Net migration to be key election issue

The level of net migration will likely be a focus of the forthcoming Federal Election with both major parties arguing for lower levels of net migration, writes Dr Abul Rizvi.

THIS THURSDAY, the Australian Bureau of Statistics (ABS) will release data on net migration for the 12 months to September 2024. That will show net migration fell again to around 400,000 after peaking at 555,773 in the 12 months to September 2023.

The 2022-23 surge was driven by Coalition-era policy settings and the new Labor Government being too slow to tighten those policies, particularly in relation to students, temporary graduates and working holidaymakers (WHMs) while making other changes that added to the underlying level of net migration.

Net migration in 2024-25 will fall further, possibly to the new 340,000 forecast by Treasury. But after that, it is highly unlikely net migration will fall below pre-pandemic levels as forecast by Treasury (around 225,000 to 230,000 per annum — see Table 1) or even lower as suggested by Opposition Leader Peter Dutton.

(Data source: Treasury Centre for Population)

Treasury is likely to replicate these forecasts in the forthcoming Budget later this month.

Treasury provides no further detail on these forecasts, either in terms of the impact of policy changes or the impact of forecast changes in Australia’s labour market relative to those in other nations. We can only guess at Treasury’s thinking.

Australian citizens

In terms of Australian citizens, Treasury is forecasting a rise in departures and an even bigger rise in Australian citizens returning. This suggests Treasury is assuming a general increase in Australian citizen movements but also a relative strengthening of the Australian labour market attracting more Australian citizens back to Australia.

NZ Citizens

In terms of New Zealand citizens, Treasury is forecasting a significant decline in NZ citizen arrivals while departures remain relatively stable. That suggests an assumed strengthening of the NZ labour market relative to that of Australia.

That is in some ways the reverse of what it has assumed for Australian citizens. It is not clear what Treasury has assumed for the impact of the creation of a direct pathway to Australian citizenship for NZ citizens.

As a general rule, that should materially increase the long-term contribution of NZ citizens to Australia’s net migration.

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Permanent residents

In terms of permanent residents, Treasury forecasts arrivals to remain relatively stable while there will be a rise in departures. That would suggest Treasury is assuming a weakening of Australia’s labour market.

It is not clear what Treasury has assumed for the fact NZ citizens no longer need to go through the permanent migration program (thus effectively increasing places for other nationalities); for the new Pacific Engagement Visa which is a permanent visa that is not counted as part of the permanent migration program or for the onshore/offshore balance of the larger migration and humanitarian programs.

Other temporary residents

The other temporary residents group covers the full range of temporary residents other than students. That includes WHMs, skilled temporary entrants, temporary graduates, Pacific Australia Labour Mobility stream (P.A.L.M.) visa holders, visitors changing status and asylum seekers.

Table 2 provides Treasury’s collective forecast for these (no further details are provided by Treasury which is very odd given the size and variety in this group).

Treasury is forecasting both a sizeable fall in other temporary arrivals and a strong increase in departures. That is possible if there was a sharp deterioration in the labour market noting that the stock of most other temporary resident visa categories is near or well above past records (see Table 3). That would suggest departures will rise but the question is whether they will rise to the extent Treasury is forecasting.

Without a significant deterioration in the labour market, it is not clear why Treasury is also forecasting a sharp fall in arrivals in the other temporary resident group. It is certainly the case that policy for WHMs, skilled temporary entrants, temporary graduates and P.A.L.M. visa holders remains highly facilitative. Asylum applications also remain strong.

Policy on visitors changing status after arrival has been tightened so some fall in arrivals in that category is to be expected.

The decline in the stock of skilled temporary entrants and WHMs from 2020 to 2022 was a function of COVID-19 reducing arrivals and some of these visa holders securing permanent residence. Since then, both groups have increased sharply due to both policy facilitation and a strong labour market.

The stock of skilled temporary entrants is likely to rise in the next few months as those who went home for the holiday period return. The stock of WHMs is likely to stabilise or slightly decline in the next few months as their visas start to expire.

The stock of temporary graduates will rise in the next few months and possibly hit new all-time records as many will have completed their courses and apply for a temporary graduate visa. This is a group Treasury may be forecasting will depart in large numbers over the next few years if they are unable to secure employer or state government sponsorship. That is likely, but the question is whether they will depart in the large numbers Treasury appears to be forecasting.

The bridging visa group (mainly onshore applications that the Department of Home Affairs (DHA) was unable to process before substantive visas expired) increased strongly leading up to and including the first part of the pandemic as DHA did not have the resources to cope with the volume of onshore applications, particularly from students.

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The Labor Government initially sought to clear that backlog but was then overwhelmed by the volume of onshore student applications. The backlog stabilised once the policy on onshore student applications was tightened. But there is no indication of steps to clear that backlog which will again prevent departures from rising as strongly as Treasury is forecasting. Cuts in public servant numbers, as Dutton is proposing, would further increase the bridging visa backlog.

The rise in the stock of ‘other’ in Table 3 was due to a combination of a surge of applications for the COVID visa which the Labor Government was too slow to close and growth in the P.A.L.M. visa.

Students

Treasury is forecasting student arrivals will fall marginally before stabilising while student departures will rise strongly (see Table 4).

After a slowdown in offshore student visa applications through the middle of 2024, universities rushed to get more offshore student visa applications lodged, particularly in November 2024. This slowed marginally in December 2024 and again in January 2025.

As a result, the DHA was able to handle the usual surge in applications during this period with relative ease and a high approval rate.

This was helped by the fact offshore applications in other sectors such as VET and ELICOS were well down in the same periods leading up to the start of the new academic year in 2022, 2023 and 2024. The Government appears to have successfully reduced the large offshore demand from these sectors that was generated by the Coalition’s COVID-era policies, particularly its unlimited student work rights policy which turned many of these providers into “visa shops”.

New Ministerial Direction 111 did not operate as a de facto cap as the Group of Eight (Go8) was hysterically claiming. It was never going to operate that way but all lobby groups have a habit of crying wolf to attract media attention and sympathy. The Go8 is no different.

Treasury forecasting huge departures increase to drive down net migration

After repeatedly missing its net migration forecasts by a wide margin, Treasury provided an update of its net migration forecast. But can this now be believed?

Having seen a strong offshore student visa approval rate in the November 2024 to January 2025 period, it is highly likely universities will be gearing up for stronger recruitment for second semester 2025 and first semester 2025.

With the failure of the student capping legislation, the Government does not have a workable tool to control student arrivals. Given the problems with capping students using provider-level caps highlighted in Senate Committee hearings during 2024, it is unlikely either major party will re-introduce such legislation. Thus there is a high level of upside uncertainty about how student arrivals will trend as universities press to increase tuition fee revenue.

While the Government has made policy changes to increase student departures, there is much resistance to this as evidenced by the size of the onshore student backlog (around 100,000), including appeals to the Administrative Review Tribunal (A.R.T.) (over 23,000 and rising strongly). Student departures are unlikely to rise as quickly as Treasury is forecasting.

Net migration in the Federal Election

The level of net migration will likely be a focus of the forthcoming Federal Election with both major parties arguing for lower levels of net migration.

On my calculations, however, net migration is unlikely to fall much below 300,000 without either further policy tightening and/or a major weakening of the labour market. The key to Treasury’s net migration forecast is the expectation of a major rise in student and temporary entry departures and a levelling off of student arrivals.

Both those forecasts should be viewed with caution. However, Dutton’s argument that he can drive net migration even lower should also be viewed with much scepticism.

Dr Abul Rizvi is an Independent Australia columnist and a former Deputy Secretary of the Department of Immigration. You can follow Abul on Twitter @RizviAbul.