A visa program designed for the emergency phase of the Covid-19 pandemic but extended to prop up the economy and save business the cost of recruiting Australians has seen a quarter of a million virtually unrestricted work visas issued in the past three years.
The Albanese government revealed this week that closing down the subclass 408 Pandemic Event visa that its predecessors introduced in April 2020 would cost the taxpayer $2 billion in lost tax revenue. Minus $450 million in goods and services tax not required to be paid to the states and territories, that is a net loss of $1.55 billion over the next four years.
Figures The Saturday Paper requested from the Department of Home Affairs reveal that what Treasurer Jim Chalmers calls “a substantial hit to the budget” is derived from the sheer number of visas issued in the three years since the special category was created, well beyond the closed-border period they were designed to cover.
Despite the cost to the economy of cancelling the visa, Home Affairs Minister Clare O’Neil argues it must be abolished to stop a trend towards “permanent temporariness” that exposes people to exploitation and undermines the whole migration system.
“The Australian multicultural experiment has in part been so successful because it’s been founded in permanency and citizenship, and what we’ve seen really over the last few decades is a shift away from that to temporariness,” O’Neil said on Monday.
Almost 230,000 people have been able to switch from student and other visas to the free-of-charge, 12-month alternative that carries full work rights, does not require specific employer sponsorship and can be rolled over repeatedly. Visa holders can travel in and out of Australia but applications must be lodged onshore.
The departmental figures reveal that 228,384 subclass 408 Covid-19 Pandemic Event visas have been issued since April 2020 and that 130,850 people still hold them, making this one of the largest single categories of visa in the migration system.
When the Morrison government decided in 2021 to leave the special visa in place beyond the emergency period and make both it and student visas more attractive with increased work rights, it promised to pass legislation to protect low-skilled workers from exploitation. It also vowed to review the arrangements by mid-2022. Neither occurred.
The twin moves to increase temporary migrants’ work entitlements – taken in response to pressure from business and particularly the hospitality sector – boosted the labour force and helped keep the economy out of recession before last year’s May federal election, and since. However, they also distorted the migration system by providing easy alternatives to other visas that are designed to ensure both balance and a focus on the most-needed skills.
This week, O’Neil and Immigration Minister Andrew Giles unveiled a new migration strategy aimed at curbing the exponential growth in migrant numbers since borders reopened in December 2021. The strategy includes fast-tracking visas for highly skilled workers, cracking down on dodgy education providers and visa-hopping, especially by students, and increasing English-language requirements. A new three-level, skills-in-demand visa will set minimum earnings at $70,000 to stop low-skilled migrants being used as cheap labour. The strategy won support from both the union movement and the Business Council of Australia.
The latest figures on net overseas migration show the population growing too quickly after two years of closed borders. Published on Wednesday, the budget update known as the Mid-Year Economic and Fiscal Outlook (MYEFO) showed migration added 510,000 to Australia’s net resident population in the past financial year. The strategy aims to halve that growth rate within two years.
Jim Chalmers said the government expected 180,000 fewer migrants over the next four years, something he called “significant progress” towards stabilisation.
“We recognise that we could do more in the demand-driven components of net overseas migration so that there’s more integrity and so that we are clamping down, where there is an obvious need to do so,” he said. Chalmers acknowledged that Treasury’s migration forecasts made in the May budget had been too conservative. He said the spike in international student numbers was largely responsible.
Opposition Leader Peter Dutton highlighted the forecast change and suggested the numbers would further stretch the housing market. “How does Jim Chalmers look the Australian public in the eye and tell them a story about migration which is not true?” he asked.
Some in government accuse the opposition of hypocrisy in calling for lower migrant numbers when they deliberately opened the floodgates.
Chalmers said axing the Pandemic Event visa was necessary to stabilise both the migration system and the workforce, despite coming at “no small cost”.
“Fewer people means less revenue for the government,” Chalmers said, acknowledging many current visa-holders would have to leave the country. “Ending the Pandemic Event visa was a really important change to try and rein in some of this growth in net overseas migration. But it means forgoing revenue, and we’re up for that.”
The figures underline concerns within the international education sector about both the Pandemic Event visa and the Morrison government’s pre-election shift to uncapped work entitlements for overseas students. Together, this prompted tens of thousands of students to abandon their studies to earn money or enrol in courses they do not intend to take to get into Australia and work. There are just over 600,000 international students in Australia.
Former Victorian state Liberal parliamentarian and now chief executive of the International Education Association of Australia Phil Honeywood blames the Morrison government for cannibalising the university sector and undermining Australia’s global education reputation.
“Whatever the original motivations were to introduce this so-called temporary visa, it became a Ponzi scheme where over 100,000 full-time students did not have to pay anything to jump out of their study course and have a full-time work entitlement for 12 months,” Honeywood told The Saturday Paper. “This included students who had only signed up for 10 weeks’ English language courses and were magically given a full-time work entitlement to work any job, anywhere in Australia.”
Honeywood said the sector was also “gobsmacked” when the previous government announced early last year that it was removing the cap on student working hours, which only worsened the situation.
“We were not privy to any consultations on this measure and it led to a flood of young people who were not motivated to study but to send Australian dollars back to their home country by working up to 100 hours a week.”
The Pandemic Event visa was introduced as the temporary solution to a problem created when Australia’s borders were closed in the pandemic’s emergency phase. It was a legal stopgap for temporary migrants whose visas were due to expire and who could not leave the country because of the border rule. However, before the borders reopened in late 2021, the Morrison government further eased the conditions on both that visa and on international student visas to avoid a mass exodus and entice those propping up the workforce to stay.
Initially, work rights under international student visas were expanded to 40 hours a week but only if the students were employed in critical sectors, such as aged and disability care, health and agriculture. The Pandemic Event visa had unrestricted hours, but only for work in those sectors. In late 2021, fearing a severe hit to the economy from a labour shortage, the then government expanded both categories to cover any kind of work. It eased conditions further in early 2022, lifting the student work caps altogether.
In July this year, the Albanese government reinstated a student working-hours cap at the education sector’s request, setting it at 24 hours a week. Acknowledging the migration strategy aims to reduce international student numbers, Clare O’Neil has also not ruled out capping the numbers outright, something the university sector opposes because of the revenue students bring.
In late August, the government announced it would phase out the Pandemic Event visa over six months. A $405 application fee was added from September 2 and the visa’s abolition set for February 1 next year.
Clare O’Neil and Andrew Giles announced the change on August 31, two days before it took effect – timing designed to enable would-be applicants to finalise their paperwork but to avoid a rush of new free applications.
However, The Saturday Paper understands the government received more than 25,000 applications in those two days. Declining to comment, the department confirmed 26,700 visas were granted between September 2 and December 10, but only 2306 of those were lodged after the new application fee was introduced.
The figures show more than 31,000 of the current Pandemic Event visas are repeats, meaning those holding them have renewed them at least once.
The Morrison government’s reasons for turning what was meant to be an emergency visa into a longer-term arrangement are revealed in a 2021 assessment of the likely impact of the change, prepared by Home Affairs.
Published quietly online in December that year, the assessment offered the government only two options in relation to temporary migration and worker shortages: do nothing, which it said would see 75,000 more temporary migrants leave within a year, or adjust the visa conditions as it subsequently did.
“If businesses cannot fill vacancies, there may be a permanent contraction in their output with flow-on economic effects,” Home Affairs warned. It said easing restrictions in a range of visa categories including subclass 408 could save business $1.4 billion a year.
“Increasing the speed at which employers can find suitable employees will reduce their search costs and the impact a long-term vacancy would have on their output.”
The department warned expanding the Pandemic Event visa “may be viewed as creating a low-skilled work visa”. It said the measure was “temporary”. Home Affairs provided no evidence of consulting affected sectors – something for which it faced criticism – blaming time pressures. It said new legislation would protect temporary migrant workers from exploitation.
Several weeks earlier, the promised anti-exploitation legislation had been introduced into parliament. It was sent to a committee for review, was never brought forward for debate and was shelved at last year’s election. The Albanese government now has its own worker-protection legislation before parliament.
This week, Clare O’Neil accused her predecessors of leaving behind a migration system “in tatters” that could not meet Australia’s skills needs. “Migration is our country’s special sauce,” she said. “If we look back at the last 70 years, virtually everything that we have done as a country that’s truly mattered has involved asking the best and brightest from around the world to come and try to help us. It is an essential system for the growth, for the prosperity, for the security of our country, and it’s one that we need to protect and nurture.”
This article was first published in the print edition of The Saturday Paper on December 16, 2023 as "Morrison-era visa f looded system".
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