What could go wrong as Australia privatises visa processing

Source: The Mandarin, 11/10/0201

On the basis of the limited information provided to the public to
date, the business and risk case for privatising visa processing
appears highly questionable, writes former Immigration deputy
secretary Abul Rizvi.
Privatisation of core government functions such as visa processing is
high risk, especially when undertaken under the cloak of
commercial-in-confidence secrecy. Major ICT transformation projects
conducted “in partnership” with a big IT company are also high risk.
Doing the two together multiplies the risk big time, but that’s
exactly what the Department of Home Affairs is doing.
The government first announced its intentions in the 2016-17 Budget
through a measure titled ‘Reforming the Visa and Migration Framework’,
promising to deliver significant savings for a relatively modest
upfront investment.
We found out considerably more about the plan with the department’s
request for information document released in January revealing that
privatisation of visa processing will take place in eight separate
bundles. Last month, The Australian reported bundle one, covering a
‘global delivery platform’ and certain low-risk visas, may be
contracted relatively soon. Subsequent bundles involve more subjective
and complex visa categories and functions, with the entire system
worth in the order of a billion dollars over 10 years, according to
evidence given by Home Affairs at Senate Estimates.
Overstated growth in application numbers
Home Affairs’ key justification for this unprecedented shake-up, in
the Department’s own words, is that it is “faced with never before
seen volumes of visa applications … forecast to increase by around 50
per cent by 2026-27.”
As the senior official responsible for design and delivery of both
permanent migration and temporary entry visas from the late 1990s
until 2007, I can tell you this argument is highly misleading and
seriously flawed. During my time in the then Department of
Immigration, we experienced a genuinely unprecedented increase in the
visa caseload:
• Net overseas migration increased from 72,402 in 1997 to 301,200 in
2008, a 316 per cent increase). By contrast, the government itself is
forecasting net overseas migration will actually decline from 240,300
in 2017 to 221,400 in 2021.
• The Migration Program grew from 67,900 people in 1998-99 to 171,318
in 2008-09 (an increase of 152 per cent). This government has cut the
Migration Program from 190,000 in 2015-16 to 162,417 in 2017-18. All
the indicators point to a further reduction in 2018-19. These cuts
will lead to a reduction in citizenship applications.
• Overseas student visa grants increased from 110,894 in 1998-99 to
320,368 in 2008-09 (an increase of 189 per cent). While student visas
reached 378,292 in 2017-18, policy actions government has taken to cut
off opportunities for successful students to secure permanent
residence will significantly slow growth in student visas over the
next few years.
• Skilled temporary entry (former sub-class 457) grew from 29,320 in
1998-99 to 110,280 in 2007-08 (an increase of 276 per cent). Skilled
temporary entry visa grants fell to 64,470 in 2017-18 and are likely
to fall further. These falls will have flow on implications for
applications for employer sponsored permanent entry.
The only areas where growth is likely to continue is in categories
like visitor visas that are already largely automated and have been
since the 1990s.
Ballooning backlogs and processing times
“No private company will take on these backlogs without eye-watering
levels of compensation.”
One area of growth that does outstrip my time in the agency is
ballooning application backlogs and blowouts in processing times. But
these are due to a mixture of poor visa design changes; uncertainty
around how the migration program is to be managed; reduced resources
relative to other Home Affairs functions; and visa processing staff
being intimidated by constant fear-mongering from the department’s
leadership and demoralised by the complaints and inquiries as the
large backlogs draw resources away from actual application processing.
No private company will take on these backlogs without eye-watering
levels of compensation. Moreover, they will demand further recompense
to get processing times back to their previous levels while
maintaining high levels of visa integrity.
Revenue from visa application charges
An improved online visa processing platform is of course worth
pursuing, as well as examining the option of using artificial
intelligence as the department suggests. But why can’t government pay
for this? The Productivity Commission found in 2016 that “revenue
collected from visa charges is three times the administrative cost”.
With massive increases in visa charges in recent budgets, that revenue
to cost gap would now be even wider!
Treasury would never agree to relinquish such a lucrative revenue
stream, so companies that win a contract to deliver visa services
would need to either increase charges even further, use their monopoly
position to find new revenue streams, reduce costs or rely on a
growing caseload.
The final option would be taking a very big risk, unless Home Affairs
guaranteed a minimum rate of caseload growth. That would hardly be
conducive to good border protection and immigration policy!
Visa charges impacting key Australian industries
Home Affairs has indicated that while successful companies will be
allowed to charge for premium services, the overall charges must not
be greater than those of key competitor nations. That would be a hard
ask given the Productivity Commission has noted that “charges for
Australian visas appear to be higher than in Australia’s major
competitor countries”.
Additional charges for high volume visas are also likely to be
strongly opposed by key Australian industries such as tourism,
education and agriculture. Home Affairs should not be allowed to wash
its hand of charge increases just because they’re imposed by a private
company. At this stage, it’s not clear if these industries are
conscious of the potential impact on their international competitiveness.
Charging for ‘premium services’ and visa integrity
The long-term implications of allowing two separate processing streams
for each visa type are truly frightening. Any monopoly provider would
want to maximise charges for the fast lane and try to drive as many
applicants as possible into that lane. There would inevitably be an
incentive for the company to be more ‘facilitative’ on subjective
criteria for applicants who paid for priority service.
For applicants and Australian sponsors who couldn’t afford the higher
charges for the fast lane, we would likely see continuing acceleration
of people by-passing standard off-shore visa processes and instead
entering Australia on visitor visas and then applying onshore for the
actual visa they need. This would perpetuate visa integrity problems
including the blowout in people in Australia on bridging visas that
Home Affairs has exacerbated through extraordinarily poor administration.
Home Affairs has suggested companies may also use their position to
generate new revenue streams such as through online advertising or
provision of ‘wrap-around services’ such as airfares, accommodation,
etc. Giving a monopoly visa service provider such power raises even
more issues around both visa integrity as well as potential abuse of
market power.
Cutting costs
“Will the Australian public be comfortable with these extraordinary
risks being taken on our behalf with such a core government function?”
A final option is for the winning company to cut costs. At present,
complex visa services are delivered by relatively low paid staff in
Home Affairs, particularly in centralised processing centres in cities
such as Adelaide. Because these staff deal with much more highly paid
lawyers and migration agents, they must have deep knowledge of the
Migration Act, extensive legal skills and good knowledge of the common
ways non-genuine applicants try to beat the system.
Any successful company would undoubtedly try to recruit existing Home
Affairs staff but pay them less to maximise profit, as we’ve seen all
too often with other outsourcing projects. Recruiting and training new
staff would risk serious errors such as applicants who are not
eligible being approved and applicants who are eligible being refused.
Alternatively, the successful company could seek to transfer the visa
processing work to a low-wage economy overseas. This would cut costs
significantly more, but the risks would rise accordingly.
On the black market, an Australian visa would be worth many times the
annual salary of low-wage economy staff. Would Home Affairs cover the
additional cost to monitor and investigate such corruption? And is the
Australian public happy to take on such a risk given its attitude to
issues such as border control and visa integrity?
We also don’t know the extent to which companies would be subject to
scrutiny by government agencies such as the Ombudsman and the
Auditor-General. Would Freedom of Information still be applicable? How
would issues of national security be addressed? How would the
successful company deal with privacy issues given the vast wealth of
personal data it would have access to? Could it even be allowed to
sell some of that data as an additional revenue stream?
Another issue would be the charges the successful company seeks
whenever government wants to change visa design or visa policy �`
something that happens very regularly. Would that also impact on the
policy advice Home Affairs gives to government, discouraging good
advice that came at a high cost?
Finally, there’s the question of what happens to thousands of
Australian staff who currently process visas as Home Affairs
employees. Home Affairs would need to meet the costs of redundancy
payments for staff who are no longer needed.
Will the business case be made public?
On the basis of the limited information provided to the public to
date, the business and risk case for privatising visa processing
appears highly questionable.
Is the government prepared to be open with the Australian public and
Parliament about this high-risk initiative?
Will the Australian public be comfortable with these extraordinary
risks being taken on our behalf with such a core government function?
And how long before taxpayers have to bail out the department because
one or more of these risks materialises?
It really is a gamble that’s just not worth taking.