There’s now a strong case that Australia needs more accountants. The country’s unemployment rate is at just 3.5 per cent. A record high number of job vacancies exists for each unemployed person. The labour market is at its tightest point in decades, and worker shortages are popping up everywhere.
Not least in accounting. The industry is in a “war for talent”.
In this war, pay seems to be one weapon of choice. According to data from SEEK, advertised salaries for jobs in accounting have grown by 1.5 per cent over the last three months, as employers try desperately to fill vacant roles. That growth rate is high by historic standards, and above the national average growth in advertised salaries of 1.2 per cent.
Firms battle for staff
Would you like your employer to pay for your study, let you work from home, and give you extra leave each year? A firm like northern NSW accounting practice Forsyths is offering all these and more. It is advertising many roles, and its website features all the above bonuses and enticements. Conditions never used to be featured on the careers section of Forsyths’ website. But the practice has realised that to win the war for talent, it might need to think not just about pay, but also about conditions.
It’s not alone. Almost every accounting firm in Australia is reporting that finding staff is a challenge, according to research by Commonwealth Bank.
“The elevated demand for accounting services has further escalated the battle to attract and retain high-quality staff. It remains the sector’s biggest challenge by far,” the bank wrote in a 2022 report on the accounting industry.
That report carried multiple stories of firms struggling to hire: “We are struggling to get applicants, let alone suitable applicants for the job,” said one Queensland-based accounting firm director quoted in the report. Two years of very limited immigration have left gaps in the ranks of Australia’s accountants.
Several categories of accountants were added to the priority skilled migration list in 2021 by the previous minister for immigration, Alex Hawke. These were “critical skills vacancies”, the minister said, and they were needed “to ensure a small number of critical occupations are filled to continue to create Australian jobs and aid in Australia’s ongoing recovery from the impact of COVID-19”.
Change is coming
Australia’s new federal government has shown great enthusiasm for reopening the borders, increasing migration and filling skills gaps.
As the next chart shows, in the years before the pandemic, Australia relied heavily on migration. Permanent skilled migration was relatively steady, yet particular growth occurred among some types of temporary migrants — students and working holiday-makers. Then the tap was turned off.
Albanese plans to turn it back on. “[M]igration will need to be a part of the solution to skill shortages,” he said in one of his first press conferences as prime minister.
The Institute of Public Accountants stands shoulder-to-shoulder with other accounting industry bodies in supporting more skilled migration, explains Tamara Plakalo, director of public affairs and advocacy at the Institute of Public Accountants. “We are addressing this as an industry at this point in time, with a common position,” she says.
Skills to pay the bills
Jobs and skills are at the centre of the new government’s agenda, as shown by September’s Jobs and Skills Summit. The Parliament House event assembled some of Australia’s most powerful people. The Prime Minister used it to defend migration’s role in providing the skills the economy needs.
“We need people immediately, now,” he told ABC Radio. “There are areas of skill shortage, including in everything from chefs to engineers to nurses, across a range of professions.”
That prime ministerial statement presaged a major policy shift in migration. “Never waste a crisis,” said Minister for Home Affairs Clare O’Neil, as she announced a lift in the permanent migration level from 160,000 to 195,000, including a lift in skilled migration.
From the Philippines to Geelong
The flow of skilled migrants is set not only to return, but to rise. In the new flow will be many accountants, and we can expect Australian firms to snap them up.
Migrant accountants can help solve major recruitment headaches, as Geelong-based accounting firm director Anthony Tripolino has found.
“We battled for quite a few years,” says Tripolino, who tried to hire accountants, to hire and train up bookkeepers, and to hire graduate accountants straight out of university.
“That didn’t end well … we tried all three, and in the end, it was the skilled migration that ended up hitting home.”
In early 2020, Tripolino’s firm hired a staff member from the Philippines who was already in Australia. The firm ended up sponsoring her migration with the help of a migration agent.
“She was highly qualified and highly knowledgeable. So, we gave her a go … it’s been probably the best thing that has happened to us, to be honest.”
The hiring process has not been without occasional problems in cross-cultural communications, he notes. “If you give one of my other staff too much work they push back, but she would just take it on. That’s a disadvantage.”
Nevertheless, he says he would hire another skilled migrant in a heartbeat. “If I found another one of her, I’d be rapt … She was willing to learn and happy to work. Nothing was too hard.”
FIONA shows the way
Migration can be a controversial topic. Exploiting public sentiment against new migration has been a regular vote-winning strategy for some minor political parties in Australia, and at various times, has been employed by major parties too. And yet migration finds support time and again among policymakers and business groups.
Why are migrants so much in demand? One answer is found in the raw numbers — tax dollars. If you come to Australia as an adult and start working, you pay tax from the moment you arrive. By contrast, people born in Australia spend at least 16 years and sometimes 25 or more drawing on public services before they begin to work and pay tax.
The Federal Treasury uses a mathematical model to help it figure out who costs the federal budget money and who contributes to it. (It is called FIONA – Fiscal Impact of New Australians). As the next chart shows, FIONA tells the government that skilled migrants are firmly in the contributor category. Other categories of migrant — and the Australian population on average — are not. Because skilled migrants make up the majority of Australian migration, on average, the migrant intake helps to fill federal government coffers.
But even skilled migrants don’t add to the fiscal coffers over their lifetime if they arrive in Australia when they are older. For that reason, analysts at the Grattan Institute think-tank have argued Australia should target young skilled migrants.
“Migrants’ age upon arrival, rather than income, appears to be the main driver of the size of net fiscal benefits from migration,” wrote Henry Sherrell and his co-authors in a 2021 report.
They argue the country is best served by seeking the highest-qualified migrants, rather than those who can fill skill shortages in specific domains. Skill shortages will usually sort themselves out, Grattan argues, via our flexible labour market and wage adjustments.
As we will see, Grattan is not the only observer to argue that if you’re inviting someone to live in your country forever, it makes sense to choose people with adaptable skills.
Competition
The upside of skilled migrants to Australia is no secret. Other countries also want that upside. So skilled migration has become a competition. Accountant shortages in Australia are matched by shortages in other countries that accept a lot of migrants, such as the US and UK. Where will the most skilled people go? Australia is trying to influence the answer to that question.
Putting down roots
The government has made plain its commitment to migration. But the commitment is about more than the size of migrant flows. The government wants to change not only how many people arrive but how long they stay.
Prime Minister Albanese wants more permanent migration, reversing a trend towards more temporary migration.
Temporary migrants without permanent work rights are one reason we lack the workers we need right now, Albanese said in September.
“When people were asked to leave and when the borders were shut, that has exacerbated the skills shortages which are there,” he said. “But I say very unashamedly that my starting point is in favour of giving people the security that comes with a path to permanent migration, a path to being an Australian citizen … It makes no sense, for example, to bring in a nurse for two years, three years, and then see them leave, try and find another nurse to take that place, have them train, have them adapt to Australian conditions as well.”
Albanese spelt out his belief that offering permanence helps us compete against other countries for migrants.
“We need to be more attractive in the global labour market for the skills that we need. One way to do that is by providing that path to permanency, which is what we intend to do.”
The architect
Australia did not always have a skilled migration program. But in the 1980s, a young economist called Glenn Withers chaired a committee that laid the groundwork for Australia’s then-pioneering points system of migration. Bob Hawke, prime minister at the time, adopted his recommendations.
Some call Withers the architect of Australia’s skilled migration program. Now a professor at Australian National University, he has observed the migration program for as long as it has existed, and he rues the drift from permanent to temporary migration.
“The migration system has lost its simplicity and its core focus,” he says. “It could do better if it took a clean approach again and went back to fundamentals. This government is showing good signs.”
Should we worry that migrants will depress accountant wages? Please don’t, Withers says. The numbers coming in are managed carefully, and “overall, migrants … actually create jobs, at least as many as they take”.
Accountants are especially good migrants because of their adaptability, Withers argues. While some occupations with very specific skillsets can shift into a situation of oversupply, accountants are capable of applying their skills generally and moving as labour market trends move.
“Accountants are absolutely central for a modern fast-changing economy. [A migration program has] got to get a good mix … [between] the key shortages and the general skill areas. Accountants are a good mix of both. Accountants can do many other jobs in management. They should be a key part of a skills scheme,” he says.
“Remember that a lot of these are going to be graduates of Australian universities. International students — they do a commerce degree and some of them will want to be formally accredited accountants, but others will want to be managers.”
This brings us back to the question of local training.
Graduates — the missing puzzle piece?
If you run an accounting firm and are seeking a young staff member to hire, you might think of hiring a graduate from one of Australia’s world-class universities.
Enrolments in management and commerce degrees — which include accounting — are down in recent years. The fall is matched by rising enrolments in IT and engineering, as students with quantitative skills shift their focus from commerce to computers. Some students who would once have set their sights on being accounting partners now dream of Silicon Valley.
Still, Australia has plenty of foreign students in business and accounting courses. Accounting is by some measures, the top subject in which international students are enrolled — a potentially enormous resource. But in most cases, at the end of their course, those students head home. Just 16 per cent of foreign students attain permanent residency directly after their course (although others may eventually become permanent residents after obtaining a different kind of visa).
In an environment of shortage, it seems to many a waste to let those students slip through our fingers. So the government is expanding students’ rights to work in Australia, lifting from two years to four years the duration of work rights offered by a temporary graduate visa.
“This will mean they can stay on longer and use the skills they’ve gained in Australia to help fill some of the chronic skills shortages we have right now,” says Minister for Education Jason Clare.
Choosing brand-new graduates of Australian universities as our permanent migrants helps meet the criteria laid out by the Grattan Institute: young workers with strong, flexible qualifications.
Institute of Public Accountants director of education Philomena Leung argues that for the best graduates to become skilled permanent migrants, policy reform can’t just focus on the highest level, setting migration levels. It must also make sure the program works well in its details. Reforms should include updating the ways skilled jobs are defined and categorised, and the generic application of English-language proficiency tests.
The remaining hindrances to skilled migration may be smaller than they used to be, but they are still a hurdle in need of fixing, she says. “If I was an experienced, skilled person in a particular occupation which is internationally valued, I would think twice as to why I should come to Australia.”
It may turn out the skilled migrants we need in future are enrolled in Australian universities right now. They just need the policy settings to be right to help them to stay. The answer may not be a choice between taking accountants off planes or out of classrooms. Instead, the answer may lie in combining both options — taking migrants into classrooms, then into accounting roles.