Australian labour mobility more important for Tonga

By Stephen Howes and Beth Orton

AUSTRALIA – January 21, 2020: 6am (DevPolicy Blog): Last year, 3,737 Tongans came to Australia to work in the Seasonal Worker Programme (SWP).

Net earnings from the SWP are what workers take home to Tonga with them. They send some of their net earnings home as remittances, and take the rest either in cash, or as purchased goods.

A World Bank study of seasonal workers in 2015 estimated that Tongan seasonal workers made on average net earnings of A$9,759 each.

This estimate is calculated based on the workers’ reported total earnings in Australia minus their expenses in Australia minus estimates of the earnings and income in Tonga that they had to forgo to be in Australia. We don’t have a more recent estimate than 2015. If anything, one would expect that amount to have increased in line with increases in the minimum wage since 2015.

The graph below shows the estimated total earnings of Tongan seasonal workers in Australia since 2012–13, assuming that every year the average worker made the same as was the case in 2015. The figures up to 2016–17 were reported by the World Bank, and we have continued the calculations for the most recent couple of years. As you can see, the aggregate earnings show strong growth, and have more than tripled from just $11.7 million in 2012–13 to $36.5 million in 2018–19.

Estimated aggregate net earnings of Tongan seasonal workers in Australia

We can compare SWP net earnings to other major sources of foreign exchange that Australia helps provide for Tonga.

Last year we provided Tonga with $28.9 million in aid. And last year, Tonga is reported to have exported $2.3 million worth of goods to Australia. As you can see from the graph below, SWP net earnings exceed Australian aid to Tonga and imports from Tonga both separately and combined.

Tonga: net earnings from SWP, aid and trade

Tonga is the first Pacific nation to achieve this milestone (it did so in 2018–19). Of all the Pacific nations, Tonga is the one that has embraced the potential of seasonal work most enthusiastically. (This article attempts to explain its success.) In 2018, we estimated that 13% of the Tongan population aged 20 to 45 left the country each year to work on either Australian or New Zealand farms. And that number would have grown since.

It’s not only an impressive achievement by Tonga, but also the sort of fact that should change the way we think about Australia’s relationship to our Pacific family. Aid is important but more aid is not the answer to the Pacific’s development problems. Already the Pacific is the most aid-dependent region in the world. Moreover, aid, whatever the benefits to Australia, costs the Australian taxpayer. Labour mobility by contrast benefits the Australian farmer, and the Australian economy more broadly.

The Pacific is not, in general, a trading region. Tonga has long had duty-free access to Australia, but is unable to take much advantage of it. Tourism is important to several Pacific nations, including Tonga, but very few Australians holiday in Tonga.

Despite the growing importance of labour mobility, Australian groups who advocate for development and for the Pacific in Australia have been very quiet to date on the subject. It’s time for such organisations as ACFID, IDCC, and Results Australia to take up this issue. There’s a lot to be done. Temporary schemes like the SWP work well for Tonga, but suit other Pacific nations much less well. We need to move beyond temporary and start talking about expanding permanent migration options.

There are also no fewer than three policy processes and inquiries in Australia currently underway to which this striking fact about Tonga is relevant. The first is the government’s preparation of its new International Development Policy. To its credit, it is meant to go beyond aid, and look at “expanding opportunities for Pacific workers to fill workforce shortages in regional Australia”.

The second is the parliamentary inquiry into “Australia activating greater trade and investment with Pacific island countries”. It would be better if labour mobility had been in the title of this inquiry, but at least its terms of reference state that the inquiry (of the Joint Standing Committee on Foreign Affairs, Defence and Trade) will examine opportunities to strengthen “employment links”.

Finally, the Senate Select Committee on Temporary Migration is inquiring into the impact of temporary migration on “the Australian economy, wages and jobs, social cohesion and workplace rights and conditions”. It’s unfortunate – and symptomatic of the disconnects in this area – that this Committee won’t also look at the impact of temporary migration on sending countries, especially in the Pacific. Tongan seasonal workers compete mainly with foreign backpackers, not Australian farm workers.

Between them, let’s hope these inquiries look into what other Pacific countries can do to emulate Tonga’s achievement, and what more Australia can do to make the future of the Pacific less about aid and more about mutually beneficial economic opportunities, like the SWP and labour mobility more broadly.

This article appeared first on Devpolicy Blog, devpolicy.org, from the Development Policy Centre at The Australian National University

Stephen Howes is the Director of the Development Policy Centre and a Professor of Economics at the Crawford School.

stephen.howes@anu.edu.au

Beth Orton is a Research Officer at the Development Policy Centre and works on labour migration across the Pacific region. She recently completed a Master of Demography at ANU.

elizabeth.orton@anu.edu.au

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