As Australia’s 2024 budget debate rages, the issue of migration has become a hot topic. The government plans to reduce net overseas migration to 260,000 next year, a target which is achievable and likely inevitable due to the natural ebb and flow of migration patterns, amplified during the pandemic.
Net overseas migration is the figure calculated by subtracting departures from arrivals annually. During the pandemic, the number plummeted due to stringent lockdowns but has surged back as those restrictions eased. This bounce back is not caused by more arrivals per se – rather, it’s fewer departures that have caused the spike.
The opposition’s plan to shrink the permanent migration program to 160,000 aligns closely with the government’s long-term plans for that program. Both sides aim to tweak the permanent migration numbers slightly, and these changes are feasible. For instance, reducing the permanent migration target from 185,000 to 160,000, as suggested, would revert to pre-pandemic levels. It’s sometimes said politics is the narcissism of small differences, and that is certainly the case here.
But permanent migration is only a small part of the story. Most immigrants arrive in Australia on temporary visas and a small portion of these then later apply for one of the 160,000 annual permanent places. About 60% of permanent visas go to people already in the country on temporary visas. So reducing net overseas migration is really about reducing temporary migration – the largest component of which is the international student intake.
The opposition’s promise to cap international students again mirrors what the government has promised. Neither party has given much detail on what they plan to do; the government has said it will cut “according to a formula” that includes the amount of new student housing universities build, and the opposition says it will “work with universities” to cap numbers. These promises should be viewed with some scepticism. Political scientists routinely highlight that politicians talk tough during election season to appease groups opposed to immigration, but follow up in government with impracticable controls to please its advocates. Don’t be surprised if these ambitious cuts quietly get shelved after the election.
However, if either party does try to rein in temporary migration by reducing international student numbers, there are major implications for Australia’s economy and society. Export education, as it is called, is one of Australia’s largest industries. Throttling it will undoubtedly be a blow to the economy, at least in the short term.
Moreover, if student migration is cut, Australian universities must change their business models. Research, which is vital to succeeding in a global knowledge economy and is now subsidised by international student fees, will suffer. If the cuts go ahead, whoever is in government will face a difficult choice between funding research directly, or causing significant economic disruption.
The opposition also aims to reduce the humanitarian intake from 20,000 to 13,750 annually. While this cut might seem stark, it aligns with historical averages, indicating a reversion to pre-crisis norms. The problem with that is, crises are currently proliferating rather than subsiding. With global conflicts on the rise, too many countries reducing their humanitarian intake could undermine the ability of the global refugee system to mitigate global instability. Cuts in Australia would not set a good example globally.
At the heart of voter concern lies Australia’s housing crisis, often incorrectly attributed to migration. It’s important to differentiate the housing crisis from a rental crisis. Currently, two-thirds of Australian households own their homes and benefit from rising property values. However, for renters, the inability to transition to home ownership due to inflated house prices is the crux of the crisis.
As Reserve Bank assistant governor Sarah Hunter recently pointed out, the root cause of high house prices is not the current short-term surge in migration but a shortfall in housing supply, made worse by the pandemic. During this time, migration halted, and yet housing issues persist. Thus, the blame should fall not on increased population but on insufficient housing development. Compounding this issue are the pandemic-related supply chain disruptions and inflation, which have escalated construction costs.
Reduced migration, particularly within crucial sectors like construction, could further inflate construction costs and therefore exacerbate housing shortages. High borrowing costs and building material price hikes are also deterring property developers, worsening supply issues. These factors are trapping potential homeowners in the rental market, creating an inherent crisis as rents rise alongside mortgage costs. Ultimately, solutions to the housing crisis lie in boosting supply – building more homes, not cutting migration.
In reframing the migration debate, it’s crucial to base our discussions on accurate data and realistic assessments. Migration policy adjustments, whether by the government or opposition, should align with broader economic needs and realities, not just serve as patchwork solutions echoing voter frustrations.
Alan Gamlen is a professor at the School of Regulation and Global Governance at the Australian National University and director of the ANU Migration Hub
