A discussion on Andrew Nortons blog about immigration as well as recent discussions about the proposed Emission Trading System and the associate permits has inspired me to revisit the issue of immigration and some alternative ways in which we might administer it. I will assume for the sake of this discussion that there is no general political support for an open border policy, although in passing I will suggest that the free immigration agreement (FIA) we have with New Zealand seems to work pretty well.
The current system of immigration may be summarised as including some key components.
1. You apply to immigrate to Australia.
2. You are assessed against some criteria which includes;
- Criminal Record
- Job Skills
- Family connection and other factors
3. If you pass the above stage your application is then queued until a slot within the immigration quota becomes available.
4. You accept the slot and become an Australian permanent resident. One who may after four years apply to become an Australian citizen.
This isn’t exactly how the system works but for the sake of this discussion I believe it is a reasonable simplification.
Whilst this system caters for the public sector criteria on who should come to Australia it does not allow any input from the private job sector or from personal imperative beyond that which feeds into the public criteria via politics. An alternative which would allow some influence based on actual market demand, and which would cut out much of the queueing, would be to follow the example of the proposed ETS and to auction off the immigration slots rather than assigning candidates to queues and rationing the spots accordingly. Such an approach would also raise revenue which could contribute towards public sector infrastructure to accomodate the new Australian residents. In practice the the annual immigration quota might be sold in blocks via auction to immigration agencies who would then onsell them to private individuals with or without other services. With permit in hand the potential immigrant would then lodge an application to immigrate here and assuming they pass the public criteria they are immediately in. If they fail to satisfy the public criteria they could onsell the permit or in the case of immigration agencies they could reassign the permit to another immigrant. This would ensure that potential immigrants to Australia get a rather immediate answer and that the immigration department does not need to sit on a pile of applications as they queue for a slot.
Such a modified approach would also allow those with specialist skills that are in high demand to displace less worthy candidates by outbidding them for a position. And employers that really need somebody with those skills may make agreements with such individuals to share the burden of the associated immigration fee. Humanitarian organisations might use the opening to buy passage for individuals that don’t qualify under the refugee program. And perhaps some people might buy passage for friends.
Of course given this introduction of an immigration market it would arguably become reasonably to drop the skills component from the public criteria and let the market sort out which skills are most needed. I suspect that a market based approach would be far more effective in getting it right, especially in regards to niche skills. And I suspect the existance of a legitamate immigration market may go some way towards reducing the size of the black market.
Of course putting a price on immigration by auctioning off the quota lends itself to a further refinement which is to switch from fixing the immigration number and lettting the market set the price, to fixing the price of immigration and letting the market determine the quantity. The pros and cons of this would entail arguments not that different to comparisons between an ETS and a carbon tax. Either approach in my view would be an improvement over our current rationed quota system.
Of course we could still work towards the ideals of open immigration by signing additional bilateral or multilateral FIAs, such as the one with New Zealand.
note: most of this thinking is currently reflected in the LDP immigration policy.
note: minor gramatical changes have been made since I first posted this.