Dr Martin Parkinson AC PSM: Address to the National Press Club
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Opening remarks
Thanks Violet, what a hard act to follow!
Please allow me to also pay my respects to the elders of these lands, past and present.
Violet has just given us a blunt message – I want to be equally blunt!
The migration debate playing out in Canberra, and indeed across our entire nation, is not addressing the challenges we face as a nation.
Indeed, some of the touted solutions will not only not fail to position us for the future, they will exacerbate, not resolve, the challenges we already face!
Let me be clear – that is not a criticism of Australians who have concerns about the level or composition of our migration program. They are legitimate issues for us to discuss.
But to think that the total number of migrants is the key, indeed the only, issue surrounding migration policy is just plain wrong.
For a start, it glosses over the complexity of the issues.
What we are seeing is yet another example of the most depressing experience of my 40 years in government – the repeated misdiagnosis of policy problems combined with the lack of political will, or perhaps political skill, to level with the Australian people.
Rather than carefully exploring the issues, setting out our options and then explaining why policy is going to take a particular approach, we are being offered simplistic solutions bound to create perverse outcomes and further erode community trust.
So what is the main game?
Let’s start with a fact that most in Australia will find surprising.
Every night, about 2.9 million people go to sleep in Australia who are not citizens or permanent residents.[1] Of these, around 2.3 million have work rights.
No matter what you are told, these people help keep our country running.
They are not here existing on the margins of our economy, in the ghettoes of society. They are, in fact, integral to our ability to run this economy, each and every day.
So while we need to have a sober, calm conversation about migration levels, and the sorts of people we want to come here in the future, today we need to answer a much more basic question: what is the actual objective of our migration system?
Because right now, there is no clear answer to that question!
And this is costing us as a country – you, me and every single one of us.
And the longer we wait to answer this question, the greater the cost we will all bear!
The 2023 Migration System Review, which I had the privilege of chairing, working alongside Professor Joanna Howe and John Azarias, identified five complementary objectives for the Migration Program. For the purposes of today I want to focus on the first of these:
Building prosperity by lifting productivity, meeting labour supply needs and by supporting exports.
The skilled migration system is the problem
While that objective seems unobjectionable, let me put four “facts” on the table.
One: Australia’s labour productivity growth is, by the Productivity Commission’s own assessment, the worst on record.
Two: A third of all occupations face a worker shortage. Two-thirds of these occupations require professional licensing.
Three: Nearly half of all permanent[2] migrants are working below their skill level.
Four: Community concern about migration, about housing, about the cost of living, about who gets to come here and why, is real and cannot be dismissed, even if the links between these issues are tenuous.
Let’s step back for a moment and reflect on this situation.
These four “facts” cannot coexist without something being seriously broken.
You cannot simultaneously have chronic skill shortages and hundreds of thousands of skilled permanent migrants underemployed. You cannot say migration is both too high and too unproductive, unless the permanent migration system itself is the problem.
I want to be very clear that this is not a political argument.
It is a systems diagnosis.
Indeed, the Migration Review concluded that Australia’s migration program, both permanent and temporary, was not fit for purpose.
That finding was accepted by government.
It was endorsed by stakeholders: employers, unions and civil society.
But what has changed since?
Not enough.
We are still having the wrong conversation.
The public debate about migration is almost entirely about numbers: how many people, from where, on what terms.
Do not misunderstand – as I said, that is a legitimate debate. It needs to happen because it matters for the social acceptance of migration.
But if you think this is the only issue, you are missing the wood for the trees.
And how you can decide on the level and composition without discussing the objective seems to me to be putting the cart before the horse.
Our future population levels – note I said levels, not growth – depend on migration.
Our domestic fertility rates are below replacement level, our population is aging and the working age population will eventually fall without migration.
But all of this, whether it’s the number of migrants, where they come from, or what they believe, obscures the more tractable, and politically easier issue to solve, and one which is directly tied to element one of the Migration Review’s five part objective for the program.
The two part problem
No one talks about the skilled permanent migration program as a two-part process, but that is precisely what it is.
Part one is getting the right skilled migrants into the country. That is the migration system: what are our needs, today and into the future, and then ensuring our visa settings, our selection criteria, the operation of the points test, the core skills list, processing times and so on, all work together to address those needs.
The Migration Review canvassed this in depth, pointing the way forward – little, if anything, seems to have been done in response!
Part two doesn’t get the same attention.
It is what happens after those skilled migrants have been granted the pathway to permanent residency/citizenship. In particular, whether Australia will let them use the skills they were brought here to contribute.
That is the skills and qualifications recognition and occupational licensing system.
It is where enormous economic value is currently going to waste, largely un-noticed.
As Violet has already described, we have a multi-step, multi-agency, multi-jurisdictional assessment and licensing process that was never designed as a system. It just accumulated, layer by layer, over decades.
It is like a river, clogged by mud, sludge and garbage over decades. But a river that can be reshaped and cleaned away by a flood of common sense and good policy!
The productivity cost
The economic cost of this is not abstract.
The Productivity Commission described Australia earlier this year as being in the midst of its worst labour productivity growth on record. Not the worst in a decade. Not the worst in a generation. The worst on record.
Our ageing population will make this worse. As Treasury’s 2023 Intergenerational Report noted, by 2060 nearly a quarter of Australians will be over sixty-five.
This should not come as a shock… every Intergenerational Report for the last 25 years has been warning of the same demographic trends, and their real, painful, consequences.
Whether you like it or not, some facts are immutable.
The ratio of working-age people to older Australians will fall.
Not only will our young likely to be poorer than we are, bearing a higher tax and debt burden than we ever did, but they will also live in a grimmer, more dangerous, regional environment than any of us ever experienced.
What’s this got to do with migration you may ask.
Well, it is another of those awkward immutable facts.
To deal with this, we need a broader tax base, with better targeted, more efficient taxes, or we need to cut expenditure to deliver a more sustainable fiscal position.
We need to incentivise innovation and investment, to raise the speed limits on our growth rate.
And we need a larger working age population, or a far more productive working age population.
Tax and other reform matters are not what today is about.
Nor is the size of our population.
But we all need to recognise that any meaningful growth in the working-age population has to come through migration.
This is not a forecast, it is a fact!
It is baked in and there is nothing, absolutely nothing, we can do to change this.
Another of those awkward immutable facts.
Again, step back and look at this.
Thinking clearly about these issues makes it even clearer, and even more perverse, that we need our existing and future populations to be as productive as possible.
This is particularly so as we stare into stagflation, our existing poor productivity performance being exacerbated by higher inflation, particularly higher fuel and food prices, due to the war in the Middle East.
Yet we have built a system that prevents migrants, not just those who may come in the future but those who are are already here, from working at their full capacity.
No matter where you sit on the size of the migration program debate, you have to recognise that a more immediate question is whether Australia is getting the economic value it should from the skilled people it has already invited here, and those it will invite in the future.
Right now, the answer is clearly no!
International roadmaps
Australia is not the first country to confront this. And we do not need to reinvent a solution. The roadmap for effective reform already exists.
Germany faced structurally similar challenges.
A federated system with inconsistent recognition standards across states, a growing skills shortage, and highly qualified migrants stuck in occupations below their level.
Their response was legislative: a Recognition Act that established a national framework, set clear timelines, and created enforceable obligations on assessing bodies. Recognition outcomes improved. The skills gap narrowed.
Canada took a different but no less effective approach.
Ontario was the first jurisdiction in Canada to establish an independent Fairness Commissioner with legislative oversight of skills recognition across regulated professions. The mandate was to ensure registration practices were transparent, objective and fair, with regulators required to report annually and submit to compliance audits.
The model worked well enough that seven other provinces across Canada adopted it.
These are case studies in how to create the reform Australia needs.
None of these jurisdictions made reform through a single sweeping change.
They built governance first, establishing a mechanism capable of looking across a fragmented system, identifying where it was failing, and driving improvement without eroding standards.
They ensured a good policy process that didn’t get distracted by the politics of the “size of the program” debate – one that was robust to whatever that outcome was.
Activate Australia’s Skills
The Activate Australia’s Skills campaign has taken this analysis seriously and built a practical policy response around it. The plan is backed by industry and unions alike.
While Violet spoke about the plan at a high level, I want to talk in more detail, because the proposals are good ones.
The centrepiece is national governance.
An independent skills and qualifications recognition commissioner: a statutory function with oversight of the end-to-end recognition system, from visa to occupational licence to employment.
Not a body that duplicates what industry associations and accreditation bodies do, but one that ensures those functions operate to consistent benchmarks, with measurable outcomes and clear timeframes.
It would identify system barriers and propose solutions while never reducing Australia’s rightly high standards.
It turns a patchwork of individual assessing bodies into a system, with shared objectives that works in the public interest to ensure an adequate supply of talent to address the nation’s skill shortages.
Every functioning system requires good governance with the right incentives
This governance framework would help facilitate harmonisation across states and territories to reduce the variation in licensing requirements for the same occupation in different jurisdictions.
A nurse qualified in Queensland should not face a different licensing process in Western Australia. An electrician licensed in Victoria should not have to start again in New South Wales.
This is achievable.
It requires political will, not significant new spending.
It may seem an odd analogy, but we’ve been here before – when we settled on a common rail gauge for cross-border railways. Rather than having to swap gauges and trains we made it seamless to travel from one jurisdiction to another.
Yet even today,125 years after Federation, we still struggle with mutual recognition.
Alongside good governance, we need a national recognition system navigation service to offer a single point of guidance for migrants working through the recognition process, across jurisdictions and across professions.
The current system requires people to navigate multiple agencies, often with no clear map. A navigation service fixes that without touching the underlying regulatory settings.
Everyone should be eligible, including people currently being forced to work below their skill level.
Again. Let me be clear, this would not be about the erosion of standards, but it would be about treating people fairly who are currently discriminated against by the existing system.
To complement this in-person guidance, we should consider a national portal like Germany has that outlines whether your profession requires licensing and how to obtain it.
The third element is financial support where it’s needed. People should not be stopped from contributing hundreds of thousands to the economy because of a recognition process that is prohibitive when they are starting out.
And the fourth is by ensuring that the way we choose skilled migrants in the first place is better informed by occupational licensing requirements, so that we stop creating the problem at the point of entry. We need a joined-up system.
These are low-cost, high-yield reforms.
A moment of consensus
The political conditions for action are unusually ripe just now.
The Treasurer’s recent Economic Reform Roundtable saw rare consensus across government, industry and unions that the skills recognition system is not working.
That kind of tripartite alignment on a structural reform is genuinely unusual.
It reflects years of accumulated frustration from employers who cannot fill roles, from unions who see skilled migrants locked out of work, and from governments who know the system they run is not delivering – not for the migrants themselves or for the rest of us.
But consensus without action is just a group of people admiring a problem.
And these windows of opportunity close quickly – when they are open, we need to strike, and strike hard.
At a time of rising inflation and weak economic growth, it is imperative that Government pulls all the levers that can significantly boost productivity.
The actions we are detailing today do just that – stagflation is a real risk and we are proposing a real reform that can help stop it!
Conclusion
When Australia invites someone here because of their skills, there is an implicit bargain: we will let you use them to your benefit but, more so, to ours!
Right now, we are not keeping our end of that bargain.
Not only is it not the fair go that we pride ourselves on, but we are wasting human capital on an industrial scale, in an economy that cannot afford to.
The reforms Violet and I have described today are not radical. They are not expensive. They should not be ideologically contested.
The evidence is there. The consensus is there. The international examples are there.
What is missing is a decision – one that can only be taken by the Commonwealth, working hand in hand with the States.
The analysis has been done. The review has been written. The roundtables have been held. At some point, knowing what the problem is and choosing not to fix it is itself a choice. And it has consequences.
My hope is that the May Budget provides the path forward.
[1] This figure includes tourists/visitors.
[2] That is, of those who have become citizens or are on permanent resident visas with a pathway to citizenship, in the 15 years to 2024, almost half (44 per cent or 621,000 people) are working in an occupation at a lower-skill level than is commensurate with their qualifications.