When the brain drain turns north again

Around this time seven years ago, prime minister John Howard was rounding out his 11-year tenure in the top job by hosting the APEC forum in Sydney.  

Readers might remember that event for two big practical jokes played. 

First, the ABC’s Chaser team managed to get a fake Canadian motorcade through a security cordon, only to have Chaser team member Chas Licciardello leap out dressed as Osama bin Laden. Ah, taxpayer funded pranks -- they’re hard to beat.

Second, the Howard government pulled off a corker, by convincing world leaders including Vladimir Putin and George W Bush that the Driza-Bone raincoat was Australia’s national dress. Even better, they got them to pose in the knee-length brown coats in full sunshine. Classic stuff, prime minster!

But when all the Pacific Rim hijinks were over, serious issues were debated. And for the poorer nations of our region, one of the solemn requests was: “Can we have our skilled workers back, please?”

Of the APEC nations, Australia, Canada and the US were proving to be magnets for doctors, engineers, accountants and pretty much anyone else needed to build the poorer economies in which they’d been trained. 

The Philippines, in particular, pressed the richer nations not to make temporary visas a stepping stone to permanent migration, as that pathway was just too tempting for people who were needed back home to build emerging economies. 

At the time, Doris Ho, president of the Philippine shipping conglomerate Magsaysay and member of the APEC Business Advisory Council, told The Australian: “It's more of a win-win if it is temporary working visas (offered) than permanent immigration, especially in countries like the US ... When you offer people permanent immigration, it's not a level playing field for labour mobility. It puts the sender country at a disadvantage and leads to brain drain.”

In Australia the Howard government, just like the Labor government to follow, was running an expansive migration program that revolved heavily around a list of occupations that needed filling. 

Howard was facing an ongoing backlash at home for the introduction of 457 visas, which unions complained were a back-door migration pathway that undermined local wages and conditions. This only intensified when the visas, introduced as 'temporary business (long stay)' in 1996, were renamed 'temporary work (skilled)' in 2012.

In actual fact, history shows that temporary visas, though rorted in some industries such as hospitality, more broadly did a lot to supply skilled labour to the drum-tight jobs market created by the resources boom. 

That said, the unions were right that the visas became a stepping-stone to permanent residency. 

One submission to the government’s ‘Independent Review of Integrity in the Subclass 457 Visa Programme’, notes that it was the Gillard government, in July 2012, that replaced existing skilled occupation lists with the ‘Consolidated Sponsored Occupations List’.

University of Adelaide legal scholar, Dr Joanna Howe, said in that submission: “The CSOL is an attempt to streamline the process of both the 457 visa application, as well as moving from a 457 visa to permanent residence via employer sponsorship and render it less confusing for employers and visa applicants.

“By way of contrast, other countries have much narrower occupational shortage lists (for example, Germany's current shortage list contains four occupations) and these tend to be culled during economic downturns (for example, Canada's list was reduced from 38 to 29 occupations in 2010).”

The CSOL list features around 740 occupations, which is one measure of how much better Australia is at pinching other nation’s best workers. It’s a ‘win-win’, where both ‘wins’ are in Australia. 

Howe notes: “The Consolidated Sponsored Occupations List is too broad and is not a genuine list of occupations which are in shortage in Australia. It is a list of skilled occupations only. Present on this list is a number of occupations where there is clearly no domestic labour shortfall.”

There is another side to this coin, however. Australia has been a very attractive destination for skilled workers from around the world, including developed nations such as the UK and US. 

Recruiting in such markets relies on several factors, but key among them is the ‘lifestyle’ that temporary migrants will enjoy and the remuneration paid in sky-high Australian dollars. 

Both those things are now looking a little shaky. 

An engineer, say, who imagines living on Bondi Beach and sending enough money home each year to buy dear old mum something like a new car, may be disappointed. 

Not only are Sydney property prices spiralling into some kind of economic parallel universe (with other cities not far behind), but the Australian dollar/US dollar valuation is starting to look more stretched than a Bondi life-saver’s Speedos.

Australia has, for many years, been the ‘drain’ into which many ‘brains’ from our region and elsewhere flowed. However, cost of living issues flowing from the housing market, and the possibility of a sharp downward correction to the dollar -- which also has large cost-of-living ramifications via imported inflation -- might just be enough to make the ‘brain drain’ flow the other way.