Why is Treasury setting Australia’s immigration numbers?


Late last month, the Senate Legal and Constitutional Affairs Legislation Committee heard testimony from immigration department officials, who confirmed that the Australian Treasury sets the nation’s immigration numbers and population policy [my emphasis]:

Senator KENEALLY: I do want to get to the NOM number — the net overseas migration number…

Mr Pezzullo: Questions about the how Treasury arrives at the net overseas migration figure and the inputs that they factor into their model are really questions better directed to the Treasury…

The Treasury is responsible for population policy. They derive the net overseas migration calculation, based, no doubt, on modelling that they do and inputs they receive from a number of areas, such as my department. In terms of how the NOM is arrived at, you will need to ask the Treasury…

Senator KENEALLY: Let’s see if we can cut it this way, then, Mr Pezzullo, because what we’ve got in this budget shows a population growth of 0.12 per cent in 2020-21 and 0.16 in 2021-22. That’s amongst the lowest growth rate in Australia’s modern history. Then we see a rapid turnaround in 2023-24 and 2024-25, to 1.26 and 1.37…

Mr Pezzullo: Given that the assumptions in the budget are put together by the Treasury, which also puts together the intergenerational population model, you will need to ask the Treasury. Both sides of the equation — the longer-term projection and how quickly NOM comes back into the positive — are in the hands of the Treasury… The Treasury is aware of all the variables…

Senator KENEALLY: I only ask this because the December 2020 Population Statement forecasts a 190,000 planning level per annum. It says, ‘Between 2020-21 and 2022-23, the planning level for the permanent program is 160,000 and from 2023-24 it is 190,000’… Does the department have an understanding that the planning level is going to change from 2023-24?

Mr Pezzullo: I can tell you what’s in my field of knowledge. My job is to deliver the in-year program and then, from budget to budget, to provide advice to the immigration minister about the management of the next year’s program. As to what the medium term entails, that’s a function of demography and population, which is under the administrative arrangements within the Treasury.

Why the hell is the Australian Treasury setting Australia’s immigration intake and population policy? Given they have responsibility for federal government revenue (whereas the Department of Finance controls expenditure), they will always have a bias towards higher immigration, since more migrants means bigger personal and company taxes.

However, the Australian Treasury will never take proper account of the costs of big migration – either financial or non-financial – since these are borne primarily by the states and residents at large.


The whole immigration program is really about numbers – the ‘Treasury numbers’ needed to sustain Australia’s rate of economic growth and the Commonwealth’s projected tax revenues.

I bet if the federal government was required to internalise the cost of immigration by paying the states $100,000 per permanent migrant that settles in their jurisdiction, so that they can fund the extra infrastructure and services required, then Treasury would no longer tout the ‘fiscal benefits’ of immigration.

Making the federal government share the benefits and costs of immigration would be a surefire way of reducing the intake back to sensible and sustainable levels.

About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.