This front-page story in The Australian on the blow out in net migration has created a frenzy of finger pointing, most of it ill-informed.

It is true net migration is currently running at levels Australia has never before experienced we are in uncharted waters as net migration for the 12 months to end March 2023 could be approaching 400,000 against a Treasury forecast of 235,000 per annum.

The Australian is actually very late to this story. Based on international movements data, it was clear by around October/November last year that net migration was blowing out well beyond the Treasury forecast in the October 2022 Budget. I explained the key visa categories of movement behind the blow out a couple of months ago.

Paul Karp in The Guardian wrote about it in January. He had previously asked the Treasurer if Treasurys net migration forecast was under-cooked. The Treasurer confirmed this.

There are four major reasons behind the blow out. The increase in the permanent migration program to 195,000 per annum is only a minor contributor to the increase.

The first reason is the Morrison Governments decision to transfer responsibility for forecasting net migration from the immigration area of the Department of Home Affairs (DHA) to Treasury.

Outside the period when international borders were closed, Treasurys general approach to forecasting net migration is to take an average of a period in the past and assume this will be replicated into the future.

Little consideration is given to the impact of current or forthcoming changes in immigration policy and there appears to be little consultation on the net migration forecast with DHA. While this may now be changing, the Secretary of DHA, Mike Pezzullo, confirmed his lack of interest in the net migration forecast in response to questioning at Senate Estimates prior to the pandemic.

Treasurys approach to forecasting net migration makes it being very wrong highly probable. But that is not enough to explain why Treasurys forecast was out by the proverbial country mile.

The second reason is implementation of a range of immigration policy settings that made Australia super attractive to people looking for low skill jobs that pay, at a global level, comparatively well. That led to a surge in international arrivals and a low number of international departures.

A classic example was the decision of former Immigration Minister Alex Hawke to provide unlimited work rights for overseas students. This created an unprecedented boom in student visa applications. On a monthly basis, these have been running at around 20 to 30 percent higher than all-time records. Australian education providers are raking in millions of dollars in student fees but history tells us that a massive acceleration in student numbers always end in tears.

Another example is Hawkes decision to create a special covid visa with full work rights that just about any student or other temporary entrant with a job in Australia could cheaply access. Tens of thousands of students abandoned their studies and secured this visa. Education providers are not happy about losing the fee revenue from these students but were those students really here to study or to work?

Both the Morrison and Albanese Government made post-study work rights significantly more generous. As a result, the number of former students in Australia on temporary graduate visas are also at record levels and climbing strongly.

While some of these immigration policy settings will gradually be closed down, their impact in terms of net migration will continue for many months to come. It will also increase the number of temporary entrants in immigration limbo unwilling to go home and unable to secure permanent residence.

The third reason behind the blow out was the massive build up of visa application backlogs over a number of years as the immigration system approached gridlock under the Morrison Government. The Albanese Governments decision to clear these backlogs, which had to be done given the applicants had a legal right to have their applications considered, contributed to the surge in net migration. The backlogs could not have been allowed to continue festering but this made a surge in net migration inevitable.

Finally, all of this was happening at a time Australia was experiencing the highest levels of job vacancies on record. The vacancies were in almost every area of the economy and contributed to unprecedented numbers of visitor arrivals (and other temporary entrants) securing another visa onshore because they could get easily a job.

This resulted in the perfect set of events to give us net migration levels we have never before seen. But it is highly likely that as the labour market weakens, and the Albanese Government tightens many of the covid-era immigration policy settings, net migration will gradually decline.

We will need to wait for the May Budget to see the new Treasury forecasts which hopefully will be better informed through consultation with DHA. We may also learn more about the Governments long-term migration strategy when it announces its response to the Parkinson Review of the Migration System.