Overseas migration on the rise

Amongst the major economic news of the past week (including the UK’s radical fiscal policy shift and Australia’s big budget upgrade) was another significant local data release – our population statistics, which showed a very welcome increase. By the ABS’s official estimates, Australia’s population grew by 0.5% in the March quarter, and by 0.9% in the year to March 2022. 

Net overseas migration (NOM) was the largest contributor to the quarterly growth, adding 96,100 people (more than three-quarters of the total 124,200-person population increase seen over the quarter). This is not only a significant increase on last quarter (which saw only 28,700 in NOM) but also the highest quarterly NOM figure on record, driven by the lifting of international border closures at the beginning of 2022. 

 
Chart: Composition of quarterly population change (‘000), Australia

Source: ABS, National, State and Territory Population

 
The strength in March quarter NOM figures comes from a much higher arrivals to departures ratio, indicating more people are coming to Australia than leaving. Over the quarter, there were approximately 2.8 arrivals for each departure – significantly higher than the average over COVID of 0.9 arrivals per departure (and 1.8 arrivals per departure in the five years before COVID). Further, recent ABS data on overseas arrivals and departures also reports the number of international student arrivals rose significantly over the March quarterly (especially compared to the low levels of student arrivals through COVID) – though there is still more recovery to go. 

Restoring overseas migration is crucial in combating continuing Australia’s current, let alone future, labour shortages. The return of international students has provided some options for key sectors that often employ students part-time (such as hospitality and retail). However, the focus of the Jobs and Skills Summit earlier this month was a lift in permanent skilled migration, which will of course make the larger contribution to Australia’s labour supply challenge. Arrivals of permanent skilled visa holders was only 27% of 2019 levels in the March quarter of 2022. 

By state, our larger states continue to lag behind in population growth given COVID disruptions over much of 2021. Growth over the year for New South Wales and Victoria was only 0.5% and 0.6% respectively in the year to the March quarter, compared to 0.9% for the whole of Australia. Queensland continues to see the strongest annual population change, growing 1.8% over the year, while also seeing the strongest quarterly increase in NOM of all states. Western Australia follows at 1.2% growth over the year, thanks to its limited COVID impacts over 2021. 

And while this return of overseas migration is a positive sign, states and territories are also taking action to further facilitate the return of more overseas migrants. Alongside the additional 11,000 state and territory sponsored visas announced by the government at the Jobs and Skills Summit, some states and territories have announced relaxed state sponsorship visa conditions for FY23 to attract more permanent skilled workers:

• Western Australia has introduced temporary measures, such as expanding the occupation list, waiving application fees, halving employment contract durations and removing extra English requirements, to attract more workers
• Victoria, Queensland and South Australia have expanded the list of eligible occupations for a state sponsored visa, and reopened applications to those applying offshore 
• New South Wales has introduced new requirements for minimum point scores and skilled work experience years which is aimed at ‘streamlining’ the application process and attracting the best suited workers to current skills needs.