Why Albanese’s migration nightmare should frighten Dutton too

Australians are about to get a rude awakening on one of the key issues for the coming federal election – and the awkward facts will set up yet another clash over housing and the cost of living. Adding more heat to the argument, the political dispute will turn, as it usually does, to competing claims about a Big Australia.

The preliminary estimates for net migration, due in early December, will offer a preliminary verdict on Labor policies before the campaign gets under way in earnest next year. The government hoped for an intake of about 395,000 for the year to June, but will have to own up to a big miss with that forecast.

Illustration: Simon Letch

This is hard news for Anthony Albanese at the very time he is aiming to lift Labor’s fortunes and prove to voters he is acting on housing, the cost of living and the economy – which also means managing the migration intake.

But this is not an unalloyed victory for Peter Dutton because he is running out of time to explain how his approach would deliver a different outcome. The opposition leader and his colleagues have been ducking and weaving on migration ever since they promised a cut in the intake in May. All the Coalition has offered voters is six months of doubt. Dutton said in his budget reply in May that he would cut the permanent intake, then expanded on this on 2GB the next day to claim he would reduce net migration to about 160,000 – based on the central assertion that he could get the outcome 100,000 below the Labor forecast.

How will he do this? Nobody can say. The Coalition cannot say if it will meet its target by cutting family reunion or skilled foreign workers. It has a number for its humanitarian program – 13,750 compared with the Labor plan for 20,000 a year – but the rest is a mystery.

The migration update in December should force a closer look at the fumbled Treasury forecasts and the empty Coalition rhetoric. Behind it all is the fact that Labor came to power with a sense of confidence that migration was under control because the nation’s doors were closed during the pandemic. Then it was shocked by the huge queue trying to get in once the doors were opened.

The initial Labor forecast for net migration in the year to the end of June 2023 was just 235,000 people, reflecting the comfortable outlook in the government’s first budget in October 2022. That was revised to 400,000 in the budget in May 2023. The actual intake for the year was 528,000.

Those are confronting numbers because everyone has a stake in the outcome. There is a social contract between migration and population: voters are generally against a higher intake when asked in opinion polls, but they also understand the need to bring in foreign workers and keep the economy growing. They expect the government to manage it smoothly.

Big surprises can undermine confidence in the overall program – and lead to anxiety about housing, congestion and rapid social change from the arrival of outsiders. The fears run deep, even though history shows Australia’s extraordinary multicultural success.

The numbers for the year to June 2024 will repeat the surprises of the previous year. Labor initially forecast net migration of 235,000 for the year in its first budget in October 2022. That was revised to 315,000 in the budget in May 2023. One year later, the next budget ticked the forecast up to 395,000.

We’ve heard more than a year of argument about why this is happening. Students have returned in big numbers, working tourists are eager to visit after the pandemic, and skilled foreign workers can easily find work in a tight labour market. The government did not make this happen, but it must deal with it.

The best analysis of the problem, by former immigration department deputy secretary Abul Rizvi, estimates a net intake of 463,000 for the year – about twice Labor’s expectation in its first budget. Rizvi set this out in a nine-page study this week for the progressive journal Independent Australia.

The government has taken some radical steps to get the numbers down, including placing unprecedented caps on overseas students. The higher education sector is livid over the financial pain, but Labor ministers are adamant about the need for the curbs. The argument this year has crystallised the concern that universities are selling pathways to residency just as much as steps to a qualification – the problem many prefer not to talk about. By imposing caps, the government has forced a decision on the level of growth the community should expect.

The migration numbers are not only shaped by how many students arrive but by how quickly they depart. Rizvi estimates there are about 1.1 million students and former students in Australia because so many want to stay. “How far the government is prepared to let this number grow is a crucial policy question,” he says.

Australia needs the workers, of course. As Ross Gittins wrote this week, the country has a shortage of workers rather than a shortage of jobs. Even so, there is a debate to be had about how many we take.

The government has imposed tougher rules on some visas, as well as hoping the flow will fall back to earlier levels. But this has not been able to meet its forecasts – even the one it produced as recently as May.

What we do not know is how the Coalition can possibly reduce net migration from about 463,000 to its claimed target of 160,000. A cut of that scale, even over three years, could damage the industries that need foreign workers. What happens to farmers who need working tourists to pick fruit? And what of the universities? Their finances are suffering under the Labor caps, but they could be ruined under the Coalition alternative.

Dutton is facing a date with migration destiny. How can he cut the intake without wrecking parts of the economy? The official estimates in December will show that Labor has missed its forecasts. But they will also show that the Coalition has an even bigger task in explaining its vague policy – if it is to be taken seriously on migration at all.

David Crowe is chief political correspondent.

Cut through the noise of federal politics with news, views and expert analysis. Subscribers can sign up to our weekly Inside Politics newsletter.