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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.

Key recommendations:

  • Abolish the Business Investment and Innovation visa program.
  • Scale back and independently evaluate the Global Talent visa program.
  • Avoid targeting permanent skilled worker visas at temporary skills shortages via occupation lists.
  • Commission an independent review of points-tested visas in order to better select younger, skilled migrants.
  • Require the Department of Home Affairs to improve the administration of permanent skilled worker visas and accelerate processing times.
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Grattan Institute Report No. 2021-06