Budget 2023: Migrants moving to Australia put pressure on the tight rental market
More than 700,000 people are expected to move to Australia by the end of next year, adding further strain to the country’s already very tight rental market.
The Albanian government’s second budget handed over on Tuesday evening predicts a temporary wave of migration due to a “one-off” catch-up after the Covid-19 pandemic.
At the same time, budget papers confirm that rental demand has picked up sharply, partly due to an influx of new tenants who have moved here following the reopening of Australia’s international borders.
Treasury officials noted that the rental market in Australia is currently very tight, with national vacancy rates nearing a low of about 1 percent and advertised rents up more than 10 percent since last month.
The budget includes lighting for tenants – but only a few.
The 1.1 million households receiving the maximum Commonwealth Rent Assistance payment will benefit if the government raises the rate to 15 percent.
The government also expects average rental costs to pick up in coming years as increases in advertised rents feed into existing leases when they are renewed.
Labor is working on plans to raise the cap on the number of visas Australia issues to skilled migrants each year in a bid to address the dire labor shortages facing many industries.
The decision has sparked debate about how newcomers can find a home in Australia as the country is going through a crisis regarding rent and housing affordability.
Reserve Bank Governor Philip Lowe told the National Press Club in Canberra last month that Australians wanted to live close to infrastructure and had an obsession with large tracts of land.
He noted that during the pandemic, average household size decreased as share housing broke up and said households should increase again if rents fell.
Opposition leader Peter Dutton has said he recognizes the need for more skilled workers, but called the question of how Australia’s housing market will cope a difficult one.
Tuesday’s budget forecasts that 400,000 people will have migrated to Australia by the end of this financial year and another 315,000 by the end of 2024.
Budget papers note that the higher forecast for net overseas migration is largely due to fewer temporary migrants leaving Australia than usual, rather than a higher number of people arriving.
And even with a stronger short-term outlook, total net overseas migration is not expected to catch up with pre-pandemic levels until the end of 2030.
Migration is expected to largely return to normal patterns from fiscal year 2024-2025 and net overseas migration is expected to continue at 260,000 in fiscal years 2025-2026 and 2026-2027.
According to budget papers, net overseas migration was cumulatively nearly 500,000 lower than projected pre-pandemic by the time border restrictions were eased in late 2021.
Treasury expects employment growth to be supported by stronger migration, with an expected 1 percent increase in the next financial year.
This is a quarter of a percentage point stronger than the October budget forecast.
The Albanian government has released its second budget as it embarks on a review of the federal migration system following a recent review.
While Labor plans to finalize its final migration strategy later this year, the government says it is “ensuring the migration system delivers the skilled migrants needed to address persistent skills shortages”.
About 70 percent of places in the 2023-2024 permanent migration program will be allocated to the skills stream, and the government will improve pathways to permanence for temporary skilled migrants.
Holders of temporary graduate visas with selected degrees are given two additional years of work rights after college in an effort to get skilled workers in shortage industries.
The government is providing $50 million over four years from fiscal year 2023-2024 to address the serious problem of the exploitation of temporary migrant workers.
The Treasury Department will receive $22 million over four years and $5.6 million annually thereafter to continue its work at the Population Center and model the tax benefits of migration.
The government will provide $125.8 million 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 $75.8 million over two years from 2023-2024 to extend the current increase in visa processing resources to clear the backlog of people awaiting their visas.
In addition, $50 million over four years from 2023-2024, and $15.3 million annually thereafter, will be spent on enforcement and compliance activities to “maintain the integrity of the migration system.”
Some visa applicants will face higher fees, with application fees expected to increase by $100 million in 2023-2024 and by $665 million over the five years from this fiscal year to the end of 2027.