But Council of Small Business Organisations Australia chief executive Luke Achterstraat said his organisation was strongly opposed to annually lifting the TSMIT, until “a significant amount of time has passed” and a review had been conducted to show the already increased new threshold was working.

“It’s going to price out a significant number of employers,” he said.

The council is also pushing for small business carve-outs where they say the average earnings are well below the income threshold, including for hairdressers and beauty therapists.

“COSBOA submits that where evidence from labour market insights is provided, exemptions from the TSMIT should be granted,” Achterstraat said in a letter to Home Affairs Minister Clare O’Neil.

Australian Chamber of Commerce and Industry chief executive Andrew McKellar said indexing the threshold during an acute shortage of workers would worsen the situation for employers.

Loading

“While it is reasonable for the threshold to be reviewed, automatic indexation will remove some of the government’s options to handle current tightness in the labour market,” he said.

The government declined to comment.

The discussion paper doesn’t say whether the annual increase to the core stream would be tied to the wage price index or another measure, such as the national minimum wage increase. It says the upper threshold of the pay range within that pathway would be increased at the same time, but that limit is yet to be set.

The government is piloting a system of labour agreements between aged care providers and unions to bring in lower-earning migrants to fill jobs in the short-staffed industry. Immigration Minister Andrew Giles recently signalled he is open to expanding similar pathways into other industries in need.

Loading

The discussion paper says there is a “strong understanding” migrant workers will be needed in the medium term to fill shortages in essential industries, despite moves made to improve wages and conditions in those sectors, including Labor’s bargaining reforms.

According to the paper, the government has begun to examine what specific migration streams for the care economy would look like.

“For example, these arrangements would be sector-specific, given the different skill and labour needs across aged care, child care and disability care,” the paper says.

McKellar said the government “must continue to create migration pathways for all severely depleted sectors”.

Cut through the noise of federal politics with news, views and expert analysis from Jacqueline Maley. Subscribers can sign up to our weekly Inside Politics newsletter here.