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Even before the COVID-19 pandemic hit, there was a strong case to cut immigration, which had run at turbo-charged levels for 15 years:

First, Australian real wage growth had remained stillborn for nearly 10 years:

Australias labour underutilisation rate had been stuck at stubbornly high levels:

Whereas average monthly hours worked had collapsed to record lows:

All three indicators pointed to an Australian labour market that has been chronically oversupplied, driven by the tidal wave of migrants, both temporary and permanent.

When combined with the negative impacts on housing affordability, congestion and overall amenity in our major cities, it is clear that Australias mass immigration experiment has unambiguously reduced living standards for the typical Australian household.

The situation is obviously far more fragile now with the economy devastated by the COVID-19 pandemic.

Real unemployment has risen to levels not seen since the 1930s Great Depression and Australian households are facing heavy income losses once emergency income support is wound back.

Thus, the absolute last thing Australian workers need is to be competing for scarce jobs with hundreds of thousands of migrant workers arriving every year.

Yesterday, Labors opposition leader, Anthony Albanese, flagged a new immigration platform aimed at protecting Australian workers:

The draft platform says Labor would favour permanent migration over temporary migration.

Labor will restore public confidence in Australias temporary migration program and ensure that temporary migration does not adversely affect the employment and training opportunities for Australians, particularly young people who suffer from higher rates of unemployment and underemployment, the draft platform says.

Labors priority is to ensure that job opportunities are offered to local workers first and that temporary migration will never be used as a means to undercut local wages, conditions and training opportunities.

The document also says Labor would encourage skilled migrants to move to regional and rural areas where there are skills shortages

Labor aspires to progressively increase Australias government-funded humanitarian intake to 27,000 places per year, the document states. Labor aspires to progressively increase the community-sponsored refugee program intake to 5000 places per year

The document says Labors humanitarian program would accommodate LGBTIQ people who fear persecution.

This is a great start by Labor. But it needs to go much further to restore integrity to the immigration program and maximise living standards.

Below are suggestions on how to practically reduce Australias immigration intake, both temporary and permanent, to sustainable levels.

The number of temporary visas outstanding reached absurd levels at the end of 2019, at nearly 2.5 million people:

The first step to lowering the number of temporary migrants should be to significantly lift the Temporary Skilled Migration Income Threshold (TSMIT) from $53,900, which is well below the median Australian wage of $1,100 per week ($57,200 p.a.), according to the ABS:

This TSMIT wage floor has now fallen $3,300 (6%) below the median income of all Australians ($57,200), which includes unskilled workers. Thus, the TSMIT has incentivised employers to hire cheap migrants instead of local workers, as well as abrogated the need to provide training.

The wage floor for all skilled migrants (both permanent and temporary) should be set at least at the 75th percentile of earnings (preferably higher).

This would ensure that the temporary migration scheme is used sparingly by businesses to employ only high skilled migrants, not as a general labour market tool for undercutting local workers and eliminating the need for training.

Second, the federal government should lift English-language and financial requirements for international students, alongside limiting work opportunities.

Raising entry standards would ensure a smaller number of high quality international students, while also ensuring they are financially independent and not reliant on work for income.

In turn, this would lift export revenue per student and reduce competition in the workplace. It would also ensure that students come to Australia to study, not for ulterior motives, such as to work and/or to gain permanent residency.

These measures alone would dramatically reduce temporary migration into Australia.

The permanent migrant program is dominated by the skilled stream, which has set aside 108,000 places for so-called skilled workers:

Even before the COVID-19 pandemic hit, this skilled stream was highly dubious.There was no evidence that Australia was experiencing skills shortages that warranted such a strong intake.

We also know that Australias skilled migrant program has been widely rorted, attracting migrants to areas already heavily oversupplied with workers (e.g. accounting, engineering and IT), with most of these migrants employed at levels well below their claimed skills set.

Skilled migrants generally also have significantly higher unemployment and underemployment than the Australian born population, and are paid less. This is evidenced by the Department of Home Affairs Continuous Survey of Migrants. This surveyshows that migrants have significantly worse labour market outcomes than the general population:

In particular:

Even if we focus on the skilled stream only, both median earnings and unemployment is far worse than the general population:

These are shocking results. Skilled migrants should be paid well above the general population, which comprises both skilled and unskilled workers, as well as have very low unemployment.

Thus, like the temporary skilled visa system, the permanent program has unambiguously undercut workers and contributed to Australias poor wage growth, in addition to crush-loading the major cities and making housing less affordable.

With Australians now facing mass unemployment, and skills shortages virtually non existent across the economy, there is zero rationale for maintaining such a strong permanent migrant program.

Instead, the skilled program should be phased back to historical levels of around 35,000, and be reserved only for truly world-class leaders in their field that Australia cannot foster internally.

Moreover, these highly skilled migrants should have an income pay floor set at least at the 75th percentile of earnings (preferably higher), as for temporary skilled migrants.

No longer should Australian employers be allowed to simply grab a migrant to fill ordinary positions in the labour market cheaply. Instead, they would have to lift wages to attract workers (thus countering anaemic wages growth), as well as commit to training local workers.

Lets also not forget that many migrants come to Australia on temporary visas with the hope of transitioning to a skilled permanent visa.

Therefore, if Australia was to remove the carrot of permanent residency by slashing the skilled intake, it would also reduce the flow of temporary migrants, since the two areas are intrinsically linked.

Cutting immigration in this way is an easy sell for Labor. All it needs to argue is:

Most Australians know these to be true and would resonate with these common-sense arguments.

Labor should also state that it is merely seeking to lower immigration back toward the historical (pre-2004) average, and that the new lower intake would still be at the higher end of developed nations.

Moreover, progressively lifting the humanitarian intake by around 10,000 is smart, provided it is accompanied by large reductions in other categories of immigration, since it automatically counters faux arguments of racism and xenophobia that are likely to emerge from the fake left.

If Labor wants any chance of winning the next election, it must return to its working class roots and represent the interests of regular Australians over inner-city progressives. Otherwise it will remain in the political wilderness.

Leith van Onselen is Chief Economist at the MB Fund and MB Super. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.

More here:
Labor takes baby steps toward immigration reform - MacroBusiness