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Peter Dutton wants to reduce migration for housing. Here’s why it’s not a good idea

Opposition Leader Peter Dutton has suggested that the level of Australia’s permanent migration program be reduced from 185,000 – as the government proposes in the budget – to 145,000. This is a significant reduction.

Their reasoning is extremely simple: fewer immigrants means fewer people needing housing in the midst of a housing crisis.

As tempting as this logic may be, it is misleading to suggest that problems related to migration or housing are easy to solve. Far from there.

Rather, these measures could be counterproductive, leaving us with fewer people to fill important skills gaps and ultimately doing little to manage population growth.

Bidding for skills

Under the current system, there are two main streams of migration: family and skilled. Dutton’s announcement has raised questions about what types of immigrants would be eliminated.

As the number of new permanent residents in the family stream is dominated by partners and dependent children of Australian citizens who have a legal right to residence in Australia, Dutton’s proposed cut would have to come overwhelmingly from the skilled stream.

A teacher chats happily with a teenage student in a classroom.
Teachers make up part of the skilled immigrant intake to Australia.
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Currently, the leading occupations in the skilled stream are nurses, teachers, IT workers and engineers. These are all occupations in high demand. If hiring for these professions were to decline, employers would have to look for alternative sources of people with these skills. This would be bad news for New Zealand as Australian state governments would likely target their nurses and teachers.

Additionally, state and territory governments would engage in a bidding war for people with these skills. The effect of this would not be a decrease in housing demand in the states that won this war nor in empty houses in the states that lost.

This is not a solution to the real estate crisis, which is mainly due to the lack of adequate supply.

Additionally, more than 50% of people granted permanent residency already live in Australia. Your conversion to permanent residence on the mainland does not free up housing.

Temporary versus permanent

Over the past 18 years, the level of Australia’s permanent migration program has fluctuated in the narrow range of 160,000 to 195,000 under seven different prime ministers, starting with John Howard. This has proven to be a successful bipartisan policy, which has allowed us to slow the aging of the population, maintain a high employment-population ratio (fewer dependents per worker) and provide the skills necessary for economic development.

Much of the concern about immigration levels has arisen because net overseas migration, according to the Australian Bureau of Statistics, reached 518,000 in 2022-23. This is an extraordinarily high figure by historical standards.

It is not well understood that almost all of this net movement (90%) is related to temporary residents, not permanent residents. This is important because temporary residents differ in many ways from permanent residents.

People walking on a wide path.
Temporary immigrants cannot access many government services.
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Excluding tourists and New Zealand citizens, there are around 1.7 million temporary residents in Australia. They are ineligible for most government services including Medicare, the Pharmaceutical Benefits Scheme, the National Disability Insurance Scheme, state education, national tertiary fees and many more. Temporary residents do not buy houses.

While temporary residents are found in the rental housing market, most are primarily found in student or backpacker-only housing, or live with a larger number of people per household than the permanent population.

Differences between temporary and permanent residents are not taken into account in calculations made for planning documents such as government budgets and intergenerational reports. It is mainly the permanent population that contributes to economic development and productivity. Planning and understanding would be greatly improved if the Bureau of Statistics divided the estimated resident population into permanent and temporary components.

Temporary arrivals in 2022-23 were approximately 200,000 more than in 2018-19, the last pre-COVID year. This was due to the COVID-induced backlog of students and holiday workers wanting to come to Australia, all arriving in the same year, alongside the normal annual intake.

Temporary departures were around 100,000 fewer in 2022-23 than in 2028-19 due to an explosion of people changing visas (known as “visa hopping”) on land.

A university classroom full of students
Both the Labor and Liberal Parties support new limits on the admission of international students.
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In 2022-23, a staggering 192,000 student and graduate visa holders opted for the temporary employment visa (408), which gave them an additional two years of residence. Eligibility for the 408 visa was expanded during COVID to provide a means of employment to temporary residents stuck in Australia, but this figure was for the post-COVID period.

In March 2024, around 40,000 former holiday workers were on a 408 visa or bridging visa, the first time holiday workers had joined the visa-hopping bandwagon. Had these visa applicants left Australia in 2022-23 instead, the net migration outcome would have been very different.

What about international students?

Both major parties have proposed limits on the admission of international students to Australia.

The number of people on student visas in Australia at the end of March 2024 was only slightly higher than the pre-COVID peak. And the current figure is likely due to the delay in registrations created by COVID border closures.

Dealing with dodgy educational institutions that exploit international students is important, as is the genuine student exam introduced by the Labor Party, but limiting the number of people attending reputable universities is unnecessary and will likely have negative consequences. There could be staff reductions, abandonment of careers and a reduction in the level of university research.

So what could be done to manage the migration more effectively?

The government could start by keeping the permanent migration program at its average level of 18 years. Rather than cutting overall income, severely restricting visa switching by accepting fewer visa applications from people already in the country would better manage population growth.

This, combined with leaving international student admissions as is and cracking down on dodgy educational organisations, would be more helpful than the current proposals from both major parties.

The Bureau of Statistics should also divide the estimated resident population into permanent and temporary components. This data would help create better immigration planning and policy.

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