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How will the 2020 budget impact Australian immigration in 2021?

How will the 2020 budget impact immigration

Background 

The 2020 budget is one of the most challenging in living memory. Faced with the global Coronavirus pandemic and its associated economic impact, the Budget is expected to do the heavy lifting to get the economy back on track for an eventual return to growth. 

Migration has historically played a significant role in moderating the impact of economic shocks – higher levels of migration increase aggregate demand across the economy, introduce capital, and generally provide a form of economic stimulus. However, managing higher levels of migration while infection rates remain high overseas and a recession with high levels of unemployment has health, political and economic challenges.  

Strands of populist nationalism which featured during the ‘good times’  increase in strength during periods of growing unemployment often driven by the belief that migrants ‘take’ jobs, despite evidence to the contrary. The government is forced to walk a narrow line between providing economic stimulus via migration and public demands to put Australians first.  

The impact of Coronavirus 

Without rehashing the past 12 months in anxiety-inducing detail, the Coronavirus pandemic has suppressed cross border travel in a way not seen in modern times. The current rate of border crossings is approximately 1% of the level 12 months ago. In addition to the challenges of the travel restrictions imposed by government, interstate travel restrictions and caps on quarantine have resulted in a very challenging immigration environment. 

The economic shutdown has resulted in widespread hardship for temporary migrants including international students, temporary work visa holders (Sc 482 & 457) due to the reduction of employment and shut-downs, in particular in sectors feature high levels of casual and part-time work, such as hospitality. Without Federal government support, these temporary visa holders have been forced to rely on some state government measures, charity, drawing on savings, and superannuation or returning home.  

The overall impact of these changes is a reduction in Net Overseas Migration to a negative level, a result not seen since 1946. The impact of this reduction is significant – fewer people in Australia means less economic stimulus as a result of a reduced number of people in Australia spending. 

Budget 2020 

It is in this environment that the Morrison government has released its 2020 Budget, including its determination for the 2020-21 migration program.  

The Budget makes several key assumptions upon which to base the program – it considers that a Covid-19 vaccine will be available by the end of 2021, resulting in a gradual reopening of borders. Australia has already entered into a bilateral agreement to form a ‘travel bubble’ with New Zealand. Speculation abounds that a number of Pacific, South East, and East Asian nations may follow, including Singapore, Taiwan, Japan, and South Korea.  

Overall planning levels for the permanent program remain at previous levels of 160,000 people. In reality, due to the lack of international travel, many of this cohort are likely to be in Australia already as part of the approximately 1.5 million temporary migrants in Australia.  

Broadly the program seeks to prioritise: 

  • Focus on the employer sponsored, new Global Talent (GT) and Business Investment and Innovation Program (BIIP) at the expense of the SkillSelect independent visa program
  • A significant increase in Family visa places from 47,732 to 77,300 including 72,300 Partner visas (again mainly onshore)
  • English language requirement for Partner visa applicants and additional sponsorship obligations
  • Visa application charge waiver and refund for persons who held temporary visas and have been impacted by the coronavirus pandemic.

One critical element that the Budget was never going to address is the response to the shortfall in temporary visa holders. In particular the shortfall in Working Holiday Makers, departure of international students, and potential return of tourists. While these are critical issues for the economy, they fall outside the scope of the Budget, which focuses solely on the allocation of places for the permanent program.

Department of Home Affairs Migration program planning levels ↗

Skilled  

Global Talent 

The Global Talent Independent (GTI) was presented as a major success story for the 2019-20 migration year with the program meeting its full complement of 5,000 places. The government has tripled the number of places available to 15,000 for the migration year ending June 2021. 

The government is seeking to build on the program’s success through the creation of a new ‘whole-of-government’ Global Business and Talent Attraction Taskforce which will link existing government programs to create incentives for businesses to establish in Australia. The Taskforce is focused on businesses with a turnover above $250M and a focus on HK based businesses. 

Business Innovation and Investment  

The Business Innovation and Investment Program (BIIP) will increase to 13,500 places with an increase in visa application charges of 11.3%. The government has also flagged changes to improve the quality of investments and applicants to focus on higher-value investments and owners of businesses of scale and entrepreneurs. 

Employer Sponsored  

No changes were announced to the employer sponsor program, though the industry is expecting the government to announce a review of the Skilled Occupation Lists in the near future in response to significant economic impact of the pandemic. 

New Zealand Citizens 

Access to the Subclass 189 NZ stream will be expanded to all NZ citizens who have at least 3 years taxable income above the Temporary Skilled Migration Income Threshold in the previous 5 years. The government is expected to launch a public campaign to promote this avenue given the lack of take-up of the existing program. 

Family  

Partner visas 

As noted above, 77,300 places have been allocated to the Family program including 72,300 Partner visas. Processing times for Onshore Partner visas are currently estimated at up to 27 months with a backlog of approximately 90,000 places. This year’s allocation is a significant increase on past years and has the potential to remove most of the onshore backlog of Partner applications. Critics claim the government’s change may be driven by the potential illegality of capping Partner visa applications under the Migration Act. 

The most controversial element of the Partner visa announcements appears to be the additional requirement for English language proficiency for visa applicants, though it appears these changes will also apply to the sponsoring spouse. Subsequent statements by Prime Minister Morrison and the Acting Minister for Immigration, Citizenship, Migratnservices, and Multicultural Affairs Alan Tudge have stated the changes are for the purpose of

  1. ensuring that aspiring migrants have access to the necessary public services to ensure their wellbeing;
  2. promoting social cohesion; and
  3. improved job opportunities.  

While the operation of this proposal remains unclear, the government’s statements and details in the budget expect it will generate ~$5M in forward estimates. This suggests the changes will impose an obligation to demonstrate Functional English at the initial 820 application stage, and if the individual cannot meet the requirement, impose a 2nd Visa Application Charge to cover 500 hours of adult English education which will be completed prior to the grant of the permanent visa.

Given the significant media around these changes, it is possible the government shifts its position rapidly to a more acceptable format to reduce outcry. Further pressure may result in the requirement being removed altogether or neutered to the extent it has little or no impact. 

Other changes will come into force including mandated character checks, sharing sponsor information with the visa applicant, enforceable sponsorship obligations through the introduction of the Migration Amendment (Family Violence and Other Measures) Bill 2016. These were major changes introduced some time ago and are likely to have potential impacts on Australians as they would prevent the grant of a visa where a sponsoring partner has previous convictions for violent or sexual crimes. While there is a clear interest in protecting vulnerable migrants there are legitimate questions about whether people who have served out the penalty of any crime are subject to ‘double punishment’ on the basis of being deprived of being reunited with their partner.  

Finally, the government announced it will prioritise Onshore Partner visa applications for regional residents, though the policy basis for this is at best unclear. It is likely this move is being announced as part of a more general move to regional concessions in the immigration program. 

Refugee 

The Humanitarian program is set at 13,750 places with a mix of onshore and offshore grants. This is down by 5,000 places. 

In separate moves, discussion has started about creating pathways for Safe Haven Enterprise Visa holders to obtain permanent residency through work in critical sectors in regional areas as the government seeks to address shortfalls in labour supply in the agricultural sector in particular. Further information is expected over the coming weeks. 

Visa Application Charge Refunds and Waivers  

The government has announced a series of fee refunds, waivers, and extensions for visa holders who have been unable to travel to Australia, including Prospective Marriage visa holders, Pacific Labour Scheme, and Seasonal Work Program visa holders.  

Waivers will be available for Working Holiday Makers and Visitor visa applicants to boost tourism once the borders re-open and in some cases, visa holders will be eligible for a fee waiver to enable them to return to Australia where they departed due to the Coronavirus pandemic. 

Conclusion 

In some respects, the budget raises more questions than it answers. The lack of change to the employer-sponsored program suggests the government expects a similar number of applications next year, despite a drastically different economic situation.  

For the most part, the fee waivers and refunds are equity related – enabling people who were badly impacted by the pandemic to return to Australia. We will continue to advocate for the government to expand these measures (such as through extension of the 485 for holders who are offshore and unable to return) though for many the damage has already occurred. While these measures are broadly to be applauded, it is unlikely they will be themselves restart temporary migration needed to generate tourism dollars and broader economic activity. 

The significant increase in the Partner visa allocation is to be applauded but many, including the author, will consider the addition of English language criteria to be misplaced and see echoes of Australia’s shameful history of imposing language requirements on undesirable migrants under the ‘Dictation test’ of the White Australia policy. Initial media response suggests this issue has emerged as the main talking point around the 20-21 migration program. Stiff resistance is expected from public policy advocates. It remains to be seen to what extent Australians are willing to permit the government to intervene in their intimate relationships, including associated with the Migration Amendment (Family Violence and Other Measures) Act 2018

It appears the GTI and BIIP programs are expected to deliver the primary economic benefits in this year’s budget. It will be interesting to explore what the impacts of these visas are economically over the coming months as past record of delivering economic returns is mixed (for the BIIP) or unknown (for GTI). The GTI has significant potential to deliver highly talented migrants a direct pathway to PR but whether this will result in direct positive economic outcomes is, at this stage, unclear.