The federal government’s approach to attracting skilled workers from overseas should prioritise bringing home Australians living abroad rather than being fixated on incentivising foreigners to settle in Australia.
Currently, it is estimated that there are a million Australians living abroad. Each year, that number increases.
On average, over the three immediate post-pandemic years to the financial year ending 2025, one Australian citizen leaves this country for every 18 new migrants moving in.
Cumulatively, over the course of the two decades between 2005 and 2025, about a quarter of a million Australians have left to seek a better life elsewhere.
The Commonwealth Department of Social Services estimated that 112,000 pension recipients live overseas. Among them, 88,000 live abroad permanently, and 24,000 live or stay overseas for an extended period (i.e., longer than three months) each year.
Subject to asset and income tests, pensioners living abroad are generally still entitled to the basic pension of up to $1,135 per fortnight if single, and $1,712 per fortnight as a couple if partnered. The aggregate cost of overseas-spent pensions could reach up to $2.9 billion per annum.
Rather than stimulating the Australian economy and supporting jobs in Australia, pension payments made to Australians living abroad end up benefiting the economies of other countries.
And who could blame these expats? Cost-of-living in Australia is outrageously expensive. Tax for working Australians is punitive. And the rapid demographic change, especially in the post-pandemic years, has coincided with increased crime, overcrowding, and infrastructure deterioration.
Polling commissioned by the Institute of Public Affairs suggests that 54 per cent of Australians say they no longer recognise the country they grew up in anyway. It makes sense, then, that places like Thailand, Vietnam, and Bali – which offer more affordable living – look increasingly attractive to many Australians. Others look to places that offer more opportunities, like Singapore, Japan, and the United States.
Those of us left behind have had to deal with the consequences. Australia is in the midst of a skill and worker shortage crisis. IPA research has found that job vacancies in Australia have been at or above 325,000 for more than five years and are currently about 79 per cent higher than pre-pandemic average.
IPA Research Fellow Saxon Davidson observed:
For more than three years, the Albanese government has used Australia’s worker ‘shortage crisis to justify its record, out-of-control migration intake. [Australian Bureau of Statistics] data again reinforces that this approach has failed’.
The unemployment rate among new migrants, at about 7.05 per cent, according to the ABS, is – and has consistently been – higher than the unemployment rate of Australian-born citizens, which is at about 4.46 per cent as of the time of the analysis.
While the overwhelming majority of new migrants are wonderful individuals, foreign migrants tend to be less productive than Australian workers.
During the pandemic, when international borders were closed and the Australian diaspora returned from overseas, labour productivity skyrocketed by 4.06 per cent from the March quarter of 2020 to the March quarter of 2022 – reaching a record high. When borders reopened in the March quarter of 2022, productivity plummeted – by 6.10 per cent by the June quarter of 2023.
Notably, this period coincided with two critical events: the highest level of net overseas migration on record, of more than 538,000 in the financial year ending June 2023, and the largest exodus of Australian citizens since at least 2005, of more than 30,000 net in one financial year. The following year, another 25,000 Australian citizens left their homes on a net basis.
A NewsCorp Australia readers’ poll reported that its survey participants ‘want action on the brain drain’, with 87 per cent saying that the government should do more to help Aussies abroad return home.
Incentivising Australians to return home, to address the country’s skill and worker shortage crisis, is far better than bringing in even more foreigners. The persistence of this crisis despite the net arrival of roughly 1.7 million foreign migrants, since the end of the pandemic, has shown that foreign workers are not the solution.
IPA research found that one key barrier to solving the worker shortage crisis is the fact that Australian pensioners and veterans still face an effective marginal tax rate of about 65 per cent should they earn over $226 per week. This occurs as a 50 per cent claw back is applied to their pension for every dollar earnt over $226 on top of normal tax. This and the intrusive income reporting requirements are locking many Australians out of work.
Worse, the effective punishment for earning an extra income in the midst of a cost-of-living crisis contributes to driving more and more pensioners to leave Australia to settle abroad.
Red tape, punitive state and federal tax, high energy costs, as well as other barriers to investment and workforce participation disincentivise Australian expats from returning home.
Australians want their friends and family to come home, and they have every right to. The federal government’s migration and overseas skill acquisition policy should be focused on bringing Australians back home – not inviting even more foreigners to do the jobs that should be done by Australians.
Dr Kevin You is a Senior Fellow at the Institute of Public Affairs
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