Australian Treasury increases net migration forecast

Treasury has increased forecasts for Australia's net migration by 80,000 — an ambitious move in a strong labour market with employers still sponsoring new migrants and new visa initiatives that have to be accommodated, writes Dr Abul Rizvi.

THE AUSTRALIAN TREASURY HAS RELENTED to the hard reality of data published by the Australian Bureau of Statistics (ABS) on net permanent and long-term movements and how immigration policy works – at least for 2024-2025.

It has increased its net migration forecast for 2024-2025 from a hugely unrealistic 260,000 to 340,000. That’s after underestimating 2023-2024 net migration by between 50,000 and 130,000.

My forecast for 2024-2025 has a net migration outcome of between 350,000 and 375,000. Not much different from the Treasury’s forecast.

It may be that Treasury knows of unannounced policy changes that it has incorporated into its slightly lower forecast or that it is expecting a more significant deterioration in the labour market.

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Treasury’s original net migration forecast for 2024-2025 required net migration to fall from 445,000 in 2023-2024 to 260,000 in 2024-2025 – a one-year decline of 185,000.

That was never going to happen given the strong labour market and the relatively limited policy-tightening steps taken — essentially limited to overseas students.

Its new forecast for 2024-2025 requires a one-year net migration decline of over 105,000. That is still ambitious in a strong labour market where people will be reluctant to depart, employers and state governments will continue to sponsor new migrants – temporary and permanent – and the Government has added new visa initiatives in 2024-2025 that have to be accommodated.

But what about 2025-2026?

For 2025-2026, the Australian Treasury has forecast net migration falling to 255,000 and presumably has held its 2026-2027 net migration forecast at 235,000. That will mean reducing net migration from the current 2024-2025 forecast of 340,000 – a reduction of between 85,000 and 105,000.

To date, the Government has brought down net migration largely through a major tightening of the set of student visa policies it inherited from the Coalition. That has been highly controversial in the International Education Industry.

But as net migration falls, making further cuts becomes increasingly more difficult. It’s a bit like pushing down on a heavy-duty spring. The initial push is comparatively easy while pushing further and further becomes harder and harder.

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Over the past decade, governments of both persuasions have added more and more visa initiatives that have pushed up the structural level of net migration. On my calculations, the structural level of net migration in a normal labour market is likely to now be over 300,000.

To get net migration to below 300,000 in a normal labour market with unemployment of around 4.5 percent would require highly controversial policy tightening affecting many industry sectors with heavy pushback from lobby groups such as the Business Council of Australia (BCA), National Farmers Federation (NFF) and the Tourism lobby.

But 2025-2026 is, of course, on the other side of the next Federal Election.

That’s probably why Peter Dutton has walked back his net migration target of 160,000. He now says we will find out his net migration target after the Election.

This way he can keep the various business lobby groups and the National Party on side while still pretending he will cut net migration by more than the Labor Party.

So voters will be promised large cuts in net migration by both sides of politics but with little information on what will be cut or how — and, don’t be fooled by Dutton’s promise to cut the permanent migration program, after the Election, if elected, he will quickly learn of the legal and other obstacles to that!

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.