ABUL RIZVI: Government cuts permanent migration program but forecasts net migration to rise (Part 2)

Government has cut the migration program ceiling from 190,000 to 160,000 per annum but at the same time is forecasting net migration to rise from 241,700 in 2017 to 259,600 in 2018 and 271,700 in 2019. This was after it forecast a steady decline in net migration in the 2018 Budget. This is likely the result of changes to temporary skilled entry policy, working holiday makers and a continuing rise in visitors changing status after arrival including record numbers applying for asylum.

In Part 1 of this article we examined the planning levels for the 2019-20 Migration Program. In Part 2 we examine how the Government may have arrived at its forecast of net migration.

It should be noted the migration program reflects the number of permanent or provisional visas granted while net migration is the number of people arriving in Australia and remaining here for 12 months out of 16 irrespective of visa type or citizenship, less the number of people who had been counted in the resident population and then depart Australia for 12 months out of 16.

Table 1: Forecasts of Net Migration in 2018 and 2019 Budget Papers

2017
2018
2019
2020
2021
2022
2019 Budget Forecast
NA
259,600
271,700
271,300
267,600
263,800
2018
Budget Forecast
242,600
234,600
231,400
227,400
221,400
NA
Difference
NA
Plus 25,000
Plus 40,300
Plus 43,900
Plus 46,200
NA
Source: Commonwealth Budget Paper No. 3, Appendix A
Table 1 highlights a dramatic shift in the Government’s forecast of net migration. Between the 2018 and 2019 Budgets, the Government has ramped up its forecast of net migration over a four year period by 155,400 despite a substantial cut in permanent migration. Over the ten year period the Government is asking us to focus on, the difference in net migration is an additional 409,800.

The Government has provided no explanation for this dramatic switch in its net migration forecasts. So let’s look more closely at the components of net migration to see where the differences may be.

Table 2: Contribution to Net Migration by Broad Category (SEE END OF ARTICLE)

The permanent residence component of net migration fell almost 20,000 to 66,548 in 2017-18 and this is likely to fall further in 2018-19 and 2019-20. This will be due to reductions in the migration program; changes to counting methodology; increased emphasis on permanent visas to people already in Australia; and the new four year wait for social welfare that will force many new migrants to leave if they are unable to secure satisfactory employment (ie increasing permanent departures).

The key will be what happens to the economy and the labour market. If this weakens significantly, net migration will fall like a stone as many in the stock of over 2 million temporary entrants in Australia may lose their jobs and have no social welfare or insufficient savings to fall back on.

Assuming relatively strong economic growth over the next few years, as the Government has in its 2019 Budget, the question is which other components of net migration the Government has assumed will rise to achieve the extraordinary reversal in net migration being forecast?

It is unlikely the Government will have forecast any significant change in the net movement of Australian or NZ citizens unless it has assumed the global and NZ economies will deteriorate rapidly while the Australian economy remains strong.

Offshore student visa grants to end February 2019 indicate a slight fall in 2018-19 compared to 2017-18. While this may be compensated in March 2019, traditionally a strong month for offshore student visa grants., it is unlikely student arrivals contributing to net migration will be much above the level for 2017-18. Onshore student visa grants to end February 2019 are running at around the same level as the previous year.

While student visa holder departures in 2017-18 increased at a relatively fast rate, the total stock of student visa holders in Australia as at end December 2018 showed ongoing growth. Opportunities for students to access permanent residence have been tightened significantly. However, it appears Australia’s relatively strong labour market is enabling students to find work opportunities to supplement their ability to extend stay as students and undertake additional courses in search of permanent resident opportunities.

It is unlikely the Government is relying on a further boost in the student contribution to net migration which is already at 44 percent.

During the first six months of 2018-19, there has been a minor resurgence in offshore skilled temporary resident visas granted, arresting the decline in such visas since 2011-12. This is likely to reflect unwinding by new Immigration Minister David Coleman of the ham-fisted changes made to temporary skilled entry by Peter Dutton. The stock of skilled temporary entry visa holders at end December 2018, however, was still down compared to the same time the previous year. Thus only a  small increase in contribution of skilled temporary entry to net migration could reasonably be assumed unless the Government intends further major unwinding of the Dutton changes as well as a speeding up of processing times. This is possible given pressure from employer groups.

It should be noted the ALP has announced an intention to further tighten skilled temporary entry by significantly increasing the minimum salary requirement.

The Government may well be assuming continuation of the strong increase in visitors changing status over the past five years. There are a number of factors pointing to this including further cuts to places for Partner visa applicants forcing more to enter Australia on visitor visas and apply onshore.

But the biggest contribution is likely to flow from the massive increase in visitors applying for asylum. The record number of asylum applicants in 2017-18 would not yet be fully showing up in the net migration estimates produced by the ABS. Moreover, it is likely the Government is assuming the strong application rate for asylum will continue in 2018-19 and beyond, especially as it has reduced budget funding for visa and citizenship processing over the next few years.

The contribution of working holiday makers to net migration picked up marginally in 2017-18 after falling steadily since 2010-11. The decline until 2017-18 is likely to have been due to ongoing reports of working holiday makers being exploited as well as the increase in tax rates for these visa holders. In the last 12 months, the Government has announced a number of offsetting changes to attract more working holiday makers including offering them a third year in Australia and an increase in caps for some countries under the higher immigration risk Work and Holiday visa. The increase in these caps is being offset by ongoing decline in first visas granted to people from lower immigration risk Working Holiday Maker agreement countries.

The efforts to attract more working holiday makers is not, however, at this stage showing up in the stock figures which remain flat.

Contribution of the Other Temporary entry to net migration has been more than negative 10,000 since 2009-10. The stock of people on the range of visas in this grouping has been rising strongly, predominantly due to growth in the Student Temporary Graduate visa.

Students who secure a Temporary Graduate visa do not add to net migration because they have already been counted in net migration while they were on a student visa. But they are counted as a net migration departure when they leave. All other things equal, this would over time make this category a larger negative.

Another two factors impacting this grouping are:

  • people on bridging visas departing Australia after failing to secure another substantive visa or having been located and removed by immigration compliance staff – if government takes a strong approach to locate and remove failed asylum seekers, this grouping may become a larger negative; on the other hand
  • if the new temporary parent visa grows strongly, this grouping would become a smaller negative than would otherwise be the case. Over time, the size of the temporary parent category could become very large, especially if an ALP Government, should it win the election, proceed with the much more relaxed version of this visa that it has announced. The Shadow Spokesman has not indicated an estimated level of take up but has indicated it will be very popular.

Conclusion

The dramatic reversal in the Government’s forecast for net migration appears heavily dependent on a strengthening economy as well as increases in the contribution to net migration from working holiday makers; visitors changing status and applying for asylum or Partner visas; and an increase in the contribution to net migration from the new temporary parent visa.

Abul Rizvi was a senior official in the Department of Immigration from the early 1990s to 2007, when he left as deputy secretary. He managed the migration program from 1995 to 2007.

TABLE 2

Table 2: Contribution to Net Migration by Broad Category
 2016-17
 2016-17
 2016-17
 2017-18
 2017-18
 2017-18
 Arrivals
 Depart
 Net
 Arrivals
 Depart
 Net
 Students
          150,320
            46,330
          103,990
          159,436
            54,449
          104,987
 Temporary skilled 
            32,400
            15,770
            16,630
            26,541
            15,200
            11,341
 Visitor
            71,870
            18,160
            53,710
            78,020
            20,628
            57,392
 Working Holiday
            50,040
            25,850
            24,190
            49,286
            22,415
            26,871
 Other temporary
            10,780
            23,840
–           13,060
            14,067
            28,494
–           14,427
 Permanent visas
          105,690
            20,440
            85,250
            87,775
            21,227
            66,548
 Family
            29,830
               5,510
            24,320
            26,516
               5,700
            20,816
 Skill
            45,780
               8,000
            37,780
            43,014
               8,150
            34,864
 Humanitarian
            23,880
                  120
            23,760
            12,082
                  142
            11,940
 Other permanent
               6,200
               6,810
–                 610
               6,163
               7,236
–             1,073
 New Zealand Citizen
            31,860
            25,870
               5,990
            30,236
            23,543
               6,693
 Australian Citizen
            78,890
            93,140
–           14,250
            76,338
            90,742
–           14,404
 Other
               6,980
               6,930
                    50
               4,000
            12,269
–             8,269
 Total
          538,820
          276,330
          262,490
          525,698
          288,965
          236,733
Source: ABS Cat: 3412
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