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Overseas migration returns – but slowly

The latest release of population estimates by the ABS last week revealed that Australia’s population grew by 0.25% in December 2021 quarter, and by 0.5% through 2021. Natural increase remained the largest contributor to quarterly growth, adding 34,200 people. However, in contrast to most of 2020 and 2021, net overseas migration (NOM) contributed almost half of the total increase (29,100 people).

So, for the first time since the onset of the global pandemic, Australia’s net overseas migration has returned to positive. Nevertheless, it was still much lower than levels seen before, with total number of overseas arrivals in the December 2021 quarter 41% fewer than in the December 2019 quarter, indicating that passenger flows (which include tourists as well as migrants) to Australia have yet to fully recover. 

Source: ABS, National, state and territory population

This marks an important turning point for the country, as net overseas migration accounted for around two thirds of Australia’s population growth prior to the pandemic. Going forward, restoring overseas migration as a source of population growth is key for our population revival.

The stunning June labour force data released yesterday, which showed employment growth of 88,000 people, a record labour force participation rate, and the unemployment rate falling to 3.5%, highlights the scale of Australia’s short-term labour need, and why a fast and sustainable return of overseas migration to the country is so important.

However, while Australia needs skilled migrants, the reverse seems to be less true. Foreign skilled workers have grown wary of Australia’s lengthy border closures and difficult visa processes over the pandemic. This is evident in the latest visa report by the Department of Home Affairs, which shows the level of temporary visa holders in May 2022 is still significantly lower than pre-COVID for students and working holiday makers, despite international borders being opened three months earlier.

Local companies and organisations have reported missing out on foreign candidates to other countries due to Australia’s slow and complicated visa processes and the increasing uncertainty associated with becoming a permanent resident here. This suggests that full recovery of skilled migration to pre-COVID capacity will still be a challenging road.

At the state level, the trend in interstate migration continued to favour Queensland, with the boost coming at the expense of New South Wales and Victoria. Through 2021, Queensland’s population grew by 1.4% - the highest growth rate observed in any state and territory – with much of the increase attributed to net interstate migrants, while in NSW and Victoria, population increased by 0.1% and declined by 0.1% respectively. Over the December quarter, both NSW and Victoria experienced continued declines in net interstate migration, while Queensland welcomed the largest wave of interstate migrants it has seen since the 1990s.