Laravel Testing - migrating/refreshing wrong environment

Laravel v5.5.14
PHPUnit v6.4.1

I have a Laravel application with a number of feature tests. My base TestCase uses the RefreshDatabase trait for triggering a DB refresh before each test, and the env variables in my phpunit.xml looks like so;

<php>
    <env name="APP_ENV" value="testing"/>
    <env name="DB_CONNECTION" value="sqlite"/>
    <env name="DB_DATABASE" value=":memory:"/>
    <env name="CACHE_DRIVER" value="array"/>
    <env name="SESSION_DRIVER" value="array"/>
    <env name="QUEUE_DRIVER" value="sync"/>
</php>

The intention being to leave the development mysql DB connection alone and run the tests using sqlite in memory. Despite these settings (and clearing cached config etc) the DB refresh always refreshes the mysql connection DB.

I've looked into the functionality within RefreshDatabase and debugged the refreshDatabase method, which contians;

$this->usingInMemoryDatabase()
                        ? $this->refreshInMemoryDatabase()
                        : $this->refreshTestDatabase();

And usingInMemoryDatabase always returns false. Looking at the content of that method, when retrieving the DB_CONNECTION from config it always returns mysql, even though it should be being overridden by the env variable above.

What is going on here?