Selling the right to live in Australia to rich foreigners doesn’t work that well, according to an inquiry by the Productivity Commission.
The commission’s initial analysis shows that handing out visas based mainly on price leads to a short-term gain in revenue to the government but can have a negative long-term economic effect.
“The demographic composition of immigrants matters,” says commissioner Paul Lindwall.
“Australia should be seeking skilled migrants of a working age who can contribute positively to the work force and help to mitigate the impacts of our ageing population.”
Immigration is a defining feature of Australia with more than one in four Australians born overseas.
Modelling by the commission suggests that a charge of between $35,000 to $45,000 per person would maintain the current annual intake of permanent immigrants at 190,000.
But such a system would reduce the number of skilled immigrants and significantly increase the number who currently would not meet the required criteria under existing skill and family visa classes
And the future returns from incomes generated by immigrants might not be that good.
“Charging a higher price for visas would likely generate higher government charge revenue relative to current levels,” the report says.
“However, visa charges are just one component of revenue that governments receive from immigrants. Another major source of revenue is income tax. The lifetime contribution of income tax is commonly much larger than current visa fees, but varies substantially by visa category.”
Under the Significant Investor Visa scheme, an applicant must invest at least $5 million in Australia for a minimum of four years to get a visa.
However, the commission is cautious about the economic benefits of this scheme.
“It is not clear that the benefits exceed the costs of giving away a valuable asset: permanent residency in Australia,” the commission says.
The commission’s Migrant Intake in Australia publication is a draft report. It will take submissions before it issues its final report in March 2016.
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