Partial equilibrium model The terms of reference for this inquiry ask the Productivity Commission to examine the scope to use alternative methods for determining Australia’s migrant intake including a specific scenario in which entry charges would be the primary basis for selection of migrants, subject to migrants meeting health, character and security requirements. The Commission has developed a partial equilibrium to help explore the impacts of alternative methods to determine Australia’s migrant intake, relative to the current system where the intake of migrants is determined primarily by a mix of qualitative criteria, quotas and imposts and where price is not the principal means to allocate visas. A preliminary version of the model was used for the draft report. Substantial improvements have been made to the model since the draft report, reflecting feedback received in two workshops (a technical workshop in December 2015 and a policy workshop in February 2016), in submissions and from a referee report. This model has been used to explore how the composition of Australia’s permanent migrant intake might change under visa charging scenarios. It also provides illustrative estimates of the potential fiscal impacts. This model is used to complement the qualitative analysis of alternative immigration policies elsewhere in the report. This technical supplement explains the key features of the partial equilibrium model, namely: background to the model (section C.1) modelling framework (section C.2) parameterising the (section C.3) fiscal impacts (section C.4) policy scenarios and results (section C.5). C.1 Background to the model A partial equilibrium approach When evaluating the impacts of pricing/charging scenarios on Australia’s permanent migration intake, issues that need to be considered include:
Partial equilibrium model The terms of reference for this inquiry ask the Productivity Commission to examine the scope to use alternative methods for determining Australia’s migrant intake including a specific scenario in which entry charges would be the primary basis for selection of migrants, subject to migrants meeting health, character and security requirements. The Commission has developed a partial equilibrium to help explore the impacts of alternative methods to determine Australia’s migrant intake, relative to the current system where the intake of migrants is determined primarily by a mix of qualitative criteria, quotas and imposts and where price is not the principal means to allocate visas. A preliminary version of the model was used for the draft report. Substantial improvements have been made to the model since the draft report, reflecting feedback received in two workshops (a technical workshop in December 2015 and a policy workshop in February 2016), in submissions and from a referee report. This model has been used to explore how the composition of Australia’s permanent migrant intake might change under visa charging scenarios. It also provides illustrative estimates of the potential fiscal impacts. This model is used to complement the qualitative analysis of alternative immigration policies elsewhere in the report. This technical supplement explains the key features of the partial equilibrium model, namely: background to the model (section C.1) modelling framework (section C.2) parameterising the (section C.3) fiscal impacts (section C.4) policy scenarios and results (section C.5). C.1 Background to the model A partial equilibrium approach When evaluating the impacts of pricing/charging scenarios on Australia’s permanent migration intake, issues that need to be considered include:
migrant-intake-supplementc.docx