Australia's migration system will undergo a major overhaul after a scathing review described it as "broken" and leaving the country at risk of falling behind in the global race for skilled migrants.
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Home Affairs Minister Clare O'Neil announced two major changes ahead of next month's federal budget as well as a wider tranche of draft reforms in her address to the National Press Club on Thursday.
The opposition said it wants to see further analysis on the outcomes, calling it a "very confusing outlook" while the Greens say it "fiddles at the margins without confronting the most significant failings".
Peak industry bodies and unions, however, have so far welcomed the changes, describing them as "critically important" and giving businesses a "fighting chance" in the global talent war.
The first major change will increase the temporary skilled migration income threshold from $53,900 to $70,000 for applications after July 1, after it had remained at 2013 levels for almost a decade.
The second change will create a pathway for temporary skilled migration workers to become permanent residents as from the end of the year.
"This does not mean an expansion of our capped permanent system. It does not mean more people," Ms O'Neil said.
"It simply means that a group of temporary workers who had been denied even the opportunity to apply for permanent residency will be able to do so."
Prime Minister Anthony Albanese will meet with state and territory leaders on Friday in a national cabinet meeting to discuss migration settings.
The leaders are expected to canvass how they can better work together to address housing, services and infrastructure needs as the population grows.
The Review of the Migration System review, released Thursday, found the skilled migrant program was not targeting the right people and was failing to retain international students after they graduate.
Led by former Treasury secretary Martin Parkinson, the review offered 38 possible areas for reform, including a temporary graduate visa for international students after they complete their studies.
Ms O'Neil released a draft migration strategy for public consultation designed to fix a system she described as "suffering from a decade of genuinely breathtaking neglect".
"It is broken. It is failing our businesses, it is failing migrants themselves. And most importantly, it is failing Australians," Ms O'Neil said.
"If populate or perish described Australia's challenge in the 1950s, skill up or sink is the reality we face in the 2020s and beyond.
"Today, we aren't bringing in the talent we need, and we aren't making the most of the talent we've got."
The draft outline of the Australian Migration Strategy proposes a streamlined three-tiered skilled migration system to simplify overly complex processes to make Australia more attractive for skilled overseas workers.
This would include a highly-skilled stream with fast turnaround times and minimal requirements to be met.
A middle stream would cover the bulk of the applications and be determined by priority areas identified by Jobs and Skills Australia.
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The final stream would be for lower-skilled workers where there are major labour shortages.
"One of the reasons there is so much exploitation is because we have allowed low-wage migration programs to operate in the shadows, for example, through exploitation of our international student visa system," Ms O'Neil said.
"That has allowed areas of the economy that rely on these workers to become either highly vulnerable to exploitation, or subject to chronic, ongoing labour shortages that put huge pressure on existing workers.
"Instead of pretending that some students are here to study when they are actually here to work, we need to look to create proper, capped, safe, tripartite pathways for workers in key sectors, such as care."
Other draft reforms include creating a new area in the Department of Home Affairs, which would work alongside Jobs and Skills Australia to identify the skills needed in the economy.
The changes also propose reducing the number of visa categories as well as establishing a monitoring system to enforce wages and conditions to detect and prevent exploitation and tougher regulations for migration agents.
Ms O'Neil outlined a "slow and crazily complex" system weighed-down in a "bureaucratic nightmare", with hundreds of visa categories and subcategories so complicated a diagram "would look like a tangled bowl of spaghetti".
"Remember that other developed countries are competing for the same migrants that we really need. For aged care nurses, engineers and tech experts, complexity and delay can put them off Australia altogether," she said.
"Australia's migration system has become dominated by a very large, poorly designed, temporary program, which is not delivering the skills we need to tackle urgent national challenges.
"And, that program created the essential ingredients for exploitation of migrant workers."
Australia faces 'global talent war'
The commissioned review found Australia would lose out in the hunt for highly-skilled migrants "without more innovative and attractive visa products and service delivery".
It comes as the World Bank warned that countries heavily reliant on migrants, like Australia, will struggle to fill workforce gaps without more focus on improving pathways.
ACCI chief executive Andrew McKellar welcomed the proposals, saying it gave industries a "fighting chance to recruit" skilled workers in a tight market.
"Every day we hear from businesses of every size, in every industry, and right across the country that they're facing unprecedented challenges trying to find enough skilled workers to fill job vacancies," Mr McKellar said.
"Protracted processing times, excessive costs and confusing administrative measures mean that our migration system is falling short of meeting the needs of businesses, workers, and the economy."
ACTU president Michele O'Neil said the "broken" system had failed Australian and migrant workers and led to mass exploitation.
"Too often we have seen claims of skill shortages when in some sectors the real shortage is of jobs with fair wages and conditions," she said.
"The government's commitment to design exploitation out of the system is critically important and we look forward to working with them to see this realised."
But Greens immigration spokesperson Senator Nick McKim was more scathing of the announcement's blind spots.
The Tasmanian senator said the government's response did not address family reunion visa issues and improving pathways to permanent protection for asylum seekers.
"The report and the minister's speech today fiddles at the margins without confronting the most significant failings of our broken migration system," he said.
"Australia needs a migration system that is underpinned by social priorities rather than economic, which helps build a vibrant multicultural country that is diverse, resilient and celebrates cultural diversity."
The opposition's immigration spokesperson Dan Tehan said he was concerned Ms O'Neil's announcement would mean a sharp uplift in net overseas migration.
The federal government expects the figure will be significantly higher than the October 2022 forecast, owing to the return of international students.