Skilled migration needs a reset: report

Australia designing a better skilled migration program could be the solution to major economic challenges, a new report says. 

Lack of productivity growth, growing debt in the federal budget and the economy's transition to net-zero could be assisted by key reforms, a submission by public policy think tank The Grattan Institute to the federal government's migration review said.

In the past decade, only a quarter of permanent visas were issued to migrants based on their skills with the rest granted through family and humanitarian streams. 

The submission said while this reflected the diverse objectives of Australia's migration program, the government should target permanent skilled visas at younger, higher-skilled migrants.

This would allow them to stay in Australia for longer and contribute to the economy. 

A second recommendation was to change policy to ensure permanent employer sponsorship was available for workers earning more than $85,000 a year in any industry. 

The institute said this would better target migrants with valuable skills, simplify the sponsorship process, offer clearer pathways to permanent residency and boost Australian government budgets.

It also said while the temporary visa system helped to fill worker shortages, they also made up most of the pool for permanent applications which meant that program should also be targeted towards highly-skilled migrants.   

Another key recommendation was to abolish the Business Investment and Innovation Program, which prioritises older and less-skilled migrants.

The institute estimated these reforms could boost federal and state government budgets by a combined $159 billion over the next three decades and by $27 billion over the next decade alone.

But its submission also warned against expanding intakes of less-skilled migrants to meet worker shortages and said it risked undercutting wages and increasing exploitation.   

The report found such a plan could erode public trust in Australia's migration program and fuel concerns about the nation becoming a "guest worker" society.

In September, Home Affairs Minister Clare O'Neil announced Australia would lift its permanent skilled migration cap to 195,000 places for this financial year, up from 160,000. 

A comprehensive review of Australia's migration system is expected to release a report by the end of February.