Migration review says system is beyond tinkering and major change is needed

As the World Bank issues a warning that the international competition for skilled migrants is intensifying, the Review of the Migration System to be released on Thursday has found that the nation is at risk of losing out because of glaring shortcomings in current arrangements.

The review found that the skilled migrant program is poorly targeted and the visas on offer are increasingly unattractive while insufficient attention has been paid to retaining the best and brightest international students once they graduate and are ready to enter the workforce.

"Skilled migration has been an important driver of Australia's economic growth," the review said, "filling skills gaps, supporting increased labour force participation, and contributing to productivity growth."

"However, the program is not effectively targeted to either current or future needs.

"There is growing international competition for highly skilled migrants and Australia risks falling behind without more innovative and attractive visa products and service delivery."

The review, led by by former Treasury secretary Martin Parkinson, is due to be released by Home Affairs Minister Clare O'Neil on Thursday, along with an outline of its Migration Strategy. The minister is expected to detail the government's approach in a major speech to the National Press Club.

In addition to an overhaul of skilled migration, the review argues there needs to be significant reform of migration arrangement for lower-paid workers.

It said the current piecemeal approach was "not meeting our needs or protecting vulnerable migrant workers", citing problems including sponsorship arrangements tying workers to their employer, leaving them vulnerable to exploitation.

The review also warned of an emerging under-class of "permanently temporary" migrants that has "caused harm to Australia and to migrants, and undermined community confidence in the migration system".

The tough appraisal has come as the World Bank warns that countries such as Australia that are heavily reliant on migrants to fill workforce gaps will need to take a fresh approach to managing migration.

"Populations across the globe are ageing at an unprecedented pace, making many countries increasingly reliant on migration to realise their long-term growth potential," the World Bank said. "Wealthy countries as well as a growing number of middle-income countries face diminishing populations, intensifying the global competition for workers and talent."

At the same time, the population in low-income countries is expected to grow rapidly, "putting them under pressure to create more jobs for young people".

World Bank senior managing director Axel van Trotsenburg said migration "can be a powerful force for prosperity and development when it is managed properly".

The agency said climate change would further fuel migration as people fled its impacts and called for improved management of people flows.

"Current approaches not only fail to maximize the potential development gains of migration, they also cause great suffering for people moving in distress," the World Bank said. "About 2.5 per cent of the world's population - 184 million people, including 37 million refugees - now live outside their country of nationality."

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It said countries like Australia should encourage migration, facilitate the inclusion of new arrivals and "address social impacts that raise concerns among their citizens".

The federal government has flagged that the net migrant intake will be significantly biggest than the 235,000 forecast in the October budget. According to the Australian Bureau of Statistics, the net migrant intake in the year to September 2022 reached almost 304,000 and both short and long-term visitor arrivals surged early this year, exceeding 600,000 in February.

The influx of migrants, which includes international students and skilled workers, has helped ease the nation's labour shortage but has also contributed to the pressure on housing, particularly rental accommodation.