Australia’s migration opportunity: how rethinking skilled migration can solve some of our biggest problems - Grattan Institute

Australia’s migration opportunity: how rethinking skilled migration can solve some of our biggest problems

by Brendan Coates, Trent Wiltshire, Tyler Reysenbach

14.12.2022 Submission
Submission to the Inquiry into Australia’s Migration System, 14 December 2022

A reset of Australia’s skilled migration program can lift Australians’ living standards, attract global talent, raise Australia’s lagging rate of productivity growth and boost federal and state government budgets by billions each year.

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Only a quarter of permanent visas issued over the past decade actually assessed migrants’ skills. Another one-in-three went to the families of those skilled migrants. The rest came via the family and humanitarian streams, reflecting the diverse objectives of our migration program.

Permanent skilled visas must therefore be targeted at younger, skilled talent to allow them to stay in Australia long term, not to address short-term skills shortages. Temporary skilled migration helps fill shortages, but also provides much of the applicant pool for permanent skilled migration, so should also target high-skilled migrants.

A less prescriptive visa system that helps attract the world’s best and brightest is the key to strengthening our sovereign capabilities in areas like cyber security.

Permanent employer sponsorship should be available for workers in any occupation earning above $85,000 a year. This would better target migrants with valuable skills, simplify and speed up the sponsorship process, offer clearer pathways to permanent residency for temporary sponsored workers and recent graduates, and boost Australian government budgets by $125 billion over the next three decades.

The Business Investment and Innovation Program, which selects older and less-skilled migrants, should be abolished, saving government budgets up to $34 billion over three decades.

A single points-tested visa should replace the skilled independent, state-nominated and regional streams. Points should only accrue for characteristics that predict migrants’ success in Australia. And more weight must be given to the skills of secondary applicants, who account for about half of all permanent skilled visas.

Temporary sponsorship should be available for migrants in any occupation who earn more than $70,000 a year. Labour-market testing should be abolished and sponsorship made portable so that migrant workers can more easily switch employers.

The government should avoid expanding less-skilled migration solely for the purposes of work, especially as many workforce shortages will ease now the borders are open. Expanding less-skilled migration — especially for workers on temporary visas — could undercut the wages of low-paid Australians and further increase exploitation. And it could also erode public trust in our migration program and amid concerns about Australia becoming a `guest-worker’ society.

But less-skilled migrants may be needed to meet care economy workforce needs in the short term. But given the risks, it is a poor long-term solution. Offering permanent visas could limit exploitation, but could see workers leave the sector unless wages rise, and entails a large long-term budgetary cost if it means fewer skilled visas are issued.

Care economy workforce shortages will only be fixed in the long term if wages rise to competitive levels to better reflect what these jobs demand of workers.

We would like to thank the Scanlon Foundation for its generous and timely support of this project.

Trent Wiltshire

Migration and Labour Markets Deputy Program Director
Trent Wiltshire is the Deputy Director, Migration and Labour Markets, in Grattan Institute’s Economic Policy Program. He previously worked at the Victorian Department of Treasury and Finance, as Domain Group’s economist, and at the Reserve Bank of Australia.

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