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Australia’s Advancing Prosperity report with a focus on migration

Updated: Apr 14, 2023

Australia’s Productivity Commission tabled its 5-year Advancing Prosperity report which has a focus on Australia’s migration system, particularly the skilled migration program. Australia has seen a decline in productivity.


Migration is a vital part of the country’s productivity with skilled visas a major stream, hand-in-hand with that is a system that allows the right kind of migrants in to work in jobs that need to be filled.


The report tabled some recommendations including its opinion of business skills visas saying that these performed poorly and that these visa holders are a drain on Australia’s economy. It also suggested that occupation lists be removed but that the Temporary Skilled Migration Income Threshold (TSMIT) for temporary and permanent skilled visas be increased.


These are the reforms that the report suggested:


Abolishing investor visas


The Australian Government should abolish the Business Innovation & Investment visa program. Temporary migration should be facilitated for people with genuine plans to start a business in Australia, while pathways to permanent residency should involve the revised Skilled Independent visa, based on a points’ test that better accounts for income levels and age.


Implementing wage thresholds for employer sponsored visas


The Australian Government should remove current list‑based restrictions for employer‑sponsored temporary and permanent skilled visas and set an income threshold well above the Temporary Skilled Migration Income Threshold (TSMIT) rate. The income threshold that applies to temporary migration should be lower than for permanent. The income threshold for employer‑sponsored permanent visas should increase with age, though at some older age, people would no longer be eligible for this visa category.


Improving skilled independent visas


For the Skilled Independent visa (subclass 189), the Australian Government should remove current list‑based restrictions, but the points system should be able to award points for any factors shown to be associated with fiscal and employment benefits. Additional points should be awarded for ongoing employment in Australia according to income level, with different income benchmarks for different age groups. Moreover, the design of the points system should be updated regularly based on empirical research.


Meeting the needs of human services without stifling wage increases


The Australian Government should introduce a pilot of a special permanent visa subclass for occupations in human services sectors largely funded by government (such as aged and disability care), but only if these are facing likely enduring and significant labour shortages that are weakly responsive to wage increases. The visa subclass should be subject to the current Temporary Skilled Migration Income Threshold and include a condition that the applicant remain employed in the relevant sector for 4 years.


The pilot should be evaluated for its impacts and need after several years.


It should also be abandoned if the Australian Government develops sustainable alternative funding options for aged care that are sufficient to meet the wage increases required to limit labour shortages.


Improving temporary migration and pathways to permanent residency


The Australian Government should amend settings for temporary skilled migration to increase their duration to 6 years, subject to continuous employment (for a set percentage of a given year) with a sponsoring employer (with the ability to move to a new sponsoring employer under the same visa).


While temporary skilled migration visas should not come with an expectation of permanent migration, pathways to permanent migration should be available under revised employer‑sponsored and independent skilled visas.


For international students, obtaining a qualification from an Australian tertiary education provider should be associated with some expectation of being able to test their skills in the Australian labour market, but not an expectation that their qualification alone will qualify them for permanent residency. The Australian Government should increase the duration of stay for Temporary Graduate visas (subclass 485) for graduates with Bachelor and higher level degrees, such that an extension to five years is guaranteed subject to proof of ongoing employment above a set wage threshold.


These changes should be subject to the revised Employer Nominated and Skilled Independent visas, both of which would place greater emphasis on age and income (recommendations 7.2 and 7.3).


Improving job mobility for employer sponsored visas


The Australian Government should amend settings for employer‑sponsored temporary and permanent visas to better allow workers to switch to competing employer‑sponsors including by permitting a short period of unemployment while looking for a new sponsor.


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