The Australian government will change the rules on some visas to curb temporary migration numbers and overhaul what it calls a “broken” migration program. But experts say immigration was already predicted to return to the long-term trend and the effect of migration on jobs and housing is unclear.
Net overseas migration – the difference between the number of arrivals and departures from Australia – has boomed since international borders reopened in 2022. Net overseas migration accounted for more than 80% of population growth in the year to March, with arrivals alone up more than 100% on the year before.
Dr Aude Bernard, a demographer/population geographer at the University of Queensland, describes what is happening as “recuperation migration” as many people who would have come to Australia while the borders were closed have finally made it into the country.
“Migration is [only] now getting close to compensating for the people who left [during the pandemic], and the people who didn’t come,” Bernard says. “And the people who would have come in 2020, 2021, some of them would have had children.
“Yes, migration is high but it’s actually a bit more complicated.”
This complexity is borne out in population projections released with each federal budget and budget update.
Prior to Covid, the projection was for net overseas migration to average about 240,000 a year for the rest of the decade. In other words, 240,000 more people would come to Australia than leave every year. Projections in federal budgets since the beginning of the pandemic have reflected the huge drop and subsequent increase due to closed borders, but have the rate returning to a long run average again.
Despite all of this volatility, the 2023-24 federal budget projected that the population in 2030 will only be slightly below what was estimated before the pandemic.
Complicating the picture further, the government’s new migration strategy, released this week, updates those figures again, based on its new changes to student and skilled worker visas. Those figures estimate that net overseas migration will fall from 510,000 in 2022-23 to 235,000 in 2026-27. This is slightly below the 260,000 in 2026-27 that was estimated in the 2023-24 federal budget.
Prof James Raymer of the school of demography at the Australian National University says the current level of net overseas migration is “artificially high” because people who would now be leaving the country have already left during the pandemic.
“A lot of people who are here will leave in another year or two. [It will] go back to a more normal state.”
Raymer also notes that these artificially inflated levels are disguising that immigration is still lower than it was before Covid for temporary student and temporary worker visas.
“If you look at the data on the kind of flows coming in, both temporary and permanent, they’re actually lower than what they were before Covid,” he said.
“So you get to this impression [that] migration is really, really high in Australia. And I would argue that while it has increased since Covid, a lot of people coming [to Australia] haven’t been here long enough to leave again.”
The government has cited effects on wages and jobs on the higher rate of immigration. But the effects on issues such as housing, labour markets and inflation, especially in the short term, are not clear, according to Dr Ryan Edwards, an economist at ANU.
Edwards says migration works on supply and demand – immigrants consume goods and services but they also fill job shortages and bring necessary skills. Over the long run, they help increase productivity and all of this is on top of the benefits to migrants themselves.
“There’s potentially negative and potentially positive effects across a whole range of markets” says Edwards.
“And especially when it comes to housing and inflation, we don’t really have that much conclusive evidence either way. It’s quite decidedly mixed.”
Many Australian industries rely heavily on temporary migrants, especially hospitality, healthcare, childcare and construction.
“The Australian economy has had a need for additional workers,” says Prof Robert Breunig from ANU, who has done research on the effect of migration on Australian workers.
“And immigrants who come here actually spend a lot of money. They create a big demand for goods and services in Australia. And so it turns out, at least over the last 20 years, those two things kind of balance out.”
Breunig says the caring sectors are particularly dependent on migrants. “If we close the country off to migrants, wages will go up. But we’ll also have a lot of labour shortages and a lot of services won’t get delivered.
“That’s why the conversation is a little more complicated than ‘migrants drive up housing prices’.”
The housing market hasn’t kept up with the surge in migration over the past 12 to 18 months, but it has kept pace over the previous decade, according to Dr Ben Phillips from ANU’s Centre for Social Research and Methods.
“We’ve had very strong immigration since the late 2000s,” Phillips says. “And by and large since then, we have really built a lot of housing.”
“Plenty would argue that if we built more [houses] that prices would be a little bit lower, rents might be a little bit lower. There might be some truth to that. But by and large, we’ve had a very strong period of population growth. And we’ve matched that with very strong dwelling growth.
“But I think in the short term, you’re certainly seeing some growing pains because the housing market can’t really keep up.”
