Government widely misses net migration forecast

New data released by the Bureau of Statistics has revealed that net migration numbers have drastically exceeded the Government's forecast. Dr Abul Rizvi explains how this happened.

ON THURSDAY 15 AUGUST 2024, the Australian Bureau of Statistics (ABS) released Net Permanent and Long-term (NPLT) movement data for 2023-24.

At 469,140, this is the earliest approximation for net migration that the ABS publishes and compares to the Government’s forecast of net migration for 2023-24 of 395,000. But is it likely the Government forecast is that far out?

Prior to COVID, NPLT followed the same quarterly pattern as net migration. It also tended to be equal to or higher than net migration annually, particularly for the March quarter. That changed after COVID. The quarterly pattern was thrown out and NPLT was substantially higher than net migration (see Chart 1).

At some stage, it is likely the pattern and relationship between NPLT and net migration will return to normal (NPLT will be higher than net migration as more long-term residents depart and fewer short-term arrivals extend their stay). But was that the case in 2023-24?

In the September quarter of 2023, NPLT was 145,550 compared to net migration of 151,000.
In the December quarter of 2023, NPLT was 57,210 compared to net migration of 107,300.

In other words, NPLT remained lower than net migration for the first six months of 2023-24 but the average difference was beginning to narrow and in March 2024 may have gone back to normal (net migration being lower than NPLT).

For the March quarter of 2024, NPLT was a record 195,040, even higher than the March 2023 quarter NPLT of 154,890. Prior to COVID, NPLT for the March quarter was usually much higher than net migration for the same quarter. Will that again be the case for the March quarter of 2024?

One way of considering this question is to look at changes in the stock of temporary visa holders that tend to stay in Australia for longer periods (note changes in the stock of temporary entrants include both people counted as part of net migration as well as short-term movers and hence not counted as part of net migration).

Table 1 compares the change in stocks of key temporary entry categories for the March and June quarters of 2024 compared to the March and June quarters of 2023.

Other than for bridging visa holders and skilled temporary entrants, growth in the stock of temporary entrants in the March quarter of 2024 was generally lower than in the March quarter of 2023. That was the case even more so in the June quarter of 2024 compared to the June quarter of 2023.

While net migration in the first half of 2023-24 was higher than NPLT movements, the changes in the stock of temporary entrants suggest it is quite possible that net migration in the second half of 2023-24 was lower than NPLT. We will not know the answer to that question until late 2024 when the ABS publishes its preliminary estimate of net migration for 2023-24.

One uncertainty to that view would be the positive net movement of Australian citizens in 2023-24 when the Government had assumed a negative Australian citizen contribution to net migration. But that may make only a minor difference (possibly around 20,000).

Another uncertainty is that since 1 July 2023, New Zealand citizens have had a direct pathway to Australian citizenship without having to go through a formal permanent resident visa stage. That is likely to have slowed growth in the stock of NZ citizens and increased the opportunity for other temporary entrants to become permanent residents as this policy change freed up places in the formal migration program.

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A further uncertainty is what happened to visitors extending their stay beyond 12 months out of 16 and hence being counted as part of net migration. These boomed in 2022-23 to 88,400 (or around 13 per cent of net migration in that year).

During 2023-24, the Government tightened policy on visitors extending their stay by increasing the use of the “no further stay” condition. But it wasn’t until 1 July 2024 that the Government banned visitors from applying for student visas onshore, a method some education providers were using to bypass scrutiny in offshore student processing.

A substantial number of visitors applying for student visas onshore is likely to be reflected in the large increase in the stock of bridging visa holders during 2023-24 as well as a strong increase in students appealing to the Administrative Appeals Tribunal (AAT).

These three uncertainties are likely to have pushed net migration in 2023-24 to exceed the Government forecast of 395,000. But I suspect these may not be enough to push net migration up to the 469,140 in NPLT movements in 2023-24.

The other big question is whether net migration is falling fast enough to get to the forecast of 260,000 for 2024-25. Uncertainty around that may be the key driver to where the Government sets student caps for 2024-25.

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.