Net migration in 2024-25 may exceed Treasury forecast by 45,000

With net permanent and long-term (NPLT) movement for the nine months to March 2025 at over 360,000, the chances of net migration being anywhere near Treasury’s forecast of 335,000 for 2024-25 are now very limited.

NPLT movement is the best early indicator of the level of net migration. In 2023-24, NPLT was 469,140 compared to a net migration outcome of 445,638 (net migration was around 5 per cent less than NPLT).

While COVID disturbed the relationship between NPLT and net migration, that appears to now be returning to normal, with NPLT again slightly higher than net migration on an annual basis (see Chart 1).

(Data source: ABS Arrivals and Departures / Overseas Migration)

NPLT movement for the nine months to March 2025 was 361,670 compared to 397,800 for the same period to March 2024. On a pro rata basis, it needed to fall to under 300,000 for the first nine months of 2024-25 to make the Treasury forecast even remotely plausible.

NPLT arrivals in the nine months to March 2025 were slightly higher than for the same period to March 2024. While NPLT departures were also higher in the nine months to March 2025, this was only marginally so. Departures are not increasing as quickly as Treasury is forecasting.

NPLT movement for the full financial year 2024-25 is likely to be around 400,000, if not more. If net migration in 2024-25 is again 5 per cent less than NPLT, that suggests a net migration outcome in 2024-25 of around 380,000. That would be 45,000 higher than the latest Treasury forecast. That reflects poor forecasting.

Treasury has developed a bad habit of overestimating the fall in net migration, primarily due to an assumption that departures will increase very quickly. The evidence shows that the large number of students and working holidaymakers who arrived in 2022-24 are largely seeking to extend their stay rather than depart. That was eminently predictable based on past experience.

Treasury’s poor net migration forecasting has not helped the Government to make good policy decisions. Just for 2024-25, Treasury first forecast net migration for 2024-25 at 260,000. It then increased that forecast in December 2024 to 340,000. For some inexplicable reason, it then reduced the forecast to 335,000 in March 2025.

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?

Net migration in 2025-26

And what of Treasury’s net migration forecast in 2025-26 of 260,000? If the net migration outcome for 2024-25 is indeed around 380,000, net migration in 2025-26 at 260,000 would represent a fall of over 100,000 from one year to the next. What could explain such a large fall?

Apart from another increase in the student visa application fee, the Government has not at this stage announced any significant further policy tightening for 2025-26, either to encourage departures or slow arrivals. It has not even released any details of its 2025-26 permanent migration program, which it will be under pressure to increase.

Treasury’s forecast of a further fall in net migration to around 260,000 in 2025-26 relies heavily on a rapid and very large increase in departures of students and other temporary entrants. While departures will rise simply because of the unprecedented size of the student and temporary entry cohort currently in Australia (over 2.9 million), there is strong evidence that students and temporary entrants are continuing to look for ways to extend their stay, especially as the labour market remains strong. That was inevitable.

In addition, a sharp economic slowdown in the U.S., as currently being forecast, would put upward pressure on net migration as more Australian expats return to Australia and fewer leave. We may even see a rise in U.S. citizens seeking to come to Australia long-term, noting that the Work and Holiday visa for U.S. citizens is uncapped.

Moreover, the Labor Government does not have an effective tool for capping students after its capping legislation failed to pass the Senate in late 2024.

In these circumstances, net migration falling to 260,000 in 2025-26 looks highly unlikely.

Australian Treasury increases net migration forecast

Australia's Treasury increases 2024-2025 net migration forecast by 80,000

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.