ABUL RIZVI. Morrison says ‘enough’ to a problem largely of his making.

Nov 21, 2018

Scott Morrison says ‘enough’ to the level of migration to Sydney and Melbourne (see here). Yet he fails to mention that it was his actions that brought about the surge in migration to Sydney and Melbourne in the first place. And more knee jerk decisions won’t help, either from the Commonwealth or the states.

As immigration minister, Morrison took three key steps that would deliver the surge of migration to Sydney and Melbourne.

  1. He locked in the migration program at 190,000 per annum by formally linking the level of migration to budget figuring. 
  2. Under Morrison, usage of the many visas that encourage migrants to settle away from Sydney and Melbourne declined significantly and that decline continued under Dutton until 2017-18 (see here).
  3. Morrison implemented recommendations of the Knight Review that led to a very large increase in overseas students. The rapid increase in net overseas migration to Sydney and Melbourne is very much due to overseas students. This was strongly encouraged by state governments who, together with the Commonwealth, failed to plan for the required infrastructure.

Linking migration to the Budget

In the now infamous 2014 Budget, Morrison as immigration minister decided he would formally link the size and composition of the migration program to budget figuring (it seems Joe Hockey and Mathius Cormann went along with him). This enabled Morrison to claim the associated net budget benefit for his portfolio. As a result, the government approved migration program level has since been locked in at 190,000 per annum.

When Tony Abbott argued for an 80,000 cut to the program, it was this budget linkage that enabled Morrison to argue the Home Affairs portfolio would need to find some $5 Billion in budget savings over 4 years (see here). 

Linking the migration program to budget figuring forced Peter Dutton, keen as ever to follow Tony’s lead on everything, to introduce the idea that the 190,000 government approved program was actually a ‘ceiling’ not a ‘target’ (see here). This way Dutton cut the program to 163,000 in 2017-18 without having to provide the budget offsets (which on a pro rata basis would come to around $1.87 Billion over 4 years). With Morrison apparently now approving of a cut to the ‘ceiling’, will the budget offset rules be enforced or don’t they apply to a Prime Minister?

Usage of regional visas

For over 25 years, we have had a range of visas that encourage migration to regional Australia and the smaller cities (see here). But usage of these peaked in 2012-13 at around 40 percent of the skill stream. From Morrison’s first year as immigration minister, usage of these visas declined while the share of net migration to Sydney and Melbourne surged. 

We will never know how different things may have been in terms of congestion in Sydney and Melbourne if Morrison’s keenness for these visas had started when he first became immigration minister rather than more recently.

Overseas students

Overseas students in recent years have represented around 40 percent of net overseas migration. Their contribution to net overseas migration has surged from around 32,000 in 2011-12 to over 100,000 in 2016-17 (see ABS Cat: 2412). The bulk of these students went Sydney and Melbourne and a large portion of them went onto become permanent residents in Sydney and Melbourne.

Where to now

In his characteristic style, Morrison seems keen on another knee-jerk reaction. But states should counsel him against that. Rather he should look carefully at the impact of actions Dutton has already taken and assess the implications of those for the long-term. 

For example, net overseas migration is already in decline (see here). This is only the start. On current policy settings, net overseas migration will fall considerably further from the peak of around 260,000 in 2016-17 to between 150,000 and 200,000 by 2019-20 – a slowing economy could see net overseas migration below 150,000. The consequences of this for a range of industries would be significant.

Assuming the Commonwealth sticks with Dutton’s recommendation of a migration program of around 160,000, the key will be what happens to the 1 million or so long-term temporary residents already in Australia as well as how the government manages the backlog of partner visas (see here). 

The impact on NSW will be proportionally greater. For the 12 months to March 2018, net overseas migration to NSW has already fallen to 90,000 from a peak of around 103,000 in the 12 months to March 2017 (ABS Cat: 3101). On current policy settings it will fall further. Moreover, net interstate migration out of NSW (and mainly to Victoria and Queensland) has increased to 20,000. This too may increase in the next 12 months as the stock of overseas students in Australia look for pathways to remain which will inevitably be away from Sydney (and Melbourne) due to the way the migration program is currently being managed. 

At the same time, the rate of natural increase in NSW continues to decline – it fell from just under 50,000 in the 12 months to March 2013 to 43,500 in the 12 months to March 2018. This is the inevitable consequence of below-replacement fertility and an ageing population.

There is nothing wrong with trying to reduce migration to Sydney and Melbourne. There is nothing wrong with reducing immigration. But knee-jerk actions in this space have serious long-term consequences (see here). And it seems Morrison wants to pursue major policy changes while at the same time outsourcing visa processing to the highest bidder (see here). 

Can Morrison stop himself long-enough to think through the issues more carefully before he acts? 

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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