Coalition immigration policies set to undergo massive changes

On 1 July 2023, the Albanese Government will reverse a large number of Coalition immigration policies that helped drive net migration to record levels in 2022-23 — the surge that actually had little to do with “catch up”.

But what impact will these reversals have on future net migration? While Treasury forecasts net migration will gradually fall to 315,000 in 2023-24 and 260,000 in 2024-25, can we rely on that given Treasury forecasts are largely based on historical averages and only a very broad-brush assessment of immigration policy rather than a more detailed visa type by visa type analysis?

Overseas students

The biggest change from 1 July 2023 will be the re-imposition of work restrictions on overseas students. From 1 July 2023, the almost 600,000 overseas students currently in Australia will be restricted to working 48 hours per fortnight when classes are in session. This reverses former Immigration Minister Alex Hawke’s decision to allow students to work as many hours as they wished even when classes were in session.

That decision drove offshore student visa applications to extraordinary records as the student visa became essentially an unsponsored, low-skill work visa that was strongly promoted by education agents. The Department of Home Affairs (DHA) and numerous universities also reported extensive fraud in the caseload as “students” looked to take advantage of both unrestricted work rights and Australia’s strong labour market.

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The surge in offshore student applications was by far the biggest driver of net migration in 2022-23 and will have made a much larger portion of students dependent on being able to work multiple jobs and often over 60 or 70 hours per week.

Depending on how strongly the restricted work rights are enforced and how careful Australian employers are to ensure they are not complicit in enabling students to breach the work conditions of their visa, we may see the growth in offshore student visa applications in 2023-24 start to plateau (all other things equal).

The Albanese Government has allocated an additional $50 million over four years for immigration compliance work. But this is coming off a very low base after the Coalition Government had allowed such work to be reduced to levels I have never before seen. Reducing immigration compliance activities allowed unscrupulous operators and agents (registered and unregistered) to become increasingly brazen in undermining the visa system.

Against that background, an additional $50 million over four years may not go very far unless targeting enforcement of student work rights is made a priority. At this stage, there is no indication that will be the case given the range of higher-priority immigration compliance issues that must be addressed.

Offsetting the impact of restricted student work rights on student visa demand will be the new Aged Care Labour Agreement. It is now likely that lower-tier universities and private Vocational Education and Training (V.E.T.) providers will strongly promote short Certificate III courses in aged/disability care. These are generally cheap courses and have a low English language entry requirement. That will increase demand for offshore student visas as well as onshore students switching to such courses — a high-risk strategy to meet the very genuine shortage of aged/disability workers in Australia.

A key will be how rigorous the vocational education regulator (ASQA) is in ensuring only high-quality courses are registered. The other factor will be the willingness of aged care employers to continue to offer places to overseas students doing such courses after an initial surge. At some point, demand for places will exceed supply leaving students who have done such courses in limbo.

Over the longer term, demand for offshore student visas will be driven by the replacement of the “genuine temporary entry” requirement with a “genuine student” requirement as recommended by the Parkinson Review. At this stage, the Government has not indicated how this will be designed.

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Temporary graduate visas

Both the Coalition and Albanese Governments also made temporary graduate visas more attractive with longer stay provisions. This led to the number of temporary graduates in Australia rising from around 90,000 in mid-2021 to almost 190,000 at end April 2023. This was despite large numbers of temporary graduates securing permanent residence through state/territory government nominations, a skilled independent visa or an employer-sponsored skilled temporary visa.

From 1 July 2023, two major changes will take place with this visa (which has two streams):

the requirement for a formal skills assessment in the graduate work stream (used by V.E.T.-qualified students) was removed between 1 July 2022 and 30 June 2023 — this will resume from 1 July 2023; and
in the post-study work stream (used by higher education qualified students), the duration of stay is to be extended by two years from 1 July 2023.

The former will reduce demand for temporary graduate visas while the latter will increase demand. Overall, it is likely the number of temporary graduate visa holders will continue to rise in 2023-24 offset by the number of such visa holders who secure a state/territory nominated visa or a skilled independent visa. The key will be the strength of the labour market enabling temporary graduates to secure skilled jobs.

Working Holiday Makers (WHM) and Work and Holiday (W&H) visas

The Coalition Government made major changes to the Working Holiday Maker (WHM) and the Work and Holiday (W&H) visas including increasing caps on the W&H visa by 30 per cent in 2022-23. It also allowed these visa holders to work with one employer for longer than six months, enabled them to apply for a third visa and increased age limits.

These changes rapidly increased WHM/W&H visa holders in Australia from around 19,000 in early 2022 to almost 140,000 by end April 2023. This will have been another major driver of record net migration in 2022-23.

From 1 July 2023, WHM/W&H visa holders will need to change employers every six months and the W&H visa cap will revert to 2021-22 levels. All other things equal, that would reduce the contribution of these visas to net migration.

The Government has announced that the WHM agreement for UK citizens will have two changes. Firstly, from 1 July 2023, UK passport holders will be able to apply for a Working Holiday visa between the ages of 18 and 35 years inclusive. This is a five-year increase from the current maximum age of 30 years inclusive.

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Secondly, from 1 July 2024, UK passport holders will be eligible to be granted Working Holiday visas for up to a total of three years without having to meet any specified work requirements.

While this will increase the number of WHMs from the UK, it will also mean fewer WHMs doing agricultural work. This will crank up pressure on the Government to further increase Pacific Australia Labour Mobility (P.A.L.M.) visas granted and/or to reject the Parkinson Review recommendation to limit WHM/W&H visas to one year.

It will also encourage Nationals Leader David Littleproud to again lament the Albanese Government’s decision to abolish his agriculture visa. That would have, of course, further increased net migration, turbo-charged exploitation and accelerated asylum applications. Australia dodged a bullet there.

Special COVID visa

The special COVID visa was introduced by the Coalition Government and was mainly used by former overseas students (and WHM/W&H visa holders) to extend stay in Australia. The special fee-free COVID visa is generally for a period of 12 months and does not require an English test or any skills or sponsorship requirement.

As of 31 March 2023, 197,822 visa applications were received and 153,362 visas were granted since the visa was introduced in 2020 (some people would have secured a second COVID visa while others departed). These numbers are likely to have increased very significantly in the three months since March 2023 and will have held back departures of student visa holders — thus contributing to record net migration.

If this visa is closed to new applications from 1 July 2023 (as anticipated), then its holders will need to find another way to extend lawful stay in Australia unless they depart. Many are likely to apply for an onshore student visa to do an aged/disability care course. Some may apply for asylum as a cheaper means of extending their stay. That would drive up the asylum application rate faster than is already occurring.

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Skilled temporary entry

With Australia’s strong labour market, the number of skilled temporary entry visa holders increased from 90,737 at end 2021 to 126,575 at end April 2023. The increase would have been held back by the large number of skilled temporary visa holders securing permanent residence in 2022-23.

From 1 July 2023, the minimum salary for skilled temporary entry visas will rise to $70,000 after being frozen by the Coalition Government at around $53,000 for ten years. The higher minimum salary will reduce demand for this visa as will the longer temporary graduate visas (temporary graduates will more readily access permanent residence without using skilled temporary entry as a stepping stone).

That will be offset by an increase in demand for this visa due to the Aged Care Labour Agreement which uses a significantly lower salary, lower English requirement and only a Certificate III qualification.

Overall impact on net migration

Net migration undoubtedly peaked in 2022-23 and will now decline with the withdrawal of most of the COVID-era policy settings from 1 July 2023.

How fast it declines will depend on three main factors.

Firstly, it will depend on how student visa policy evolves including:

whether immigration compliance activity targets student work rights;
demand for aged/disability care and nursing support courses;
use of provider risk ratings to manage fraud in the caseload; and
how the new “genuine student” criteria is designed.

Secondly, whether the large contribution of visitors extending their stay that started in 2018 and continued in 2022 will again be evident in 2023-24. Based on publicly available data, this issue remains a mystery. We may learn a little more when the Australian Bureau of Statistics publishes detailed estimates of the composition of net migration in 2022.

Finally and possibly most significantly, whether the labour market weakens in 2023-24 as forecast by Treasury. If significant weakening does take place, the Federal Government will come under pressure to tighten immigration policy further (including reducing places in the skilled independent category). State/territory governments may become more reluctant to use their full allocation of places.

That would lead to some rise in departures but the risk is that around a million students, temporary graduates, special COVID visa holders, WHM/W&H visa holders and asylum seekers may be left in immigration limbo and facing destitution. Media reports suggest that is already becoming evident at a time the labour market is still strong.

A much weaker labour market would also mean many migrants who have secured a permanent visa in recent years are without any social support due to the four-year wait for social security.

As always happens when the labour market weakens significantly, net migration would fall rapidly.

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.