For Tonga, Australian labour mobility more important than aid and trade combined

Tongan participant in the Seasonal Worker Programme (DFAT/Flickr/CC by 2.0)

A World Bank study of Seasonal Worker Programme (SWP) workers in 2015 estimated that Tongan seasonal workers made on average net earnings of A$9,759. 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 the amount to have increased in line with increases in the minimum wage.

The number of Tongans coming to work in Australia through the SWP has grown rapidly. The scheme only started in 2008. By 2012-13, there were 1,200 Tongans in the SWP, and by 2018-19 3,740. Combining these two figures — average net earnings, assumed constant, and the growing number of workers — gives estimates over time of the aggregate net earnings of Tonga’s SWP workers. As you can see from the graph below, Tonga’s aggregate net SWP earnings 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 earnings to other major sources of foreign exchange that Tonga derives from Australia. Last year Australia provided (Table 6) Tonga with $28.9 million in aid. Also last year, Tonga is reported to have exported $2.3 million worth of goods to Australia. As you can see from the graph below, in 2018-19, SWP net earnings exceeded Australian aid to Tonga and imports from Tonga both separately and combined.

Tonga: net earnings from SWP, aid and trade in 2018-19

Tonga is the first Pacific nation to achieve this milestone, and it did so just last year. 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 share 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 with the Pacific. Aid is important but more aid is not the answer to the Pacific’s development challenges. 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 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, the new policy 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 briefly states that this 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 its relationship with the Pacific less about aid and more about mutually beneficial economic opportunities, like the SWP and labour mobility more broadly.

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Stephen Howes

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

Beth Orton

Beth 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.

4 Comments

  • In the past 6 months, I’ve read three stories of Tongans who have died while participating in this program. The three deaths raise a red flag. This number is too much. I think the number of deaths should be zero. The government of Tonga ought to be alarmed and to investigate these deaths so they will critique and identify weaknesses of the program. Perhaps the workers are not healthy and physically not suitable to do the job. I doubt anyone in the government is paying attention to this aspect of the program.

    On 4 September 2013, the Parliament discussed this program. The discussion was focused on the middleman/company who organized and arranged the process including the necessary visas and plane tickets for the workers. After the workers gave them the cash for their visa and tickets, the company disappeared with their money.

    I think this is a great program.

  • Thanks for your comment. The World Bank survey I mentioned also asked seasonal workers in Australia how satisfied they were with their experience in Australia. Tongan workers gave the highest rating of 9.9 out of 10. 99% of Tongan wokers also say that they would recommend the SWP to others in their village.

    There are undoubtedly instances of exploitation of farm workers, but the SWP has good systems in place to report this. Employers will lose their license to employ SWP workers if they are found to have abused workers. More broadly, due to political and public pressure and media exposure, farmers are having to improve the way they treat workers. That’s the main reason we argue that growth in the SWP has been so rapid – farmers are turning towards the more regulated labour supply option.

    Regards,

    Stephen

  • There should also be an investigation about the vast number of Tongans (& other Polynesians) who have participated in the program and have had severe heatstroke, illnesses and deaths due to the weather and living conditions.
    There have been many times where these workers have been ripped off by the employers sending them home with $1,000AUD to zero dollars. Many of these Tongan boys are not able to speak English to fight or speak up against their employer and don’t understand their rights to their pay, therefore forcing many of them to run away and become illegal overstayers in Australia.
    More importantly some of these workers come here to work and withstand harsh weather conditions, long hours (some working 15hr+ days) and receive less than the minimum wage which is just inhumane. Australia is a country of opportunity and equal rights, however unfortunately it does not apply to the SWP.

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