The 5-year Productivity Inquiry produced by the Productivity Commission (PC), which was tabled last week but has been in government hands for over a month, takes aim at a number of aspects of Australia’s current migration system that would radically affect its skilled migration program.

The Advancing Prosperity report seeks to address the productivity growth decline Australia and other advanced economies face. Productivity in an economic sense is simply obtaining more from less through efficiencies and optimisations. Advances in, and the uptake of, new technology is one example of productivity increasing.

Australia’s migration program is a component of productivity in the labour market, save for visas that are not designed for work: such as visitor visas, and parent visas. These visas, however, affect aggregate productivity in that visa holders are consumers within Australian society as tourism operators can no doubt attest.

The efficiencies when it comes to skilled migration are the supply of skilled migrants and matching that supply with the jobs needed to be filled. This is in addition to the general goal of innovation of increasing efficiency in work practices, and labour and skill mobility for all workers.

Many recommendations are based on ways to improve the visa subclass’s net fiscal impact (NFI): the lifetime net contribution of permanent migrants to Australia’s public wellbeing, primarily by contributing more in taxes than drawing on Australia’s social safety net. The NFI is not the only thing to consider, however. There are social and cultural implications that are much harder to quantify, but these are primarily the drivers of family and humanitarian visas. Highly skilled older migrants that can readily transfer their skills is another example of a hard-to-quantify factor.

There are several broad recommendations by the PC.

Business skills visas should be abolished

The report damns this visa category, stating that it “performs poorly on almost all fronts”, despite amendments made over the years when it was first identified as being a poor program and the PC recommends its abolition. The primary reason is because of its NFI.

Analysis shows that the NFI by age and visa category is zero for primary skilled migrants when they are 40 on arrival to Australia, higher than the general population, after which it turns negative. This is the reason why there is an age cap on skilled migration with few exceptions. The ages when the NFI turns negative is younger for secondary skilled visa applicants and family visas.

The NFIs are broken down further by skilled category. Not surprisingly, employer-nominated visas have the highest NFI at $557,000 over the primary visa holder’s lifetime, while business skills visas is the only skilled visa category that is negative at -$117,000 for the primary visa holder and which is likely to be more if secondary applicants are included. Therefore, on average, business skills visa holders are a drain on Australia’s public purse strings.

This is not the first time business skills visas have come under fire from the PC.

There is no information on how the Global Talent independent program has fared by comparison.

Remove occupation lists but increase the TSMIT for temporary and permanent skilled visas

Occupation lists are seldom updated. This includes the Australian and New Zealand Standard Classification of Occupations (ANZSCO) by the Australian Bureau of Statistics (ABS) and the visa occupation lists from which the ANZSCO occupations are taken.

Instead, wage thresholds similar to the Temporary Skilled Migration Income Threshold (TSMIT) should increase, with potential carve outs. It may also increase with the primary visa applicant’s age to ensure increasing the overall NFI.

They, therefore, recommend at least a two-tiered income threshold with a lesser amount for temporary visas.

Thankfully, the report recognises that income thresholds are problematic. They must be “high enough to make skill lists redundant and to avoid concerns about displacing lower-wage incumbent workers, and low enough not to eliminate migration of many valued skilled workers.”

An income threshold too high for non-professional occupations that are in demand will see that they are either not sponsored, or there would be an increased risk of worker exploitation, and likely breaches of charging for a migration outcome.

There is no mention of the Annual Market Salary Rate (AMSR) and whether this would be necessary if income thresholds were implemented.

Recognise ongoing Australian employment and income levels for General Skilled Migration visas

For points-tested migration visas (subclass 189 - Skilled – Independent visa, subclass 190 - Skilled – Nominated visa, and subclass 491 – Skilled Work Regional (Provisional) visa), the system should be better calibrated to recognise ongoing Australian employment (which it currently does), income levels and when the potential migrant first arrived in Australia (which it currently does not). The additional factors should be considered because they contribute to Australia’s productivity as a temporary visa holder, adding to their NFI.

Additionally, those already working in Australia would “hit the ground running” with local work experience.

Specialised permanent human services sectors visa

Due to sustained labour shortages and the inability to attract workers in the human services sector, primarily the aged and disability care sectors, and the fiscal constraints of increasing wages and funding to attract suitable workers, a new permanent visa for occupations in this sector is recommended.

The current TSMIT of $53,900 should be implemented with a condition that the primary visa holder is employed in the sector for at least 4 years.

Anyone familiar with the subclass 187 - Regional Sponsored Migration Scheme visa will know that enforcing a permanent visa condition based on employment comes with a steep public cost. It would be better to have these occupations as part of the 482/TSS visa program instead of Company-specific labour agreements, with the ability to transition to a permanent visa after time working on this visa.

This reverses the onus of compliance from the Department of Home Affairs to the visa applicant: something that was done when the 187 visa closed to all except legacy visa holders and replaced with the subclass 494 – Skilled Employer Sponsored Regional (Provisional) visa that transitions to a subclass 191 – Permanent Residence (Skilled Regional) visa after at least 3 years.

Increasing 482 visas to 6 years and providing pathways to a permanent visa

The recommendation to increase the duration of all 482/TSS visas to 6 years and “strengthen” a pathway to a permanent visa.

This would effectively unwind the policy set many years ago when the old subclass 457 - Temporary Work (Skilled) visa was abolished. Some legacy visa holders are still working their way through the migration system to a permanent visa.

Switching employers as the holder of employer-sponsored temporary and permanent visas should be easier with the ability to be unemployed for longer than the current 60 days for a 482/TSS visas to find suitable employment. Perhaps nobody informed the PC that with nil visa conditions for subclass 186 - Employer Nomination Scheme visas, switching employers is not a problem.

The subclass 485 – Temporary Graduate visa should also be increased to 5 years for even bachelor degree graduates and should have access to a permanent visa provided employment and income levels are achieved.

Some skill assessments to be abolished

Lastly, the report demonstrates a disconnect between licensing to practice a particular profession and the skill assessment many skilled visas require to obtain a visa.

For non-formal licensed occupations, primarily occupations where VETASSESS is the assessing authority, there is no added value to the skill assessment process. The report takes a swipe at this need given costs and that assessments are “often undertaken by non experts.” Ouch!

The perennial question is how many of these recommendations will be implemented by the government. Certainly, pathways to a permanent visa for 482/TSS visa holders have been openly supported as well as increasing the TSMIT.