Data are helping to reshape Australia’s migration system

The government’s migration strategy, released in December, seeks to ensure that the limited number of skilled visas Australia offers go to the most skilled applicants. Improvements to skilled migration could lift our sluggish productivity growth and boost government budgets while making the process simpler and more transparent for migrants.

Big investments in data assets by governments in recent years have been key to understanding and unlocking these potentially enormous gains. Decision-makers need to be informed about how the system is working and the impacts of policy choices. Without data, they’re just making educated guesses.

The Person Level Integrated Data Asset (PLIDA) is an indispensable tool for the public service and independent researchers. By enabling datasets on incomes, visas, social services, healthcare, demographics, and more to be linked, it enables researchers to uncover invaluable insights into our migration system, along with other big economic issues.

Before PLIDA, there was no way to understand the income and employment dynamics of migrants holding different visas or to track the outcomes of those visas over time. A policy analyst could only look at a point-in-time snapshot from the Census, or use survey data to follow a sample of permanent migrants for 18 months after their arrival in Australia.

But understanding dynamics over time is crucial: migrants often hold several visas before becoming citizens, and they can take more than 18 months to settle in Australia, have their qualifications recognised, and find a good job. Unlike survey data, PLIDA also contains the entire population of Australian migrants, allowing granular and precise analysis of migrants with diverse experiences.

Analysis using PLIDA data has underpinned the government’s recent reforms.

The Business Investment and Innovation (BIIP) visa was closed to new applicants, with places reallocated to other permanent skilled visas, after modelling by Treasury using PLIDA showed that the visa was costing the federal budget about $117,000 over the lifetime of every recipient. Previous Grattan Institute research found that people who got a business investment visa tended to be older, speak poor English, and earn very low incomes in Australia.

In comparison, the average employer-sponsored migrant lifts government budgets by $557,000 over their lifetime. This is because employer-sponsored migrants are typically younger, and earn higher incomes, meaning they pay more in taxes and use less government services over their lifetimes.

The government has also taken steps to prevent the temporary skilled visa from becoming a de facto low-skilled work visa. This followed Grattan Institute analysis of PLIDA showing that temporary skilled migrants who earn less than $70,000 per year struggled to negotiate wage increases, indicating weak bargaining power. The minimum salary requirement for a temporary skilled visa has been frozen at $53,900 since 2013. In response to our analysis, the government increased the minimum salary requirement to $70,000.

The government has also committed to reforming points-tested visas, which typically account for two-thirds of all permanent skilled visas. On current trends, more than 800,000 of these visas will be offered in the next decade.

Grattan Institute’s latest report uses PLIDA to show which characteristics of migrants suggest they will be able to get high long-run earnings in Australia. We show how small tweaks to the current points test, and consolidating separate state and regional points-tested visas into a single points visa, would enable Australia to select a higher-skilled migrant cohort, lifting the wages of Australian workers, and boosting government budgets by about $171 billion over the next three decades.

Other key reforms are in the works, including ensuring high-performing students have the chance to stay in Australia permanently, and reforms to regional visas, including working holidaymakers.

PLIDA is managed by the ABS, which puts safeguards in place to ensure the data are used responsibly, and individuals’ privacy is maintained. Only experienced researchers from approved organisations can access it, and only for specific projects. Researchers access the data through a secure portal, where data have been anonymised, and any output is vetted by the ABS to ensure no individuals can be identified.

With these important safeguards in place, Australia could be making even more use of the data. Limited analytical capability in the public service means that PLIDA isn’t used to its full potential to inform policy advice in the migration system, and more broadly. The government should invest more in this capability.

And governments will need to continue investing in PLIDA so that Australia can continue to reap the massive rewards of a well-functioning skilled migration program.