Migrants and nation pay for failure of skills recognition with productivity fail
When I became Treasury secretary 15 years ago, problems with our skills recognition system were already widely known. Since then, the case for reform has only grown and become more urgent.
Almost half of permanent migrants now work below their skill level, despite one in three occupations facing worker shortages – a systemic skills mismatch issue that is undermining both the economy and our migration program. While multiple factors contribute to this mismatch, a key structural driver is the inefficiency of our skills recognition and occupational licensing systems. When I chaired the Migration System Review in 2023, we heard strong support for a skills and qualifications recognition system that maintains safety and quality while also enabling recognition outcomes in a timely and affordable manner.
Skills recognition reform was also a hot topic at the Treasurer’s recent Economic Reform Roundtable, with strong consensus across government, industry and unions that the current system isn’t working as it should. These calls for reform have been made before. The difference now is that the policy pathway is clear. Thanks to reforms in comparable countries, we now have a road map for how to reconfigure the skills and qualifications recognition system here in Australia.
Germany has legislated a Recognition Act to accelerate recognition outcomes and create a national framework across its federated system, while Canada has established a network of independent commissioners to ensure skills recognition processes are fair, transparent and responsive to industry needs.
What is clear is that a high-functioning skills and qualifications recognition system needs a steward: a mechanism or institution capable of looking across sectors, creating the right accountability incentives, identifying friction points, and driving ongoing improvement without eroding standards. One very practical solution is to establish an independent skills and qualifications recognition commissioner or ombudsman. This statutory role would be responsible for overseeing the end-to-end system, from visa granting to occupational licensing and securing a job.
It’s worth emphasising that the commissioner or ombudsman would not duplicate assessment functions done by industry associations or accreditation bodies. Rather, it would ensure those functions operate to consistent benchmarks and with measurable outcomes and time frames, creating a structural incentive for continuous improvement. Essentially, we would be turning a patchwork of individual assessing bodies into a governed system, with shared objectives of ensuring high standards and delivering the skills our citizens and employers need in the face of ongoing shortages, resulting in better outcomes for existing Australians and new immigrants alike.
Good governance reforms such as this will never grab headlines, but they are nonetheless critical for dealing with systems challenges such as this. There are, of course, other important reforms that can improve parts of the system, such as a national navigation service, an online portal to guide migrants through the recognition process, and a more rational way of choosing those most likely to contribute to Australia. But the essential first step is to establish national governance of the system with responsibility for continual improvement, including licensing harmonisation across states and ensuring the system is responsive to evolving national and global labour market dynamics.
Governance reform of this nature is low-cost but high-yield. It creates a feedback-driven system that can self-correct over time, aligning regulatory effort with national workforce needs. In Manitoba, Canada, for example, this model led to an almost doubling of recognition rates over eight years, simply by injecting greater accountability into the system.
The logical home for a function such as this is Jobs and Skills Australia, which coincidentally is in the midst of a legislative review to revisit its mandate and functions.
JSA already sits at the intersection of labour markets, education, training and migration. Its tripartite structure also provides the architecture needed to ensure the overseas skills and qualifications recognition system meets current and future industry needs and operates in the public interest. JSA’s statutory independence is also an important factor, necessary for any effective and impartial oversight function.
Setting up national governance and oversight for the skills recognition system isn’t about adding red tape – it’s about making sure there’s clear accountability, which every good system needs to work well. When migrants are invited here because of their skills, the system should allow them to use their skills as quickly and efficiently as possible, while upholding the high standards Australians expect.
No matter where you stand on migration numbers, creating a more affordable, efficient and fair system for recognising overseas skills and qualifications is the kind of reform that just makes sense. It is a political no-brainer.
Martin Parkinson is chancellor of Macquarie University. He served as Secretary of PM&C and Treasury.
Challenges with Australia’s system for recognising skills and qualifications have been a drag on productivity for decades. But as challenging as it has been to have skills and qualifications gained interstate recognised, the situation is far more difficult if these are gained overseas.