Pearls and Irritations

The Government has at last revealed some details of its 2019 Budget forecast for a record breaking level of sustained NOM. The key is a significant increase in the net contribution from temporary visa holders. This would mean the current stock of around 2 million temporary entrants in our population must rise even more rapidly. Are we on the way to transitioning from a migrant settler nation to a guest worker society? But if there is a shortfall in forecast NOM, what would be the implications for the Prime Minister’s job creation pledge and for its ten year tax plan?

If the Government’s NOM forecasts are realised, they will represent the largest contribution from immigration to Australia’s population over any four or ten year period in our history. These NOM forecasts are essential to delivering the Prime Minister’s pledge to create 1.25 millio0n jobs over five years and to the Government’s budget/tax plan (see here).

Such a high level of NOM will do nothing to help with ‘congestion busting’ without very significant infrastructure investment. It would put increased pressure on government service delivery.

The Government is forecasting NOM in 2019 compared to the 2018 outcome, will rise by over 23,000 (the increase is even bigger when compared to the four year forecast in the 2018 Budget). But even a 23,000 increase in one year is substantial and would need to be driven by either:

• a very much stronger labour market; and/or
• policy changes; and/or
• further loss of control of the visa system.

A more detailed analysis is needed to establish which are the assumed key drivers and a clearer understanding of the Government’s immigration policies and administration.

Table 1: Net Overseas Migration (NOM)

Source: ABS Cat 3412, Question On Notice No 31, BE 19/032

 Overseas Students

Home Affairs is expecting overseas student arrivals to continue to increase strongly in 2019 and in 2020 and then grow more slowly in subsequent years. Offshore student visa grants for the 11 months to end May 2018-19, however, suggests minimal growth over 2017-18. With Home Affairs having announced significant tightening of visa processing for VET students from Nepal, together with a decline in offshore visa grants to students from China, the growth in students Home Affairs is expecting will need to come from other sources, particularly India.

Home Affairs is also expecting growth in student departures to slow in 2019 to less than 1,000. Given the rapidly growing stock of students in Australia, together with significant tightening of opportunities to extend stay, somewhat faster growth in student departures would seem more likely.

The Home Affairs forecast of a 7,000 increase in student contribution to NOM in 2019 and another 2,500 in 2020 would appear high without further policy change and/or a stronger labour market.

Skilled Temporary

Coming off a low number of offshore skilled temporary visas granted in 2017-18, there has been a strong increase in 2018-19. This would support Home Affairs’ forecast of a 4,000 increase in contribution to NOM in 2019. A strong labour market would be needed for this increase to be sustained in subsequent years.

Visitors

Home Affairs is forecasting ongoing strong growth in visitors changing status after arrival. This suggests it does not expect the current large offshore backlogs and slow processing times for partner visas and employer sponsored visas being addressed in any significant way – thus continuing the incentive for potential offshore visa applicants to enter on visitor visas and then apply to change status.

It may even suggest that rapid growth in visitors from Malaysia and China in particular applying for onshore asylum are expected by Home Affairs to continue. If correct, that would be an extraordinary admission.

Working Holiday Makers

Home Affairs is forecasting a modest increase in working holiday makers. That is likely to include slowing decline in S/C 417 (Working Holiday Maker) arrivals offset by an increase in caps for the higher immigration risk S/C 462 visa (Work and Holiday Maker). A strong labour market together with the option of a third year in Australia for working holiday maker visa holders would support the assumed modest increase in their contribution to NOM.

Other Temporary Entry

Home Affairs expects the negative contribution of this category to decline due to an increase in arrivals but little change in departures. These appear very odd assumptions due to:

• growing stock of Temporary Graduate (S/C 485) visa holders who are unable to extend stay in Australia and hence contribute to increasing departures – it would be very surprising if Home Affairs does not anticipate any significant increase in these departures over the next few years;
• growing stock of failed onshore asylum seekers departing or removed either on unexpired bridging visas or as overstayers – once again, it would be surprising if Home Affairs does not anticipate any significant increase in these departures over the next few years;
• increase in arrivals under the new Temporary Parent visa which has a ceiling of 15,000 places per annum – it appears Home Affairs is not anticipating many of the 15,000 places being filled each year although it may take until 2020 and 2021 before these visa holders begin to appear in the NOM arrival figures due to the way NOM is counted; and
• increase in arrivals on S/C 407 Training visa.

Permanent Arrivals

Home Affairs is forecasting a modest increase in permanent arrivals despite the cut in the permanent migration program announced in the March 2019 Population Plan. This may reflect how the 2018-19 Program is delivered. However, if the 2019-20 Migration Program is delivered as planned, we should expect a decline in permanent arrivals due to the significant planned reduction in the Skilled Independent (S/C 189) category in 2019-20 and an increasing portion of this category being taken up by NZ Citizens who have been in Australia long-term (and hence would not be counted in NOM figures when they secure permanent residence as they would have already been counted when they originally came to Australia on a S/C 444 visa).

The increase in the waiting period for access to social security to four years is likely to drive a faster rate of permanent residents departing than assumed by Home Affairs.

Other

The ‘other’ category includes NZ and Australian citizens plus movements that have not been categorised. Home Affairs is not expecting the aggregate of these categories to change much. However, if Australia’s economy strengthens significantly compared to other major economies, as forecast in the 2019 Budget, Home Affairs should be forecasting this category to make a much smaller negative contribution to NOM.

Conclusion

Unless the Australian economy strengthens in 2019-20, and assuming no other policy changes, the Home Affairs forecast for NOM is likely to be substantially on the high side. That would make delivery of the Prime Minister’s job creation pledge very difficult to achieve. If the Australian economy and labour market weaken significantly, NOM could fall like a stone making the jobs pledge impossible.

Abul Rizvi was a senior official in the Department of Immigration from the early 1990s to 2007 when he left as Deputy Secretary. He was awarded the Public Service Medal and the Centenary Medal for services to development and implementation of immigration policy, including in particular the reshaping of Australia’s intake to focus on skilled migration. He is currently doing a PhD on Australia’s immigration policies.

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