People walking down a busy Sydney street in the morning

Improve permanent skilled migration to supercharge economic benefits: Grattan

by Brendan Coates

Rethinking permanent skilled migration after the pandemic shows that abolishing the Business Investment and Innovation Program and boosting the number of skilled worker visas would supercharge the economic benefits of Australia’s skilled migration program and result in nearly $4 billion in extra personal income tax receipts alone over the lifetime of each yearly migrant intake.

Other reforms, including making employer-sponsorship available for workers in all occupations provided they earn above median full-time earnings of $80,000 a year, would better target visas to people with the most valuable skills, and simplify the sponsorship process for firms and migrants. And it could boost the fiscal dividends by at least another $9 billion from each yearly intake.

The report finds the Federal Government has recently moved policy in the wrong direction by shifting the composition of the permanent skilled intake towards older, less-skilled migrants.

As a result, more than one-in-four permanent skilled visas are allocated to boosting business investment and to the unproven Global Talent program. These changes should be reversed because they have reduced the lifetime fiscal dividend from each annual intake of permanent skilled migrants by at least $2 billion.

‘When we reopen the borders, Australia should unashamedly select permanent skilled migrants for their long-term economic potential,’ says lead author and Grattan Institute Economic Policy Program Director Brendan Coates.

‘Skilled migrants tend to be younger, have more skills, and earn higher incomes than the typical Australian – so they generate a fiscal dividend for Australians because they pay more in taxes than they receive in public services and benefits over their lifetimes.’

The report shows that Business Investment and Innovation Program, or BIIP, visa-holders bring fewer benefits than skilled migrants selected through other streams, because they are older, speak little English, and earn lower incomes.

The new Global Talent Program, which was being expanded rapidly before the pandemic, should be scaled back while its value is assessed.

The number of skilled worker visas – allocated via employer-sponsorship and the points-test – should be expanded.

Employer-sponsorship should be available for workers in all occupations, provided they earn above median full-time earnings of $80,000 a year.

Points-tested visas should no longer be restricted to occupations identified as having skills shortages, and points should no longer be awarded for undertaking regional study or a professional year.

‘One positive from the COVID catastrophe is the unique opportunity for Australia to reset and improve our skilled migrant intake,’ Mr Coates says.

‘Our report shows how we can seize this moment to make Australia an even better place – for those of us who already live here and for those who aspire to come here.’

This is the first of a series of Grattan reports on migration, co-authored by Grattan fellow Henry Sherrell, one of Australia’s leading experts on migration policy. The series does not seek to determine the size of Australia’s population or annual intake, but looks at how we can improve our migration system to ensure that it delivers the biggest possible benefits for Australia.

Contact: Brendan Coates, Economic Policy Program Director: 0412 798 229, Brendan.coates@grattaninstitute.edu.au