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This report argues that Australia should select permanent skilled migrants for their long-term economic potential. Skilled migrants tend to be younger, higher-skilled, and earn higher incomes than the typical Australian. Skilled migrants generate a fiscal dividend to the Australian community because they pay more in taxes than they receive in public services and benefits over their lifetimes.
Recent federal government decisions have taken Australia in the wrong direction. They have shifted the composition of Australia’s permanent skilled migrant intake away from visas with a track record of selecting younger, skilled migrants best placed to succeed in Australia. Today, a growing share of permanent skilled visas are allocated to boosting business investment and to the unproven Global Talent program. These changes should be reversed. They could reduce the lifetime fiscal dividend from each annual intake of permanent skilled migrants by at least $2 billion.
The number of skilled worker visas – allocated via employer-sponsorship and the points-test – should be expanded. But these visas also need a rethink. Permanent skilled worker visas should no longer be targeted at skills shortages. Instead, permanent skilled worker visas should be targeted at younger, higher-skilled migrants who are best placed to benefit the Australian community in the long-term.