Last week the Australian published a story that net overseas migration would reach 650,000 over the two fiscal years, 2022-23 and 2023-24.
Since the story included comments from Treasurer Jim Chalmers and Secretary of the Treasury Steven Kennedy, we can assume these numbers will appear in the population survey accompanying the May budget.
The new figures have attracted attention in the media, especially with regard to the Effects of large-scale migration in the labor and housing markets.
The dramatic reversal in the level of net overseas migration is indicated in the following table:
What explains this huge turnaround?
Net overseas migration is determined by the number of migrants arriving each year versus the number of migrants leaving. If more migrants arrive than depart from Australia, this gives us positive net migration.
Due to border closures during the pandemic, Australia had extremely low net migration in the period 2020-21 September.
However, the migration recovery within a year was clearly much greater than had been expected by officials in Canberra when preparing for the migration Federal Budget Statement 2022-23which appeared last year.
The following table compares the net migration from 2021-22 September (the most recent year for which data is available) with the calendar year 2019 (the last year not affected by the pandemic).
The table shows that the high level of net migration in 2021-22 was due more to people not leaving Australia than to people arriving.
Very little of the increase in net migration over these two years was due to the granting of permanent resident visas to people living offshore or the movements of Australian and New Zealand citizens.
Rather, the increase is explained by changes in the movements of temporary residents, such as international students, working holidaymakers and other temporary or bridging visa holders.
The changes in the number of temporary residents in Australia provided by the Ministry of the Interior indicate how net migration may have changed due to the main types of temporary visas. These statistics are shown in the following table:
The main reason for the higher number of arrivals than departures since 2021 is changes in the movements of international students and working holidaymakers.
The preceding table shows that the number of students and working holidaymakers in Australia fell by 421,000 from 2019-21 September due to the pandemic. But this number recovered to 368,000 from September 2021 to February 2023.
This means that many students and working holidaymakers have arrived in the past year, but very few have left. The rate of increase in these arrivals has been much greater than policymakers had expected.
Read more: COVID cuts international student numbers in Australia in half. The risk now is that we will lose future skilled workers and citizens
Many temporary residents would also normally have been expected to leave Australia by September 2022, but have failed to do so.
This includes many people on bridging visas, which reached a record 369,000 in September 2022. A bridging visa is issued to people who are in Australia awaiting the outcome of another visa application.
This number included a huge backlog of applications for permanent skilled visas and many people (50,000 or more) who arrived by air on a tourist visa and then applied for asylum in Australia. Almost all of these asylum applications are turned downfew have been deported.
Also, during the pandemic, the Morrison government extended eligibility for a temporary work visa (visa subclass 408) to people in Australia whose temporary visa was due to expire. This allowed many people to stay in Australia when they otherwise would have left.
Finally, there has also been an increase in the number of graduate visa holders in the longer term due to a policy change in 2011 and other recent changes by the Albanian government.
A temporary increase, then back to normal
This data tells us that the recent increase in net overseas migration is due to policy changes that have caused it made people stay in Australia rather than the policy changing that made sure people could come.
This continued in February this year when the Albanian government allocated additional funds to clear the backlog of people with bridging visas. This has led to a significant decrease in the number of people on bridging visas, many of whom have been granted permanent residency.
The highly unusual movements during the pandemic have led to a temporary increase in net migration, which is expected to last for two or three years. After this, net migration should return to pre-pandemic levels as the number of outgoing migrants picks up again.
Has a similar situation happened in Canada. In 2022, the net migration will exceed one million people – a higher proportional increase than in Australia.
Read more: 1.4 million fewer than expected: how coronavirus could affect Australian population in next 20 years
The impact on the labor force and housing
The consequences of this temporary wave of net migration on the labor force and housing are complex and cannot be interpreted in the simplistic terms now visible in many media.
The high level of net migration is largely due to people staying in Australia rather than leaving. Almost all of these people were already working in Australia and were already housed.
In addition, students are often housed in dorm rooms or live in extremely crowded conditions, while working holidaymakers often live in backpacker hostels.
But there is no denying that the rental housing market in Australia is under a lot of pressure, largely due to the conversion of long-term rentals to short-term rentals. Migration adds to this pressure.