With the Albanese government’s second budget in place, Australia is preparing for a significant influx of migrants. It is estimated that over 700,000 people will move to the country by the end of next year, which will further strain an already tight rental market. The budget acknowledges the surge in rental demand, particularly due to the reopening of Australia’s international borders, causing national vacancy rates to plummet to record lows and advertised rents to increase by more than 10%.
While the budget does provide some relief for renters, it mainly focuses on households receiving the maximum Commonwealth Rent Assistance payment, increasing the rate to 15%. However, the government anticipates that average rental costs will continue to rise in the coming years as advertised rents impact existing lease agreements upon renewal.
In response to dire workforce shortages, the Labor party plans to raise the cap on skilled migrant visas to address the issue. This decision has sparked concerns about how new arrivals will find housing in a country grappling with a rental and housing affordability crisis.
The Reserve Bank Governor, Philip Lowe, highlighted Australians’ desire to live near infrastructure and their preference for large properties during the pandemic. He suggested that household sizes would need to increase again in order to lower rents, as share houses dissolved and people sought individual accommodations.
Opposition Leader Peter Dutton acknowledges the need for skilled workers but recognizes the challenges faced by Australia’s housing market in accommodating new arrivals.
The budget projects that 400,000 people will have migrated to Australia by the end of this financial year, with an additional 315,000 expected to move by the end of 2024. However, the forecasted rise in net overseas migration is primarily driven by fewer temporary migrants leaving the country rather than an increase in arrivals. It is not anticipated that net overseas migration will fully recover to pre-pandemic levels until the end of 2030.
The budget predicts that migration patterns will gradually return to normal from the 2024-2025 financial year, with net overseas migration projected to stabilize at 260,000 in the subsequent years. Prior to the relaxation of border restrictions in late 2021, net overseas migration fell almost 500,000 below pre-pandemic expectations.
The Treasury expects stronger employment growth due to increased migration, with a projected 1% increase in the next financial year, exceeding the previous forecast outlined in the October budget.
As the Albanese government progresses with its overhaul of the migration system, temporary skilled migrants will have improved pathways to permanent residency. Additionally, temporary graduate visa holders in select fields will receive an additional two years of post-study work rights, aimed at addressing workforce shortages.
The government has allocated $50 million over four years to combat exploitation of temporary migrant workers and $22 million to the Centre for Population to model the fiscal benefits of migration.
To address the backlog of visa applications, $75.8 million will be allocated over two years to extend visa processing resources. Another $50 million will be invested in enforcement and compliance activities to maintain the integrity of the migration system.
While these initiatives aim to streamline migration processes and address workforce shortages, some visa applicants will face higher fees. Application charges are expected to increase by $100 million in 2023-2024 and by $665 million over the next five years.
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