- AREAS FOR FUTURE REFORM
Explore a reformed points test to better identify migrants who will drive Australia’s long-term prosperity
Consider developing a new Talent and Innovation visa to drive growth in sectors of national importance.
- INTRODUCTION
Permanent skilled migration should aim to maximise Australia’s long-term prosperity. This goal is distinct from meeting genuine labour shortages, which is the primary purpose of temporary skilled migration.
The way we select permanent skilled migrants (while providing clear pathways to permanent residence for temporary skilled migrants) should differ from the temporary migration system and focus on the factors that best contribute to lifting Australia’s long-term economic productivity and workforce participation. It should respond to the challenges posed by our ageing population
In planning both permanent and temporary skilled migration, however, we must recognise the intrinsic link between the two.
Given migration accounted for two-thirds of population growth in the 10 years before the pandemic, and permanent migration is the largest feature of the contribution from migration over the long run, these choices will also have lasting impacts on Australia’s social fabric.
The Government sets an annual planning level on the number of permanent skilled migrants, with allocations distributed across 4 main streams (and various sub-streams).
- Points-tested skilled migration: includes Skilled Independent, Skilled Nominated and most Regional visas, which are selection-based on a points test.
- Employer-nominated: requires applicants to be nominated by a sponsoring employer.
- Global Talent: intended to target exceptionally skilled migrants in priority sectors.
- Business Innovation and Investment: intended to target migrants who invest or drive innovation.
In 2023 – 24, Australian Goverment plan to grant 190.000 permanent visas
- Independent streams: 93075.
- Employer-nominated: 36825.
- Other talent and innovation: 7200.
- Family: 52500.
- Special Eligibility: 400.
- WHY ACTION IS NEEDED
The Migration Review found that Australia’s permanent skilled worker programs have historically delivered clear economic benefits, but that there is evidence that the economic impact of the skilled migration stream has weakened in recent years. The Migration Review considered that there is scope for Australia to sharpen its efforts to boost prosperity and remain competitive.
Furthermore, as described in the reforms to the temporary skilled migration system, the permanent program has drifted away from providing clear and fair pathways to permanent residence for temporary skilled migrant workers. This not only poses ethical challenges in terms of lack of fairness, but restricts Australia’s access to migrants with proven experience in the Australian labour market.
Points-tested skilled migration
- There is a need to simplify and recalibrate the basis for selecting independent skilled migrants, not least to get the balance right between selecting the best temporary visa holders seeking to stay permanently while also drawing highly skilled permanent migrants.
- The current points test used to select independent skilled migrants is complex and does not effectively attract migrants best able to contribute to Australia’s long-term prosperity.
- It includes factors which are likely to be poor predictors of success in the labour market, such as regional study or community language skills. Australia’s current points test also does not effectively capture age and skill trade-offs, despite both being strong predictors of migrant success and fiscal impact.
- Furthermore, features of the current independent skilled visa might discourage temporary skilled migrants from being able to apply through independent, points-tested migration pathways. This could limit their options to employer-nominated pathways, which creates a power imbalance between a migrant and their employer. Addressing this imbalance is part of the Government’s renewed emphasis on permanent migration.
Employer Nomination Scheme
- The Employer Nomination Scheme visa produces the strongest lifetime fiscal outcome for the nation in the permanent skilled migration program. The strong skill and job matching ensures the migrant is using their qualifications and experience, allowing the program to deliver long-term benefits.
- Previously, the Employer Nomination Scheme visa did not provide a direct pathway to permanent residence for many Temporary Skill Shortage visa holders, effectively rendering these temporary skilled migrants ‘permanently temporary’. Migrants could only be nominated for permanent residence after three years with their sponsoring employer. This situation, where the employer holds the pathway to permanent residence, creates a power imbalance between a migrant and their employer, which can be a driver of worker exploitation.
- The Government has already acted on this issue by expanding the eligibility requirements for the Temporary Residence Transition stream of the Employer Nomination Scheme visa to enable employers to sponsor holders of all streams of the Temporary Skill Shortage visa. In addition, the period of time a Temporary Skill Shortage visa holder must be employed with a sponsoring employer in order to be eligible for the Temporary Residence Transition stream has been reduced from three years to two years.
Global Talent Program
- The current Global Talent Program had its origins in initiatives that commenced in 2018 and is intended to attract migrants with a record of outstanding achievement, entrepreneurial ideas and cutting edge skills who can make a major contribution to Australia.
- Several submissions to the Migration Review pointed to a lack of transparency in the visa application process and long processing timeframes. In addition, some Global Talent visa applications are made in lieu of an attractive visa product for highly skilled workers in the temporary program.
Business Innovation and Investment Program
- The Migration Review concluded that the Business Innovation and Investment Program (BIIP) is delivering poor economic outcomes for Australia. This has been further supported by previous reviews, including work undertaken by the Productivity Commission and the Grattan Institute. Skilled migrants are estimated to contribute $300,000 more in fiscal benefits over their lifetime compared to a BIIP visa holder.
- Furthermore, just over 80 per cent of company directors within the Business Innovation Stream are in retail or hospitality, which are sectors not typically associated with major advancements in productivity and innovation.
- The Migration Review flagged the opportunity to draw on the relative strength of the Significant Investor stream to design a visa product more sharply targeted to select migrants who can drive innovative investments in sectors of national importance or play a valuable role in the venture capital industry.
- ACTION
Explore a reformed points test to better identify migrants who drive Australia’s long-term prosperity
- There are challenges in clearly identifying and calibrating factors for a new points test. These include making evidence-based judgements on the relative weighting of work experience in Australia and offshore, dealing effectively with age requirements and constructively recognising the potential contributions which could be made by accompanying spouses.
- The Government will consider the development of a new analysis-based points test to identify more effectively the independent migrants who will make the greatest contribution to the country. In the design of a new and simpler points test, the Government will ensure there are clear and fair pathways for temporary skilled sponsored migrant workers to apply for self-nominated pathways to permanent residence.
- The reformed points test will also seek to better reward skill level over perseverance. Which will mean for example, faster pathways for international student graduates who are working in skilled jobs in the labour market, but fewer pathways for graduates not working in skilled jobs.
- The Government has already commenced this challenge with the commissioning of work through the Australian National University to study the factors that drive success in Australia. This research found that certain characteristics such as education, English language skills, occupation and age all play an important role in determining the economic outcomes of permanent skilled migrants. The analysis also found that certain factors are more important in predicting migrant outcomes in the short term relative to the long term (and vice versa).
“The Government will publish a discussion paper later in 2023 outlining the proposed approach to the redesign of the points test and will further consult on proposed changes. This will also consider impacts to State/Territory nominated and Regional visas, given these are points-tested visa programs.”
Consider developing a new Talent and Innovation visa to drive growth in sectors of national importance.
- The Government’s broader reforms, such as the new Specialist Skills Pathway, will open up new and streamlined pathways for highly skilled migrants with the skills we need.
- This allows the Government to more sharply target the existing Global Talent program to a relatively small number of migrants who can make outsized contributions to Australia.
- Development of this new Talent and Innovation visa will also consider how best to drive innovative investments and entrepreneurship in sectors of national importance. These are some objectives of the current BIIP visa, yet are poorly realised under existing settings.
- A new Talent and Innovation visa could create a single, streamlined pathway to attract relatively small numbers of highly talented migrants to Australia, such as high performing entrepreneurs, major investors and global researchers.
- Permanent residency is an important drawcard to attract these migrants as we compete with other nations in the global race for talent. As the Government considers the design of the new, single Talent and Innovation visa, the Government will not provide any new allocations for the BIIP visa.
Information from “Australian Department Home of Affiars”
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