Nearly half our permanent migrants are working below their skill level: former Treasury Secretary

Australia’s failure to fully use the skills of its permanent migrants is an “enormous waste” for the economy, former Treasury Secretary Martin Parkinson has warned, calling for urgent action in the May budget to free up this talent.

Nearly half of all permanent migrants were working below their skill level, Parkinson said in a Wednesday address.

The former senior public servant led a review of migration for the Albanese government, presented in 2023 and concluding that the migration program, including permanent and temporary arrivals, was not fit for purpose.

In what amounted to an indictment of the government’s failure to follow through, he said this finding had been accepted by government and stakeholders but not enough had been done since to fix problems.

The debate about numbers, where people came from or what they believed “obscures the more tractable, and politically easier issue to solve” relating to the skilled permanent migration program.

This program involved two parts.

“Part one is getting the right skilled migrants into the country. That is the migration system: what are our needs, today and into the future, and then ensuring our visa settings, our selection criteria, the operation of the points test, the core skills list, processing times and so on, all work together to address those needs.

"The Migration Review canvassed this in depth, pointing the way forward – little, if anything, seems to have been done in response.

"Part two doesn’t get the same attention.

"It is what happens after those skilled migrants have been granted the pathway to permanent residency/citizenship. In particular, whether Australia will let them use the skills they were brought here to contribute.

"That is the skills and qualifications recognition and occupational licensing system.

"It is where enormous economic value is currently going to waste, largely unnoticed.”

Parkison said Australia prevented migrants, including those already in the country, from working at their full capacity.

“We have a multi-step, multi-agency, multi-jurisdictional assessment and licensing process that was never designed as a system. It just accumulated, layer by layer, over decades.

"It is like a river, clogged by mud, sludge and garbage over decades. But a river that can be reshaped and cleaned away by a flood of common sense and good policy.”

“No matter where you sit on the size of the migration program debate, you have to recognise that a more immediate question is whether Australia is getting the economic value it should from the skilled people it has already invited here, and those it will invite in the future.”

Supporting the Activate Australia’s Skills campaign – a campaign backed by business, union, and community organisations for reform of Australia’s complex and burdensome skills recognition system – Parkinson said an independent skills and qualifications recognition commissioner was needed.

This would be a statutory function overseeing an end-to-end recognition system, from visas to occupational licences to employment.

“It would identify system barriers and propose solutions while never reducing Australia’s rightly high standards.

"It turns a patchwork of individual assessing bodies into a system, with shared objectives that works in the public interest to ensure an adequate supply of talent to address the nation’s skill shortages

"Every functioning system requires good governance with the right incentives.

"This governance framework would help facilitate harmonisation across states and territories to reduce the variation in licensing requirements for the same occupation in different jurisdictions.”