not really attracting skills. We are attracting people who are semi-skilled at best, and whose skills can be taught to people already here fairly easily. But business does not want to do this because they would have to pay more.

The trouble is, once these semi-skilled people come in, they increase the demand for scarce highly skilled people to educate their children, engineer new infrastructure, and give them medical services.

McKellar said that lifting the floor to $90,000 would “kill the immigration program overnight”.

This is a damning admission. The average wage is $92,000. So, McKellar’s prediction suggests that the only people who would come to Australia under a skills program would be those earning less than the average wage. In short, dragging the average wage down, not lifting it up.

What about the “shortage” of doctors? Well, Australia has more medical graduates per 1000 people per year than Sweden, Germany, the UK, the US, New Zealand, and virtually every comparable country.

The trouble is than far fewer of them are going in to general practice for the simple reason it pays badly. The trend started in the late 1990s when the Howard Government started to undermine Medicare. In the past 10 years the number going in to general practice has fallen 40 per cent.

The Hawke-Keating Government, on the other hand, increased the rebate for GP consultations from just over $8 when Medicare began in 1984 to $24 when it lost office in 1996. It kept up with health-price inflation.

Medicare was so good that people were leaving private insurance in droves. The private insurers turned to Howard who legislated various bribes and penalties to attract and keep people in private insurance while at the same white-anting Medicare.

In the 26 years from 1996 to 2022, the rebate for a consultation went up from $24.50 to just $39.75. GPs’ incomes were and are being squeezed. To get a decent return on all of their training, skills and long working weeks, more are finding they cannot possibly bulk-bill.

The shortage of doctors (mainly GPs) is not a skills shortage because we have plenty of medical graduates. It is a pay and conditions shortage.

To keep up with health-price inflation, the rebate for a GP consultation would have to be about $70 to $75 which is what most non-bulk-billing doctors now charge. They are not being greedy or gouging. They are doing what everyone else quite reasonably wants to do: maintain or steadily increase their income.

Increasing the rebate; taking away the private-insurance bribes and penalties; and increasing nurses’ and other medical workers’ pay would deliver a more equitable and efficient medical system in Australia than stealing medical skills from overseas.

The story is similar with education. Again, since 1996, the Federal Government has poured extra money into private schools and squeezed public schools. It is so bad that when a student enrols in a private school it cost the Federal more than if the student enrolled in a public school.

If the Federal Government gave all the money to the states to dish out, much of the problem would be solved.

It has now become a skills shortage because not many people are prepared to take up a teaching degree because of the low pay and poor conditions. But it will not be solved by higher immigration. That will only result in more students and an even greater teacher shortage. We should train our own and make it worthwhile.

As for the Furphy that we need higher immigration because of an ageing population, remember that those people who came to Australia as immigration was ramped up in the late 1990s are now retired to approaching retirement age. That ramping has made the problem worse, not better.

The danger with next month’s jobs summit is that all the usual suspects will ply their usual self-interested snake-oil remedies which the Government will swallow to the detriment of the people who do not have a seat at the summit: those whose lives are made worse by high population – waiting for a medical appointment; sitting in congested traffic; cut out of housing; or with children in teacherless classes.

It will not address the fundamental problem: government tax and other policies which have caused capital and profits to grab an ever-greater share of Australian wealth at the expense of the share going to labour and government services and income support.

And bringing in more cheap labour will only make it worse.

Crispin Hull is a former editor of The Canberra Times and regular columnist.

This article was first published in The Canberra Times and other Australian media on 16 August 2022.

Crispin Hull BA, LLB (Hons) | Property Convenor  |  ANU School of Legal Practice Lawyer of the Supreme Court of the ACT, on the Register of Practitioners kept by the High Court of Australia


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