Migrant intake has ‘already hit record 500k’

The government has framed the record numbers as a one-off event as foreigners return to Australia after the end of pandemic-era border closures, though it has repeatedly been surprised by the resilience of the demand-driven temporary intake.

The Home Affairs Department this month revealed more migrants were waiting for permanent visas than there were spots available in the 190,000-person permanent program after a 64 per cent increase in applications over the past financial year.

Business has largely welcomed the arrival of foreign workers and students, which it argues is vital for filling acute labour shortages. Economists say the size of the intake has added to pressures in the rental market and has helped push house prices higher.

Grattan Institute economic policy program director Brendan Coates said the record numbers would add to Australia’s inflation challenge.

“The biggest short term economic impact is that it’s likely to push unemployment lower, and inflation higher, since new arrivals tend to spend more than they earn and therefore add more to demand for jobs than the jobs they take, especially among international students who are the big driver of record migration currently,” he said.

“Record rates of migration are also adding to housing demand, pushing vacancy rates lower and rents higher. An extra 100,000 migrants resident in Australia over 2023-24, compared to the budget forecasts (315,000 for 2023-24), would push up rents by a further 1 per cent.”

Mr Coates said higher rents benefit older, wealthier Australians who tend to own housing, and hurt younger, poorer Australians who tend to rent, raising inequality in Australia.

Mr Rizvi said the strength in migration numbers was a by-product of the resilience of the jobs market, which still boasts a near-50 year low jobless rate of 3.6 per cent despite 12 interest rate rises.

“Net migration always falls when the labour market weakens,” Mr Rizvi said.

So far, demand from employers has easily soaked up a surge in foreign arrivals. Job openings have declined by 15 per cent over the past year, but they remain well above pre-pandemic levels.

Mr Rizvi said the bulk of the increase in net overseas migration was from international students, working holidaymakers, and people on short-term visitor visas moving to another visa that allows them to stay longer than 12 months.

He said an increasing number of international students were applying as higher education students to maximise their chances of entry to Australia, but then switching to a private college six months after arrival to save money.

More than 90 per cent of offshore VET applications over the past six months were rejected, whereas onshore applications to switch to a VET course had a refusal rate of less than 7 per cent.

“It’s much easier to get a visa offshore if you’re doing a higher ed course than if you’re doing a VET course, but it’s of course much cheaper to do a VET course than a higher ed course,” Mr Rizvi said.

About 14,200 international students switched from a higher education course to a VET course last financial year, up from 6246 in 2021-22. Another 14,781 switched from an English language course to a VET course.

Education Minister Jason Clare announced this month that colleges targeting international students will be banned from paying commissions to agents who facilitate poaching from universities and other colleges

The Albanese government is due to respond to the first major review of Australia’s migration system in decades before the end of the year.

The size of Australia’s migration program was explicitly excluded from the review, led by former public service chief Martin Parkinson. It was largely focused on improving the efficiency of the visa system amid a global race for talent.

A spokeswoman for Treasurer Jim Chalmers said the return of students and working holidaymakers had been even stronger than expected.

“International arrivals are above average due to the strength of Australia’s labour market and the education sector’s steady rebound following the pandemic,” she said. “Treasury will update its net overseas migration forecasts in the usual way.”