Last week, MPs, business leaders, unions, and economists met at the national Jobs and Skills Summit to discuss the future of the jobs market in Australia. High on the priority list were the skills shortages felt across Australian workplaces, increasing productivity, and improving the migration system.
On this podcast, host Kat Clay interviews Grattan CEO, Danielle Wood, who gave the opening address at the summit. She is joined by Brendan Coates, Economic Policy Program Director.
Read Danielle’s opening remarks from the conference.
Transcript
Kat Clay: Last week, MPs, business leaders, unions and economists met to discuss the future of the jobs market in Australia. High on the priority list were the skills shortages felt across Australian workplaces. Increasing productivity and improving the migration system. Today, we’re lucky to have Grattan CEO, Danielle Wood, who gave the opening address at the summit to rave reviews with the Australian financial review, calling her the summit’s early start.
We’re also joined by Brendan Coates, our economic policy program director. So, Dani, you gave the keynote address at the jobs and skills summit. what would some of the highlights for you?
Danielle Wood: It was really fascinating for me. I certainly hadn’t been to, any of the sort of previous. it was, as you said, a mix of kind of business leaders, union leaders, people from civil society, some, some academic researchers and policy experts, about 140 people, in the room on, on top of, you know, prime minister and treasurer and all the, the state premiers.
So it was, it was pretty incredible collection of people that there was a. I think that’s a really good energy in the room, and I’d say a sense of, of, of goodwill. A couple of highlights for me, I think, you know, a number of commentators have mentioned the sort of the presence of, of women in the summit.
Michelle O’Neill in a panel on the first day. Drew a comparison with the Hawke 1983 summit where there was, there was one woman out of a hundred in the room. This was, I think, pretty close to 50, 50 and women were certainly very prominent in a number of the, the really important and meaty discussions. The actual highlight I think was there was a panel on the second day and the topic was workforce participation, but they had a, A series of young people that had for various reasons themselves been at the fringes of the labour market.
It was actually kind of hearing their stories and a reminder of how sometimes the system does let people down who are there to make it, who can make a really important contribution. I thought that was really powerful. And I think it was particularly powerful to know that, you know, they’ve got those decision makers, and business leaders, sitting, sitting and hearing those contributions.
So that, that was a real highlight for me. So, I mean,
Kat Clay: Dani, the federal government released their outcomes from the summit late on Friday. The document breaks down recommendations into immediate actions, areas for further work, and complementary existing commitments. There’s a number of areas where Grattan has been pushing for change, so I want to go through some of them with both you and Brendan now.
The first thing that struck me from this document were there, there were big moves on pay equity, and I wanted to know whether these changes that are proposed here will have a significant impact on women’s earnings or when the problem itself is more systemic than can be dealt with by publicly calling out companies without pay equity.
Danielle Wood: Or the moves themselves, as you allude to, there are really about greater transparency and publication of.
The, the, the sort of pay equity gap within corporations, look, clearly that’s not sort of single handedly going to close the, the gender earnings gap, but I do think it is, it’s a significant shift, in, in mindset for, for many businesses, you know, create some incentive to try and improve representation, particularly of women in more senior and better paid roles.
So, those measures, modelled on other ones that we’ve seen overseas, and we have seen some shifts. In response to publication of that kind of data. And, you know, I think the corporate leaders at the summit as well, you know, really acknowledged that, that once these things. are out there in the public domain, you start to build, KPIs for, for senior leaders around them.
That, that’s really when you start to get action. But ultimately there, there are a number of different fronts when it comes to, to pay equity. You’re talking about things like supporting more women to participate in the workforce where they want to after they’ve had children. you’re looking at things like addressing structural problems for low pay in, in highly feminized sectors, particularly the care sectors, breaking down gender segregation, across occupations, which is still deeply entrenched in Australia, and better sharing of unpaid care between men and women.
so, all of those really need to be on the table if, if we’re going to, to close that gender earning gap. Over time.
Kat Clay: So, one of the areas for further work and a cornerstone of your address is developing a long-term vision for early childhood education and care reform to better support parents workforce participation as a national priority and the development here of an early years strategy.
What should governments be addressing in this vision?
Danielle Wood: There are a number of people that were probably a little bit disappointed in the summit that the government didn’t bring forward changes to make early learning and care more affordable. the government has announced a policy which is due to come into effect in July next year, which is about reducing the cost barriers to, to new parents accessing care.
there was a push to move that to, to January. It didn’t happen. And You know, I understand the government’s reasoning, particularly around trying to get the workforce in place to actually deliver that. So, I think the idea of this early year strategy is to come at this in a bigger picture and more strategic way.
There are a number of different threads that feed in. So, the question of affordability is crucial. We need to make sure, particularly as we put more money into the system, that the parents are actually benefiting from those extra supports. and that we have a path to transition to low-cost universal care, which is the other component of the government’s announcement, accessibility is really important as well, making sure that we have enough high-quality care in the places where it, where it’s needed.
So, we’re hearing a lot more about childcare deserts, where families are not able to access the care, they need. there was a really important contribution, I think, from David Littleproud, the Nationals leader at the Senate, when he talked about, you know, just how often, young families in regional areas are struggling to get the care places they need.
and the final component of it is, is workforce strategy. So, the industry regulator thinks we’re going to need an extra 39, 000 early childhood educators by next year. As you make that system more accessible by reducing out of pocket costs, Demand is only going to increase. and we are at the moment losing educators at the rate of knots.
So, as I mentioned in my speech, you know, of the people that qualify for an early childhood, certificate qualification, half of them are gone within a decade from the sector. For construction qualifications, you have very, very few people. Dropping out of the industry. So, we have a big problem with retention.
We have a problem with attraction. We know why people are leaving. Cause there’s plenty of surveys actually asking them it’s workload and pay. So really central to that strategy, I think, is how do you make these jobs, good jobs and jobs where people are recognized for the value that they’re contributing in, helping educate and care for the next generation.
Kat Clay: Yeah, your comparison that early childhood workers could make more money working at Bunnings, really struck home for a lot of people, I think.
Danielle Wood: Yeah, and I think, you know, I’m sure many of them look at that and they think, you know, I’m doing this really important but ultimately, you know, quite complex, quite emotionally draining work maybe I am better off taking the pay rise and, doing something that’s, a little easier day to day.
Kat Clay: So, the government has committed to providing strong access to flexible working arrangements and unpaid parental leave so families can share work and caring responsibilities. This recommendation is something we’ve discussed in our report Dad Days and previous research.
What does this research show about the importance of shared care and why are these changes important? Thank you.
Danielle Wood: The announcement that was made was really, it’s a change to the Fair Work Act, to improve access to, to flexible working arrangements and, and unpaid parental leave. So, the, the idea is that we’ll allow families to, to make decisions that allow them to, to better manage work and family.
so those opportunities for flexibility are actually really important for men in particular. At the moment, they’re more likely to have their requests for flexible work declined. And what our research shows is where dads are able to be more involved in care of their children in those early years, that sets them up to be more hands on throughout their children’s life.
So that’s great in terms of, opportunities for, for sharing participation of, paid work amongst couples. If dads are more involved in, in care that does allow women more opportunity to participate in the paid workforce. so, benefits for gender equality, but, but all sorts of other benefits too. So, we see, studies on, relationship satisfaction being higher where, where dads are more involved in care.
dad’s mental health and wellbeing is boosted. children’s brain development. which is, you know, not so much a gender thing, but it’s about having two adults with different styles, really hands on in raising children. So, there’s a lot of positive social benefits from this as well. If we are really serious about seeing these benefits, we need to start talking about how we can extend government paid parental leave as well.
At the moment, it’s 20 weeks. really it needs to be probably a minimum of, of 26. with a six week use it or lose it component for dads and partners. when we look around the world, you know, that’s what you need really just to shift the dial and, and to get, men more actively involved in, in taking it up.
and that’s really the only way I think we’re going to, to, to start breaking down what is a very gendered division of labour in Australia compared to other countries. Other countries are well down this road. we need to go there too, or we’re going to be left behind.
Kat Clay: So, Brendan, I’d like to turn to you now to talk about some of the aspects of migration and skill shortages.
Can you take us through some of those recommendations and actions that came out in the report?
Brendan Coates: Thanks Kat. So, I’d probably distinguish between some of the things the government’s going to do straight away and then some of the things that the government’s committed to looking to going forward. So, like the big one that was the centrepiece, I suspect of the outcomes of the summer along with well, certainly one of the big ones was on increasing the size of the permanent, migration intake this year from 160 to 195, 000 people.
It’s something we spoke about on the podcast a couple of weeks ago about the impact that will have, you know, lots of people talk about this as if it’s going to do a lot to sort of deal with the fact we have a tight labour market. We tend to think more that it’s really just means that you have a larger population in the long term, and to the extent that those migrants are coming from offshore in the first instance, what you’re really doing is you’re just adding to both the demand and supply of labour.
So, migrants feel there’s extra jobs, but they then also create the extra demand by their spending that adds to the number of jobs out there in the economy. so instead the big benefit of, of increasing that intake in the, in the sort of. In this for the government is essentially the long-term fiscal dividends.
So, you know, if you increase the size of the intake, if this remained in place long term, there’s 195, 000, then it would have a potentially very large boost to Commonwealth and state government budgets because migrants arrive in their 20s and 30s. They then have the ability to, you know, they pay a lot of tax that don’t draw much on services.
We can estimate essentially that that boost to the fiscal dividend could be up to 33 billion over a decade. Now, Claire O’Neill has also been really clear that they’re not necessarily going to increase it long term. That’s the main benefit. instead, they’ve been pretty open that they’re going to look at it as part of a review that they’ve also flagged, as part of this process, which will hopefully kick off in the next few weeks.
Before we get to that, the other changes that have been made. Is they’ve put 38 million into trying to speed up the processing backlog of visas in Australia. There’s about 900, 000 outstanding visas today that haven’t been processed. And that doesn’t mean 900, 000 more people would come to Australia if those visas are processed.
A lot of those visas are people who are on one visa, they want to shift to another. They’re a working holidaymaker, they want to become a student. They’re a student, they’ve applied for permanent residency. but there are big issues from what we hear about how the Department of Home Affairs is set up to actually process those visas.
And that’s probably going to need more investment in the long run. The other short-term ones that the government’s committed to is they’ve, committed to extend the period that international students can stay in Australia after they graduate by another two years, although they look like they’re going to apply it just to particular sets of courses, people who have done engineering.
or nursing, things that they deem to be in shortage. now the big challenge there is that those postgraduate study visas are something we haven’t written a lot on before at Grattan, but the outcomes aren’t great. You know, one quarter of those that are on these visas today are unemployed or not even looking for work.
A further 20 percent are working in places like retail, wholesale services and hospitality. So, they’re not necessarily working in skilled jobs when they do stay in Australia after they graduate. and that seems to be because part look, it might be partly discrimination, but partly it seems the temporary nature of that visa makes it hard for them to secure long term work.
And then finally, of the other things the government has committed to, they’ve extended for international students the ability to stay in Australia while you’re in Australia. there’s currently a, a relaxation of the former cap on the number of hours you could work each fortnight used to be fortnight.
Now it’s been opened up. and they’re going to extend that through for another year until, the end of June 2023, and they’ve been very clear that they’re going to stop it, which is something that, you know, is, is probably a good idea because while we’re in a world of, you know, more work rights for students, maybe relaxes the risk of exploitation, because we saw in cases like the 7 11 case a few years ago, where lots of people were working at 7 11 being underpaid.
with the threat of being sort of outed for over working more than their work hours, hanging over them. The risk is that if you uncap that, that number of work hours, which is something no one else has done in the world. we are undertaking a world first experiment here. The risk is that you turn student visas into a de facto low wage work visa in Australia.
So, they’re the big four things that they’ve done in the short term. And then there’s other things they’re exploring going forward.
Kat Clay: Yeah, and that’s a nice segue into what I was going to ask you next, which is about, how the government will be reviewing several existing migration policies, including a few which you’ve suggested previously, like the effectiveness of skilled migration occupation lists and raising the temporary skilled migration income thresholds.
Do you think that these reviews are a good thing that they’re doing, or do you think this is potentially kicking the can down the road that maybe action should have been taken at the summit?
Brendan Coates: No, I think it’s easy to sort of get caught up in the pageantry of the summit and think that that’s going to solve like so many issues at once.
Migration hasn’t been in the public eye for almost a decade on a lot of these issues. And so, you know, just the fact that we’re talking about it itself is a step forward. and some of these are pretty complex policy questions, so I didn’t expect a lot of them would be solved at the summit. So, the government has flagged that they’re going to do a review, run by an eminent panel of three people that they’ll appoint in the next few weeks.
It’ll look at the broad objectives and structure of the migration program. That presumably will then be used to inform how the migration intake is structured in future years. But the government also is, has committed to progressing work on things like the wage threshold for temporary sponsorships. So
You know, that was the big one that was part of the summit negotiations that clearly, they couldn’t reach agreement on. So, at the moment, if you’re a temporary sponsored worker, so you’re sponsored by an employer to come to Australia on a temporary basis for either two or four years, you know, you have to be earning at least 53, 900.
The ACTU wanted that raised to at least 90, 000. The business groups like ACCI were talking more about 60, 000. There’s clearly a need to raise that threshold. It hasn’t gone up. For close to a decade. So it’s been stuck at 53, 900 since 2013 past reviews have recommended it should increase, you know, if you just index it to wages growth since 2013, it would probably sit somewhere between 65 and we know that people that come here, as migrants, on temporary visas, if they earn lower wages, they are at greater risk of exploitation.
So, there’s good reasons for raising the threshold. Where the ACTU has landed with 90, 000, that would knock out two thirds of recent TSS visa applicants. So, it would knock out a large share of the program, including a lot of younger people that you actually want to be part of the program. In the long term, because your typical temporary skilled migrant is in their 20s and 30s.
They’re younger than the typical worker. If you set the wage threshold too high, then basically people who were three or four or five years of experience that were like, they might earn 70 grand, which is what Grattan has recommended. They’d struggle to earn 90. You then lose those people. They never come to Australia in the first place, and they actually form a pretty large share of our skilled migration program in the long run.
So that’s certainly one issue that’s on the tape. and they’re going to have to come to some kind of agreement on that, presumably over the course of the next few months, where there isn’t a great deal of agreement between the between the different parties. So, they’ll have to make a call. The other ones that we’ve looked at is they’ve committed to reviewing the occupation list.
That we’ve. If you’ve listened to this podcast, you’ve heard us talk extensively about the fact that those occupation with state work very well. We don’t have the data to work out what jobs should be on those occupation lists. It’s very hard to find what a shortage is. It’s particularly hard and frankly doesn’t make a lot of sense.
to select permanent migrants who are going to be here for 40 years on the basis of, whether they’re feeling or not feeling a skill shortage in the first two years that they’re in Australia. So, what we should be doing is instead ditching the occupation lists, instead just targeting high wage, high skill jobs, at least 70, 000 for temporary sponsorship, at least 85, 000 for permanent sponsorship.
And that would be a much better way forward. But the big challenge, if I can, I can finish up, Kat, is the government, Anthony Albanese is the prime minister, has made clear that he, he wants to see more permanent migration and he’s not a huge fan of the reliance upon temporary migration in Australia. One of the challenges that we’re going to have with this review is, and it’ll be a question that they’ll have to grapple with, you know, there’s, there’s, you can’t have an uncapped temporary program, which is what we have.
Lots of people come to Australia as students, working holidaymakers, tech responsive workers, and then a capped permanent program, even if it’s gone up from 160 to 195, 000 for this year, and then have a pathway to permanent residency, you know, for, for most, if not all people, you know, something’s got to give in that world, particularly in a world now where there are some pushing for low wage.
You know, lower wage occupations like personal care attendants and aged care to be added to the skills list or to be added to the program, they’re particularly challenging if you’re then going to offer permanent residence to that person, they’re not going to be near the front of the queue if you’re thinking about who you’d otherwise want to offer services.
Permanent residency too. So, there’s some big challenges down the road for the migration program that they’ll have to deal with through the review and through these other forums as well.
Kat Clay: So, Brendan, there was action about the pension and allowing pensioners to work more. Could you take us through that recommendation?
Brendan Coates: So basically, at a time when we’ve got unemployment at 3. 4%, you know, businesses are crying out for workers. One of the things the government has done is they’ve expanded the amount of income that you can earn from working before you start to lose any access to your age pension on the age pension income test.
So, the pension is means tested, which means that the more that you earn and the less pension you get in the same way, the more that you own asset wise and the less pension you get as well. So, what the government has done is for this financial year, they’ve extended a 4, 000 So you can earn an extra 4, 000 before you see any of the income from the pension clawed back.
So that’s obviously an extra incentive for pensioners to remain in work. Australia’s rate of old age workforce participation, while it’s increased in recent years, it remains lower than a lot of other countries. And so the suggestion or the argument here is that by giving pensioners greater incentives to work, more will stay in the workforce and also potentially because so few work in the first place, you won’t be giving up all that much additional age pension payments to those that are working already who will benefit from the change.
It is only for this financial year, which is basically because of the budgetary cost of the measure. So, if you did this long term, potentially it has a relatively sizable impact on the budget at a time that we’ve got. You know, a trillion dollars of debt, a structural deficit GDP. So, it’s something that National Seniors, the federal coalition of the opposition under Peter Dutton has been pushing for.
They’ve done it for this year. It’ll be an open question whether it stays in future years. Historically, once this kind of policy is put in place, they do tend to be extended. I can, you can just imagine the debates we’re going to have about the fuel excise rebate. Cut that’s supposed to run out in in later in this month, but if you were to do this, you’d also want to pair it with other things that sort of take away some of those very generous giveaways to older Australians.
So, the other way in which you can raise old age workforce participation is the retirement age now. We don’t think you should necessarily do anything on the age pension age, which is 67, but the age in which you can access your superannuation is 60. The productivity commission has suggested previously it should go to around 65.
That would have a huge budgetary boost in the long run. I think it’s about 7 billion a year as far as 2055. And it would potentially get a lot of people back into the workforce, because they would You know, not be able to rely upon state tax free superannuation. So early on. So, you know, if we’re going to have a debate about old age workforce participation, we should, you know, I think we need to look at both the carrots, but we also need to look at, you know, the other side of the coin, which is the sticks, things that we probably should, for their own reasons have rolled back.
Anyway, that would also boost participation amongst that group.
Kat Clay: So just a final question for both of you. I mean, are there any areas you want to see more action taken? Are there any places you feel are missed opportunities? Brendan, I might start with you.
Brendan Coates: The migration got a lot of focus this time round and deservedly so.
It’s probably the policy lever for which we spend the least time for year about relative to the size of the impacts it can have. I think the area the government will have to move out of the summit, particularly if they expand the permanent program permanently, is on housing. So, you know, more people adds to housing demand.
If you don’t build enough homes, then the pressure is on rents. Low-income renters are hurt the most. It’s something that there hasn’t been a lot of activity or a lot of action out of the summit on that yet. the government is flagging. They’re going to look at trying to get super funds into housing.
It’s not clear how that’s going to work or how effective that’s going to be. The impediments there are all about the fact that institutions don’t own housing in Australia because state land taxes basically make it uneconomic because they’re taxed at a progressive rate on the total landholding. So, someone owns 100 homes, pays far more land tax than if A hundred individuals either own each of those hundred homes.
So that’s probably an area I think we’d like to see more action. It’s kind of orthogonal to the questions of the summit, but it’s going to be something we’re going to have to tackle, particularly if they look at a higher migration intake in the long run.
Kat Clay: And Denny, was there anything you’d like to see action on?
Danielle Wood: Look, I’ve already mentioned paid parental leave. That is a big one for me. Look, the other thing that I think came through loud and clear at the summit that wasn’t really represented in the outcomes document, was the importance of boosting job seeker payments, as well as having a look at some of the very burdensome requirements to access those payments.
So, I think there, there was some very powerful interventions about. The way in which, the, the, the low rate of, of job seeker is now a barrier to, to job search and the way we’re trapping people in, in a world of financial and mental stress. Related to that, there was also, I think, some really important discussion about the need to change the job network system, which is the system that, tries to get unemployed, unemployed people back into work.
it has been expensive. It has been ineffective at getting long term unemployed back into the workforce. And Travis McLeod from the Brotherhood of St. Lawrence, I think, had some, some really, powerful things to say about that, as well as some suggestions of how to move forward. Beyond those things, though, I think, and it wasn’t really, to be fair, you know, front and centre of the summit, but, you know, the government will need to be building a productivity agenda.
If we want to create long term sustainable wage rises, we need to boost productivity. So, we do have to look at the way we deliver critical services like health and education. we do need to provide more investment certainty through much clearer climate policy, better digital policy. and we need to look at ways to try and, boost dynamism in the economy.
So, fixing planning laws. Brendan spent a lot of time thinking about, you know, the, the skilled migration rules that Brendan was talking about then, making sure competition laws working effectively and the productivity commission at the moment is It’s looking at these opportunities through its five yearly productivity review, and I think it’s really important that that doesn’t just get sort of shoved onto the shelf again.
you know, this is a really important long term policy conversation for this country.
Kat Clay: Thank you so much, Dani and Brendan. I really loved hearing your speech at the Jobs and Skills Summit, and if you would like to read the text of that speech, it’s available for free on our website, on the homepage, and on our news page at grattan.edu.au. If you’d like to talk to us more about this podcast or any other issues, please do. Find us on Twitter at Grattaninst and all other social media at Grattan Institute. As always, please take care and thanks so much for listening.
Brendan Coates
Kat Clay
While you’re here…
Grattan Institute is an independent not-for-profit think tank. We don’t take money from political parties or vested interests. Yet we believe in free access to information. All our research is available online, so that more people can benefit from our work.
Which is why we rely on donations from readers like you, so that we can continue our nation-changing research without fear or favour. Your support enables Grattan to improve the lives of all Australians.
Donate now.
Danielle Wood – CEO