Australia facing zero net migration in 2020-21

Abul Rizvi believes that Australia’s permanent migration program may contribute zero to net overseas migration (NOM) in 2020-21:

In 2019-20, the Government delivered a migration program around 20,000 places below the ceiling of 160,000. A record 70 percent of the skill stream was delivered to people already living and/or working in Australia. For the family stream, 56 percent of visas were to people already living in Australia. The balance would have been even more tilted towards onshore visas after March 2020 as the Department of Home Affairs suspended processing of offshore visa applications (possibly unlawfully).

The trend towards more onshore visas in the migration program will continue in 2020-21 to avoid putting pressure on the overseas arrivals cap but also due to concerns about the weak labour market and expiry of the suspension of the four year wait for access to social security by most newly arrived migrants. The suspension is scheduled to expire on 31 December 2020…

A total migration program of less than 110,000 and a humanitarian program of 2,000 to 3,000, with almost all of it delivered to people already in Australia, would mean the program contribution to net overseas migration in 2020-21 may be close to zero if not negative due to permanent resident departures.

Just because the permanent migrant intake may not contribute positively to NOM in 2020-21 doesn’t mean that it won’t contribute to NOM over the medium to longer-term.

NOM is effectively the difference between long-term arrivals and departures. So, if temporary migrants are granted permanent residency, then they are allowed to remain in Australia permanently rather than eventually being sent home.

Thus, granting 110,000 permanent visas to onshore temporary migrants will reduce future departures of said temporary migrants (since they are permitted to stay), in turn increasing NOM in future years (other things equal).

More broadly, while Australia’s NOM has recently been driven by the strong increase in the stock of temporary migrants (forecast to fall heavily in 2020):

Over the long-term, Australia’s population growth is driven primarily by permanent migration.

To illustrate why, consider the 2016 Census. This revealed that Australia’s population increased by a whopping 1.9 million people (+8.8%) in the five years to 2016, driven by a 1.3 million increase in people born overseas (i.e. new migrants):

Over the same period, the stock of temporary migrants increased by a relatively modest 448,818 people. The rest (850,000) were permanent migrants.

Temporary residents are by definition temporary. Unless they can convert their visas to permanent residency, they will have to leave eventually.

Thus, it is the permanent migrant intake that is the key driver of Australia’s population growth since this is what grows the population base over time both directly, as well as indirectly as these new Australian permanent residents have children (counted as ‘natural increase’).

To really hammer the point home, let’s conduct a quick thought experiment. If Australia theoretically slashed the permanent migrant intake to zero, there would be three broad impacts on population growth:

  1. It would reduce the flow of temporary migrants, since many migrants enter Australia on temporary visas first hoping to transition to one of the many permanent non-humanitarian visas handed out each year (currently capped at 160,000). Abolishing permanent visas would eliminate the probability of gaining permanent residency and, therefore, the incentive to come to Australia in the first place.
  2. The temporary migrants that cannot transition to permanent residency because the permanent intake has closed would eventually have to leave Australia, thereby lowering NOM and population growth.
  3. Fewer permanent residencies means less migrants having children, thereby reducing natural increase as well.

In short, if the permanent migrant intake was hypothetically reduced to zero, then temporary migrants would have to leave, inflows would roughly match outflows (over the longer-term), and NOM and by extension Australia’s population would barely increase.

In any event, Abul Rizvi’s forecast collapse in net migrant arrivals in 2020-21 will be offset to a degree by returning Australians. The federal government has made it a priority to bring stranded Australians home. So, anywhere between 25,000 and 100,000 returning citizens and permanent residents could fly into Australia in 2020-21, directly contributing to NOM.

Leith van Onselen
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