Economics Professor on Regional Visa and Pacific Labour Scheme

by Marcelle P. Villegas - October 04, 2021

Stephen Howes, Professor of Economics, Crawford School of Public Policy (ANU College of Asia and the Pacific) [Photo credit: Australian National University]

In a commentary of Stephen Howes, Director of the Development Policy Center and a Professor of Economics at the Crawford School of Public Policy, shared his opinion and discussed how the June ASEAN agricultural visa announcement could develop or evolve. He noted three possibilities.

First point he made is the possibility that Asian countries will by allowed to join the Pacific Seasonal Worker Program (SWP) and the Pacific Labour Scheme (PLS). Another scheme might be in place as well for Asian countries. Lastly, "existing backpacker caps for Asians to work in Australia would be increased." [1]

An announcement made last August by a group of Ministers on both sides of the Coalition entails that a new Australian Agriculture visa is to be created in addition to the SWP and PLS. However, the commentary notes that "it is hard to believe that the regulations for the new visa will be in place by the end of next month."

"Agriculture Minister David Littlepround highlighted the Philippines, Thailand, and Vietnam (and the UK) in his ABC interview."

However, the press release only says that the Australian Agriculture visa will be open to applicants from a range of countries negotiated through bilateral agreements. No countries were mentioned.

"Despite these assurances, the press release is in some ways more alarming than the initial Littleproud announcement," said Howes.

Aside from the agriculture sector, the new visa covers other related industry such as the meat processing, forestry, and fishing. Administration of the new visa is to be given to the Department of Foreign Affairs and Trade (DFAT).

Even with DFAT being assigned to handle the new visa, some speculate that this might pose a threat to the Pacific labour mobility in the PLS. The meat processing industry comprises 71% of the PLS jobs, while agriculture and horticulture is 21%.

"If employers in these two sectors switch to the new visa PLS will collapse," according to Howes.

He also points out that the SWP might also be in danger. "The risks are especially high given the press release's commitment to a 'demand-driven approach' -- the implication being that the new visa will be uncapped. The Australian Agriculture visa lacks public policy justification. All the sectors covered by it are already covered by the PLS."

Timor-Leste and the Pacific island nations sends workers under the SWP and PLS, and they have to meet the demand for labour in those sectors.

"If this new visa is to have a pathway to permanency built into it (something which the press release says will be considered) then so too should the PLS. And whatever safeguards are applied to the PLS should equally apply to this scheme," said Howes.

-----

Reference:

[1] Howes, Stephen (30 Aug. 2021). "Yesterday's Regional Visa announcement: The End of the PLS?". Post-Courier. Retrieved from -

https://postcourier.com.pg/yesterdays-regional-visa-announcement-the-end-of-the-pls/

Note: The article by Stephen Howes that was published on Post-Courier first appeared on Devpolicy Blog (devpolicy.org), from the Development Policy Center at the Australian National University. ret

Photo credit - https://crawford.anu.edu.au/news-events/news/5686/developing-research-centre-region



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PNG Business News - March 09, 2021

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PNG Business News - May 03, 2021

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PNG Business News - July 21, 2021

PNG and New Zealand PMs Sign MoU

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PNG Business News - October 26, 2021

Australia buys Digicel, PNG’s mobile monopoly

Photo credit: Devpolicy by Stephen Howes Yesterday, Telstra announced that it was buying Digicel Pacific. Telstra itself is only paying $270 million, and the Australian government $1.33 billion. Yet, Telstra is obtaining 100% ownership. The deal is certainly an attractive one for Telstra. But does it make sense for Australia, and for the Pacific? Digicel has had a transformational impact in the Pacific, but now has too much market power. As the Telstra release explains, it holds the dominant position in all the Pacific countries in which it operates, except for Fiji, where it is in second place. In Papua New Guinea, which I know best, and which is by far Digicel's biggest market, the company  has a 92% share of the mobile phone market. That makes Digicel effectively a monopoly in PNG. And that is why it is so profitable: like any monopolist, it exploits its market power. Australian and PNG researchers have been tracking mobile internet prices in PNG since Australia gifted it a new underwater cable . Their conclusion is that since the completion of that cable in December 2019 to today there has been no decrease in mobile internet prices. The reason is simple: the lack of retail competition. Michelle Nayahamui Rooney, Martin Davies and I last year exposed Digicel PNG’s predatory loan scheme. Digicel lends phone credit to its customers. They pay it back when they next top up. Our estimate is that Digicel made a 17% return from such loans every week, which is equivalent to an unbelievable 351200% a year. Is this really the way in which Australia want to engages in the Pacific – owning an enterprise that keeps prices high for consumers, and rips them off when they are desperate to make a call? Any monopolist is necessarily engaged in a battle between the consumer and their profits. At some point, Telstra will end up going toe-to-toe with the PNG telecom regulator, NICTA, as Digicel has done several times. It’s going to be awkward for both Telstra and the Australian government. Many will welcome the investment as a sign of Australian commitment to the Pacific. However, if we want to invest in the telecom sector in the Pacific, we should be backing alternatives to Digicel, to push prices down and improve services, not buying out the dominant player. Amalgamated Telecom Holdings based in Fiji is the Pacific’s second biggest telecom provider. It is currently planning to enter the PNG mobile market with support from the Asian Development Bank. This is the sort of investment we should be financing. That Australia has bought Digicel shows the extent to which the Pacific is now viewed through a China lens. That’s unfortunate. China is a massive economic power. Its companies will have increasing stakes in economies around the world. That is a fact we have to accept. The Australian government also needs to decide if its only goal is to counter China or if it is still seeks to promote Pacific development. When I was AusAID's Chief Economist, Digicel was the new kid on the block in the Pacific, and it was successfully challenging state-owned telcos that until then had been dominant. In 2006, in Foreign Minister Alexander Downer's flagship Pacific 2020 report, we wrote glowingly about the competition that various Pacific countries had recently started allowing in the mobile phone sector. Our analysis was right then, and remains relevant today. Yet here we are, in 2021, doing the opposite: rather than supporting greater competition in the telecom sector, subsidising the purchase of the incumbent monopolist. The decision to buy Digicel Pacific should be reversed. If it is too late for that, the Australian government should at least – in return for all its cheap and risk-reducing finance – oblige Telstra to operate Digicel for the benefit of the people of the Pacific rather than solely for its shareholders through an agreement that makes it clear that the Australian company is not only expected to return the cheap loan it has been given, but also reduce prices, and end rip-offs.   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.

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PNG Business News - October 26, 2021

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Business

PNG Business News - October 26, 2021

Digicel Pacific to be Acquired by Telstra

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