Australia is not attracting enough migrants who pay economic dividends, according to a new report.

However, the pandemic offers the country a unique opportunity to reset skilled migration in favour of younger, high-skilled workers, it says.

The report from policy think tank The Grattan Institute, “Rethinking permanent skilled migration after the pandemic“, claims that the crisis is an opportunity to “reset our skilled migration to favour young, high-skilled workers that bring the biggest economic benefits to Australia.”

And it’s a factor that could have a significant impact on the country’s continued pandemic recovery.

In a speech delivered in April, Prime Minister Scott Morrison highlighted workforce skills as the “single biggest challenge facing the Australian economy” in recovering from the COVID-19 pandemic.

And employer surveys have cited it as their single biggest concern.

The think tank suggested that post-COVID, Australia should shift away from taking older workers with less proficiency in English, as well as abolish the Business Investment and Innovation Program, a scheme that allows people to operate a new or existing business in Australia.

Instead, it says the government should focus on boosting the number of skilled worker visas, which would supercharge the economic benefits of the skilled migration program.

Brendan Coates, economic policy director at The Grattan Institute’s economic policy, said recent federal government decisions have taken Australia in the wrong direction.

“Historically, skilled migration has been working really well for us,” Coates said, adding that “changes in the permanent intake recently have shifted us away from selecting younger skilled people who earn high incomes in the labour market.”

The report suggests that focusing on a more skilled workforce would yield significant economic benefits; it could result in nearly $4 billion in extra personal income tax receipts alone over the lifetime of each yearly migrant intake.

It comes as the latest figures from The National Skills Commission reveal that difficulty recruiting — particularly for highly skilled employees — has hit a new peak since the start of the pandemic.

It found that many businesses are struggling to find suitably-qualified staff to fill all the roles that are available, with 54% of recruiting employers reporting having trouble filling vacancies in April of this year.

The latest Seek Employment Report also showed that in April the number of applications for each job advertisement on was at its lowest level since 2012.

However the report’s findings contradict criticism that Australia’s migration policy is locking out low-skilled migrants, along with suggestions the country’s skills shortages would be better and more sustainably solved by upskilling Australians.

The report suggests other reforms, including paying skilled migrants more and making employer-sponsorship available for workers in all occupations provided they earn above $80,000 a year.

This would better target visas to people with the most valuable skills, and simplify the sponsorship process for firms and migrants, the report suggests — not to mention boost fiscal dividends by at least another $9 billion from each yearly intake.

It concludes that “when we reopen the borders, Australia should unashamedly select permanent skilled migrants for their long-term economic potential.”

Skilled migrants tend to be younger and earn higher incomes than the typical Australian, it said, “so they generate a fiscal dividend for Australians because they pay more in taxes than they receive in public services and benefits over their lifetimes.”

The report’s release comes amid the federal government’s parliamentary inquiry into Australia’s skilled migration program, which is due to report back by July of this year.