The centrepiece of Peter Dutton’s budget reply was a crackdown on permanent migration, foreign property buyers and international students.
But would the cut to migration actually operate as intended, or is the opposition leader’s bark worse than his bite?
What did Dutton promise?
Dutton promised to cut the permanent migration program by 25% from 185,000 to 140,000 for the first two years, followed by 150,000 then 160,000 in the next two, a cumulative reduction of 150,000 over four years.
This will include returning the refugee and humanitarian program planning level to 13,750, a cut of one-third from the current 20,000.
Dutton said the Coalition would also “implement a two-year ban on foreign investors and temporary residents purchasing existing homes in Australia”.
After Labor committed to a cap on international student numbers, Dutton approved the measure and promised to add “a tiered approach to increasing the student visa application fee” including slugging students who change providers to “enhance the integrity of the student visa program”.
Who would this affect?
The major parts to the permanent migration intake are skilled visas and family visas so that means 45,000 fewer visas in each of the next two years for skilled workers, families such as parents and partners.
Dutton promised to ensure there were enough visas for construction workers, so the cuts to skilled visas would probably fall on other areas of skills shortages such as IT professionals, nurses, accountants, engineers and medical practitioners.
Trent Wiltshire, the deputy director of migration and labour markets at the Grattan Institute, said that if the cuts fall on the family intake it “won’t do too much to the migration numbers in the short term because they’re already here on temporary visas, and will stay on temporary visas” for longer.
Broader economic impact
Wiltshire said that although reducing the permanent skilled intake won’t have a big impact in the short term, the longer term benefit of skilled migration is “huge”, including migrants improving Australia’s productivity, filling skills shortages and paying more taxes.
Andrew Hudson, chief executive of the Centre for Policy Development, said: “Migrants are a massive economic benefit to this country. If it weren’t for migrant intake, Australia would be in a recession.”
“It’s not that the government is opening the floodgates, it’s businesses paying big bucks to get people into the country to fill labour shortages.”
He noted these included filling skills shortages in the early childhood, aged care, broader care and service economy.
Does this address the migration scare?
Dutton has complained that Labor’s budget showed “1.7 million people are coming into our country” over the next five years, a reference to projections of net migration, which includes temporary entrants in uncapped visa classes who eventually call Australia home.
But in the budget reply he did not commit the opposition to a target on net migration.
On 2GB Radio on Friday, Dutton suggested net overseas migration would also be reduced to 160,000.
Abul Rizvi, the former deputy secretary of the immigration department, has also questioned why Dutton’s policy did not address net migration:
If under Dutton’s plan forecast net migration is unchanged, how will that free up an additional 100,000 homes?
— Abul Rizvi (@RizviAbul) May 17, 2024
Wiltshire said that “net overseas migration in the short term is driven by temporary visa holders”.
“The focus on that number [permanent migration] is not really that important for the short term objective to reduce pressure on housing costs. The main game is to reduce temporary visa holders.”
What about international students?
Wiltshire said that students are the “biggest part of the temporary program” and that caps – which both Labor and the Coalition support – “will have an impact”.
But details are still vague on both sides: Labor’s caps will be set in consultation with individual universities and the vocational sector, and Dutton did not specify how stringent the Coalition’s cap would be either.
The Grattan Institute was calling for an increase in international student visa application fees before the budget, which Wiltshire said would work “in tandem with caps”. Although there are costs to reducing temporary arrivals “scaling back student visas is probably the best place [to do so]”, he said.
Wiltshire suggested Australia could also stop offering working holidaymakers visa extensions to work in regional areas, as another measure that could cut temporary arrivals.
What is the impact on housing?
On Friday the government services minister, Bill Shorten, said that in two years the number of foreign citizens who bought houses in Australia was “less than 5,000”, suggesting the temporary ban would have little impact.
Wiltshire said Dutton’s policy would have a “very minor impact on the housing market”, including because under the current rules foreign investors need Foreign Investment Review Board approval to buy existing properties.
Hudson said the Coalition’s claim to “free up more than 100,000 additional homes over the next five years” would be “inconsequential”.
“It’s a bit of a furphy to say there is a correlation between increased levels of migration and housing shortages,” he said.
Although immigration is not the cause of long-term housing shortages, some mainstream experts, such as former Deloitte Access Economics economist Chris Richardson, have linked the cost of housing to the temporary spike in arrivals.
The Grattan Institute estimates that for every extra 100,000 migrants rents might be pushed up by as little as 1%.
Wiltshire said reducing permanent migration by 40,000 a year could therefore lower rents by as little as 0.4%. But the true figure would be lower because a cut to the permanent intake doesn’t necessarily mean fewer people in Australia as many will already be here and remain on temporary visas.
