Where next for parent visas? Cost increases for Contributory Parent visas, and abolition of non-CP visas perhaps?

The Australian Government has released a report into Australia’s migrant intake, prepared by the Productivity Commission after an enquiry.

The report is challenging reading for any parents with Australian resident children, and who are considering a move to Australia.

Without wanting to be alarmist, we think there is a heightened risk of a significant increase in the cost of a Contributory Parent visa application in the not too distant future affecting new visa applicants, and the removal of the non-Contributory Parent visas to new visa applicants.

We say this in the light of comments in the Productivity Commission report, extracts of which follow.

(Page 27): The contributory visa charge of just under $50 000 meets only a fraction of the fiscal costs for the annual intake of roughly 7200 contributory parents. And an additional 1500 parents make a minimal contribution. Overall, the cumulated lifetime fiscal costs (in net present value terms) of a parent visa holder in 2015-16 is estimated to be between $335 000 and $410 000 per adult, which ultimately must be met by the Australian community. On this basis, the net liability to the Australian community of providing assistance to these 8700 parents over their lifetime ranges between $2.6 and $3.2 billion in present value terms.

Given that there is a new inflow each year, the accumulated taxpayer liabilities become very large over time. This is a high cost for a relatively small group.

Given the balance of the costs and benefits, the case for retaining parent visas in their current form is weak.

In the short term, a partial remedy would be to lower the taxpayer funded subsidy for contributory parent visas by considerably raising the visa charge, and to introduce more narrowly focused non-contributory parent visas. This would involve narrowing eligibility to non-contributory parent visas to cases where there are strong compassionate grounds.

The impact of this tightening could be partly offset by the introduction of more flexible temporary parent visa arrangements, subject to the parents or sponsoring children meeting the costs of any income or health support during their period of residence.

(page 43) FINDING 13.2
Reflecting their average older age and lower labour market engagement, the parent visa stream makes considerable demands on Australia’s health, aged care and social security system, while not making many fiscal contributions through taxes paid. The contributory parent visa charge recognises the high expected net fiscal costs of parents. However, at its current level, it is only a small portion of these expected costs.

Accordingly, most of the costs must be borne by the community as a whole, whereas many of the benefits accrue to the sponsors and the parents themselves.

(page 485) RECOMMENDATION 13.8
The Australian Government should amend arrangements for permanent parent visa applicants. In the short term, it should:

• increase substantially the charge for contributory parent visas
• narrow eligibility to non-contributory parent visas to cases where there are strong compassionate grounds to do so, accompanied by clear published criteria to limit applications for such visas
• consider lowering the caps for contributory parent visas
• introduce a more flexible temporary parent visa that would provide longer rights of residence, but with requirements, as for other temporary visas, that the parents or sponsoring child would meet the costs of any income or health supports during the period of residence.

The Australian Government should request the Australian Government Actuary to update its actuarial analysis of the long-term fiscal consequences of immigrants arriving under the parent visa stream, eventually incorporating all expenditures and revenues, including at the state and territory government level.

There is also a detailed narrative at pages 469 to 484 of the report , which includes the following observations from the Commission:

… there are strong grounds to reduce the existing very high subsidy rate for contributory visas by lifting the fee levels — say by roughly double in the first instance. As is currently the case, fees could be spread over several periods. This measure would gather more revenue, but also be likely to reduce demand — lowering the fiscal costs of this particular social policy. There are also grounds to reduce planning levels for contributory visas since this would also directly lower the net costs of the program, freeing up taxpayer funding for higher priority uses.

… reducing caps for contributory visas and a significant reduction in non-contributory visas might create a gap in visa types that might not be filled by the existing visitor visas. One option would be to create a longer-term visa class that allows a parent to stay for longer periods than standard in the visitor visa (subclass 600), and to periodically renew this visa. A new provisional visa would permit parents to stay for a longer period of (say) five years that could, after a given period of absence from Australia, be renewed multiple times. A condition would be that the parent or sponsor would have to guarantee that they could meet any income or health costs during their stays. In effect, a parent could stay permanently with periodic interruptions, so long as she or he were financially independent.

Regular readers of this blog will be aware that the Department of Immigration has already published details of a new temporary parent visa, which is due to come into effect on the 1st of July, 2017.

At a time when the Federal Government is seeking to repair its budget deficit a significant increase in the cost of Contributory Parent visas for new applicants, and a renewed effort to close the subclass 103 and 804 non Contributory Parent visa subclasses for new applicants should be no surprise in the light of the findings discussed above.

Concerned parents (or their children) who would like to lodge a parent visa application (whether Contributory or non Contributory) now to lock in the present scale of Visa Application Charges, or who would like to discuss visa strategy should feel able to complete the enquiry form on this page.

Go Matilda Visas will be pleased to discuss your situation with you, and how we might help progress and manage a visa application.