Migrant intake into Australia

Inquiry report

Released 12 / 09 / 2016

This report presents an assessment of the benefits and costs of temporary and permanent immigration, with regard to the budgets and balance sheets of Australian governments, and the income, wealth and living standards of Australian citizens.

This report was sent to Government on 13 April 2016 and publicly released on 12 September 2016.

Download the overview

Download the report

Download the technical supplements

Technical supplement A

The relationship between immigration to Australia and the labour market outcomes of Australian workers (PDF - 631 Kb)
The relationship between immigration to Australia and the labour market outcomes of Australian workers (Word - 308 Kb)

Technical supplement B

Technical supplement C

Technical supplement D

There has not been a government response to this inquiry yet.

Key Points

Immigration policy has enduring effects on many dimensions of Australian life. Getting the policy settings right is critical to maximising community wellbeing.
The current immigration system has generally served the interests of the broader community well. The key question is whether current policy settings are set to deliver the best outcomes for the Australian community over the longer term.
Australia's immigration policy is its de facto population policy. Decisions about immigration policy should be made within a broad context and explicitly take into account the associated economic, social and environmental impacts, including the differential impacts on state, territory and local governments. Community values and perspectives should inform the policy.
Australia's current immigration profile is projected to deliver a demographic dividend to Australia and higher economic output per person. By increasing the proportion of people in the workforce, immigration can reduce the impacts of population ageing, but it does not offer a long-term panacea — immigrants age too.
While some positive rate of immigration is likely to benefit Australia over the long term, the gains depend on having a system that attracts immigrants who are younger and more skilled, and policies that are responsive to economic, social and environmental conditions.
The Commission was asked to look at alternative ways of selecting migrants, including a specific proposal that uses price as the primary basis for rationing the permanent immigration quota.
- Notwithstanding the downside risks and uncertainties associated with such an unprecedented system, replacing existing selection criteria with a price-based system could offer a fiscal benefit to the Australian Government.
- The size of this benefit is highly contingent on the feasibility and credibility of enforcing tightened access to government-funded services for all non-humanitarian immigrants.
Government policies — including immigration policy — should not be driven solely by fiscal considerations. The relative merits of any policy needs to be assessed against a broader context that takes into account all the relevant dimensions of societal wellbeing.
The Commission does not support the price-based proposal.
There is scope for significant reforms within the current system that could deliver superior overall outcomes for the Australian community.
- Some of the areas for improvement relate to enhancing the integration of immigrants once they are in Australia — including through more effective settlement services and measures to mitigate the risks of immigrant worker exploitation.
- However, the biggest gains to Australia are likely to come from recalibrating the intake of permanent skilled immigrants. This would involve 'raising the bar' by shifting to a universal points test while tightening entry requirements relating to age, skills and English-language proficiency.
- There is a strong case for a substantial increase in visa pricing in relation to some elements of the family reunion stream. This would provide scope to recoup at least a portion of the high fiscal costs typically associated with immigrants in this category. In the medium term, the allocation of parent visas should be revised.
A stronger evidence base is required to inform future immigration policy. This requires further investment in data collection, integration and dissemination, and data analytics capacity.

Content Summary

This report contains 15 chapters, 5 appendices and 4 online only technical supplements.

Chapter 1 presents relevant background information for this report.

Chapter 2 provides an overview of Australia's immigration system and trends in immigration to Australia.

Chapter 3 explains the Commission's approach to this inquiry and the links between immigration, population and economic growth. It also includes an outline of the framework used to assess the costs and benefits of immigration.

Chapters 4 and 5 outline the general characteristics of immigrants and their labour market outcomes, respectively. Both chapters focus on how these differ from the Australian-born population on average and across visa categories.

Chapters 6 to 10 examine the labour market, environmental, social, fiscal and long-term impacts of immigration on the Australian community, respectively. The Commission's assessment of the overall impacts of immigration is set out in chapter 10.

Chapters 11 to 13 assess the current arrangements for temporary immigration, the interaction between temporary and permanent immigration, and permanent immigration, respectively.

Chapter 14 examines the potential impacts of a proposal to use price as the primary basis for determining the intake of permanent immigrants.

Chapter 15 considers other options for visa charging.

Appendix A outlines the conduct of the inquiry, including consultations undertaken and lists the submissions received.

Appendix B presents an overview of immigration systems in Canada, New Zealand and the United States.

Appendix C provides more detailed data on the labour market outcomes of immigrants.

Appendix D covers the potential impacts of immigration on Australia's youth labour market.

Appendix E provides further information on investor visas.

Technical supplement A presents an econometric analysis of the impact of immigration on the labour market outcomes of Australian-born people and immigrants who have been in Australia longer than 5 years.

Technical supplements B to D outline the approaches taken by, and the results of, the Commission's computable general equilibrium, partial equilibrium and fiscal modelling, respectively.