Migration to Australia is expected to return to near pre-pandemic levels from next year, according to Treasury's mid-year economic update released on Thursday.
The projection shows migration is expected to climb to 180,000 people in 2022-23, almost double the more cautious estimate of 96,000 made in the May budget when Australia's international borders remained shut.
The shift highlighted by the Mid-Year Economic and Fiscal Outlook (MYEFO) shows the federal government's intention to steadily increase migration, as it seeks to energise economic growth and replace skill shortages as part of its recovery from the COVID-19 pandemic.
Treasurer Josh Frydenberg said the government is expecting an extra 120,000 people coming into the country due to the borders opening earlier than expected.
"That's going to provide additional workers to meet some of the skill workforce shortages," he told reporters in Canberra.
Migration had crashed to negative levels for the first time since World War Two in 2020 after a widespread travel ban from the pandemic.
While negative migration levels are still projected to persist at -41,000 in 2021-22, this is a significant increase on the previous forecast of -77,000 in May.
Before the pandemic, net overseas migration had been around 190,000 people in 2019-20.
Australia's borders reopened to eligible international students and skilled visa holders from 15 December - almost six months earlier than forecast in the May budget.
Despite the revisions, the government's long-term projections are broadly in line with a previous forecast for migration to reach 235,000 in 2024-25.
Treasury said a gradual return of temporary and permanent migrants is assumed to occur from early 2022, with international students expected to return in time for the first semester of 2022.
Inbound international tourism is expected to return more broadly from early 2022, building on already established travel bubble arrangements.
But the budget update also outlines if a new variant of concern emerges (beyond Omicron) requiring more significant health responses, the international border could be closed for another six months.
Population growth is expected to return to around 1.4 per cent by the end of the forward estimates as COVID-19 restrictions continue to ease.
The overall size of the population is expected to be around 1.5 million people or 4.9 per cent smaller by 2030-31, compared to what was projected in 2019-20.