Migration–permanent and temporary visa trends

Henry Sherrell, Social Policy

Key issue
Recent changes to permanent and temporary visa policy is changing the nature of Australian immigration. Historically, the Australian Government has had tight control over the number and type of migrants arriving. However over the past two decades, the importance of other actors has become clear, including employers, higher education providers and migrants themselves.

From the beginning of Australia’s mass migration system after World War II, until the 1990s, migration policy was predicated on a settlement-based system where permanent visas were granted to new migrants on arrival in Australia. Over the past generation, migration policy has shifted into a hybrid policy framework, where temporary visas sit alongside permanent visas to underpin Australian migration.

However while the overall number of temporary visas continues to grow, the Australian Government’s ability to set the number of permanent residency visas granted each year remains a powerful tool to influence long-term migration trends.

Against this backdrop, the recent decision by the Morrison Government to reduce the number of permanent skilled and family residency visas to 160,000 per year is the first instance under the hybrid system where substantially fewer permanent visas will be available in a period of growing immigration. This creates a degree of uncertainty regarding future migration trends over the life of the 46th Australian Parliament.

This decision to reduce the number of permanent residency visas came after a period of heightened public debate about the size of Australia’s population and effects of migration.

What drives immigration?

There are a number of important factors influencing migration to Australia. Australian Government entry criteria, including the imposition of quotas for permanent visas, directly shape migration trends. In addition, the strength of the labour market and the existence of established migrant communities are examples of non-government factors.

Global factors also shape Australian migration trends. Australia’s relative economic performance compared to other countries is significant. Technology and the cost of transport have made the act of migrating cheaper. Staying connected (for example, via the internet) with those in origin countries now costs less and has fewer barriers than a decade ago. This has particular importance for temporary mobility, such as for education, tourism and business opportunities.

Executive power

Permanent and temporary visa policy is heavily influenced by the Executive and the Minister of the day. The structure of the Migration Act 1958 (the Act) means new visa categories and changes to eligibility generally occur via amendments to the Migration Regulations 1994 (the Regulations) and other legislative instruments as opposed to amendments to the Act.

The Minister tables relevant amendments to the Regulations, which the Parliament can choose to disallow. However, changes can also be made via other legislative instruments, which may not be disallowable, such as the language test requirements instrument for temporary skilled visas. There is often little public debate around these types of measures.

Permanent visas

The Australian Government places a limit on the number of skilled and family permanent residency visas granted each year. This is called the Migration Program. For five years from 2012–13, the Migration Program was 190,000. However the Migration Program was 162,417 in 2017–18, well below the ceiling figure. Following this reduction, the 2019–20 Budget established 160,000 as the new ceiling from 2019–20 to 2022–23.

Figure 1: number of skilled and family permanent visas granted, Australia, 2007–18

Number of skilled and family permanent visas granted, Australia, 2007–18

Source: Department of Home Affairs, Australian Migration Statistics 2017–18, worksheet 1.0, data.gov.au, April 2019.

Figure 1 shows the growth in skilled and family permanent visas from the Howard Government, through the Rudd and Gillard Governments and the 2017–18 reduction by the Turnbull Government.

Since 1996, a bi-partisan policy position has been maintaining a ratio of two-thirds skilled and one-third family, regardless of the size of the Migration Program.

Maintaining this ratio has implications in a period of fewer permanent visas being granted and may lead to growing waiting periods for certain visa categories. For example, while there were just under 40,000 permanent partner visas granted in 2017–18, there were over 54,000 applications lodged, slightly down on the 2016–17 figure. As at 30 June 2018, there were 80,000 pending partner visa applications, meaning an approximate two year waiting period based on the current supply of visas. If demand for this visa continues to outstrip the number of available places, this waiting period will grow longer.

Temporary visas

Temporary visas tend to be ‘demand-driven’, meaning the Australian Government does not place a limit on the number granted. Instead, entry criteria and policy are used to ‘tighten’ or ‘loosen’ program settings. Major temporary visa categories include student visas, working holiday, temporary skilled, seasonal worker, and New Zealand citizens.

Figure 2: number of temporary visas granted, select categories, Australia, 2007–18

Number of temporary visas granted, select categories, Australia, 2007–18

Source: Department of Home Affairs, Australian Migration Statistics, 2017–18, worksheet 2.0, data.gov.au, April 2019.

Figure 2 shows the number of temporary visas has fluctuated. Student visas are mostly driven by higher education institutions and the motivations of international students, while skilled and working holiday visas tend to move up and down based on the strength of the labour market. When looking at temporary visa trends, the number of visas issued cannot be used to derive rates of migration as a person may be granted a subsequent visa if their original visa expires and a migrant may already be in Australia when the visa is granted. The Productivity Commission (PC) recently found migrants transitioning from a temporary visa to a permanent visa are granted an average of 3.3 visas. This occurs as people renew their visa or gain a different type of visa.

In 2017, the Turnbull Government abolished the 457 visa program, and replaced it with the Temporary Skill Shortage (TSS) visa. While the two categories have many similarities including the requirement of an employer to sponsor the migrant, the TSS visa includes a stream without a pathway to permanent residency. As approximately 55 per cent of 457 visa holders in the past have transitioned at some point to permanent residency, this was a major change in policy direction.

Recent debate

2018 marked a renewal of the debate about population and migration trends in Australia. In February 2018, Tony Abbott, called for an 80,000 reduction in the number of skilled and family visas made available each year. In the ensuing public debate, the multi-faceted nature of migration in public policy was made clear. Key emerging issues included the role of migration in relation to the Budget, cities and infrastructure, Australia’s demography and labour market, and the role of different government jurisdictions.

The population debate in 2018 focused on the number of permanent residency visas. While this is an important factor shaping migration trends over the long-term, temporary residency visas also play a role in the short and medium-term.

In the 2019–20 Budget, the Morrison Government formally reduced the number of permanent residency visas over the forward estimates period by 120,000 but also forecast a 17 per cent increase in the rate of net overseas migration when compared to the previous Budget. Net overseas migration is the actual rate of people immigrating to Australia minus those leaving, regardless of their visa status. While the Budget papers are silent on the cause of this growth, it appears temporary visa grants to new migrants are expected to rise over the forward estimates. This means the actual rate of migration to Australia is increasing, despite a reduction in the number of permanent residency visas.

Interaction between permanent and temporary migration

Approximately half of all permanent visas are granted to people who are already in Australia on a temporary visa. This means there is a strong interdependency between policy settings for temporary and permanent visas. Further, the number of permanent visas granted is capped while the number of temporary visas is uncapped. A recent PC report on Australia’s Migrant Intake discusses this interaction, noting how different visa categories have different goals and the movement between visa categories should provoke further analysis, with the PC finding some pathways from temporary to permanent visas were ‘problematic’.

There are a number of trends emerging as a result of the reduction in permanent visas. One notable trend is that increasing numbers of people are arriving in Australia on a visitor visa and then transitioning to another form of visa, leading to a growing number of bridging visas. Approximately 25 per cent of people who count as net overseas migrants are now classified as visitors (compared to 14 per cent in 2013–14) while there is a record high number of people holding a bridging visa, meaning they are waiting for a visa application to be decided.

In addition, a growing number of people now hold temporary visas for extended periods of time. In the most recent ABS Characteristics of Recent Migrants survey conducted in November 2016, there was a three-fold increase in the number of people who had arrived on a temporary visa and remained on a temporary visa eight years later, compared to the same survey from November 2013. A number of recent analyses of Australian migration have asked what is an appropriate amount of time to spend on a temporary visa. Given the reduction in the number of permanent visa places, and the possibility of longer waiting periods for visa applicants, this issue may generate increasing public scrutiny.

Introduction of new temporary visas

In addition to the changes to temporary skilled work visas, two new temporary visas have recently been introduced, both of which signal a change in policy direction.

The temporary parent visa is commencing in July 2019. The visa has been introduced as an alternative to permanent parent visas, where the waiting period is up to 30 years (subclass 103) or the fee is in excess of $40,000 (subclass 143). Unlike existing temporary visas, the number of temporary parent visas is capped at 15,000, signalling there may be substantial demand after commencement. These migrants are not eligible to transfer to permanent visas and can stay for either three or five years. In addition, and in contrast to the permanent parent visa categories, these migrants are ineligible for any Australian Government assistance, including Medicare. As the existing parent visa policy has been in place since the late 1990s, this represents a substantial shift in approach, prioritising temporary visas over permanent visas.

The other temporary visa introduced is the Pacific Labour Scheme (PLS), a new temporary visa for up to three years, introduced in 2018. The introduction of this scheme followed the introduction and bipartisan support of the Seasonal Worker Program, where Pacific citizens are able to work in horticulture and related industries for up to nine months of the year.

The PLS is designed to promote labour mobility for Pacific citizens to earn income, and assist Australian businesses in regional communities to recruit labour. The PLS is the first multi-year employer sponsored temporary visa to fill low and semi-skilled vacancies in the labour market. Unlike other employer-sponsored visa categories, the PLS does not prioritise the skills and education of migrants and is designed for low and semi-skilled occupations.