It all adds up: reforming points-tested visas

by Brendan Coates, Trent Wiltshire, Natasha Bradshaw

02.06.2024 report


Australia should reform points-tested visas to select the most-skilled migrants for the limited number of permanent skilled visas on offer each year. Some simple changes would help drive up our flagging rate of productivity growth and boost Australian government budgets by $171 billion over the next three decades.

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Migration has shaped Australia’s diverse, highly educated, and cohesive society, and has contributed greatly to our national prosperity. But points-tested visas are not working as well as they should.

Points-tested visas, which allocate points to potential migrants depending on their age, proficiency in English, education, and work experience, account for almost two-thirds of all permanent skilled visas issued by Australia over the past decade. On current trends, Australia will offer around 800,000 points-tested visas over the next decade.

But the points test does not sufficiently reward the most-skilled applicants. Points-tested visas are offered to a subset of skilled occupations where workers are deemed to be ‘in shortage’. This shuts Australia off from many talented migrants, and distorts the study and career choices of many temporary visa-holders already here, leaving many in visa limbo.

Separate state and regional points-tested visas make up around two thirds of all points visas. Yet migrants selected for these visas accrue fewer points, work in lower-skilled jobs, and earn less over their lifetimes than other skilled migrants.

Simple reforms to points-tested visas would help us build an even more prosperous Australia.

First, the points test should be reformed to better reward the most highly-educated applicants and those with strong English language skills. Migrants trained in any high-skilled occupation should be eligible to apply, and points should be offered for any skilled employment experience. Points should no longer be offered for studying in Australia, or in a regional area, or for undertaking a professional year.

Second, state and regional points-tested visa programs should be abolished, and more skilled independent visas offered in their stead.

Our modelling shows that reforming the points test as we recommend would give an $84 billion boost to Australian government budgets over the next 30 years. Replacing state and regional points-tested visas with a single points-tested visa program would provide a further $87 billion boost to government budgets.

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