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More permanent arrivals are good news for the budget bottom line while avoiding hits to employment or wages, say accounting firms.
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Rise in overseas intake would boost GDP by $35bn: KPMG
20 December 2022
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10 minute read
A net increase in migration of 265,000 over the next five years would boost GDP by up to $35 billion by the end of the decade, says KPMG in its submission to the government on migration.
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The firm said the loss of migrants throughout the pandemic meant now was the perfect time to overhaul the country’s migration and visa programs in an attempt to address productivity and skill shortages in the workforce.
“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 $30 billion higher in 2030 than in a baseline projection,” said KPMG senior economist Sarah Hunter.
“Using the assumption that the new migrants are 20 per cent 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 $5 billion 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.”
Fellow accounting firm BDO Australia also called for amendments to the government’s migration system including the introduction of an essential skills visa to help address labour shortages in the healthcare and aged sectors.
It also recommended the government remove or simplify the labour market testing requirements, which are “overly prescriptive and add to the bureaucratic red tape at a time when skill shortages are evident and impact aspects of Australia’s economic recovery”.
KPMG’s head of migration services Mark Wright agreed and said the exodus of temporary workers during the pandemic and the lack of flexibility for migrants had been negatively impacting Australia’s economy.
“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,” said Mr Wright.
“The system needs significant reform to optimise both the level and quality of our migrant intake - a better co-ordinated VET and higher education sector will be crucial.”
“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 the skills in a globally mobile manner not tied to a single employer - effectively creating a growing nomadic workforce.”
To try and reach the “nomadic workforce” KPMG recommended that the government introduce a digital nomad visa which would provide unrestricted work rights for up to 90 days, with the potential to extend for a further three months, available to all ages and nationalities.
The firm also recommended the government raise the age threshold for company-sponsored permanent residence from 45 to 50 years.
Both accounting firms concluded that the government relied on immigration to support Australia’s growth and that a review was necessary to ensure the system met the increasingly flexible nature of the global environment.
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