Immigration and "sovereign risk"

The ongoing chatter about the Resources Super Profits Tax keeps referring to a term called "sovereign risk". Not being an economist, I had to look this up. Apparently it refers to a calculation made by foreign investors about the likelihood that the government of the country they are investing in will suddenly change the law in such a way that they will lose all or part of their investment. Obviously, a country deemed to have high sovereign risk is one where investors will be wary of putting their money.

For people thinking of investing their lives in Australia the sovereign risk factor has gone through the roof in the past weeks. Back in February the government decided to simply throw out all offshore skilled migration applications lodged before 1 September 2007. Then it changed the criteria for onshore applications so that students who had put all of their family's savings into a well-advertised and government-promoted plan to qualify for permanent residence through study were told they had never been promised any such thing and the best they could hope for was 18 months to try to find a job and an employer willing to sponsor them.

Now we have the Migration Amendment (Visa Capping) Bill 2010. This allows the government to throw out validly made applications based on any characteristic they choose - occupation, age, even nationality. Despite suggestions to the contrary by the Minister in an interview on the ABC, the Racial Discrimination Act does not prevent discriminatory laws based on a person's current nationality, only on their "national origin" -- see Macabenta v Minister for Immigration [1998] FCA 1643.

Applying for migration to Australia is becoming an increasingly risky business.