More than 700,000 people are expected to move to Australia by the end of next year, adding to the squeeze on the nation’s already very tight rental market.
The Albanese government’s second budget handed down on Tuesday night is forecasting a temporary migration boom reflecting a ‘one-off’ catch up after the Covid-19 pandemic.
At the same time, budget papers confirm rental demand has increased sharply in part because of an influx of new tenants who have moved here following the reopening of Australia’s international borders.
Treasury officials noted Australia’s rental market is currently very tight, with national vacancy rates at near record lows of about 1 percent and advertised rents growing at more than 10 per cent as of last month.
The budget includes relief for renters — but only some.
The 1.1 million households that receive the maximum Commonwealth Rent Assistance payment are set to benefit as the government increases the rate to 15 per cent.
Treasurer Jim Chalmers delivered his first Budget on Tuesday night (pictured) and announced those on the highest level of rent assistance would get extra cash
Renters are complaining the market is extremely competitive in capital cities (pictured: people line up to apply to rent a property in Sydney)
The government is also expecting average rental costs to pick up in the next few years as increases in advertised rents flow through to existing lease agreements when they are renewed.
Labor is proceeding with plans to increase the cap on the number of visas Australia gives to skilled migrants each year in an effort to solve dire workforce shortages affecting many industries.
The decision has prompted debate about how new arrivals will be able to find homes in Australia given the country is experiencing a rental and housing affordability crisis.
Reserve Bank Governor Philip Lowe last month told the National Press Club in Canberra that Australians wanted to live close to infrastructure and had an obsession with big blocks of land.
He noted that during the pandemic the average household size fell as share houses split up and said household sizes would need to increase again if rents were to come down.
Opposition Leader Peter Dutton has said he recognises the need for more skilled workers but called the question of how Australia’s housing market will cope a difficult one.
Tuesday’s budget is forecasting 400,000 people will have migrated to Australia by the end of this financial year and another 315,000 people will have moved here by the end of 2024.
Budget papers note the higher forecast for net overseas migration is largely driven by fewer temporary migrants departing Australia than usual, rather than a greater number of people arriving.
And even with a stronger short-term outlook, total net overseas migration is not expected to catch up to the level forecast prior to the pandemic until the end of 2030.
Migration is forecast to largely return to normal patterns from the 2024-2025 financial year and net overseas migration is forecast to continue at 260,000 in the 2025–2026 and 2026–2027 financial years.
Budget papers note net overseas migration was cumulatively almost 500,000 lower than expected prior to the pandemic by the time border restrictions were relaxed at the end of 2021.
The Treasury is expecting employment growth to be supported by stronger migration, with a projected increase of 1 per cent in the next financial year.
This is a quarter of a percentage point stronger than the October budget forecast.
The Albanese government has released its second budget as it embarks on an overhaul of the federal migration system following a recent review.
While Labor plans to deliver its final migration strategy later this year, the government says it is ‘ensuring the migration system delivers the skilled migrants needed to address persistent skill shortages.’
About 70 per cent of places in the 2023–2024 permanent migration program will be allocated to the skill stream, and the government will improve pathways to permanency for temporary skilled migrants.
Temporary Graduate Visa holders with select degrees will get an additional two years of post-study work rights in an effort to get skilled workers into sectors experiencing shortages.
The government is providing $50m over four years from the 2023–2024 financial year to address the serious issue of temporary migrant worker exploitation.
Treasury will get $22m over four years, and $5.6m per year after that, to continue its work at the Centre for Population and model the fiscal benefits of migration.
The government will provide $125.8m over the next four years to build on the migration reforms it agreed to at last year’s Jobs and Skills Summit.
This funding includes $75.8m over two years from 2023–24 to extend the current surge in visa processing resources to clear the backlog of people waiting for their visas.
Additionally, $50m over four years from 2023-2024, and $15.3m per year after that, will go towards enforcement and compliance activities to ‘maintain the integrity of the migration system’.
Some visa applicants will be slugged with higher fees, with the application charges expected to increase by $100m in 2023–2024 and by $665m over the five years from this financial year to the end of 2027.
