01/09/2026
No question’ temporary visa cuts will hit economy
Government attempts to slash net overseas migration by targeting temporary visa holders could carry steep costs for economic growth, as policy experts warn a planned overhaul must avoid stripping the budget bottom line of revenue generated by international students and graduate workers.
With the 3-million-strong migration pool dominated by young, working-age taxpayers, the Albanese government faces a delicate balancing act to ensure any cut in numbers does not trigger unintended economic damage.
The government’s efforts to craft a migration policy continue to be complicated by the finely balanced economic, political and human trade-offs involved in reducing arrivals into Australia.
The Coalition and One Nation have already signalled aggressive crackdowns on temporary graduate and student visa numbers in their migration policies, leaving the government under pressure to lower migration without starving the economy of key productivity drivers.
Research published this month in policy magazine Inflection Points sent ripples through migration policy circles when it revealed 30 per cent of 25- to 29-year-olds and 20 per cent of 20- to 24-year-olds in Australia were on temporary visas.
Further findings from the research, co-authored by e61 research manager Lachlan Vass and Scanlon Foundation adviser Henry Sherrell in a personal capacity and provided to AFR Weekend, show temporary visa holders comprised less than an estimated 5 per cent of both under-20s and over-50s in Australia.
Male temporary visa holders tend to outnumber females, particularly among the young adult groups.
Abul Rizvi, a former deputy secretary at the Department of Immigration, said cutting back large cohorts of young temporary visa holders “will have a negative impact on gross domestic product, no question”.
“[Younger temporary visa holders] would be economically difficult to cut [and if] you do cut, you have to cut carefully. You have to cut in a targeted way,” he said.
“What I have recommended is, rather than an open slather cut to the temporary graduate visa, do the cut based on our long-term skill needs.
“You’ve got a large number of relatively young people who have probably paid for their own education, are now working, paying taxes at the normal tax rate, not eligible for Medicare, not eligible for any social support or services.”
Vass said the economic contribution of temporary visa holders was not an argument for leaving policy settings unchanged, but rather for a more targeted selection of entrants to Australia.
“If there is a limit to the amount of migration we can have, there’s a trade-off in the type of migrants we choose,” he said.
“For every working holidaymaker visa we have, that means one less temporary skilled visa.
“And so, would we prefer a working holidaymaker visa or a temporary skilled visa? I think economically, we prefer a temporary skilled visa because they tend to be higher productivity and higher income-earning.
“Work by the federal Treasury looks at the fiscal implications of different migrants, and fiscal benefit to the federal budget tends to be larger the younger [migrants] are, to a point, because they’ve got a longer working life ahead of them, they tend to be healthier, those kind of things.”
Modelling released by the Parliamentary Budget Office last month as part of the independent authority’s medium-term budget outlook showed that a much higher net overseas migration figure – in the order of 80,000 additional people a year – would decrease the debt-to-GDP ratio to 24.5 per cent by 2036-2037.
Meanwhile, a cut of the equivalent magnitude would result in the debt-to-GDP ratio dropping to 32.3 per cent over the same time period.
“On average, migrants typically have a more positive fiscal impact than members of the total population,” wrote the PBO.
“[They were] less represented in older age groups and generally arrive after many publicly funded education and early health care costs have already been incurred overseas”.
The PBO’s own modelling showed that while 20- to 24-year-olds made up almost 25 per cent of the migrant cohort, that age bracket made up less than 10 per cent of the total Australian population.
The government’s efforts to craft a migration policy continue to be complicated by the finely balanced economic, political and human trade-offs involved in reducing arrivals into Australia.
As AFR Weekend revealed last week, the economic implications of proposed cuts to migration numbers were one of the key reasons for the government’s eleventh-hour delay in unveiling its immigration policy.
This week, Home Affairs Minister Tony Burke confirmed reports in the Financial Review that the government planned to cut annual humanitarian intake by a third to 13,750 a year.
Prime Minister Anthony Albanese subsequently backflipped on the plan.
Burke’s office was contacted for comment.
(Source; Financial Review)
