Migration to Australia is expected to return to levels similar to those before the COVID-19 pandemic, a new report says.

The ‘2022 Population Statement’ from the federal government’s Centre for Population says that COVID travel restriction resulted in 85,000 fewer people migrating to Australia in 2020-21, the first net loss since WWII.

As a result Australia has lost 473,000 potential migrants, but net inward migration is now on track to rebound to pre-pandemic levels of 235,000 people a year, the report said.

After borders reopened in late 2021, a “sharp increase in migrant arrivals” resulted in a net inflow of 150,000 in 2021-22, it said. This is on track to increase to 235,000 in 2022-23, the pre-pandemic trend level.

“Had the pandemic not occurred, cumulative net overseas migration was expected to be 473,000 persons higher across 2019-20 to 2025-26,” the report said

The return of international students drove the migration rebound last year, with 122,000 more in Australia in October 2022 than in December 2021, including 36,000 more Chinese students, up 90 per cent, it said.

Offshore student visa grants from January to September 2022 were the highest ever, while working holiday visas also surpassed 2019 levels.

The report said the impact of the pandemic was expected to be greatest in capital cities.

“In 2020–21, population growth fell to -0.3 per cent while population growth in rest‑of‑state areas fell to 1 per cent. However, capital cities are forecast to return to higher growth rates than rest‑of‑state areas from 2021–22 as restrictions are relaxed and overseas migration returns,” the report said.

“Despite being the most affected city by the pandemic, Melbourne is projected to become the fastest growing capital city from 2023–24 onwards, overtaking Sydney to become the nation’s largest city in 2031–32 with just over six million people,” it said.

In September, at the Jobs and Skills Summit, the Albanese government raised the permanent migration cap from 160,000 to 195,000 in a move that the report said would “further strengthened” the return of family and skilled visa arrivals.

The report showed Australia’s fertility rate also rebounded to pre-pandemic levels in 2020-21, up to 1.66 babies per woman.

Although it said there were “significant uncertainties” in projecting migration patterns, including the risk of fewer people leaving Australia than forecast and the downside risk that more might leave.

Student numbers, in particular, were sensitive to “movement restrictions in student source countries”, the report said.

Treasurer Jim Chalmers said the statement confirmed migration was part of the solution to skills and labour shortages.

“As the economy recovers from the worst of the pandemic, crippling skills and labour shortages are holding our businesses and our economy back,” Mr Chalmers said.

He said the government would ensure the economy had the number of skilled workers it needed.

“Australia’s migration settings need to be sustainable, serve Australia’s national interest, and not be a substitute for training and building the capacity of our domestic workforce,” Mr Chalmers said.

Meanwhile, the government has launched a review of the migration system to report in early 2023.

Mr Chalmers has promised to build a bigger and better-trained workforce in 2023 through that review and the upcoming employment white paper.

See the full report here: 2022 Population Statement | Centre for Population