Stricter immigration rules for Indian students, but not for Chinese

From The Australian:

Tougher immigration rules for Indian students

Guy Healy
September 03, 2008

AN immigration crackdown will make it harder to recruit students from India, the fast-growing big market in Australia's $12.5 billion education export industry.

University of NSW's pro vice-chancellor (international) Jennie Lang told the HES all universities were likely to have urged students to get their visa applications lodged and processed before the September 1 change in immigration risk levels, which affects a host of overseas markets.

"We will also be encouraging (Department of Immigration and Citizenship) staff in offshore posts to ensure that university sector applicants are given priority," Ms Lang said.

A spokesperson from the department said "genuine applicants had nothing to fear from the changes".

According to the latest official data, there were 65,000 Indian students in Australia in the year to June, mostly in vocational education. Although they make up a smaller market than the Chinese, the Indian growth rate is much higher: student numbers from India grew by 55 per cent, compared with 19per cent from China.

The China market, however, benefits in the latest revision of immigration risk, which is based on factors such as rates of document fraud, visa overstay and asylum claims, as well as applications for non-skilled residency for a spouse, for example.

*snip*

India was not alone in moving up the risk scale. Visa applicants from Colombia, Egypt, Ghana, Jordan, Nigeria, Sri Lanka, Romania and Zimbabwe will have to do more to show they are genuine students.

They will have to give extra evidence of their capacity to support themselves financially, especially with savings histories.

The status of these nine countries had been changed "to combat increased levels of immigration risk", the department spokesperson said.

The risk levels are set across various sectors, including English language courses, vocational education and higher degrees.

The higher risk assessment affects all sectors of the Indian education market, which moved up by one level.

Full article

Will mass immigration turn Australia into Argentina?

From CanDoBetter.org:

To consider the effect of sustained high levels of immigration on a country's middle class, one only has to look at Argentina.

In his book, The Case Against Immigration (pdf 1.4M), American writer Roy Beck notes:

One need only look to Argentina this century to see the possible perils of waiting too long to scale back immigration. During the late twentieth century, most observers have tended to lump Argentina with other Latin American countries, their economies characterized by small economic elites, a vast class of impoverished citizens, and a weak middle class. The economist Carlos Diaz-Alejandro wrote that some modern commentators have even classified Argentina with less developed nations such as India and Nigeria. Such comparisons would have been thought ludicrous just eighty years ago, he said: "most economists writing during the first three decades of this century would have placed Argentina among the most advanced countries-with Western Europe, the United States, Canada, and Australia.... Not only was per capita income high, but its growth was one of the highest in the world.”

How did Argentina cease to be one of the world's richest countries? That puzzle was the challenge for Allan M. Taylor, the Mellon Fellow at the Harvard Academy for International and Area Studies and the Department of Economics at Harvard. "More compelling and mysterious examples of failure than the ruination of Argentina are hard to imagine," Taylor said in a 1992 paper published in the journal of Economic History. He concluded that a key factor for Argentina's economic disintegration was the continuation of high European immigration to Argentina after the United States, Canada, and Australia began ending their eras of mass immigration early this century.

No single explanation could account for such a sustained and deep economic demise, Taylor said. But a crucial factor surely was the country's remarkably low savings rate, as compared to Australia, for example. Taylor linked the low savings rate to the high rate of immigration and the high fertility rate of the immigrants. Both immigration and fertility were higher than in Australia and contributed to Argentina having higher consumption and lower savings, Taylor found. The country made up the shortfall of capital for a while by heavier reliance on foreign capital. The differences in Argentina's circumstances-with their roots in the difference in immigration rates-left the country much more vulnerable than the other advanced nations to international events. Argentina's rich, middle-class economy was not able to survive.

Like early 20th Century Argentina, present day Australia has unremittingly high levels of immigration combined with a woefully low domestic savings rate. Thus, the money needed to fund the larger stream of imports and additional housing and infrastructure requirements generated by immigration has to be imported from overseas, adding to Australia's current account deficit. This has been a major factor in giving Australia one of the highest per capita foreign debts in the world.

The whole unsustainable edifice is a house of cards, just waiting to come crashing down. And when it happens, it will inevitably drag the Australian middle class down with it.

...

More on the effect of immigration on Australia's current account deficit:

According to the Former Minister for Finance, Senator Peter Walsh, Australia's immigration program during the late 1980s was dramatically expanded - primarily because of pressure on the Federal Government by ethnic leaders. By the late 1980s, immigration had imposed massive economic costs on Australia. High levels of immigration increased annual population growth to over 1.5 per cent, the highest in the developed world. According to Mr. Stephen Joske, an economist with the Australian Parliamentary Library, immigration increased demand for basic infrastructure - such as housing, hospitals, roads, and schooling. Because of Australia's low levels of domestic savings, investment capital for such infrastructure had to be imported from overseas, adding up to A$8.0 billion each year to Australia's current account deficit.

By the early 1990s, Australia - with a population of only 17 million - had accumulated a foreign debt of over A$140 billion, equal to 40 percent of GDP and exceeding other major 'debtor' countries such as the former Soviet Union. A key cause of this debt 'blowout' was the high and unsustainable levels of immigration during the late 1980s.

Stephen Rimmer, "The Cost of Multiculturalism", The Social Contract, Volume 3, Number 1 (Fall 1992).

Australia's foreign debt has ballooned since the 1980s, topping more than A$600 billion. Our current account deficit continues to exceed the "Banana Republic" levels experienced during the Hawke-Keating era.

Yet, even in the face of this impending Argentina-like disaster, immigration is being ramped up to record high levels.

Immigration: the winners and losers

Below is an extract from "The Productivity Commission on the economics of immigration" by Bob Birrell, published in People and Place, Volume 14, Number 1 (2006). It examines the Australian Productivity Commission’s 2006 Position Paper on the Economic Impacts of Migration and Population Growth, which focused on the effects on productivity (output per hour worked) and GDP per capita of higher immigration levels. The Productivity Commission concluded that the effect of a 50 per cent increase in the numbers of skilled immigrants over the twenty year period to 2024-25 will be to reduce average productivity slightly but increase GDP per capita slightly relative to 2006 immigration levels. However, as Birrell shows, the Position Paper did not assess the impact of these extra immigrants on the existing Australian population (or "incumbents", as Birrell refers to them). Birrell argues that the effect on GDP per capita for incumbents will be to lower it under the high immigration scenario relative to the maintenance of 2006 immigration levels. According to Birrell, younger Australians will be the worst affected by increased immigration.

Who benefits from high migration?

The PC [Productivity Commission] does not consider the question of who benefits from high migration. Its terms of reference did not specifically ask for such consideration. This is an unsatisfactory situation. Surely Australians ought to be informed on this vital issue.

There is no doubt that the additional migrants entering Australia under the high migration scenario will be the major beneficiaries, assuming that the PC is correct in its expectation that they will find professional and trade level employment. Since most will come from non-western societies their income levels will expand sharply. They will also enjoy the benefits of the accumulated investment in civic and economic infrastructure in Australia without having to pay an entry fee.

What about residents--or incumbents? The main losers will be young people, especially those with university training. This is because they will bear the brunt of the competition presented by the skilled migrants. Their wages and conditions by 2024-25 will be considerably lower than would have been the case in the absence of the skilled migrant competition. Ironically, lower skilled incumbents will be less disadvantaged because, under the high migration scenario, there will be few extra migrants in their skill bracket competing for employment.

Young residents will also be negatively affected because they are not property owners. They will have to compete for entry into the housing market against the extra migrant households. Australia already experiences one of the highest ratios of detached house prices to household income in the developed world. The extra migration will add to the demand side of the property price equation. It will do so at a time when, in Brisbane, Sydney and Melbourne, the respective State governments are trying to curb the spread of the suburban frontier.

The main winners from the high migration scenario, apart from the migrants themselves, will be the owners of businesses, whose markets will grow and whose profits will expand in the short to medium run as the labour to capital ratio rises. These beneficiaries include home builders, shopping centre proprietors, infrastructure providers and media owners. The beneficiaries also include most home owners, since their properties will appreciate as a consequence of the increased scarcity value of their holding with the influx of migrant households.

The high migration scenario thus seems to benefit the advantaged at the expense of the disadvantaged. Another way of viewing the situation, which supports this contention, is that the ownership of capital is skewed heavily towards the more elderly (since it depends on past savings). Hence the old win on this front too, because profits go up under the high migration scenario. Meanwhile the young lose because their lifetime wage earnings fall under this scenario.

Much of the business rhetoric about the benefits of higher migration has to do with the consequent growth in the size of the Australian economy. Yet, the Position Paper indicates that, when it comes to capturing the alleged benefits of economies of scale, 'trade and migration are substitutes'. As is pointed out in the work of the Harvard economist George Borjas, this insight has a profound bearing on the debate about the implication of high migration.

When Australia imports clothes from China, Indonesia or Fiji it, in effect, imports the cheap labour embodied in the manufacture of the garments. Instead of bringing such workers to make the garments in Australia we import the product. Likewise, when Australians import motor vehicles (currently more than 60 per cent of all motor vehicles sold in Australia are imported), they import the economies of scale that the Japanese and other major exporters have achieved. For Australia to reproduce such economies of scale (and the lower costs per vehicle associated), would require a massive increase in the domestic market (if the cars were to be sold in Australia). In other words, if Australians wish to benefit from the cheap labour and economies of scale available overseas or, for that matter, from the benefits of advanced technology in countries like Germany, it can import the products which embody these attributes. There is no need to expand migration to achieve these effects.

In order to capitalise on these benefits Australia's exports will have to increase. Currently Australia has the capacity to maintain high levels of exports deriving from its renewable and non-renewable resources. It can only do this because of its small population, that is, because there is currently a substantial surplus between what can be produced and what is needed for consumption in Australia. There is very little relationship between extra migration and the scale of rural and mining output in Australia. However, a migrant induced increase in population has a direct relationship with the level of imports, in the sense that imports will rise at least as fast as the migrant population rises.

In these terms it is hard to see the economic argument for high migration, at least from the point of view of most incumbents. One of the more bizarre outcomes of current migration policy is the high intake of professionals from the Indian subcontinent and from China (particularly those who have studied in Australia). These migrants are arriving at the very time that Australian firms and consumers are drawing on the benefits of the cheap labour in their homelands--for consumer goods and increasingly for outsourced services. In India's case this includes the outsourcing of IT services. If Australian firms can access such professional services in India and China for a fraction of the cost of such persons once they are in Australia, why bring them here?

Full report

Bob Birrell on immigration

Interview with Bob Birrell, Centre for Population and Urban Research at Monash University:

Michael Duffy: What sort of population increase is Australia looking at at current levels of immigration by the year 2050?

Bob Birrell: Yes, Michael, we did a projection of what would happen if current rates maintain. There currently are about 180,000 per year, that's net migration from overseas, and the Rudd government has given a strong indication that this is the kind of setting it wants to sustain. Should this hold over the next 40 years or so and should fertility in Australia maintain at about 1.7 (that is an estimate of the number of births each woman would have over her childbearing life, that's below replacement) we'd get to from around about 21 million now to 31.6 million by the year 2050, and of that increase nearly 10 million would be attributable to the net movement of migrants. So there's only about a million left of natural increase because fertility is below replacement level in Australia. So, almost all of the anticipated population growth will be from net overseas migration.

Michael Duffy: Yes, 180,000 a year. Where does that stand in historical terms? That's fairly high, isn't it?

Bob Birrell: Yes, it is very, very high. We're about double where we were in the year 2000. The coalition gave it a nudge before they lost power, and then in a very striking decision at the time of the May budget the government added another 37,500 a year to the migration program to push it up near 200,000 a year.

Michael Duffy: Would I be right in thinking that this has happened largely without much public discussion? I remember back in the 80s people used to debate immigration more, it seems to me. Papers used to be produced and reported and so on, but this just seems to have happened in the last few years. Many people I talk to aren't even aware of it.

Bob Birrell: Yes, I've had the same experience. Even people who are following the news quite closely are unaware of the magnitude of the recent increases. I must say I was very surprised and disappointed that Labor took this action because there's been a lot of noise before the election that they would be considering a population policy and that they would consider not just the employment implications and the economic growth implications but also urban quality of life issues, cost of housing, rental, a well as climate change. But the announcement was made without any public discussion or justification at all. When I enquired of the minister's office 'where did you get this information from?' I was told 'we've been around the country talking about next year's program'. Who did you talk to? Well, primarily the big end of town and of course they're very enthusiastic about extra numbers, and essentially that's where it came from, although I think behind the scenes the government is concerned about inflation and it's been moved to push up the numbers, in part to just keep the lid on wages.

Full transcript