Record temporary entrants set new challenges for net migration

A surge in temporary entrants over the Christmas period has given the Government new challenges in tempering net migration numbers. Dr Abul Rizvi reports.

*Also listen to the audio version of this article on Spotify HERE.

TEMPORARY ENTRANTS in Australia increased from 2.64 million at end September 2023 to a new record of 2.76 million at end December 2023. While that may get the anti-immigration types excited, the increase was driven almost entirely by the traditional Christmas period surge in the arrival of visitor visa holders (up from 0.34 million to 0.6 million) and working holidaymakers (up from 0.14 million to 0.17 million).

During the December quarter, there were the expected large falls in the number of students (down from 0.66 million to 0.55 million), New Zealand citizens (down from 0.72 million to 0.7 million), temporary skilled (down from 0.14 million to 0.13 million), temporary graduates (down from 0.19 million to 0.18 million) and other temporary employment which includes the special COVID visa (down from 0.22 million to 0.18 million).

The pattern of changes was generally standard for December quarters that are unaffected by a pandemic and closed borders (see for example Chart 1 for the pattern of changes in the stock of overseas students in Australia).

Most of these changes will move in the opposite direction in the March quarter.

The change that will be worrying the Government is the increase in bridging visa holders from 0.19 million in September 2023 to 0.21 million in December 2023. This comes after the Government had driven down the bridging visa backlog from an astonishing peak of 0.37 million at end March 2022 to 0.18 million at end June 2023. The increase is likely driven by onshore applicants for student, temporary graduate and possibly COVID visas before the chance to apply for these expired at the start of February 2024.

The crucial issue is what all this means for net migration and whether we are on track to hit the forecast of net migration falling from 518,000 in 2022-23 to 375,000 in 2023-24.

There are over half a dozen areas of key uncertainty the Government will be monitoring in early 2024, noting that the first five months of 2023-24 – in particular the September quarter – were very strong for net long-term and permanent movements. These were much stronger than in the same quarter of 2022-23 — the year of record net migration.

First, the Government will be hoping that the net student and temporary graduate departures in the December quarter of 2023 contain a large portion of permanent departures rather than predominantly people leaving short-term and likely to return in the March quarter of 2024.

To drive down the number of new student arrivals in the March quarter of 2024, the Government has reduced offshore student visa grants in the first six months of 2023 by cranking up the refusal rate.

Albanese Government targets education and health skills in migration plans

The latest indications are that the Albanese Government is seeking skilled migrants in the education and health sectors above IT, finance, engineering or trades workers.

But, the offshore application rate remains at record levels. That is unsustainable. The Government needs to go back to the drawing board on student visa policy. The plan to crank up refusals of onshore student visas is also high risk unless it is properly funded.

The Government will also be relying on its proposed stronger English language requirement for students and temporary graduates to be introduced soon to reduce application rates. I suspect the impact of this may be both marginal and temporary as many will re-sit English tests until they pass.

Second, it will be looking to reduce the rate at which visitor visa holders are extending their stay by scrutinising both offshore visitor applications more closely and scrutinising visitors applying to extend their stay after arrival. Once again, this is a heavily resource-intensive process. The Government will not want the visitor contribution to net migration again approaching almost 100,000 as in 2019-20. It reached almost 70,000 or 18 per cent of net migration in 2022.

Third, it will want to slow the contribution of working holidaymakers to net migration by limiting the rate at which they are securing second and third working holidaymaker visas after arrival.

The Coalition Government introduced the third working holidaymaker visa idea to try and address labour shortages. That decision has not been reversed. Moreover, the Coalition Government also gave working holidaymakers from the UK an automatic three-year visa. There were over 31,000 UK working holidaymakers in Australia at end December 2023.

The Government says it will release a discussion paper on working holidaymakers early in 2024. Any tightening of policy on working holidaymakers will be hotly opposed by the tourism industry, particularly in far north Queensland, where they need more working holidaymakers to help with recovery after the floods, as well as the agriculture industry that relies on working holidaymakers for farm labour. The National Party (and indeed, One Nation) will argue for no change in working holidaymaker policy while at the same time pushing for dramatic cuts to net migration.

Albanese Government still pushing to mend Coalition's student visa mess

From 1 July 2023, the Albanese Government belatedly started tightening the student visa policy it inherited from the Coalition.

Fourth, the Government will want the December quarter reduction in COVID visa holders (sub-class 408, which is mainly COVID visa holders, fell from 149,657 in September 2023 to 115,547 in December 2023) to contain a large portion of permanent departures and that this trend will continue through 2024. Its forecast reduction in net migration is heavily reliant on that.

Fifth, the Government will be hoping its more facilitative policies for NZ and Pacific Island nationals are simultaneously successful while not contributing too much to net migration. It is difficult to see how they can do both. We can expect a larger contribution to net migration from NZ citizens going forward.

Sixth, the Government has made some very sensible changes to policy on employer-sponsored visas. However, the promised faster processing of these will also lead to a strong contribution to net migration, especially while the labour market remains strong.

Finally, the Government will want its $160 million package to reduce unmeritorious asylum applications to start impacting soon with a much higher rate at which unsuccessful asylum seekers depart or are removed. That, too, is a highwire act.

The Government will need almost all of the above to go right to get net migration down to the forecast (not a target) of 375,000 in 2023-24 and 250,000 in 2024-25. Probably the biggest factor will be the relative state of the labour market.

A weak labour market would drive down net migration much more rapidly, including more Australian citizens and permanent residents departing. But no government wants a weaker labour market.

*This article is also available on audio here:

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.