A cumulative increase in net overseas migration of 265,000 people over the next five years would boost GDP in 2030 by up to $35bn, economic modelling in KPMG Australia’s submission to the Federal Government’s consultation on migration shows.

The paper argues that Australia must overhaul its migration and visa programs to minimise the economic damage done by the loss of migrants in the pandemic, remain competitive and support productivity and real wages growth. KPMG calls for “government settings that significantly increase migration levels this decade, to fill gaps exacerbated by COVID-19 and complement domestic workforce uplift and education efforts”.

The submission includes a series of policy proposals to streamline the migration system and enable an increase in arrivals to support Australia in regaining its place as one of the world’s most attractive skilled migrant destinations. KPMG welcomes the Government’s recent pledge to increase the number of permanent visas available from 160,000 to 195,000, but proposes it goes further with an additional 25,000 migrants in 2022/3 and an extra 60,000 per year from 2023/4 to 2026/27.

The paper says a whole of government effort is needed to align the increased migration levels with commensurate plans for population growth in terms of infrastructure, housing and key public services.

Dr Sarah Hunter, KPMG Senior Economist, said: “Our modelling indicates that in a scenario where the cumulative number of overseas migrants is increased by 265,000 over the next five years, real GDP would be almost $30bn higher in 2030 than in a baseline projection. Using the assumption that the new migrants are 20 percent more productive than the incumbent workforce on average – which is consistent with a focus of increased migration on skilled workers - there could be an additional $5bn lift to GDP.”

“This analysis is consistent with previous studies which have shown that the composition of the migration intake pre-COVID was budget-positive – via higher incomes and more tax revenue  – and does not depress local employment or wages in the long run. A refreshed skills-focused migration program would provide a similar boost to the economy and lift real per-head incomes.”

Mark Wright, KPMG Head of Migration Services, said: “Two years of international border closures has significantly disrupted the nature of the workforce and a series of measures to overhaul migration policy are needed to ensure permanent and company-sponsored skilled visa systems remain attractive to migrants and efficient for employers. There has been a variety of issues  – migration cuts before COVID-19; the exodus of temporary workers during the pandemic; border closures; short-term visas with either no, or protracted pathway to permanency; outdated and restrictive occupation lists; poor market testing and burdensome administration. The system needs significant reform to optimise both the level and quality of our migrant intake  – a better coordinated VET and higher education sector will be crucial.”

He added: “We have to be more flexible in a globally competitive market. Much of the foreign talent has not returned to Australia post-pandemic to resume their careers since the reopening of international borders. A growing number now choose to use their skills in a globally mobile manner not tied to a single employer – effectively creating a growing nomadic workforce. We need to tap into this emerging workforce.” 

Recommendations

The paper has a series of recommendations to improve Australia’s migration system, focusing on key themes such as aligning immigration rules with how businesses manage their workforces and simplifying the skilled immigration program. These include:

  • Establishing a new Sponsored Project Visa for targeted short-term projects, valid for 12 months, including a minimum salary, with no labour market testing requirements.
  • Introducing a ‘Digital Nomad’ Visa that provides unrestricted work rights for up to 90 days, with the potential to extend for a further 3 months, that is not age restrictive and is available to all nationalities.
  • Increasing flexibility for Australian Multi-National Enterprise to deploy their foreign employees by streamlining the Temporary Skilled Visa (TSV) pathway for intra-company transfers, and allowing TSV holders to job-share or engage in part-time work for a designated period of time.
  • Removing tiered occupational links to 2-year or 4-year Temporary Skilled Visas, and replacing it with one overarching Priority Occupation List, including a universal 4-year visa, with potential for indefinite extension. Roles not on the List to be awarded a 4-year TSV if the salary exceeds $90,000.
  • Considering lifting the age threshold for company-sponsored permanent residence from 45 to 50 years, with conditions.
  • Extending targeted immigration programs such as the Pacific Australia Labour Mobility (PALM) scheme; and programs supporting semi-skilled/unskilled labour to be demand-driven with visa capping based on local labour market conditions.

Mark Wright said: “The business community has clearly stated that access to permanent residence is an important lever to attract skilled foreign labour. Currently the migration rules governing transition to permanency are not aligned to how employers target and recruit that labour. A simple solution is allowing all Temporary Skilled Visa holders to apply for permanent residency (PR) with the support of their sponsoring employer at any point during the visa’s validity. Facilitating clear pathways to PR is especially important in regional areas where there are serious skills shortages and a higher concentration of seasonal and labour-intensive industry.” 

Leveraging the foreign student base

The paper also stresses the need to better leverage existing and future migrant workers and attract leading professionals to priority sectors. The role of students is given considerable emphasis, as previous KPMG economic analysis, referred to in the report, has demonstrated the significant potential hit to GDP resulting from the loss of young skilled migrants, including university students and graduates.

Mark Wright added: “Australia underutilises the foreign workforce already here. Anecdotal evidence suggests only 20 percent of the foreign student population progresses to permanency. We propose an approach which gives a ‘push incentive’ to foreign talent resident here. In a competitive market, it is essential that we make it more attractive for foreign students by offering the carrot of permanent residency.”

Student-related recommendations include:

  • Allowing graduates from Australian tertiary institutions with a qualification aligned to the Priority Occupation List to apply for a three-year Temporary Graduate Visa with full work rights: providing holders with a pathway to permanent residence via three years working with a sponsoring employer in a regional location, and five years in Sydney, Melbourne or Brisbane.
  • Implementation of a Regional Skills Match Database which contains the details of foreign graduates from an Australian tertiary institution granted a Temporary Skilled Visa and an extension of the Australian Skills Guarantee to include international students and graduates on temporary visas.

In the paper, KPMG also argues that the Global Talent Visa is complex to navigate, and it takes too long to make a decision. To attract leading professionals into priority sectors in Australia, KPMG proposes that certain priority occupations be pre-approved for a Global Talent Visa and government-approved recruiters be allowed to identify appropriate candidates and invite them to apply.

 

Read the full submission:

For further information

Ian Welch
KPMG Communications
0400 818 891
iwelch@kpmg.com.au