Australia’s migration system: broken, according to Labor’s own minister
Over the weekend, many Australians took to the streets to raise awareness about the adverse consequences and costs of Australia’s current migration policy. Those marches were peaceful, except, of course, in Victoria (where the government has legislated, or seeks to legislate, working from home and stealing from Woolworths, Bunnings, and Coles). Unfortunately, a radical element has grabbed the headlines, but setting those headlines aside, it is worth noting that the current architects of Australia’s migration policy have MPs who agree the system is broken and failing to deliver for Australia.
Migration has long been hailed as Australia’s “special sauce,” fuelling economic booms, cultural vibrancy, and national growth. While many of those claims can be debated, what if the system managing migration is fundamentally flawed? In a candid speech delivered in February 2023, Labor MP and then Home Affairs Minister Clare O’Neil didn’t mince words: Australia’s migration system is broken.
Drawing directly from her address entitled “How Australia broke its migration system, and what we can do to fix it,” (which might explain why Tony Burke, and not Clare, is now Minister for Home Affairs), we explore how even members of the governing Labor Party acknowledge the deep-seated issues – and why urgent reform is needed.
The historical highs and current lows of migration
O’Neil, representing one of Australia’s most diverse electorates where over two-thirds of residents have at least one parent born overseas, speaks from personal experience about migration’s benefits. She describes her community as “pulsing with life,” enriched by migrant-owned businesses and multicultural traditions.
Historically, migration has aligned with national needs: post-WWII reconstruction and population growth to “populate or perish,” the embrace of multiculturalism in the 1970s, and skilled inflows that powered decades of economic expansion.
Yet, as O’Neil starkly puts it, “Australia’s migration system is broken. It is unstrategic. It is complex, expensive, and slow. It is not delivering for business, for migrants, or for our population.” After eight months in her role, she couldn’t find anyone who could explain what the current system is designed to achieve.
This lack of purpose is a “travesty” amid pressing challenges like stagnant productivity, climate transition, geopolitical risks, and an aging population.
Migration, she argues, should be part of the solution – but it’s not. Instead, the system has drifted aimlessly for more than a decade, failing to match migrants’ skills with Australia’s needs.
The core structural flaw: a shift to “permanent temporariness”
At the heart of the problem is a dramatic, unplanned shift from permanent to temporary migration. Australia’s model has traditionally emphasised permanency and citizenship, encouraging migrants to build lives, start businesses, and integrate fully. However, since 2005, while the number of net skilled permanent migrants has hovered around 30,000 annually, temporary migrants (excluding visitors) have ballooned from 1 million in 2007 to 1.9 million in 2023 (and will reach 2.8 million in 2025 under Minister for Home Affairs Tony Burke).
This explosion happened “not through thoughtful planning and strategy, but by negligence and continental drift.” Only 6-7 per cent of these temporary migrants hold skilled visas, and there’s no real assessment of whether they’re bringing the capabilities Australia needs. Worse, the temporary program now fills 65 per cent of permanent slots, making the unplanned tail wag the strategic dog.
“The Australian Retailers Association said shops were under attack across the nation, but that Victoria was an “absolute hotspot”.
“Victoria Police said it charged multiple people in Operation Supernova. Detective Acting Inspector Rachele Ciavarella alleged the syndicate was part of a co-ordinated criminal enterprise profiting from stolen goods.
“Those arrested are predominantly Indian nationals on temporary, student, or bridging visas,” police said.”
The New Daily, Aug 31, 2025
O’Neil highlights the consequences:
- Inverted priorities: It’s easier for low-skilled temporary migrants to enter than high-skilled permanent ones. “We’ve got the system backwards.”
- Trapped in limbo: Many migrants endure “permanent temporariness,” cycling through visas without stability. This prevents them from investing in education, businesses, or roots, creating a “Kafkaesque limbo” that’s detrimental to both individuals and the nation.
- Exploitation risks: Employer-sponsored temporary visas foster worker abuse in sectors like agriculture, hospitality, and retail – issues O’Neil says no one wants in Australia.
This reliance on temporariness undermines the potential of migration, leaving Australia ill-equipped to address its challenges.
Outdated rules, bureaucracy, and lost opportunities
Beyond structure, O’Neil points to a web of inefficiencies clogging the system:
- Untapped potential: International students, trained in Australia’s top universities, have to leave post-graduation or end up in under-skilled jobs (50 per cent of cases). Partners of skilled migrants also struggle to enter the workforce, leaving “value just left on the table.”
- Arcane and ineffective rules: Occupation lists are outdated, especially in fast-evolving fields like tech. Skills recognition from abroad is “really, really problematic,” with nurses facing $20,000 costs and 35-month waits. The points system doesn’t properly weigh factors like age – treating a 39-year-old the same as a 24-year-old despite differing economic impacts.
- Complexity and delays: Visa processing is slow and costly. O’Neil contrasts Nobel laureate Brian Schmidt’s four-day visa in 1994 with today’s 178-day (or longer) waits for similar talents. Market testing often feels like “box ticking.”
The result? Australia’s global share of skilled migrants has halved over three decades. While competitors roll out red carpets, Australia offers “complexity, bureaucracy, cost, uncertainty and delay” – often leading to temporary stays that deter top talent.
Labor’s path to fixing the broken system
In her 2023 speech, and pitching a “nation-shaping reform project”, O’Neil proposed eight major changes:
- Clear purpose: Define the system’s goals to align with national challenges.
- Structural redesign: Rebalance temporary and permanent programs, including long-term planning with states on infrastructure and housing. (Not necessarily more migrants, but smarter ones.)
- End permanent temporariness: Clarify truly temporary pathways and manage them fairly.
- Skills focus: Strategically target and attract needed skills, streamlining processes for regions and small businesses. Actively market Australia globally.
- Unlock potential: Speed up skills recognition and support secondary applicants and students into the workforce.
- Integration: Link migration with labour, training, and education via Jobs & Skills Australia.
- Prevent exploitation: Design out vulnerabilities in the system.
- Simplify administration: Cut arcane rules and reduce complexity.
A renovator’s delight
In closing her speech, O’Neil echoed Donald Horne’s “Lucky Country” label but warned that Labor’s migration policy drift is no longer affordable amid serious economic, social, and security challenges. Migration is “pivotal to who we are,” and fixing it could reignite Australia’s engine of progress.
That a Labor MP was the author of the critique highlights that acknowledging flaws isn’t partisan – it’s essential for national interest. Imagine attracting the world’s best minds, boosting productivity, and building a more resilient Australia. If we continue on the current path, however, those talented individuals won’t want to come.
What do you think? Share your thoughts in the comments – has migration worked for you, or do you see the issues O’Neil described in 2023?
Roger Montgomery is the Founder and Chairman of Montgomery Investment Management. Roger has over three decades of experience in funds management and related activities, including equities analysis, equity and derivatives strategy, trading and stockbroking. Prior to establishing Montgomery, Roger held positions at Ord Minnett Jardine Fleming, BT (Australia) Limited and Merrill Lynch.
He is also author of best-selling investment guide-book for the stock market, Value.able – how to value the best stocks and buy them for less than they are worth.
Roger appears regularly on television and radio, and in the press, including ABC radio and TV, The Australian and Ausbiz. View upcoming media appearances.
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It’s sad to see the Neo Nazis stain what was a legitimate reason to protest. All Australians deserve a well structured immigration system that works for us and immigrants, and sets Australia on the path to a stable properous future. Unfortunately this gave the politicians an easy out in painting all protesters as racists, and further avoiding taking up the challenge of improving immigration policies. It also proves that we are not grown up enough to have a sensible debate on difficult issues.
Perfectly articulated, Christos! Thank you for sharing your thoughts and response.