Treasury is assuming Australia's borders will reopen in January, but don't book your international flights just yet

Treasury modelling released on Thursday is based on Australia’s international borders reopening from January.

More stranded Australians' details have been exposed.

More stranded Australians' details have been exposed. Source: AAP

Australia’s borders are anticipated to reopen to international travellers from January next year with arrivals forced to undertake two-week quarantine periods, according to Treasury modelling.

The border reopening is a key assumption underpinning figures in the federal government’s economic update, released on Thursday, which revealed the nation is facing its worst budget deficit since World War II.

Treasury assumes the travel ban will be lifted on 1 January allowing the resumption of arrivals by temporary and permanent migrants, providing a much-needed economic boost. 

Treasurer Josh Frydenberg addresses the media during a federal budget update.
Treasurer Josh Frydenberg addresses the media during a federal budget update. Source: AAP

But Treasurer Josh Frydenberg has downplayed the predictions saying no decision on when Australia’s travel ban will be lifted has been made.

“In terms of the borders, the assumptions are that it very gradually starts to come back that the quarantine is applied, that you start bringing in some international students – that is work that we have been undertaking," he said.

"Of course, the environment with respect to coronavirus is very fluid. So decisions haven’t been taken about start dates for that. These are Treasury's forecasts and as you can understand, it's a very dynamic environment."

Australia’s net migration intake is expected to fall 85 per cent this financial year as the full impact of the international travel ban is felt.

Treasury has predicted these numbers will fall from 232,000 in 2018-19 to 154,000 in 2019-20 and 31,000 in 2020-21.

It said net overseas migration is being significantly affected by international travel restrictions and constraints on the ability of applicants to meet visa application requirements.

“Future migration levels remain highly uncertain, due to the path of the pandemic and the nature and duration of measures taken to contain its spread at home and abroad,” its economic outlook says.

Deloitte's Chris Richardson says the hit to migration is putting a hole in the economy. (AAP)
Deloitte's Chris Richardson says the hit to migration is putting a hole in the economy. (AAP) Source: AAP

Deloitte economist Chris Richardson has estimated the steep fall in migration could strip as much as $50 billion from national income this year and next.

“That's a hole in the Australian economy,” he told SBS News.

“Come the end of 2021, there will probably be a quarter of a million fewer people in Australia than we've been expecting before the virus.”

He said borders need to remain closed right now for health reasons, but when the health risk passes, Australia should return to a “strong migration intake”.

“You need to set a sensible date for modelling - the start of next year is as sensible as anything else - but it remains to be seen,” he said.

"Everything now depends not just on the virus, but also on a defence against it. Can we get a vaccine, can we get it out fast enough or the medication that helps us fight off the virus." 

Temporary visa holders have been unable to enter the country since foreign nationals were barred by the nation's international travel ban implemented on 20 March.

According to data provided to the COVID-19 committee, nearly one million temporary visa holders - excluding those with tourist visas - remain outside the country as at 7 June.  

Treasurer Josh Frydenberg told SBS News the hit to migration has certainly had an impact on the nation's bottom line.

“We would like to see migration levels come back … but obviously that has to be based on the medical advice,” he said.

“We’re all beneficiaries of Australia’s strong multicultural diverse environments and long may that continue.”

The federal government has recorded a deficit of $85.8 billion in 2019-20, which is projected to blow out to $184.5 billion in 2020-2021 as a result of record spending.

4 min read
Published 23 July 2020 at 5:24pm
By Tom Stayner