Interview: Border control, immigration policy, and economic performance

Border Management Magazine - March 2019

Migration programme
Australia's migration programme 1990/91 - 2017/18. Image supplied.

Abul Rizvi PSM talks to editor Nicholas Dynon about how strong border control underpinned big – and successful – increases in skilled migration to Australia.

BMM: In terms of borders, the Howard government (1996-2007) is perhaps most widely remembered for polarising and politicising the migration debate – controversially played out in the ‘children overboard’ scandal. But is this a somewhat narrow reflection? Is there more to the border legacy of the Howard years?

AR: It’s understandable that the Tampa affair and ‘children overboard’ is what people remember, but around the same time, independently to this, Howard very significantly changed immigration policy from 2001. He increased the skilled intake very significantly, and he did it through an innovative way of bringing in increasing numbers of long-term temporary entrants – 457 visa holders, overseas students and working holiday makers – and creating pathways for them to secure migration. 

For an old-time immigration officer that might sound like anathema: bringing in long-term temporary entrants and allowing them to change status was taboo for most of the 1990s.

So the change that Howard brought about was quite dramatic, both in terms of border control philosophy as well as what appeared to be his approach to immigration up until then, which was to keep immigration very low and very tight. The extent to which he boosted it was unprecedented in Australian history, you’d have to go back to Menzies and Holt to find another time when immigration levels were increased so quickly.

Now people laugh, ‘well why did he do that?’ There are three main drivers that I think drove Howard down that path. The first was that in his 2001 immigration election policy document the bulk of the document actually doesn’t talk about Tampa, the bulk of the document talks about the success in increasing the labour force performance of skilled migrants to Australia. 

By using the Longitudinal Survey of Immigrants to Australia, he was able to contrast migrants arriving in Australia prior to the Howard Government changes of 1996-97 with those of migrants arriving after those changes, and he showed that their labour market performance was dramatically improved. As he boasted about that in his election policy document, it was inevitable that the business community would turn around and say ‘well why don’t you increase the migration program for these skilled migrants if they’re contributing so much to the budget and to the economy?’ The BCA in particular pushed this line hard.

Secondly, it was a point at which the economy – both the global economy and the Australian economy – were taking off, partly driven by China but also driven by what economists call the demographic dividend – Australia was in the strongest part of our working age to population ratio, and that was also driving the economy.

The strength of the economy was creating massive skills shortages, and the Howard Government was getting belted from pillar to post by the business community, the Labor opposition and the universities for failing to invest adequately in the training of Australians and being criticised for allowing the skills shortages to emerge and not planning for them.

But the third factor – and I believe this is the biggest factor – was that throughout the whole of the 1990s Australia’s fertility rate fell every year, year-after-year. By 1999, the Australian Bureau of Statistics was forecasting that our fertility rate would continue to fall and possibly reach 1.6 babies per woman possibly even as low as 1.5 with dramatic implications for the ageing of the population. The implications for the economy and the budget were quite frightening for Treasury. 

We had, in the immigration department in about 1999, commissioned a report by Professor Peter McDonald and Rebecca Kippen [The impact of immigration on the ageing of Australia’s population] that showed that if the fertility rate continued to decline, the rate of ageing would be quite severe, and a very steeply ageing society creates major challenges in terms of economic management and management of the budget. 

Those factors led the Howard Government to do a complete about face on immigration levels. Instead of cutting immigration, which he’d done for four years, his government suddenly started to increase it quite dramatically.

BMM: What is the evidence slower ageing is beneficial from an economic and budgetary perspective?

AR: There’s certainly an enormous amount of literature which highlights – usually through economic modelling – what the impacts of rapid ageing are. Now you may or may not believe that sort of economic modelling. A better way of looking at it is to compare Australia and Japan. 

Why compare these two countries? Well, because in many ways they are polar opposites from an immigration and population perspective. From 1990 onwards, Japan’s working age to population ratio in the next 25 years fell by 10 percentage points – a very steep decline. During the same period, Australia’s working age to population ratio initially increased until about 2009 and then declined only very gradually. 

In other words, Australia sustained a relatively high working age to population ratio throughout that period whereas Japan’s declined every year year-on-year throughout that period. As a result of that, the employment to population ratio in Japan fell from about 62 percent to about 57 percent, by contrast Australia’s increased from about 58 percent to over 62 percent. 

The contrasting impact on the two economies and budgets of the two countries was enormous. Australia’s budget debt to GDP increased but only increased marginally, whereas Japan’s has shot ahead and is now more than 200 percent of GDP. In terms of per capita GDP, Australia’s per capita GDP continued to increase throughout that period very significantly, Japan’s slowed markedly. 

The most surprising one though is real wages. Real wages in Japan since 1990 have been just about flat, Australia’s real wages have increased by almost USD 20,000 per person over that period, a remarkable shift. Of course there were other factors involved, but in my view ageing was the big one there.

BMM: How did the Howard government use strong border control to enable a more targeted and growing migration program?

AR: There are two things that strong border control from an immigration perspective brings you. Firstly, it enables you to control the way immigration is managed, who is coming in and what contribution they are making.

If you are to contrast Australia with most of Europe or indeed the USA, for example, who have traditionally had very poor border control, the labour force impact of the people who migrated to those countries is quite different because of their labour force characteristics. Whereas in Australia we were able to tailor the labour force characteristics of the people we were recruiting to those who had the skills that met Australia’s needs, that had the right age profile, and that good English language skills – they were three big changes that Howard was able to make because we had control of the immigration program.

Secondly, control of borders gives a level of confidence to the public that migration can indeed be managed in the national interest. If you don’t have good border control you lose that confidence and the ability to manage the immigration program in the national interest.

BMM: The levers of border control that you’re talking about there are largely legislative and policy…

AR: Yes, but other border control changes were also relevant over that period. During the mid-1990s we were under intense pressure to introduce visa waiver, which effectively meant people arrived at our borders and were assessed at the airport. That was the way Europe managed arrivals from most visa waiver countries, and that’s the way the U.S. did it in the mid-90s. 

We decided to go in a different direction. We, of course, had our universal visa system which was viewed as a bit odd by most other developed countries at that time, which meant everyone had to have a visa. We also introduced the electronic travel authority. 

At the time we introduced the ETA both North American and European countries laughed at us – ‘why would you do that, what a waste of money!’ Well, history shows us that we took the right path by introducing the ETA, and the countries in Europe and the USA in particular have eventually copied us and indeed gone further. 

The introduction of the ETA reflected in many ways our obsession with border control. And it’s been that obsession, I believe, that’s allowed us to manage the migration program in the way that we have.

The U.S. and Europe started down this path after 9/11, and in many ways they are playing catch-up. The U.S. now, for example, has a very large illegal immigrant population and a very large population of failed asylum seekers – effectively an underclass in that country – and that makes immigration management so much more difficult.

BMM: As many emerging economies transform countries of net emigration to countries of net immigration, what will be the impact on traditional immigration destinations such as Australia.

AR: That is in many ways the most fascinating question. In Europe they worry about illegal immigration and how to manage it. Many of these nations are taking enormous steps to reduce both legal and illegal immigration. But because they have fertility rates that are generally lower than Australia, and because they have populations that are substantially older than Australia, they inevitably face in the longer term much more rapid ageing and population decline. The same is faced by countries such as Japan which is already introducing new immigration programs – Japan in fact now has a points tested migration category now similar to ours – some say they copied ours –countries like the Republic of Korea may go down the same path.

But the big one in this space is of course China. China is now facing a very steep decline in its working age population. The most recent UN population projections suggest that China’s working age population will fall from around one billion presently to around 700 million in 40 to 50 years. That’s the largest decline in the working age population of any country ever in the history of the world – think about that, especially given Australia’s extraordinary reliance on strong economic growth in China. 

We do not know what happens when a strong, powerful economy loses 300 million working age people who shift into the aged cohort because we’ve never been there. But we know from the experience of Japan and from economic modelling that the prospects are not good. 

I don’t believe the Chinese government will just sit back and say well that’s bad luck. They will act. I think China will no longer be a country of net emigration that it’s been for the last 30 years where around five million people per annum net have left China. I think China will switch to being a country of net immigration over the next decade.

We could we see within 20 years China becoming a country where the net migration rate is actually a positive three to five million, not a negative three to five million per annum.

The question then arises where will the young skilled people that China wants come from? And I think the Chinese government has already shown its hand on this. What it wants is people who left China many, many years ago or the children of the people who left China or the grandchildren of the people who left China to come back. 

They will seek to attract their diaspora back to China. And they’ve already made an initial step in this regard by introducing a five year visa for people who no longer have Chinese citizenship but have Chinese ethnicity.

It will be interesting to see what the impact for a country like Australia – with quite a sizeable portion of the population being of Chinese origin – will be.

The second big challenge in that regard is that China wants to become involved in the international education business. We may no longer be seeing a net number of Chinese students leaving China but indeed a net number of students going to China. Given that China is our biggest source of overseas students what does that mean for our overseas student industry?

BMM: Recent years have seen massive change to the architecture of Australia’s bureaucracy in relation to the handling of immigration policy, including the merging of immigration with customs and border protection and the subsequent establishment of a Department of Home Affairs. And then there’s the ongoing issues surrounding the offshore processing of irregular maritime arrivals. What issues arising from these changes will a new government face following the imminent federal elections?

AR: The merging of immigration with a range of other law enforcement functions is Australia going down the pathway of other nations who also have the immigration function incorporated with the law enforcement function. It could be argued that we’re just copying good practice from what other countries have done. I would contend that would be the wrong interpretation.

I think what other people are doing is playing catch up because they lost control of their borders, and putting immigration into law enforcement is what that’s about. I believe Australia’s success has been combining good border control with good immigration management to give you a very successful socially cohesive society and a successful economy. We do the wrong thing by copying others on immigration. They should be copying us as they did with the ETA. 

I think merging immigration with all those law enforcement functions led to the visa processing function being downgraded. It is now a second class function within the Home Affairs portfolio. People who wear uniforms and carry guns are the important people. They are the people who attract the resources. 

Visa processing has become unimportant and is losing the battle for resources even though it’s the visa processing function that actually generates much of the revenue through application fees. Application fees to Australia are now massive and the revenue significantly exceeds the level of resources allocated to the function. I don’t know where the other revenue goes but it’s not going to the visa processing function.

As a result we have a number of problems. Firstly, really poor morale in the visa processing areas. Secondly, as a result of a combination of poor morale, poor visa design, and poor implementation, we have visa application backlogs growing to levels unheard of. If backlogs had grown to that level when I was running the migration and temporary entry programs, [the then Immigration Minister] Philip Ruddock would have had me sacked.

We have a situation where for example, visitor arrivals changing status onshore are over 24 percent of net overseas migration. That is an astonishing number, and it reflects a visa system that is out of control. It reflects poor border control, not good border control to take forever to process visa applications. 

As a result, the number of bridging visas on-hand has grown enormously. In 2017-18 there were almost 200,000 bridging visas on hand, and a large backlog of bridging visas is just a honeypot for people smugglers. And that is what we are seeing. We’ve seen an incredible increase in asylum applications in the last two to three years to levels unheard of – well beyond anything that happened under [previous Prime Ministers] Rudd and Gillard. 

Those applications are being processed very slowly, they are then flowing on to the AAT. The big surge at the AAT hasn’t occurred yet even though in the last year and a half the backlog of asylum cases at the AAT has more than doubled from eight and a half thousand to almost 18,000. 

So what we’re seeing is a decline in the effectiveness of border control and simultaneously a reduction in the skilled stream of legal migration. In many ways the reverse of the Howard Government’s legacy.

Abul Rizvi PSM served in the Australian Department of Immigration from the early 1990s to 2007, including as First Assistant Secretary Migration and Temporary Entry Division and Deputy Secretary, prior to moving to the Department of Broadband, Communications and the Digital Economy as Deputy Secretary. His public service career commenced in 1982 in the Department of Finance. Abul was awarded the Centenary Medal in 2001 and Public Service Medal (PSM) in 2004 for services to the development and implementation of immigration policy, including in particular the reshaping of Australia’s intake to focus on skilled migration. He is currently undertaking a PhD at the University of Melbourne on Australia’s immigration policies.

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