Politics Analysis

Dutton’s unlikely net migration target

By | | comments |
(Cartoon by Mark David / @MDavidCartoons)

After failing to mention it in his Budget reply speech or in his interview with Sarah Ferguson on 7.30, Dutton found a friendly radio shock jock in Ben Fordham to reveal his net migration target of 160,000.

He would have known Fordham would not ask difficult questions like:

  • How did you determine that target was best for Australia?
    • how does the target balance the demographic, economic, social, humanitarian and environmental goals of immigration policy? 
    • which experts did you consult on this target and what did they advise?
  • What specific policy changes would be needed to deliver that target?
  • What is your timeframe for implementation of the target?
  • Which areas of net migration would you prioritise for reduction?
  • What would be the consequences of those changes for affected Australian businesses and employers, as well as key industry sectors that are heavily reliant on immigration (such as health and aged care)? 
  • Given prior to the pandemic Treasurer Frydenberg, in his "back in black" Budget, forecast net migration at around 270,000 per annum over the forward estimates, why do you think 160,000 is more appropriate?
  • How did you calculate that would free up 100,000 homes compared to Labor’s net migration target?

Dutton probably has not considered these questions or would have simplistic answers like claiming immigration is the key driver of the housing crisis even though most experts point to a range of factors that have culminated in the current crisis over a very long time. Given that Australia’s population has only just reached the level forecast by Frydenberg in 2019, would Dutton argue the Coalition Government had a plan to build sufficient housing for that forecast?

Leaving aside Dutton’s justifications for his 160,000 target (or indeed the Labor Government’s justification for its long-term net migration target of 235,000), let’s look at how a net migration target of 160,000 (or 235,000) might be delivered.

Timeframe

Dutton has not indicated a timeframe for his immigration cuts. While the reductions to the migration and humanitarian programs could be delivered from 2025-26 (should Dutton win the next election), it would take much longer to deliver the proposed cut to net migration.

The Labor Government has forecast net migration to fall from over 520,000 in 2022-23 and possibly well over 400,000 in 2023-24 (actual forecast is 395,000) to 260,000 in 2024-25; 255,000 in 2025-26 and 235,000 in 2026-27. While these are still not formal commitments with a policy framework to deliver these, it seems the Government is gradually getting closer to that. The above questions that Dutton should respond to are also ones the Government should address. The difference is the size of the cuts Dutton has now committed to is far greater.

If Dutton is elected in 2025, it would take some time for him to identify and negotiate the required policy changes, more time to implement those changes – noting many would require legislative amendments and/or renegotiation of agreements with foreign powers – and more time still to then see any effects. The very earliest that he could deliver net migration of 160,000 would be 2026-27, but more likely much later, especially as he would have to negotiate with the National Party. 

Role of the National Party

Crucial to delivering a net migration target of 160,000 will be the support of the National Party. It is highly likely that Dutton failed to mention the 160,000 net migration target in his Budget reply speech because he did not have the full agreement of the National Party. Which will extract its pound of flesh from Dutton for its support.

In an interview on Sky News, Nationals Leader David Littleproud made it clear he will not support cuts that negatively impact regional Australia. If visas that disproportionately benefit regional Australia are excluded from Dutton’s cuts (and Littleproud has other visa demands that would boost net migration), Dutton’s task will become much harder.

Past parallels

Outside the pandemic, the closest Australia has come in the last decade to a net migration outcome of 160,000 was in 2014-15 when net migration was around 184,000. The key point to note about 2014-15 is that it coincided with a sharp increase in unemployment to over 6%.

Indeed, almost every major fall in net migration in the last 50 years has coincided with weak labour market conditions. When the labour market is weak, we attract fewer net migration arrivals and generate more net migration departures.

The contribution of Australian citizens to net migration in 2014-15 is a good example of the impact of a weak labour market. It is not a coincidence that the pre-pandemic record negative contribution of Australian citizens to net migration was in 2014-15 at negative 25,880 (see Table 1). Almost 100,000 Australian citizens departed Australia in that year on a permanent or long-term basis.

In a normal year, the Australian citizen contribution to net migration is more likely to be around negative 10,000.

We see a similar effect with the NZ citizen contribution to net migration falling to a low of 4,670 in 2014-15 due to the relative weakness of the Australian labour market in that year. In years when the Australian labour market was stronger relative to the NZ labour market, we had seen the NZ citizen contribution to net migration as high as 44,670 in 2011-12.

Table 1: Net Migration in 2014-15
Source: ABS: Migration

In a more normal year, the New Zealand citizen contribution to net migration has tended to be around 10,000 to 20,000, although last year’s policy change to provide NZ citizens with a direct pathway to Australian citizenship may push that closer to 20,000. Would Dutton be prepared to reverse that policy change? Quite possibly, but it would negatively affect our bilateral relationship with NZ (which he may not care about). It may help get the NZ citizen contribution to net migration down to 15,000.

Thus Dutton’s task of getting net migration down to 160,000 per annum would be greatly assisted by a very weak labour market. Perhaps he intends to adopt the kind of austerity measures Tony Abbott used to engineer such a weak labour market.

But it is doubtful he would be keen to publicly rely on this to deliver his target.

Students

Students are by far the largest contributors to net migration — hence the current intense focus on reducing their contribution to net migration (which is now falling).

Student numbers had been steadily rising following major policy tightening in 2009-10 when the student contribution to net migration fell to 25,020 in 2010-11 and as the recommendations of the Knight Review started to take effect from 2013-14. The student contribution to net migration continued to rise to the pre-pandemic peak of 112,710, or 47% of net migration in 2018-19.

In 2021-22, the Coalition Government introduced extraordinary policies to boost overseas student numbers — policies such as unlimited work rights, fee-free student and working holiday maker applications and the special COVID visa.

The message to industry was to go forth and expand as rapidly as possible and hang the consequences. So it did. Not only did universities go berserk, recruiting as many students as they could, but private providers also boomed as the regulators were in no position to police quality. It was like an unregulated gold rush.

In 2022-23, students contributed an extraordinary 264,670 to net migration of 528,420.

That student numbers were blowing out was clear by late 2022 when it seemed the new Labor Government would act to reign things in. But it delayed acting until July 2023 when it started to act in a relatively timid way by reversing some Coalition Government policies. It only got serious about taking firm action later in 2023 and early 2024.

The Government is now winding back an industry that had grown massively along with very substantial numbers of offshoot businesses reliant on that industry, such as student accommodation providers, grocery stores, bookstores, transport services, coffee shops and bars.

The crucial question for Dutton (and the Labor Government) is, how much further would be sensible to wind back the industry to get to an overall net migration target of 160,000? This is not just a matter of the degree of financial and employment pain current and future governments are prepared to inflict on the industry directly but also on support businesses.

Dutton is unlikely to care about the financial position of our universities and perhaps not even the private providers in the industry. But the Nationals (and indeed the Shadow Spokesperson for Education) will want to protect regional universities and regional private providers, even the more dodgy ones.

Moreover, as overseas student numbers are cut back, that will eventually start to affect students studying in key skill-shortage areas such as health and aged care, education, engineering and IT. Once again, that may be something Dutton is not fussed about.

As a starting point, Dutton may decide the student contribution to net migration should be limited to say, the average of the five years prior to the pandemic — that is around 40%. After all, he was Home Affairs Minister during that period. That would mean the student contribution to net migration of 160,000 would need to be driven down to around 60,000. That would be less than half the level in the full financial year prior to the pandemic.

But that will be insufficient to get to net migration of 160,000. Dutton will need to cut students much further (as discussed later in this article).

Another key question is whether the cut should be delivered using caps as both the Government and Dutton consider appropriate (albeit using different approaches to capping) or whether a more sustainable approach can be developed.

Luckily for Dutton, the Labor Government may learn of the chaos created by student caps before Dutton is elected.

Temporary skilled

This visa has always been managed on a demand-driven basis as it responds directly to employer needs, particularly in a strong labour market and/or when there are significant skilled job vacancies. The weak labour market of 2014-15 led to the contribution of this visa to net migration falling to 10,080 after it had increased to 34,520 in 2011-12 when the labour market was stronger.

Dutton has experience with this category having made some seriously ham-fisted changes to it in 2017 which his own party was steadily reversing. In 2017-18, the contribution of this visa to net migration had been reduced to 11,400 but increased to 16,400 in 2018-19 as backlogs were allowed to be cleared. With the increase in skill shortages from 2022, the net migration contribution of this visa increased to 43,540 in 2022-23.  

The three key changes the Labor Government has made to this category are:

  • increasing and indexing the minimum salary that must be paid after a decade of that salary being frozen;
  • opening up pathways to permanent residence after Dutton shut many of them down to try and reduce the number of people in immigration limbo; and
  • developing a more streamlined Aged Care Labour Agreement to enable this visa to address the major shortages in aged care workers.

The first two changes would have put downward pressure on demand for this visa while the latter increased it.

More recently the minimum period of relevant skilled work an applicant must have done to get this visa has been reduced from two years to one year. This change is likely to assist temporary graduates to more easily access a temporary skilled visa. Dutton may try to reverse this but that would leave more temporary graduates in immigration limbo for longer.

Dutton may also try to again restrict pathways to permanent residence (which mainly affected regional employers using those pathways) and/or restrict the skilled occupations that are allowed. It would be surprising if he tried to shut down the Aged Care Labour Agreement which is part of this visa. He may legitimately tighten the Agreement to reduce integrity risks.

Restricting the use of this visa by regional employers, who tend to recruit to lower-skilled occupations, would be strongly resisted by the Nationals. Any restrictions to this visa would be strongly opposed by the business community, as well as by the health and aged care industry, which is a major user of this visa. As a former Health Minister, Dutton will not want to be blamed for exacerbating the current health and aged care crisis while our population ages further.

Dutton himself has demanded greater use of this visa to recruit construction trade workers. He will want to deliver on that but that is not as simple as it sounds.

A major reduction in the contribution of this visa to net migration would appear unlikely unless Dutton is prepared to be crazy brave. The best Dutton could hope for is to get that down to around 30,000 with some highly controversial, and possibly quite silly, policy changes.

Visitors extending stay

The contribution of this visa grouping to net migration increased strongly in the decade prior to the pandemic. It steadily increased from 21,490 in 2008-09 to 53,020 in 2018-19. The big jump to 98,900 in 2019-20 would have at least partly been due to the early phase of the pandemic. After falling into negative territory during the pandemic itself, in 2022-23 it was again a very high 88,400.

Part of the increase has been due to the rise in visitor visa holders seeking asylum. That was certainly a key driver prior to the pandemic. The other drivers are visitors seeking onshore student, family or employer-sponsored visas.

The Labor Government has started to address this by a combination of increased offshore refusal rates and increased use of the "No Further Stay" condition. Dutton would want to use these measures to a much higher degree. There are two problems with excessive use of these measures.

Very high refusal rates will anger Australians who want their families to visit them in Australia and businesses who want to invite key overseas business partners to visit for meetings and so on, while increased use of the No Further Stay condition will drive up applications for asylum.

The Labor Government recognised this when it belatedly allocated $160 million to address the historically huge number of asylum seekers in Australia. That will be insufficient, but it is doubtful Dutton would spend even more money on that given he refused to do anything about this issue when he was Home Affairs Minister (other than to counter-productively decimate the immigration compliance function).

Even with a massive increase in refusal rates and the use of No Further Stay, Dutton would not be able to count on getting the visitor contribution to net migration to anything much below 40,000. He would need to do more and perhaps be prepared to introduce a blanket regulation that people on visitor visas cannot in any circumstances (other than asylum) apply for another visa while in Australia.

That would get the visitor contribution to net migration down more significantly. But it would further crank up asylum applications, overstay rates and daily media of heartbreaking stories of people being removed from Australia (assuming Dutton would adequately fund immigration compliance rather than again decimating it).

But even that would not get the visitor contribution to net migration below 35,000.

Working Holiday Makers

Working Holiday Maker (WHM), including Work and Holiday (W&H), contribution to net migration is driven by five main factors:

  • state of the labour market;
  • number of agreement countries;
  • eligibility criteria such as age and English language requirement;
  • caps on each agreement country where applicable; and
  • policies enabling WHMs to secure a second or third WHM visa or some other type of visa.

The WHM/W&H contribution to net migration fell from 38,400 in 2012-13 to 23,090 in 2014-15 with the sharp weakening of the labour market. WHM/W&H are less likely to come to Australia when the labour market is weak and more will leave earlier. It remained between 25,000 and 30,000 until the pandemic, despite a steady increase in the number of W&H agreement countries including China (5,000 places); Spain (3,400 places); Israel (2,500 places); Vietnam (1,500 places); Singapore (2,500 places); Peru (1,500 places).

During the pandemic, a number of policy and eligibility changes were made including making the WHM agreement with the UK an automatic three-year visa and increasing the age limit from 30 to 35. The Coalition Government also introduced the opportunity for WHMs and W&H visa holders to be granted a third WHM visa, increased the W&H visa caps by 30% (WHM visas are uncapped) and temporarily allowed fee-free applications.

Not surprisingly, the WHM/W&H contribution to net migration boomed reaching 70,848 in 2022-23. While the 30% increase in W&H visa caps has been returned to previous levels, WHM/W&H visa applications/grants continue at a strong pace.

There are some sensible options to slow the rate of growth in WHM visas including an English language test (this would also help reduce the high level of exploitation of WHMs) and abolishing or restricting access to a second or third WHM visa.

But the Nationals will know that regional Australia, particularly regional tourism businesses and farmers, are heavily reliant on WHM/W&H visa holders. Littleproud has already made it clear he will oppose measures to reduce the flow of WHM/W&H visa holders to Australia.

Changing the terms of WHM/W&H visa agreements with individual countries would take considerable time and create much ill-will towards Australia. Dutton cannot easily and unilaterally change the terms of bilateral agreements with other nations although taking Morrison’s lead with the French on the submarine contract might suggest Dutton may not care.  

Dutton would have a very tough time getting the WHM/W&H contribution to net migration down much below 30,000 without a dragged-out fight with the Nationals as well as with tourism and farming lobby groups. The Labor Government will also be nervous about tightening policy on WHMs but may have more freedom to do so than the Coalition.

A very weak labour market, however, would do the trick.

Other temporary visas

This group is a jumble of different temporary visas, the main ones include:

  • temporary graduates who generally make a negative contribution to net migration because this visa is granted to graduating students already in Australia and then are counted as a net migration departure when they leave;
  • bridging visa holders who either depart voluntarily or are removed involuntarily following compliance action;
  • temporary parents; and
  • Pacific Australia Labour Mobility (PALM) visa holders.

The new MATES visa for young Indian professionals, which starts in November 2024, may also be included in this grouping.

For most years immediately prior to the pandemic, this grouping made a negative contribution to net migration of between negative 10,000 and negative 20,000. In 2022-23, this switched to a positive 14,810 as options for these people to remain in Australia increased, including the special COVID visa, together with the attraction of a very strong labour market.

The number of temporary graduates in Australia is now around 200,000. The Labor Government has tightened policy on temporary graduates (after initially loosening it) from July 2024, so there should be some decline in students accessing this visa and some increase in temporary graduate departures and temporary graduates securing skilled temporary visas due to the reduction in the skilled work requirement.

Dutton may choose to tighten policy on temporary graduates further similar to actions being taken in the UK. That would upset the universities but Dutton (and his far-right constituency) doesn’t care for them anyway.

Increasing the departure of bridging visa holders would require significantly more investment in immigration compliance than the additional funds allocated to this by the Labor Government after years of this function being run down by the Coalition Government.

Would Dutton be prepared to reverse his policies as Home Affairs Minister and increase funding for immigration compliance? Most likely, but we should not forget the Coalition’s hatred for increasing the number of public servants.

The Coalition introduced the temporary Sponsored Parent visa as part of a 2019 Election promise, against the background of Australia’s strict permanent parent visa policy. While the numbers on this visa currently remain relatively small, Dutton will be wary of any increase. He may choose to cap the number of temporary parent visas or tighten policy to prevent a risk of numbers blowing out, especially if he significantly tightens visitor policy. But that would cause a large backlash from Australia’s migrant community (about which Dutton may not be too perturbed although he is trying to court the Australian-Indian community).

Any tightening of policy on the Pacific Australia Labour Mobility (PALM) visa stream would be hotly opposed by the Nationals. Indeed, Littleproud is already advocating for the reinstatement of his now-abolished Agriculture visa. That would turbo-charge farm worker exploitation, accelerate asylum applications and increase net migration. But that will not matter to Littleproud because he looks with envy at U.S. farmers who have access to a similar visa to bring in easily exploitable, cheap farm workers.

At best, Dutton may be able to resist reinstatement of the Agriculture visa. He will not be able to convince Littleproud to reduce the PALM visa, which continues to contribute to a steady flow of asylum applications. That is because of both the exploitation of these workers, as well as the fact they have only a very limited pathway to permanent residence.

Dutton will also find it hard to shut down the new MATES visa given the origins of this was a joint Morrison/Modi statement of June 2020.  This visa provides two-year visas for 3,000 young Indian professionals (plus family) every year. The visa itself is fine but will put upwards pressure on net migration which the Labor Government never considered.

Overall, Dutton may be able to get this visa grouping back into negative territory with some aggressive policy tightening and compliance action but that is unlikely to be any lower than negative 10,000. Labor’s policies would see this contribution being no lower than negative 5,000.

Permanent migration

The permanent migration contribution to net migration is much lower than the size of the permanent migration program because around 65% of the program is delivered via people who are already onshore and hence already counted in net migration.

Dutton has proposed cutting the permanent migration program from 185,000 to 140,000 while retaining the two-thirds to one-third balance in favour of the skill stream.

The family stream in 2024-25 is planned to be 52,500. If Dutton was to reduce visas issued in the family stream while maintaining the desired ratio, that would amount to a cut of around 6,200, leaving a family stream of 46,300.

But the Migration Act requires partner and child visas to be managed on a demand-driven basis. While Dutton was able to, illegally, limit partner visas when he was Minister, there is now much better knowledge in the media of the legal issues. They would take him to task if he again tried to limit these visas. Demand for partner visas will rise over the next few years with the increase in younger temporary entrants in Australia and more Australians travelling overseas long-term.

This is likely why Dutton has announced he will increase the permanent program in future years.

Table 2: Migration Program
(Source: DHA. NOTE — does not include 3,000 permanent places for Pacific Engagement visa)

The only family visas Dutton could legally reduce are the 8,500 parent places and 500 places for other family members. Noting the massive 30-year application backlog for permanent parent visas and the hot political issue that is, it is doubtful Dutton would want to significantly reduce the parent visa cap, but he will have no choice given his clear commitment to reduce the program while maintaining the two-third to one-third ratio. He will need to publicly reveal the inevitability of this reduction to parent visa places at some stage. That will have a massive backlash from Australia’s migrant community.

That would leave a skill stream of 93,400 compared to the current planning level of 132,500.

The impact of that reduction on the Budget would be significant based on Treasury’s FIONA model. Dutton will again rue that when Scott Morrison was Immigration Minister, he used an increase in the skill stream as a Budget offset. While Treasury should never have allowed that, Dutton is again stuck with Morrison’s legacy.

In reducing the skill stream, Dutton is unlikely to try and limit employer-sponsored migration as that provides the largest economic and budget benefit and is most highly valued by the business community. He will also not be allowed by Littleproud to touch the Regional visa.

Dutton will focus on cutting the Skilled Independent visa and the State/Territory Nominated visa. The problem with cutting these back too far is that it will reduce the number of health, education, IT and construction trade workers Australia can recruit. Dutton will need to find a way to defend that decision.

For example, in 2022-23, some 5,360 registered nurses (plus accompanying families) migrated to Australia via the skilled independent category. In addition, around 600 medical practitioners (plus accompanying family members) migrated via the skilled independent category in 2022-23.

A massive cut to the skilled independent category represents both a budget/economic cost as well as a cost to the health system.    

In permanent migration terms, Dutton will also need to consider the new Pacific Engagement Visa (PEV), which, for no apparent good reason, is not counted in the permanent migration program even though it is a permanent visa. This is not a well-designed visa and Dutton may feel he can abolish it and just wear the backlash from Pacific Island nations. He is used to that.

Implications for net migration of permanent migration cuts

Prior to the pandemic, the contribution of permanent migration and humanitarian programs to net migration ranged between 70,000 to 85,000. With the cuts to permanent migration being proposed by Dutton, he could reasonably expect that contribution to fall to around 65,000. That is because his cuts to permanent migration – other than the cut to the Humanitarian Program – will mainly impact people who secure permanent migration after having been in Australia for many years. These are people who have already been counted in net migration.

By comparison, the Labor Government would need to be counting on the permanent migration intake to contribute around 90,000 to net migration due to the larger Humanitarian Program and the new PEV, both of which are mainly visas that go to people who are offshore.

It should be noted that the state of the labour market does impact the contribution of permanent migration to net migration. For example, in 2014-15, the permanent visa contribution to net migration was 70,210 when the permanent migration program was 190,000. Skilled migrants, in particular, tend to depart at a higher rate when the labour market is weak.   

What does this mean for Dutton's target?

What does this mean for Dutton’s net migration target and for Labor’s long-term net migration forecast of 235,000? Table 3 outlines where things might turn out if Dutton is prepared to adopt some fairly extreme measures to reduce net migration and where things currently stand for Labor’s long-term forecast based on current and announced policy settings.

Despite the extreme nature of the measures Dutton may have to adopt (for example, a blanket prohibition on visitors applying to extend stay, virtual abolition of Skilled Independent category, a 75% reduction in parent places and a halving of the student contribution to net migration compared to the last year before the pandemic), I can’t get net migration down to anywhere near 160,000.

Table 3: Net migration scenarios for the two major parties
(Source: Author calculations)

To get to net migration of 160,000, Dutton would have to either:

  • stare down the Nationals over visas that are targeted at regional Australia; and/or
  • drive up unemployment quite significantly; and/or
  • introduce a much lower national student cap (which seems to be Dutton’s proposed approach), whereby the cap is reached very early in each financial year, along with massive levels of chaos in the industry.

Dutton will choose the third of these options as he will be more prepared to buy a fight with the universities than with the Nationals.

But the challenge for the Labor Government to get to its forecast for net migration of 235,000 per annum won’t be a lot easier unless it is prepared to also make some controversial policy changes.

The problem is that neither major party has explained the policies they will adopt to get to their respective net migration targets/forecasts (and probably won’t before the Election). 

 

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.

Related Articles

Support independent journalism Subscribe to IA.

 
Recent articles by Abul Rizvi
Despite Dutton's blustering, a long-term net migration policy is essential

With a 2025 election edging closer, the race is on for the Albanese Government to ...  
Dutton’s deportation claims contradicted by his own record

While Peter Dutton beats his chest over the Coalition's strong-arm approach to ...  
Labor's re-drafted Ministerial Directive on visa cancellation is misguided

Albanese's re-drafting of Ministerial Direction 99 with a zero-tolerance approach ...  
Join the conversation
comments powered by Disqus

Support Fearless Journalism

If you got something from this article, please consider making a one-off donation to support fearless journalism.

Single Donation

$

Support IAIndependent Australia

Subscribe to IA and investigate Australia today.

Close Subscribe Donate