1. Introduction
1.1 In 2002, the then Department of Immigration, Multicultural and Indigenous Affairs (DIMIA) sought the advice of Australian Government Actuary (AGA) on the financial implications of a proposed new visa category for parent migration. Under the proposal, successful applicants were to be required to make a significant contribution towards the costs expected to be met by the Commonwealth Government through a large second visa application charge. This charge was levied on each adult included in the application (with a very much smaller second charge applying to children).
1.2 We provided a report in August 2002 describing the model we had constructed to estimate cashflows and the net financial impact (in present value terms) of the proposal and setting out the results and sensitivity analysis on key parameters.
1.3 Subsequently, we provided advice on the appropriate mechanism for indexing the second visa application charge to ensure that it reflected the appropriate weighting of the drivers of total cost and this was reflected in the legislation established to provide for indexation of the charge.
1.4 The Contributory Parent Visa (CPV) category came into effect in 2003 with separate classes for onshore and offshore applicants and an option to take out a temporary visa (at a cost of around 60% of the full second visa application charge). A holder of a temporary visa could subsequently convert to a permanent visa, with the residual charge paid on transition (subject to any annual adjustments). The second visa application charge was initially set at $25,000. This amount has been indexed annually in accordance with the statutory requirements and is now $31,555.
1.5 We have noted at various times that there will be a need to review the original model to update the assumptions, taking account of more recent experience and recalibrate the indexation methodology. The Department of Immigration and Citizenship (DIAC) has now asked us to undertake this review.
1.6 This report has been prepared by Susan Antcliff, FIAA.
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