Political responses to policy problems come in a variety of forms. They range from refusal to accept there is even a problem to dramatising the extent of the problem; from blaming the previous government for the problem to dealing with it rationally and implementing solutions.
When it comes to the excessive number of migrants entering the country, the Albanese government’s preference is to deny the problem while quietly working in the background to wind back the number of net long-term international arrivals as quickly as possible.
There are no major announcements, no real explanations of what actions are being taken. There are just a couple of arbitrary targets the government intends to meet. It’s a Clayton’s migration policy: a migration policy when you think there is no policy.
It’s worth going through the background to this problem – and let’s be clear, this is a problem. The recent size of the migrant intake has led to extraordinarily high population growth, particularly in Melbourne and Sydney, and this in turn is causing a range of negative consequences particularly in the housing market.
At 2.5 per cent a year, Australia’s population growth in 2022-23 was among the highest among advanced economies.
There is no doubt the most recent figure of net overseas migration – the difference between long-term arrivals and long-term departures – for the year ending in June last year, at 518,000, was a shock to the government.
Only a few months before, Treasury had been projecting a figure of 400,000. It’s close to impossible to fathom the reason for this sizeable error, particularly as Treasury has access to up-to-date information from the Department of Home Affairs.
The magnitude of long-term departures, in particular, appears to have been significantly over-estimated. But given the Covid hiatus in migrant arrivals, it was entirely predictable that departures would be much lower than average because so many migrants had just arrived.
Any steady-state modelling was always going to lead to gross inaccuracies.
The Treasury has gone out on a limb by predicting NOM for this financial year and next to be 260,000, which is much closer to the average for this century. But contradicting these forecasts are those of Home Affairs Minister Clare O’Neil, who puts a figure of 375,000 for NOM in 2023-24 and 250,000 in 2024-25. At 375,000, NOM is more than 40 per cent above the recent average.
There is little doubt that the government has begun to read the political tea leaves on immigration. Even though cost-of-living remains the major concern of voters, the proportion of survey respondents who now nominate immigration also as a concern has doubled in a year.
The effect of this attitudinal change has led to a close to complete volte-face on the part of O’Neil.From declaring she was unconcerned that international students were coming to Australia to work and stay, she now has changed her tune and is insisting these students must be motivated solely by getting an education.
She doubled the length of stay for international student graduates, only to change her mind within months and return to the previous arrangement. (Graduates from India have had their prolonged post-graduation visas protected by dint of a previously agreed bilateral agreement between the Australian and Indian governments.)
But rather than explicitly declare that we have too many long-term migrant arrivals and too few long-term migrant departures, O’Neil has put in place several measures that she hopes will bring down the NOM while ensuring the vested interests in this space don’t complain too loudly.
She recently abolished – on the quiet – the so-called golden ticket visas used by wealthy older migrants, often with poor English. This was an obvious move but the numbers involved were never great – fewer than 30,000 in total since 2016.
But the big-ticket item was always international students, who make up the biggest group by far among long-term arrivals. Without measures to reduce the number of international students coming to the country, as well as ensuring graduates leave within reasonable timeframes, any changes to NOM will be relatively small.
According to the federal Department of Education, there were just over 780,000 international students studying in Australia last year, an increase of 28 per cent on the previous year. (There had been a noticeable fall during Covid.) Most are enrolled in higher education, but significant numbers are vocational education and training students. The two largest source countries are China and India.
Rather than simply cap the number of new international students as a means of controlling their number – Canada has done this – the government has implemented several measures that should have the effect of reducing the number of international student numbers over time.
These include tightening the English language requirement and insisting that potential students are motivated by obtaining an education rather than seeking to work and secure permanent residence in Australia.
From a visa acceptance rate of more than 90 per cent, the rate is now closer to 80 per cent. Students are no longer able to swap from enrolment in higher education to cheaper VET courses and keep their visas.
The impact of these changes has been to hit VET the hardest, although some universities also are being affected. To maintain their status as low-risk providers with Home Affairs, which assists the ease with which prospective students can obtain visas, some universities now are withdrawing offers to students from certain countries.
Needless to say, these changes are causing a degree of consternation in the international student sub-industry. Many institutions are highly dependent on overseas student enrolments for their financial viability. Others have grown accustomed to the free cashflow associated with international student fee income, subsidising substantial research programs as well as building works, among other things.
Whether this backdoor tweaking of the migration program is the best means of quickly reducing the NOM is debatable. For starters, it’s not clear what the magnitude of the impact will be, with early indication suggesting international student arrivals still remain at elevated levels.
A tax on international student enrolments is an alternative. The key advantage is that it would generate some additional revenue for the government, arguably partly offsetting some of the external costs that the large number of international students inevitably impose, while also deterring the more marginal students from applying.
The reality is that Labor government has been all over the shop when it comes to immigration. There are clearly some Labor parliamentarians who basically believe in open borders and this affects thinking on the matter.
After its election victory in 2022, the Albanese government adopted an extremely welcoming approach to new migrants, declaring that any surge in numbers was simply a catch-up for the Covid interruption.
As it became clear that NOM was heading for historically high and unsustainable numbers, the government quietly started to back-pedal.
The more constructive approach would be to admit the mistakes and to discuss openly what sort and size of migration program bests meets the national interest. In this way we can then implement the optimal policy settings to achieve this outcome.
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