Pearls and Irritations

Net permanent and long-term (NP&L-T) movements data published by the Australian Bureau of Statistics (ABS) was recently used by the far right Institute of Public Affairs (IPA) in a highly politicised analysis of the January 2024 data on NP&L-T movements. This ‘analysis’ was naturally picked up by the Murdoch press via the Daily Telegraph with very little scrutiny.

Using the NP&L-T movements data, the IPA extrapolates that net migration ‘this year’ could be 660,000. If ‘this year’ refers to 2023-24, the IPA makes no mention of the Government actual forecast of net migration of 375,000, the role of Coalition Government policies that contributed to the net migration blow out in 2022-23 or the fact that changing these policies and seeing the effects of these changes takes time. The IPA analysis makes no mention of the policy tightening implemented since July 2023 or other policy tightening that has been announced and will be implemented over the next few months.

It was a standard IPA hit job.

My analysis of the January 2024 net permanent and long-term data is here. The reality is that fault for the blow out in net migration lies with both the Coalition and Labor Governments. That is because immigration policy changes take considerable time to take effect.

Why is the relationship between NP&L-T movements and net migration important?

The relationship between NP&L-T data and net migration data sounds arcane but it could be crucial to the immigration debate leading up to the next election.

Net migration counts people who have been out of Australia long-term, arrive and then stay for at least 12 months out of 16 months less those who have been in Australia long-term and depart for at least 12 months out of 16 months. It is the way the ABS counts the contribution of immigration, irrespective of visa category or citizenship (long-term movement of Australian citizens is included), to the size of the population.

The ABS publishes NP&L-T movement data with only a one-month lag. It is the best early approximation of net migration that we have. The ABS publishes net migration data with an initial lag of about 6 months and then revises this data as more information is secured on the actual length of stay of new arrivals and departures. Often we will not know the final estimate of net migration some 12+ months after the relevant period.

Because of this, we will have lots more information on recent NP&LT movements ahead of the next election than on net migration.

Chart 1 tracks the two data sets since the September quarter of 2016.

Three points to note from Chart 1.

First, prior to the pandemic, NP&LT movements were consistently higher than net migration on an annual basis.

Second, on a quarterly basis, NP&L-T movements were significantly higher than net migration in the high movement September and March quarters (driven mainly by students) while the reverse was the case in the June and December quarters but by a smaller magnitude.

Third, for a year or so after the pandemic and re-opening of international borders, net migration was significantly higher than NP&L-T movements. This is likely to have been due to:

• An extraordinarily strong labour market in 2022 and 2023 meant more people were attracted to Australia and fewer people departed;
• A smaller temporary entrant cohort reduced departures; and
• Policies put in place by the Coalition and retained by Labor for too long further reduced departures of people who the ABS had initially assumed would depart (eg the covid visa and unlimited work rights for students).

NP&L-T movements in the seven months to end January 2024 was 258,090 and for the 12 months to January 2024 was 481,620. The IPA says that on this basis, net migration “could reach 660,000 this year”. It is not clear whether the IPA is referring to the 2023 calendar year or the 2023-24 fiscal year.

Net migration for 2023 to end September 2023 was 427,500. To get to 660,000 for 2023, net migration in the December quarter of 2023 would have to be 232,500. That would be over 70,000 more than the highest net migration for any quarter in our history. Given December is generally a low quarter for net migration, the IPA is dreaming if it thinks net migration in 2023 would reach 660,000.

If the IPA is referring to fiscal year 2023-24, that would exclude the record net migration March quarter of 2023. While it is highly unlikely the Government can reduce net migration in 2023-24 to its forecast of 375,000, the idea that net migration in 2023-24 will be 660,000 is just IPA scaremongering.

There are three very good reasons why it makes no sense to use NP&LT data alone to extrapolate what net migration may be in 2023-24:

• The relationship between NP&L-T movements and net migration appears to be gradually returning to normal. If that is the case, NP&L-T movements in the March quarter of 2024 will be around the same or higher than net migration. It will not be greater than the record March quarter of 2023.
• Straight extrapolation takes no account of the general policy tightening that has been taking place since July 2023.
• Specific policy changes that will mean NP&L-T movements in the March quarter of 2024 will be lower than net migration include the higher refusal rate for onshore student visa applications, increase in offshore visitor refusal rates and increased use of the ‘no further stay’ condition with visitor visas.

Taking these factors into account, it is likely net migration in 2023-24 may be between 400,000 and 500,000, not 660,000.

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