RUDD TO BOOST SKILLED IMMIGRATION

UNCLAS SECTION 01 OF 02 CANBERRA 000520 SENSITIVE SIPDIS E.O. 12958: N/A TAGS: PGOV ECON PREF ELAB SMIG AS SUBJECT: RUDD TO BOOST SKILLED IMMIGRATION REF: CANBERRA 362 ¶1. (SBU) SUMMARY: The Rudd government plans to significantly boost Australia's migration program to address labor shortages in the Australian economy. The Skilled Migration Program will be expanded by 30 percent. The Government is also considering boosting unskilled migration, including a labor scheme for Pacific islanders. Some union leaders have given these proposals qualified support, but others are skeptical, believing it is a measure by Rudd to suppress wages as part of his "war on inflation." The Government is reviewing the current Howard-era temporary migration program (457 visas),which the Australian Labor Party (ALP) and unions criticized prior to the election as an attempt to undercut Australian workers. While wanting to reform the 457 visa program, the Rudd government is also committed to making it easier for employers to use. These moves have implications for the ALP's relationship with the union movement, and could revive the historically divisive political issue of immigration. END SUMMARY SKILLED MIGRATION TO ADDRESS WORKER SHORTAGES ¶2. (U) As part of the 2008-09 budget, Immigration Minister Chris Evans announced a boost to the permanent skilled migration program by 30 percent or 31,000, bringing the number of places to 133,500 - a record increase. To put this into perspective, the Howard government added 5,000 places in the previous year's budget. The reason for this increase is that business is crying out for workers. Low unemployment, an aging population and a booming mining sector are some of the factors that have contributed to a significant shortage of workers. It is estimated that, if nothing changes, Australia will have shortage of 240,000 skilled workers by ¶2016. Both sides of politics and the Australian Council of Trade Unions (ACTU) support migration as a way of addressing this problem. 457 VISA SCHEME FOR SKILLED MIGRANTS RETAINED ¶3. (U) The Howard Government re-aligned the migration intake in favor of skilled migration and almost doubled the total intake during its eleven years in office. During the last term of the Howard Government, the ALP and the unions harshly criticized the employer-sponsored temporary skilled migration visas (457 visas) which they claimed were being used to hire cheaper foreign labor. A factor encouraging this, according to the unions, was that the minimum salary levels for the 457 visa did not reflect the market rate. As a result of a August 2007 parliamentary inquiry, Immigration Minister Evans has commissioned a review of the temporary skilled migration program which is due to report in October. However, he supports temporary skilled migration, declaring the "debate about temporary migration, quite frankly, to be over." As a result of complaints about processing delays, Evans has directed his department to expedite applications from employers who have good records. Over the last five years, the number of 457 visas granted yearly has increased from 40,000 to 100,000. PACIFIC ISLANDERS FOR AGRICULTURE ¶4. (SBU) Prior to last year's election, the Howard Government did not support a guest-worker, unskilled labor program, claiming it would drive down wages and conditions. In 2006, then Treasurer Peter Costello said: "Australia has never been a guest worker country. We've never been a country where we bring you in and ship you out." The ALP's pre-election Qposition was that it was monitoring New Zealand's experimental guest-worker program. Since the election, it has become clear that the Rudd government will introduce a scheme to provide Pacific-Island workers to the agricultural sector (reftel). There are reports that a pilot program may be approved by Cabinet next month and Foreign Minister Stephen Smith has indicated he will make an announcement at the Pacific Island Leaders Forum in August. Proponents of the scheme argue that seasonal industries would get the labor they need and Pacific economies would benefit from the inflow of remittances. Opposition Leader Brendan Nelson has given qualified support for a guest-worker program. UNIONS ARE SUPPORTIVE BUT CAUTIOUS ¶5. (SBU) The unions accept that migration has a part to play in addressing labor shortages in Australia but they want an emphasis on training local workers and a review of 457 visas to be part of any program. The President of the ACTU, Sharon Burrow, has said she supports a guest worker scheme, as does CANBERRA 00000520 002 OF 002 the powerful Australian Workers Union (AWU),led by Paul Howes. However, the more militant Construction, Forestry, Mining and Energy Union (CFMEU) is opposed. The CFMEU's National Secretary, John Sutton, has said it is a "sop to employer groups and their right wing think tanks" that would lead to the "Mexicanization" of the labor market. ACTU Secretary Jeff Lawrence, saying he is concerned with the Immigration Minister's intention to "get on with it" and substantially boost migration, wants the Government to proceed cautiously and to consult organized labor. THE POLITICS OF MIGRATION ¶6. (SBU) COMMENT: Opposition to cheap Pacific Island labor galvanized the union movement in the 1890s, particularly the AWU - Australia's oldest union. One of the first major pieces of legislation passed in the Australian Parliament banned Pacific islanders coming to Australia. So it is perhaps symbolic that the AWU has given qualified backing to the guest worker scheme. Ironically, former Prime Minister John Howard, who was often accused of stirring up anti-immigrant and racist sentiment, presided over a substantial increase in permanent skilled migration, much of it non-British. Similarly, the Rudd government's increased migration intake will also include a large proportion of non-British. If well planned, this should not become a political issue, but not everyone is convinced. If unemployment rises and migrants have trouble adjusting there could be a backlash by far right parties, incoming senator and former union leader Doug Cameron noted on May 19. THE POLITICS OF INFLATION ¶7. (SBU) COMMENT CONTINUED: Before the election, ALP politicians spoke frequently about the "skills crisis" and the upward pressure this was putting on inflation and interest rates. They never mentioned increased migration as a solution, however, for fear of alienating Howard's former working class supporters. Instead, ALP rhetoric focused on training workers. Now in power, the ALP must deal with the fact that training is a long term solution and Australian businesses needs workers now. The "elephant in the room" is that this migration boost, by reducing labor shortages, is also intended to slow wages growth as part of Rudd's war on inflation. STETTENBAUER