The development benefits of expanding Pacific access to Australia’s labour market

Abstract

A stable and prosperous Pacific Islands region is essential for Australia’s security and foreign policy. Australia is investing significant amounts of aid in the development of the region with very mixed results. The economic, demographic, governance, and climatic challenges the Pacific faces will make sustained development of the region even more difficult in the years to come. It is for this reason that Prime Minister Turnbull has committed Australia to a ‘step-change’ in its engagement with the Pacific built on fresh ideas. One idea that would produce a ‘step-change’ would be to make it easier for citizens of the Pacific Islands region to work in Australia. This would allow citizens of the region to earn an income far above their potential at home, and considerably improve their living standards. This Analysis assesses the impact of two models of such a proposal: one capped and one uncapped. It finds that allowing just 1 per cent of the Pacific’s relatively small population to work in Australia would bring more benefits to the people of the Pacific than what Australia currently gives in aid. Measures would need to be taken to manage risks and costs to Australia; however, these risks should be weighed against the significant benefits it would bring to Pacific Islanders.