Australian Startups Hope New Migration Strategy Fills Skills Shortages

A woman runs past the Sydney Harbour Bridge in Sydney.
A woman runs past the Sydney Harbour Bridge in Sydney.

Summary

Many small, sustainability-focused businesses hope Australia’s overhauled migration strategy will also help the country compete for talent.

SYDNEY—Australia’s overhauled migration strategy aims to curtail a post-Covid surge in new arrivals and ease pressure on housing markets. Many small, sustainability-focused businesses hope it will also help Australia to compete for talent they fear will otherwise head to the U.S.

The strategy, announced this month, will result in a 14% reduction in migrants over the next four years than would otherwise be expected, according to government forecasts. It also includes a new visa class for workers with skills in areas including renewable energy and other technologies, emphasizing Australia’s search for quality over quantity.

With the U.S. economy about 60 times larger than that of Australia’s, officials and executives say that attracting highly skilled migrants is crucial if Australia wants to stay competitive globally. Australia’s government is unable to match the financial ambition of the Biden administration’s Inflation Reduction Act, which spurred US$282 billion of investment in clean-energy projects in its first year, according to Goldman Sachs.

“But there’s no point throwing dollars at building a whole lot of things if we can’t solve labor supply shortages," said Jack Curtis, chief commercial and operations officer at Neara, which builds digital 3-D models of utility networks to help improve their resilience and efficacy.

The Australian government appears to be listening. The new skills-in-demand visa announced this month is designed to make the country more attractive to migrants, including engineers and programmers, by providing a clearer pathway to citizenship and giving them more time to find a new job if their employment ends before the term of their visa.

Net overseas migration to Australia hit a record 518,000 in the 12 months through June, as students returned and businesses acquired temporary workers following more than two years of Covid-related disruptions that included border closures.

Still, 36% of professions remained beset by skills shortages in 2023, up from 31% in 2022, according to the country’s national skills body. More than 50% of design, engineering, science and transport occupations experienced skills shortages, Jobs and Skills Australia said.

Paul Riley, chief executive of Sydney-based plastics recycler Samsara Eco, said a lack of skills was a major hurdle for engineering and tech companies in Australia, which like the U.S. allowed much of its domestic manufacturing to relocate to Asia over recent decades.

About 43% of staff at Samsara Eco, which develops enzymes to break down even unsorted and dyed plastics into fresh feedstock for reuse, were born overseas, Riley said.

“We’re trying to bring those skills back. It’s got to be the skills," Riley said.

Australia’s migration overhaul followed this year’s government commitment for 40 billion Australian dollars (US$27.21 billion) in renewable-energy funding. Treasurer Jim Chalmers has flagged more financial support in the 2024 federal budget but warned that Australia wouldn’t import IRA-style grants and subsidies wholesale.

“We will complement, not copy, the priorities and plans of other nations," Chalmers said last month. “We won’t realize Australia’s unique geographical, geological, geopolitical, intellectual and meteorological advantages by designing an Inflation Reduction Act lite—looking only for big numbers but missing the bigger picture."

That’s not to say that direct financial support can’t move the dial, even for startups without an inbuilt reliance on carbon credits or subsidies.

“But you get a grant from the U.S. government for part of your facility, of course that’s going to be attractive to you," said Riley, whose company is considering both the U.S. and Europe as destinations for its first overseas unit.

Australia’s unions consulted with policy makers on the new migration strategy and broadly backed the changes. They successfully advocated for domestic skills and training programs to be more closely integrated with migration policy, and for the simplification of labor-market testing requirements in defining skills shortages.

“We cannot simply return to the self-fulfilling prophecy of reliance on temporary skilled migration, where we have seen exploitation become rife across a range of industries," Australia’s largest union, the Australian Workers’ Union, said during the consultation process.

Quickly boosting skills and capability in manufacturing will be crucial to Australia’s ambitions, said Paul Sernia, CEO of small-scale hydrogen-power company Endua. Sernia was a co-founder of Nasdaq-listed EV-charging company Tritium, which last month said it would close its factory in Brisbane, Australia to consolidate operations in Tennessee.

“Domestic manufacturing capability is really very underpowered in Australia and it’s not very broad. It doesn’t run very deep," Sernia said.

Write to Stuart Condie at stuart.condie@wsj.com

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