Permitting Pacific Island workers to seek employment in Australia would have a more beneficial effect than foreign aid, claim Lowy Institute researchers Leon Berkelmans and Jonathan Pryke. They consider two ways it might work.

Australia is investing significant amounts of aid in the development of the region with very mixed results. The economic, demographic, governance, and climatic challenges the Pacific faces will make sustained development of the region even more difficult in the years to come.

It is for this reason that Australia’s Prime Minister Turnbull has committed Australia to a ‘step-change’ in Australia’s engagement with the Pacific, built on fresh ideas.

One idea that would produce a ‘step-change’ would be to make it easier for citizens of the Pacific Islands region to work in Australia. This would allow citizens of the region to earn an income far above their potential at home, and considerably improve their living standards.

Allowing just one per cent of the Pacific’s relatively small population to work in Australia would bring more benefits to the people of the Pacific than Australia currently gives in aid.

‘There are two possible approaches: capped and uncapped.’

Measures would need to be taken to manage risks and costs to Australia; however, these risks should be weighed against the significant benefits it would bring to Pacific Islanders.

Uncapped

To illustrate the effect greater labour mobility could have in the region, we have modelled the impact of effectively extending the Australian labour market to include the Pacific Islands.

There are two possible approaches: capped and uncapped. In the uncapped model there would be no numerical restrictions on the numbers that could come to live and work in Australia.

‘Pacific Islanders would need to pay for their own passage to Australia and be responsible for their own needs once they arrive.’

The uncapped model would not, however, see the abolition of passport and border controls, as occurs in the Schengen Area of the European Union. Rather, under this proposal, a special visa category would be created, similar to the subclass 444 visa that allows New Zealanders to stay and work in Australia, with certain restrictions.

The Lowy Institute’s Jonathan Pryke.

Pacific Islanders would need to pay for their own passage to Australia, and be responsible for their own needs once they arrive. The granting of visas would still be subject to health checks, as with other visa classes, to ensure that migrants are not entering Australia to take advantage of the healthcare system for pre-existing conditions.

A character test would also be required. Conditions would also need to be set on the visa to ensure that the scheme did not create a pathway for economic migrants from other parts of the world.

Capped

A less ambitious option that would help mitigate these risks and obstacles but would still provide labour opportunities for Pacific Islanders in Australia would be the implementation of a capped model.

Under the capped model an annual immigration quota would be imposed. This would help to mitigate some of the risks and costs and give the government an extra degree of control over labour movement, while still delivering real benefits to the Pacific Islanders.

‘This would deliver a benefit to the Pacific Island citizens that would be 29 times the value of Australia’s existing aid program.’

This capped model would be based on a lottery-style system to ensure that skilled and unskilled Pacific citizens have an equal chance of accessing the labour market. It would minimise unintended consequences, for example exploitation of the scheme by the Pacific elite.

The most important decision to make in relation to a capped model would be the size of the quota. It should be both large enough to actually have a significant impact in the Pacific, but small enough to reduce the downside risks and costs to Australia.

Ultimately, the exact number will be determined by whatever is politically palatable.

Benefits

If Papua New Guinea is included in the capped model and the cap were set at five per cent, this would deliver a benefit to the Pacific Island citizens that would be 29 times the value of Australia’s existing aid program. There would be an annual quota of roughly 23,900 people coming to Australia, three-quarters of which would come from Papua New Guinea.

If the cap were set at just one per cent, this would deliver a benefit to the Pacific Island citizens that would be three times the value of Australia’s existing aid program, and equate with an annual quota of roughly 2,850 people.

If there is a relatively open labour market between Australia and the Pacific, the annual income for those who migrate could increase by around $25 billion (2005 purchasing power parity adjusted in US$), benefits that are around 40 times Australia’s current aid budget to the region.

This is an edited excerpt from the Lowy Institute discussion paper ‘The Development Benefits of Expanding Pacific Access to Australia’s Labour Market’ by Leon Berkelmans and Jonathan Pryke. Reproduced by kind permission.