If you were a young, single overseas backpacker and you had the choice of working in a bar in Bondi or the “back of Bourke”, which one would you pick?
I am a Scottish-born Australian who came here as a skilled migrant. I was never forced to work in regional Australia. I chose to live in the regions because I have an affinity, having grown up in a Scottish rural town.
But if I was 19, I would probably pick Bondi for a drink and a party unless the rules pointed me in another direction.
Currently, the backpacker visa allows young people to visit Australia for a year. If they don’t want to head home, they can elect to work for three months in a regional area. This will allow them to gain a second-year visa.
This desire to stay in the sun has been useful for regional areas, which have for decades seen declining populations. It has meant that many travellers, including UK citizens, were forced to consider a stint in the bush if they wanted to stay.
I know many backpackers who were reluctant to go to the regions at first, but afterwards thoroughly enjoyed the experience. If they hadn’t been obligated to go, they might not have.
But the new UK-Australia trade agreement, signed under the Morrison government, removed that requirement as a sweetener for the British government. As a result, when it comes into force, estimated in 2024, British backpackers can arrive in Bondi and stay for three years.
As a commodity analyst and an economist, I believe in the importance of unrestricted trade between nations. The recent post-Brexit free trade agreement between the UK and Australia is beneficial to trade, yet it has one major issue – the removal of these backpackers from agricultural labour markets.
These are the unintended consequences of trade talks.
This might not seem like that big an issue, given it’s only one country. Yet British travellers take up on average 20% of all backpacker visas and that number jumped to closer to 30% last year. The new agreement will significantly reduce the supply of backpackers in regional Australia, which will have a material impact on the ability to find labour.
Not only will we lose the British backpackers but the overall number of backpackers has dropped. During the first year of the pandemic, the number of backpackers dropped to 31,000. This is against an average of 194,000 in the five years preceding Covid.
The total pool of “backpacker” labour has diminished at the same time as permanent arrivals have also dropped. Rural regions of Australia have relied strongly on backpackers for many roles, from tending the bars to driving grain harvesters.
So the country is suffering from a severe staffing shortage in permanent arrivals, which doesn’t seem to be sorting itself anytime soon.
That means the competition is more fierce for non-ag jobs. Not only can backpackers take a job in a bar in Bondi, but they might even take a job in an office – a white-collar job.
So there is a real question for agriculture: how are you going to attract people to sit in a dusty header for 12 hours before getting home to a little cottage and microwaving rissoles?
We need migration in the city, but also the country. Modern Australia is an immigrant country and has been reliant on migration to grow. This has created a unique multicultural environment in the cities and regional areas. This has especially been the case in rural areas over the past decade as the composition of overseas-born Australians moves away from being as anglo-centric as it has been.
Immigration has been so important that during the past 161 years, in only 21 years has Australia experienced a year of net loss migration, that is, more emigration from Australia than immigrants. In 2021, 29.1% of the Australian population was born overseas.
Due largely in part to the Covid pandemic, 2020-21 was the first year since 1945-46 to see net migration turn to a loss. The reduction in migration into Australia has caused a massive undersupply of labour.
The supply of labour will continue to be an issue long into the future and is reducing the effectiveness of Australia in growing the agricultural economy.
That means farmers will have to increase the inducements to encourage workers to move to the regions, increasing the cost of food. Are you ready to pay more?
Andrew Whitelaw is a commodity analyst and co-host of the AgWatchers podcast
