Australia’s permanent and temporary skilled visa programs were originally designed to select highly skilled workers capable of making a particularly strong contribution to the economy. There is growing international competition for highly skilled migrants and Australia will need to overhaul its permanent skilled migration program to attract migrants who are able to meet future needs.
Historically, Australia‘s permanent skilled labour programs have delivered clear economic benefits. There is growing evidence that the economic impact of the skilled migration stream has weakened in recent years. In the 2020-21 Migration Program only 39 per cent of places were allocated to the Employer Sponsored and Skilled Independent Programs. While this has increased to 48 per cent in the 2022-23 Migration Program, a majority of places continue to be provided for less highly performing visas in economic terms – the State and Territory nominated visas, regional visas and other niche visas, including the BIIP.
BIIP made up 28 per cent of program allocations in 2021-22. The number of places allocated for this visa has been significantly reduced in the 2022-23 Migration Program. The BIIP is designed to attract investors, entrepreneurs and innovators. Available evidence suggests economic conditions of migrants entering under this program are weaker than in other streams. Data from tax returns show that average incomes, including from investments, are lower than other Skilled visas.
For those holding an Investor stream visa, the minimum investment tends to be made into the required asset classes to meet the criteria for grant of the visa, and the remainder invested passively or into low productivity businesses such as retail and food services. For those in the Business Innovation stream who are required to own and operate a business, business turnover results tend to be poorer for migrant-owned businesses than those owned by longer-standing residents and investment is predominantly in lower productivity sectors.
Unlike the other skilled streams, the BIIP makes a lower economic and fiscal contribution per primary migrant than the average Australian, reflecting a much older cohort who earn lower incomes (mostly from capital returns), despite their relatively high wealth. The longer a person contributes to the labour force and the higher their wage (which is associated with higher skilled employment), the greater their economic and fiscal contribution.
Lifetime per person economic contribution of skilled migrants by Visa Stream ($ million)
The Productivity Commission – one of the 483 parties that submitted their public proposal to the Panel which carried out the review – cites that “Younger and more skilled immigrants are best placed to make a positive economic contribution to Australia. These types of immigrants provide a demographic dividend by increasing the proportion of people in the workforce, thus reducing the negative impacts associated with an ageing population.“
The report suggests consideration be given to whether BIIP is to be retained as a substantial program.