The Future of Migration: Australia's Shift Towards Skilled Workers

The government aims to alter the composition of Australia's permanent skilled migrant intake for 2022-23, gravitating towards visas that historically select younger, skilled migrants who are better positioned to thrive in Australia. Simultaneously, the total number of skilled visas offered will rise to 109,900, approximately 30,000 more than the planning levels of 2021-22.

As highlighted in the Grattan Institute's 2021 report "Rethinking Permanent Skilled Migration," individuals obtaining a permanent skilled visa to Australia typically establish long-term residency and contribute to the workforce for many years. Hence, policy decisions regarding visa allocation can have enduring impacts over several decades.

However, there remains a necessity for further reforms to enhance Australia's migration program, such as eliminating visa programs lacking economic viability and streamlining the sponsorship process for both businesses and migrants.

Significant Surge in Skilled Worker Visas

The allocation of skilled worker visas, facilitated through employer sponsorship or the points test, will surge to 91,652 in 2022-23, a substantial increase from 50,900 in the current financial year. This increase stems from both the augmentation in visa numbers and the aforementioned shift in composition. Employer sponsorship will witness an 8,000 increase, totaling 30,000 permanent skilled visas, while the points-tested Skilled Independent category will triple to 16,652 visas.

Individuals selected through these programs exhibit high levels of skill and typically earn higher incomes than their Australian counterparts of similar ages. Furthermore, they contribute significantly to the Australian economy. For instance, according to Treasury estimates, primary holders of permanent employer-sponsored visas pay approximately $557,000 more in taxes over their lifetimes than they receive in public services and benefits. Similarly, primary holders of Skilled Independent visas contribute around $386,000 more in taxes than they anticipate receiving in return.

Scaling Back Business Investment Visas

The Business Innovation and Investment Program (BIIP), often termed as Australia's "buy a visa" scheme, has been reduced from 13,500 visas to 9,500 and should be abolished altogether. Few investors are directing funds towards projects that wouldn't otherwise materialize, and they often lack the entrepreneurial expertise beneficial to the Australian community. Research by the Grattan Institute indicates that recipients of this visa are typically older and earn considerably less than other skilled migrants.

According to Treasury research published in December 2021, each primary visa holder under this program costs Australian taxpayers an average of $117,000 over their lifetime due to their lower tax contributions compared to their utilization of government services and benefits. Shrinking the BIIP and reallocating places elsewhere is projected to save taxpayers approximately $1 billion from the current intake, a significant boon for a government grappling with the long-term financial implications of the pandemic and demographic shifts.

Reduction in the Global Talent Program

The Global Talent visa program, aimed at attracting highly skilled professionals, has been downsized from 15,000 to 8,448 places. While attracting global talent remains a commendable objective, the mechanisms employed to select migrants for the program lack robustness. There are minimal regulations, with applicants not mandatorily requiring a sponsoring employer or a firm salary offer. Until a more rigorous evaluation is conducted, scaling back this visa program is a prudent step.

Future Steps for the Government

The federal government has committed to reviewing the occupation lists dictating eligible jobs for skilled migration visas. However, it would be more effective to abolish these lists altogether, given their cumbersome nature, susceptibility to lobbying, and ineffectiveness.

Instead, employers should be subjected to wage thresholds of $70,000 for sponsoring temporary visa workers and $80,000 for sponsoring permanent visa workers. Sponsored workers should receive salaries equivalent to those of Australian workers to prevent wage undercutting. These adjustments would ensure visas are targeted towards individuals with the most valuable skills and simplify the sponsorship process for both firms and migrants.

Moreover, points-tested visas should undergo independent review to prioritize younger, highly skilled workers based on their age, qualifications, skills, and English proficiency. Allocation of points should focus solely on characteristics indicative of success in Australia.

In conclusion, while discussions about migration policy often center on intake size rather than selection criteria, the recent enhancements in Australia's skilled migration program signify a significant step forward, albeit not garnering substantial attention on budget night.