Australia's Immigration Policy: A Masterclass in How Not to Do It! By Paul Walker

Inspired by a recent piece from Leith van Onselen over at Macrobusiness.com.au, let's unpack why this setup is less "land of opportunity" and more "land of missed opportunities." We're talking about a policy that's supposed to bring in top talent but ends up importing underemployment, low wages, and a side of economic drag.

Let's kick off with the international student visa system, which has morphed into something resembling a pyramid scheme for residency. A fresh study titled "Perverse policy incentives and inferior economic outcomes" by Matthew Maltman and Christopher Parsons, published in Migration Studies, lays it bare. Back in the day (1999–2012), Australia rolled out the 880 visa series, dangling permanent residency carrots for overseas students in certain fields. The result? Negative migrant selection, folks with lower incomes and slimmer chances of landing high-skilled jobs compared to overseas-educated migrants or locals.

Fast-forward to today, and Jobs and Skills Australia (JSA) echoes this in their International Students Pathways and Outcomes Study. Nearly 70% of international higher education students cite migration as a key reason for choosing Australia, not just the beaches or the barbecues. These grads earn way less than domestic counterparts, think $56,900 for business and management internationals versus $115,000 for locals. Engineering and computing? $60,000 vs. $100,000. Many end up in retail or driving Ubers, far from their degrees. JSA notes they're less likely to snag jobs in their field or at qualification level, with effects worse for uni. grads than VET ones.

The Graduate Outcomes Survey reinforces this: international grads consistently show poorer labor market outcomes and lower salaries than domestics. It's like paying top dollar for a Ferrari and getting a go-kart.

Now, onto the so-called "skilled" migration program. A report from the Australian National University by Peter McDonald and Alan Gamlen calls it out: Australia's migration program "has failed to deliver what it promises." Only 12% of permanent spots go to genuinely new skilled arrivals from offshore. The rest? Family members clogging the pipes. Officially, 30% is for family visas, but factoring in skilled workers' families, it's over 60%. And don't forget the 20,000 humanitarian migrants annually, who often face poor job outcomes per Treasury data.

The Grattan Institute's work highlights similar issues. Their reports show that while some skilled visas deliver fiscal wins, others drag the budget down.

Employer-sponsored visas shine with a +$560,000 net outcome, but business innovation and investment program (BIIP) migrants cost -$120,000 each. Overall, recent migrants spend more than they earn initially, putting pressure on resources.

The Committee for Economic Development of Australia (CEDA) piles on: recent migrants earn significantly less than Aussie-born workers, and it's getting worse. They're increasingly stuck in low-productivity firms, with nearly a quarter of permanent skilled migrants in jobs below their skill level, costing the economy $1.25 billion.

The 2023 Migration Review (aka the Parkinson Review) found 51% of overseas-born bachelor's grads in unskilled jobs three years post-graduation. That's not a skills boost; that's a skills bust.

So, what's the Albanese government doing? In 2025, they've bumped the international student planning level to 295,000 for 2026, a 25,000 increase, while loosening English requirements and lowering risk ratings for some providers. They've introduced integrity measures, like banning onshore student visa applications for visitors and temp grads, but critics say it's prioritising quantity over quality. This could exacerbate skills shortages, tank productivity, and squeeze living standards further.

Australia's immigration system is like a leaky boat: it's taking on water from poor design, perverse incentives, and a focus on numbers over nous. The fix? Shrink the program, hike the wage floor to above the median ($90,000+), make all skilled visas employer-sponsored and field-specific, ditch retirement and parental visas, and tighten student entries for only the best and brightest.

If policymakers keep ignoring these studies, we'll end up with more underpaid Ubers and fewer innovators. Australia deserves better, quality migrants who boost the economy, not burden it.

https://www.macrobusiness.com.au/2025/11/more-proof-australias-immigration-system-is-failing/